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Bengals Practice in UC's Bubble
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bearcats23 Offline
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Post: #161
RE: Bengals Practice in UC's Bubble
(04-08-2022 01:46 PM)bearcatmark Wrote:  
(04-08-2022 11:55 AM)bearcats23 Wrote:  
(04-07-2022 02:53 PM)bearcatmark Wrote:  Considering all these franchises keep going up exponentially in value, I'm very dubious of the idea that they are losing money.

This is so far off base. You're comparing apples to oranges. Net worth to net income. It's the typical democrat news fodder issue..."so and so is worth $1 billion and paid a lower rate of tax than a school teacher". Yep, great analogy. That's why we have the estate tax in the US. People don't understand the difference between net worth and taxable income.

The Reds lost $42 million over the past two years. That's cash flow losses, and that's kind of a big deal, even to a guy like Castellini. He can't cover expenses with increases in team value and net worth, it takes cash flow.

What the Reds are doing now is cutting costs and stockpiling not just prospects, but they're stockpiling cash as well. They will have a couple very profitable years due to TV revenue, radio revenue, and MLB profit sharing. Then they will take that cash and their shiny new prospects and make a run at it in a few years to hopefully compete with the Dodgers, Yankees, etc. of the world that don't have to play the rebuilding game.

Ignoring the political BS that you cannot resist, these franchises aren't appreciating in value at the rate they do because they are hemorrhaging money. If they were losing money the way you seem to believe..he'd go ahead and cash out to a buyer at 10 times what he bought in for.

He hemorrhaged money for the past two years, in others years, like this year, it will swing the opposite direction quite drastically and they will make a lot of money. I happen to have a pretty intimate knowledge of the Reds finances, their revenue streams, and how the industry works. I don't "believe" that they lost money, it's a fact that they lost a substantial amount these past two years. Again, this is cash flow losses, not loss in value or net worth. These cash flow losses are real to the ownership group. They are now going to make a lot of money for a few years to recoup and then they will have the cash to make a run at it again in a few years. It's the life of small market baseball. So sitting back and saying they didn't lose anything because the value of the club is going up is short sided and ignores the fact that you can't cover overhead with increases in value.

You're also wrong by insinuating that the value of the clubs is based on their cash flows, which isn't even close to accurate. What's funny about the valuation of these sports clubs is that they aren't valued like a typical business based on their discounted cash flows. People are passionate about sports, and if you're a crazy wealthy guy that wants to own a club, you're going to pay far more than what the cash flow valuation would warrant. There's only 30 teams available to own, so there's a limited supply and high demand with wealthy people that are willing to pay far more than what an equivalent non-sports business with identical financial metrics would be worth.
 
04-09-2022 10:19 AM
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bearcats23 Offline
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Post: #162
RE: Bengals Practice in UC's Bubble
(04-08-2022 01:04 PM)Cataclysmo Wrote:  God you guys want to invoke politics into every damn discussion. I give you plenty of fodder on the political boards. Stop ruining the main boards with this crap too.

Sorry I couldn't resist. It's just one of my huge pet peeve's that I hear in political chatter all the time.

"Donald Trump is a billionaire and paid a lower rate of tax than school teachers, it's not fair!!!!"

Get a basic understanding of how taxation works in our country. Trump owns a massive amount of real estate, there's depreciation deductions, cost segregation opportunities, net operating loss carryovers, etc.

His billionaire net worth will be taxed at 40% when he dies, and this is wealth that was already taxed previously when it was generated through income taxes. So don't worry, he pays a far higher rate of tax in his lifetime than janitors and school teachers.

People don't understand the difference between net worth and income or cash flows. It's a huge pet peeve, and Mark's comment triggered me.

Rant over, back to the previous discussion.
 
(This post was last modified: 04-09-2022 10:24 AM by bearcats23.)
04-09-2022 10:23 AM
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OKIcat Offline
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Post: #163
RE: Bengals Practice in UC's Bubble
(04-09-2022 06:01 AM)doss2 Wrote:  Bengals to build cheap air bubble practice facility.


https://www.wcpo.com/news/local-news/i-t...lltop-land

I jokingly shared here weeks ago that UC would make the Bengals "a deal" on the Bearcats' dirty old bubble when the new IPF goes in. 04-cheers
 
04-09-2022 10:23 AM
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Post: #164
RE: Bengals Practice in UC's Bubble
(04-09-2022 10:19 AM)bearcats23 Wrote:  
(04-08-2022 01:46 PM)bearcatmark Wrote:  
(04-08-2022 11:55 AM)bearcats23 Wrote:  
(04-07-2022 02:53 PM)bearcatmark Wrote:  Considering all these franchises keep going up exponentially in value, I'm very dubious of the idea that they are losing money.

