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Cobb and Nelson wont come cheap

Discussion in 'Packer Fan Forum' started by ivo610, Jan 25, 2014.

  1. ivo610
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    ivo610 Cheesehead

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  2. Packerlifer
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    Packerlifer Cheesehead

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    More of an issue for 2015.
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  3. weeds
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    weeds Cheesehead

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    Yep, it is....but it is also an underlying reason why a team like Green Bay with limited cash reserves is unable to play "the free agency game" the way other teams can and do -- if for nothing else, for the short term. Keep both of these guys and other areas of the team have to become patch-work.
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  4. captainWIMM
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    captainWIMM Cheesehead

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    I expect the Packers to sign one or both of them to extensions before the start of the regular season.

    I'm not sure why you think the Packers don't have enough cash reserves to compete with other teams in the free agent market. They were able to pay for the south zone expansion and in addition for $62 million to Rodgers and Matthews in 2013.
  5. NOMOFO
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    NOMOFO Cheesehead

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    correct... it's a non-issue.
  6. ThxJackVainisi
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    ThxJackVainisi Lifelong Packers Fanatic

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    According to the Sports Business Daily article linked below, as of the end of their last fiscal year, March of 2013, the Packers cash reserves were $254M. The article has a table showing net profit, revenue, player costs, and net income from 2010 through 2013. It also cautions that the bonuses for the contracts for Rodgers and Matthews go on the 2014 books. http://www.sportsbusinessdaily.com/SB-Blogs/On-The-Ground/2013/07/Packers.aspx

    Contrast that $254M to the money available to some teams. The article linked below lists the richest NFL owners according to Forbes’ annual list. The Seahawks’ Paul Allen’s net worth is about $15 billion, The Rams’ owner is about $5B (with his wife about $9.5B), The Dolphins and Buccaneers owners are both listed at $4.4B, etc. In all 19 teams are owned by billionaires.http://profootballtalk.nbcsports.com/2013/03/26/paul-allen-is-the-richest-nfl-owner/

    The cap is a leveling influence but there’s no question teams with virtually unlimited bank accounts can overcome big mistakes in free agency than the Packers could. From the article linked in the OP, “In 2013, the Packers paid nearly $7.6 million for Nelson, Jones, Cobb and second-year pro Jarrett Boykin. For less than what Seattle is paying Sidney Rice, the Packers got 224 receptions, 3,245 receiving yards and 20 touchdowns.” If that were reversed, it would be a much bigger deal in Green Bay.

    Teams like Seattle can go to the edge of what the new CBA allows in stretching signing bonuses over time and if that contract “blows up” they can do it again with another player. Again, the cap and constraints of the CBA (regarding how long bonuses can be prorated) level the playing field somewhat but there’s no question never having to worry about money is an advantage the Packers don’t have. BTW, money from stock sales can't be used to sign or extend players, only to improve or expand facilities.
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  7. captainWIMM
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    captainWIMM Cheesehead

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    That is true, but all of these guys are that rich because they made smart business moves. While I agree with you that's it's theoratically easier for them to absorb big free agent signings they don't like making too much bad decisions either.
  8. ivo610
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    ivo610 Cheesehead

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    The sooner these guys get locked up to long term deals the better. Your #1 and #2 hit free agency and we will have problems.
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  9. GreenDeath
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    GreenDeath Canuck

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    Bingo. Putting extensions like this off is the wrong move. Key contributors and core players, you lock them up before that final year of their deal. You never know what team out there is going to potentially offer that guy 15% more than you are, and in this day in age with players giving the agents the keys to the car and telling them to "get me the most money", it's a risk I don't like the Pack taking.
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  10. HardRightEdge
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    HardRightEdge Cheesehead

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    Even in the uncapped year, when the Packers had the second highest player compensation costs in the league, they had net earnings of $10 mil, $5 mil after land value write-downs and were cash flow positive. That's from memory but should be very close.

    Even before the stadium expansion which provides meaningful additional revenue, the Packers posted record net earnings in 2012. Expect another record in 2013.

    TT commented last off season that Murphy advised him he was under no team restrictions with respect to spending. There's no reason to see that changing any time soon.

    Having a billion dollar owner provides no advantage in player retention or acquisition over the Packers at this time or for the foreseeable future. The salary cap makes it so.

    It would take failures to sell out or a sudden plunge in NFL popularity impacting visitor gate shares and the next TV contracts some years down the road to prevent this franchise from spending up to the cap each and every year. If they don't, it's not because they can't. It's because they're looking at in-season provisions and a multi-year view of negotiations down the line. This was covered at some length in another thread.

    It's also interesting to note that we're moving into the phase of the new CBA where teams have to start worrying about minimum payouts. The CBA calls for a minimum cash payout average over a mulityear period of something like 95% of the cap. Somebody else can look up the exact provisions.

