"Why does NFL team value matter? It's not tangible. It has no meaning until an owner actually sells the team".
Sure. It isn't liquid cash. But it is a positive reversion and valuable in several ways. An example is, using the value as collateral to buy more businesses to make more money and so forth. The notion that you ignore reversionary value as intangible is incorrect. It isn't intangible if you can use it to advance wealth or borrow against it. Sure, it is transparently tangible only when you dispense such a business, but to sit here and say it doesn't have tangible value is just wrong. When your team's IRR is evaluated at any given time for its valuation, the reversionary interest is a big part of the value.
I simply disagree with the concept that the players and the owners are so rich, that there is no intrinsic difference in the way they're perceived. Not so. Players start off as average people right in front of our eyes and grow to become millionaires in short order. A very tangible growth that one can appreciate. With the owners, without getting into how they accumulated their wealth, while it is plausible that they also grew their wealth from abject poverty, you still can't take that amount of time (decades of wealth accumulation) and feel the same connection to them.
As for your statement about a collectively bargained agreement, I agree it was collectively bargained and therefore there isn't much one can do here. However, my point was more general in suggestion. My point was maybe the division of profits could be such that it is fair and equitable in its disbursement. Why should just be a 50% division of profits? If it must be so, why is the reversionary increase in value of all the clubs not taken into account? There is inbuilt unfairness in the system was all I was saying. Again, your postulate of the likelihood of a team being a winning team and impacting fans' entertainment value? Come on! If we had the same players with a reduced cap of say 100M per year per team, do you think we'd have players dropping out after being drafted by the NFL? No, we would have the same exact number of players playing for the same teams, entertaining us the same way, with the exception that they would be earning their salaries commensurate with the cap.
1. Borrowing against the equity of a business is just one way of converting an intangible asset into tangible debt. If you're borrowing to buy another business, where is the cash flow coming from to purchase said business? Its not like anybody is going to sell you a business on speculation. There's at least some consideration for cash flow.
2. Of course you can't feel the same connection to Owners... most fans don't even know who they are. They're largely anonymous. They have a bigger connection to players because they're the entertainment. They're the one's they see.
3. It's not 50% profits. It's 50% top line revenue. That's an exceptionally sweet deal, and much better than many businesses you've probably worked for. There's companies out there that make gigantic gross margins, well north of 70-80%, that don't come close to paying their employees 50% of revenue.
The obvious danger of tying salaries to profitability is what happens when profitability decreases?
I gave the example I think last year, but there was a year not too recently where the GB Packers had something like $10M in operating profits one year. It was a ridiculously low number for an NFL team. Most of that was because they extended Aaron Rodgers and gave him like a $60M signing bonus (straight cost to the business), and they also spent a ton on stadium renovations that year.
The cap would go up and down like the stock market if compensation were tied directly to operating profits. Any given year that the Owner decides to make substantial renovations, player compensation decreases. Is that fair?
Nope, and that's why they bargained it the way they did. Player comp grows and decreases as the business grows and decreases.
You could argue they deserve more than 50%, but in reality, that's still a super sweet gig.