This is so far off base. You're comparing apples to oranges. Net worth to net income. It's the typical democrat news fodder issue..."so and so is worth $1 billion and paid a lower rate of tax than a school teacher". Yep, great analogy. That's why we have the estate tax in the US. People don't understand the difference between net worth and taxable income.

The Reds lost $42 million over the past two years. That's cash flow losses, and that's kind of a big deal, even to a guy like Castellini. He can't cover expenses with increases in team value and net worth, it takes cash flow.

What the Reds are doing now is cutting costs and stockpiling not just prospects, but they're stockpiling cash as well. They will have a couple very profitable years due to TV revenue, radio revenue, and MLB profit sharing. Then they will take that cash and their shiny new prospects and make a run at it in a few years to hopefully compete with the Dodgers, Yankees, etc. of the world that don't have to play the rebuilding game.

Ignoring the political BS that you cannot resist, these franchises aren't appreciating in value at the rate they do because they are hemorrhaging money. If they were losing money the way you seem to believe..he'd go ahead and cash out to a buyer at 10 times what he bought in for.

He hemorrhaged money for the past two years, in others years, like this year, it will swing the opposite direction quite drastically and they will make a lot of money. I happen to have a pretty intimate knowledge of the Reds finances, their revenue streams, and how the industry works. I don't "believe" that they lost money, it's a fact that they lost a substantial amount these past two years. Again, this is cash flow losses, not loss in value or net worth. These cash flow losses are real to the ownership group. They are now going to make a lot of money for a few years to recoup and then they will have the cash to make a run at it again in a few years. It's the life of small market baseball. So sitting back and saying they didn't lose anything because the value of the club is going up is short sided and ignores the fact that you can't cover overhead with increases in value.

You're also wrong by insinuating that the value of the clubs is based on their cash flows, which isn't even close to accurate. What's funny about the valuation of these sports clubs is that they aren't valued like a typical business based on their discounted cash flows. People are passionate about sports, and if you're a crazy wealthy guy that wants to own a club, you're going to pay far more than what the cash flow valuation would warrant. There's only 30 teams available to own, so there's a limited supply and high demand with wealthy people that are willing to pay far more than what an equivalent non-sports business with identical financial metrics would be worth.

Good to get a post from someone else with accounting, appraisal knowledge.

In buying, selling, valuing businesses I typically used and saw used methods:

1. Asset valuation
2. Discounted cash flows
3. Comparable sales

In sports franchise I agree with you that Comp sales sets valuation because the supply is limited but there are lots of big money with big egos.

Had you asked the average Cincinnati person who Bob Castellini was before he bought the Reds and you would have got a lot of blank stares. Ego, vanity, community pride.
 
04-09-2022 10:37 AM
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Bearhawkeye Offline
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Post: #165
RE: Bengals Practice in UC's Bubble
(04-09-2022 10:19 AM)bearcats23 Wrote:  
(04-08-2022 01:46 PM)bearcatmark Wrote:  
(04-08-2022 11:55 AM)bearcats23 Wrote:  
(04-07-2022 02:53 PM)bearcatmark Wrote:  Considering all these franchises keep going up exponentially in value, I'm very dubious of the idea that they are losing money.

This is so far off base. You're comparing apples to oranges. Net worth to net income. It's the typical democrat news fodder issue..."so and so is worth $1 billion and paid a lower rate of tax than a school teacher". Yep, great analogy. That's why we have the estate tax in the US. People don't understand the difference between net worth and taxable income.

The Reds lost $42 million over the past two years. That's cash flow losses, and that's kind of a big deal, even to a guy like Castellini. He can't cover expenses with increases in team value and net worth, it takes cash flow.

What the Reds are doing now is cutting costs and stockpiling not just prospects, but they're stockpiling cash as well. They will have a couple very profitable years due to TV revenue, radio revenue, and MLB profit sharing. Then they will take that cash and their shiny new prospects and make a run at it in a few years to hopefully compete with the Dodgers, Yankees, etc. of the world that don't have to play the rebuilding game.

Ignoring the political BS that you cannot resist, these franchises aren't appreciating in value at the rate they do because they are hemorrhaging money. If they were losing money the way you seem to believe..he'd go ahead and cash out to a buyer at 10 times what he bought in for.

