Future of the NFL Cap

[Luvnit2]

(07-12-2022, 10:37 AM)ATOTR Wrote: I mean,  it would make sense it it were a different business or a different investment. 

You have 50M sitting around and want to put 25m into a new commercial development.  Your 50 is probably making 7-10% annually - so just use that cash to get a large loan at 5%, and the borrower is 'making' or saving 3-5%.   

But, what this McLuvin guy is saying, is that Owners/Teams 'dont have have a ton of cash' sitting around for player contracts.

Which is ludicrous; these teams have huge operating budgets and inflow of cash (That is why there is a Salary Cap). 

No one is going to personally borrow 100M/200M/300M dollars to pay year-to-year players, whose contracts are not  fully guaranteed, who may get traded, cut, injured, sit out, etc.   They will structure the contacts and the commitments to work within their cashflow and budgets. 

What he said was 100% wrong. He should just admit it was dumb 

Dumb?

Interest rates were less than 3% the last 5 years? They call it cheap money. I know because I borrowed millions and then got a return of 10 to 12% on the cash. What business do you own which has given you great financial knowledge? We are discussing paying players bonuses today for future work 4 to 10 years down the line.

The great things about low interest loans, they can locked in for no fees at any time or if an owner has the cash, they can pay them off at any time. The loan interest is also tax deductible. The bonus is tax deductible too. So, not as far fetched as you think an owner would borrow 100 million for a Watson contract the next 10 years, some cash down and then a loan.

There is  a huge difference between cap costs calculated yearly and cash paid yearly. The Tv money does not pay the owners for money they will get 4 to 10 years down the road, they pay it yearly for Tv revenue.