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The fallacy that owners paid themselves bonuses to manipulate profit/loss

teeray

By teeray,
in Carolina Panthers

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teeray Newbie

teeray

Posted
Posted

I posted this in another thread but decided to make a new thread about this issue of owners paying themselves large bonuses or salaries to manipulate profit/loss on their books.

This whole argument seems to be based on the idea that the owners would manipulate the profit loss data to a third party because "they could pay themselves large bonuses to cover up their actual profit/loss and therefore the data would not be reliable or useful (paraphrasing).

Many on here have emphasized salaries/payments to owners as a way to suggests that owners may be manipulating their profit/loss by paying themselves higher than normal salaries or giving themselves big bonuses in order to essentially lie and say that they are losing money when they really are not.

IMO there is one glaring fallacy with that opinion. It would be unworldly stupid from a business perspective.

As soon as you cut yourself that bonus check you would have to turn around and cut a check to Uncle Sam for @40% of that bonus.

SO if Richardson gave himself (or any employee) a $50 million dollar bonus to "cook the books" a little bit for negotiating leverage, he would immediately lose @$20 million dollars to the government. That is a big bite to absorb just to say "Nana nana boo boo stick your head in doo doo" to the NFLPA.

But as long as that money stays within the Panthers it is untouchable by the government since NFL teams are tax exempt because the NFL umbrella is considered a non-profit organization.

And I believe (and correct me if I am wrong) as long as you are the owner of the NFL team you can borrow against your team (which is a major asset like a house) which is a loan that is not taxable. As a matter of fact the interest on said loan can deducted off on your income on your tax return.

So from a business perspective I don't see how in the world it would make any sense to pay yourself a higher salary or give yourself a large bonus just to manipulate profit/loss. The tax losses alone would take years to recoup and a new CBA would end up being nothing more than a break even proposition if an owner did this.

As far as I know the only reason other companies ever do this is to reduce the corporate taxes they owe which isn't an issue for NFL teams and other non-profit organizations.

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Udogg Contributor

Udogg

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Posted

Or they could have formed another company. Bought the team with a loan from the new company they formed, pay back the company (which they own) as a loan repayment. Thus paying themselves back on initial investment. Hell they could even charge themselves interest on the loan. Or any other bajillion ways there are to cook books and show a loss when there isn't one. Unless they open the books there is no way to quantify whether or not they are cooking them. That's why the bookkeepers are always the first people arrested :).

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