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

[TheRealDeal]

Not true. I am uneducated in hockey yet I enjoy it. Well.... it at least holds my attention.

Then you've never given it a chance because you want to hold on to the days when fighters you could relate to were actually popular instead of in today's world of combat sports where they would and do get eaten alive.

[teeray]

Then you've never given it a chance because you want to hold on to the days when fighters you could relate to were actually popular instead of in today's world of combat sports where they would and do get eaten alive.

I've tried but unless there are two striker in there that are.... well boxing it is boring.

BTW this may be your greatest thread hijack of all time :D

[ElIngeniero]

But what you are saying is not basic finance it is risk v. reward. And as accomplished businessman like most NFL owners are you would be very hard pressed for someone to come in and say "Eat 20M now and maybe you pick up 12M in profit on the other side." And anyone say "Sounds like a good idea let's do it."

What you are suggesting is that an owner would be willing to risk 20M in order to try to win 12M (32M - 20M tax loss). No sane person would do that unless there were assurances that it was a lock.

Those odds are too poor to be a good wager.

Even if we are talking a smaller amount of tax loss it seems unlikely that anyone would be willing to take a guaranteed loss in the millions just to flub their numbers for the NFLPA. Especially if they aren't even certain if they are going to come out ahead on the other side.

Just not buying it.

Manipulating profit and loss is what I was referring to as basic finance.

And the point is...the owners are taking a tax hit regardless. If they give themselves a 50M bonus, its taxed as personal income. If its left as profit for the company/team, its taxed as profit/capital gains. The nfl is tax exempt but individual teams are not. So the owners will pay the 20M regardless. Taxes and death....

[TheRealDeal]

I've tried but unless there are two striker in there that are.... well boxing it is boring.

BTW this may be your greatest thread hijack of all time :D

You made a thread to counter a point someone who no one has ever heard of on this board made, it deserved to be hijacked.

You like boxing because it's easy for you to understand, you know when someone good happens for someone, it's cheap to pick up and pretend you are your favorite boxer in your living room, and it's free to watch a lot of times. When you do try it, if you get hit, it's cool because you have those pillows on your hands for protection and the rounds are so short no real damage is done anyway.

You don't know anything about MMA so you don't know what's going on half the time therefor you don't like it. It costs too much money for you to pretend to do and there isn't a lot of it out there for free. You don't want to try it because you might actually bleed and you don't want that. It's too violent for you. It's easier to understand body punch body punch clinch break body punch whiff whiff dance than it is to understand wrestling, striking, submissions, etc and all the nuances of each.

Plus you have more heroes in boxing because they never fight anyone good. How can so many guys only have 1 or 2 career losses? How many champions can one weight division have? How many weight divisions can there be between 123 and 125 pounds?

[TheRealDeal]

Gotta run...have a good weekend all except Teeray

[teeray]

You made a thread to counter a point someone who no one has ever heard of on this board made, it deserved to be hijacked.

You like boxing because it's easy for you to understand, you know when someone good happens for someone, it's cheap to pick up and pretend you are your favorite boxer in your living room, and it's free to watch a lot of times. When you do try it, if you get hit, it's cool because you have those pillows on your hands for protection and the rounds are so short no real damage is done anyway.

You don't know anything about MMA so you don't know what's going on half the time therefor you don't like it. It costs too much money for you to pretend to do and there isn't a lot of it out there for free. You don't want to try it because you might actually bleed and you don't want that. It's too violent for you. It's easier to understand body punch body punch clinch break body punch whiff whiff dance than it is to understand wrestling, striking, submissions, etc and all the nuances of each.

Plus you have more heroes in boxing because they never fight anyone good. How can so many guys only have 1 or 2 career losses? How many champions can one weight division have? How many weight divisions can there be between 123 and 125 pounds?

There isn't a lot of MMA for free bc it sucks and nobody wants to watch it. People would rather watch people play poker than watch two white guys roll around on a mat.

How long before Rayzor comes in and yells at us again??

[Razeyfingers]

MMA is superior to boxing because it complicates the ways to attack and defend against someone. It makes matches much more of a thinking game than many one on one sports, let alone boxing. . . Plus, it is as close to "two men enter, one man leave" as you are ever gonna get.

I dont understand when people say there is not enough striking in mma. The Heavyweight champ Valasquez and former champ Lesnar are both strikers. The 205 champ Jon Jones is a striker and the baddest 24 yr old in the world. The 185 champ is a striker, Anderson Silva. The 170 champ GSP is a striker. The 155 Frankie Edgar is also a striker. I could keep going into the new 145 and 135 classes too, theyre both dominated by strikers. So I dunno man, it sounds like youre not watching it much, Teeray.

Maybe you should learn the techniques just a lil before you watch another match. Its good stuff, you might like it.

[Tiger n Miami AU83]

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.

Ok, I'm going to help out here as I have some expertise in some creative (but legal) structuring.

Right now is a perfect environment (with low interest rates) to take large ordinary income payments. An owner could establish a charitable trust, throw in some LLP's in the structure, throw in an investment trust and if done correctly, acheive the following with a hypothetical extra $10M in ordinary income (paid as a bonus):

1. A charitable contribution equal to $10M ($3.8M would be saved in taxes actually paid by the owner).

2. Maintain full control of the investments in the ultimate holdco trust (the $10M principle).

3. Receive an additional net present value of future annuity payments to a charitable organization as currently deductible. In a very low interest rate environment, the PV is very high and almost nothing in current income taxes may be due on the full $10M (uncle sam gets practically nothing of the hypothetical bonus).

4. Eventually take back out the full 10M if he can acheive a decent rate of return over a long enough period (like 5-6% over 20 years or so, not like the owner needs the money now, hell its extra money to set aside anyway).

5. Maintain control of the investment throughout the life and preserve the $10M principle and take it all back at the end, all while taking a HUGE current year deduction that could come close to paying nothing in taxes on the extra $10M bonus.

This involves some complex structuring and so forth, but bottom line, an owner could take a huge bonus ordinary income payment and while interest rates are still low, take advantage of a strategy like this that revolves around PV and is low rates. Trust me, these owners have advisors (better than me) that will take a large sum of income and get a lot more out of it with a lot less in taxes than you would ever believe.

By the way, Mayhem Miller is pretty cool. If you have not seen it and have watched MMA for the last decade, including pride, the best mma video ever made is on youtube called "why we love MMA" (though it has been taken down a few times also).

[pstall]

I still contend it's also got alot to do with the golden goose of public subsidies going away. Forever.

Bank of America stadium is old by NFL standards. Ironically look at where JR stands as far as the owners and revenue streams and such.

Yes, it's also about salaries and labor and junk. But the owners realize, the free ride is over and they are going to have to pony up more of their own money from now on. So they are trying to mitigate that as much as they possibly can.