    Every team is working now in a fairly narrow band between minimum cash and maximum cap.

    You're going to start seeing reporter projections about which teams are likely to be most active in free agency based on minimum cash pay requirements.
    Last edited: Jan 26, 2014
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  11. captainWIMM
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    captainWIMM Cheesehead

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    I agree with most of your post , don't expect record net earnings in 2013 though as the Packers dished out $62 million to Rodgers and Matthews.
  12. HardRightEdge
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    Good point. Assuming the signing bonuses were cash payouts in 2013 with nothing deferred, you're most certainly correct. Revenues should tip a record though.

    In that case, 2014 earnings should be a banner year.

    The point to keep in mind is nobody runs an organization of this size or manages cash year-to-year. 5 year averages are more relevant.
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  13. ivo610
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    ivo610 Cheesehead

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    would record earning have anything to do with stock offering?
  14. HardRightEdge
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    No. Money taken in through the stock offering is not counted as revenue or operating earnings. It's a balance sheet matter.

    Speaking of the stock offering and the Packer structure, let's look at the Packer advantages over a billion dollar owner:

    1. The stock offering is tantamount to a tax free, cost free gift from the ban base, like hundreds of millions in capital falling from the sky. That does not happen elsewhere, and I'm tempted to say it's an overwhelming advantage if one discounts market size.

    2. Also, some of these billion dollar owners feel the need to extract a sizeable income from the franchise to support a particular lifestyle for themselves and family members (who might also be on the payroll). While Murphy is handsomely paid, it could be a lot worse.

    3. Some of those billion dollar owners are asset rich, cash poor and in some cases not really billionaires at all and may be leveraged to the hilt. You can be pretty confident Jerry Jones is not carrying a $250 million cash reserve, or if he is it's offset by debt.
  15. packfan1
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    Also, just because someone is listed as a billionaire that doesn't mean that it is liquid assets that being cash. The Packers organization is valued over a billion dollars...that is not liquid cash either. As mentioned previously the salary cap eliminates any unfair advantage.
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  16. ThxJackVainisi
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    ThxJackVainisi Lifelong Packers Fanatic

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    While it’s true a lot of teams in the NFL carry debt and some owners use their teams as a source of revenue (the heirs of George Halas who own the Bears do), but to think the Packers have an advantage over Paul Allen’s team because if they get permission from the league to sell stock it’s “free money” doesn’t make any sense. The proceeds from the last stock offering were about $67M. That’s great, don’t get me wrong but that’s not even one-half of one percent of Paul Allen’s net worth. That’s a rounding error for Allen. And yes, he can get his hands on 100s of millions of dollars. And while your average billionaire may not have $100M liquid, they can get their hands on that kind of money because of their net worth.

    And Jerry Jones has a lot of debt but Forbes lists his debt to value ratio at 12%. They say the Cowboys are worth $2.3B so 12% of that is $276M. But Jerry’s team generated $539M in revenue in 2012. By contrast, the Packers generated $302M. That’s a significant difference season after season.

    The new CBA helped the Packers (and the other teams) a lot. But read some of Murphy’s comments before they got that deal. In a 2010 article he’s quoted as saying player costs were outpacing revenue by a 2 to 1 rate and that the Packers’ local revenues were flat since 2007 and “because the salary cap and floor were determined by total revenues, shared and unshared, the small-market Packers are experiencing the pinch of other teams’ revenues driving up every team’s player costs.” Murphy called it a “non-sustainable model”. http://profootballtalk.nbcsports.co...inancials-raise-specter-of-unshared-revenues/ That’s why the Packers are trying to maximize revenue they don’t have to share with other teams. That’s why they expanded Lambeau and are going to expand the pro shop. That’s also behind the land purchases around Lambeau. They’re in good shape now, but over time, the rich get richer and that goes for the NFL too, particularly teams in big markets. If the owners of other teams get in financial trouble, the team can be sold and will experience an infusion of new money. That’s not the case with the Packers. The Packers can’t afford to miss on free agents the way Snyder did, they have to be more careful.
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  17. HardRightEdge
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    1. You can have all the money in the world but the salary cap prevents you from spending it.

    2. Prior to the new CBA, the model was unsustainable for 2/3 of the clubs. That the NFL was a wonderful business to be in prior to the new CBA was a widespread misconception. There's a reason the owners earned major concessions in the new CBA. The business model works for most teams now; it works for all who can sell out.

    3. The Packers are among the most likely to sell out regardless of the team they field. The statement, "the Packers can’t afford to miss on free agents the way Snyder did, they have to be more careful," is not supported by history.