He hemorrhaged money for the past two years, in others years, like this year, it will swing the opposite direction quite drastically and they will make a lot of money. I happen to have a pretty intimate knowledge of the Reds finances, their revenue streams, and how the industry works. I don't "believe" that they lost money, it's a fact that they lost a substantial amount these past two years. Again, this is cash flow losses, not loss in value or net worth. These cash flow losses are real to the ownership group. They are now going to make a lot of money for a few years to recoup and then they will have the cash to make a run at it again in a few years. It's the life of small market baseball. So sitting back and saying they didn't lose anything because the value of the club is going up is short sided and ignores the fact that you can't cover overhead with increases in value.

You're also wrong by insinuating that the value of the clubs is based on their cash flows, which isn't even close to accurate. What's funny about the valuation of these sports clubs is that they aren't valued like a typical business based on their discounted cash flows. People are passionate about sports, and if you're a crazy wealthy guy that wants to own a club, you're going to pay far more than what the cash flow valuation would warrant. There's only 30 teams available to own, so there's a limited supply and high demand with wealthy people that are willing to pay far more than what an equivalent non-sports business with identical financial metrics would be worth.

Very good points. Some of that "value" includes publicity/fame and/or personal satisfaction for those that want it. I mean how many of us would know who Castellini was if he didn't own the Reds (edit: looks like another poster beat me to that point). Or George Steinbrenner - heck he became a character on perhaps the most popular show in tv history. Of course, with publicity/fame you take the bad with the good (as Bob has seen lately and Mike Brown could tell him all about).

However, I do get a "bubble" impression (does that count as bringing this discussion back on topic? haha) from a lot of these valuations given how fast many have increased relative to cash flows (and assuming it continues). Cash is still King imo. But I also don't get the feeling it's gonna pop anytime soon. If you are among the mega wealthy, ya gotta spend that money on something, right?
 
(This post was last modified: 04-09-2022 01:11 PM by Bearhawkeye.)
04-09-2022 12:53 PM
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mlb Offline
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Post: #166
RE: Bengals Practice in UC's Bubble
(04-08-2022 11:55 AM)bearcats23 Wrote:  
(04-07-2022 02:53 PM)bearcatmark Wrote:  Considering all these franchises keep going up exponentially in value, I'm very dubious of the idea that they are losing money.

This is so far off base. You're comparing apples to oranges. Net worth to net income. It's the typical democrat news fodder issue..."so and so is worth $1 billion and paid a lower rate of tax than a school teacher". Yep, great analogy. That's why we have the estate tax in the US. People don't understand the difference between net worth and taxable income.

The Reds lost $42 million over the past two years. That's cash flow losses, and that's kind of a big deal, even to a guy like Castellini. He can't cover expenses with increases in team value and net worth, it takes cash flow.

What the Reds are doing now is cutting costs and stockpiling not just prospects, but they're stockpiling cash as well. They will have a couple very profitable years due to TV revenue, radio revenue, and MLB profit sharing. Then they will take that cash and their shiny new prospects and make a run at it in a few years to hopefully compete with the Dodgers, Yankees, etc. of the world that don't have to play the rebuilding game.

There is nothing about this ownership group that makes me believe they are capable of pulling this off. They've been trying to do this for 10 years and keep tearing it down after a couple years because it is "too expensive".
 
04-11-2022 07:25 AM
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bearcats23 Offline
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Post: #167
RE: Bengals Practice in UC's Bubble
(04-11-2022 07:25 AM)mlb Wrote:  
(04-08-2022 11:55 AM)bearcats23 Wrote:  
(04-07-2022 02:53 PM)bearcatmark Wrote:  Considering all these franchises keep going up exponentially in value, I'm very dubious of the idea that they are losing money.

This is so far off base. You're comparing apples to oranges. Net worth to net income. It's the typical democrat news fodder issue..."so and so is worth $1 billion and paid a lower rate of tax than a school teacher". Yep, great analogy. That's why we have the estate tax in the US. People don't understand the difference between net worth and taxable income.

The Reds lost $42 million over the past two years. That's cash flow losses, and that's kind of a big deal, even to a guy like Castellini. He can't cover expenses with increases in team value and net worth, it takes cash flow.

What the Reds are doing now is cutting costs and stockpiling not just prospects, but they're stockpiling cash as well. They will have a couple very profitable years due to TV revenue, radio revenue, and MLB profit sharing. Then they will take that cash and their shiny new prospects and make a run at it in a few years to hopefully compete with the Dodgers, Yankees, etc. of the world that don't have to play the rebuilding game.

There is nothing about this ownership group that makes me believe they are capable of pulling this off. They've been trying to do this for 10 years and keep tearing it down after a couple years because it is "too expensive".

Fair enough. I do think they were set up for a more sustained run this last go around but the covid year really threw a wrench into the plans. Dropping $42 million in two years was surely not the plan for their run when they went through the last rebuild.
 
04-11-2022 07:45 AM
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