Monday, September 26, 2011

Losing cheap

During the preseason, the Tuesday Morning QB on ESPN's page 2 talked about "losing cheap" versus "winning expensive"....

A little context here. In other sports, baseball in particular, one team can go out an spend wildly on free agents and have a very bloated payroll. While another team might go out and spend maybe 25% of that. The high payroll team will likely be in contention, and will sell out many games. The low payroll team will not be anywhere near contention and will have a lot of empty seats.

But who makes more money? Surprisingly, they both make a profit due to revenue sharing. And while the high payroll team makes a higher number, the lower payroll team will also garner a nice profit. As a percentage of what they expend, the lower payroll team often does better.

Now football is different due to the salary cap. But in this year's - and next year's - cap, there some wiggle room. While the NFL as a whole has to spend 90% of the cap space, there are some teams with payrolls that exceed the cap, meaning that they are 100%+, so another team can be 90%-. And even that overall aggregate 90% is a little misleading. There are still some back salaries to pay out, sometimes to players no longer around. And that means there are some teams that went more youth, no high priced free agents, and have a lot of cap space.

Miami is one such team. And they reportedly have at least $8 million in cap space. So maybe they go 4-12. But with revenue sharing, they will make money anyway. Maybe not as much as the Cowboys or Redskins, but Mr. Ross will post a profit.

And so in a way they are "losing cheap" because he decided to take less of a profit, and spend less. Thus, as a percentage of what he spends, he's doing okay.

Sources inside tell us that he instructed Ireland to not spend on free agency, to let it ride and grow the team with a youth movement.

Who knows what he has in mind...but like many of you, I am losing faith in the Dolphins ownership to to the right thing and try and win games - rather than strictly treating it as a business...

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