    4. If there is any cushion to be had, it is in the size of the market. But that's the market, not the net worth of the owner.

    5. Paul Allen owned the Seattle SuperSonics. Where are they now? That's a rhetorical question. Bottomless wealth does not immunize the fan base from the owner getting bored with his toy or grow tired of a losing investment. Even with his new stadium, if Ziggy gets bored or dissatisfied with the return on his investment, it could be hello LA or hello London.

    6. If the Dallas Cowboys franchise required a cash infusion Jerry Jones would have to take out yet another loan, if he could get one, or sell a chunk of the team. Such a circumstance would imply a large decline in the popular appeal of NFL football rendering his stadium, where half the franchise value resides, a white elephant. If the league fell under economic duress, the Cowboys would be one of the first to fall, barring entry of a cash-investor willing to lose money.

    7. Rich guys hate losing money even on their hobby businesses.
    Last edited: Jan 26, 2014
  18. HardRightEdge
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    Those statements are poorly thought through and largely incorrect.

    What we pay our WRs vs. Rice is utterly irrelevant. Compare what we pay our QB vs. what they pay theirs, our top edge rusher vs. theirs, our inside linebackers vs. theirs or our top cornerback to theirs.

    Your contention that a rich team like Seattle can pay out big signing bonuses to players who bust and then just turn around and repeat the process is completely misguided. That's the fast road to cap hell. Certainly you're familiar with the concept of "dead cap money"...every signing bonus $ counts against the cap sooner or later; the more often you don't get value for those bonuses, the more dead cap you accumulate. The Seahawks have a ton of dead cap built into their contracts now. Their window is narrow, and it will likely shut when Wilson comes up for renewal...like what we just saw in the Baltimore housecleaning.

    That Murphy would have made such statements in 2010 is no surprise...that was the uncapped year where he had the second largest player compensation outlays in the league.

    There is absolutely no indication that a cash consideration would come into play for any Packer signing, now or in the foreseeable future. It's all about cap management. If one sees us not spending up to the cap, it has nothing to do with cash considerations...it's a multi-year consideration of future cap room needs coupled with a cap management philosophy that tries to avoid dead cap like the plague.
    Last edited: Jan 27, 2014
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  19. captainWIMM
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    captainWIMM Cheesehead

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    While I agree with most of your thoughts, I have to disagree with the Seahawks dead money issue. While they don´t have a lot of cap space available (a little bit more than $3 million) they don´t have a lot of dead money counting against their cap either (actually less than the Packers $1.2 million). And aside of cutting Percy Harvin, which will obviously not happen, no other play that would be cut would result in massive dead money either.
  20. HardRightEdge
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    I like to look at dead cap that's on the roster...what it costs to replace guys in the event of injury, underperformance, age.

    I was looking at 2013 dead cap. Seattle had 4 guys over $10 million and 9 over $5 million. If you click on the "Dead Cap" heading in the following link the table will sort:

    http://www.overthecap.com/teamcap.php?Team=Seahawks&Year=2013

    However, now I'm looking at 2014. They'll have only 1 guy over $5 million (Harvin) and 6 guys at $3 million or more:

    http://www.overthecap.com/teamcap.php?Team=Seahawks&Year=2014

    So, you are correct, they are in good shape for next year. I should have known Schneider wouldn't drive them into a cap dead end.
  21. captainWIMM
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    captainWIMM Cheesehead

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    And the only one I think they would cut actually cut of those guys would be Sidney Rice.
  22. NOMOFO
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    NOMOFO Cheesehead

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    The Seahags cap issues were kicked around endlessly in another thread... no need to carry it on here... but that is misleading, to say the least, to say he's the only guy they will need to cut. The Seahags will need to get ready to pay for their two best players in a year. That hampers what they can do this year. You mention cuts, what about their current starters that are FA? I took a good long look at the seahags roster issues for next year and I fail to see how anyone could downplay the changes that will hit that team.
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  23. captainWIMM
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    captainWIMM Cheesehead

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    I was just talking about the Seahawks dead money issues, not their overall cap situation. I know they don´t have a lot of cap room to work with and they´ll have some tough decision to make. But I´m quite sure Schneider is capable of working the cap as well and the Seahawks will be able to have a competitive team on the field next year.
  24. GreenDeath
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    They have a ton of guys to pay, Sherman and Thomas are up after next season and then in 2016 they have Wilson, Okung, Irvin, Lynch, Miller. They're going to lose half of those guys, especially since since they've already given Harvin and Chancellor huge pay days.

    That's one of the benefits for this new CBA. If you can hit on those mid round draft picks, you're going to have a five year window to really do some damage because of their extremely low cap numbers and the team options. That's what allowed them to get guys like Avril and Bennett, the salaries of Sherman and Wilson.

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