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If the Angels acquired Harper or Machado, I would...


Torridd

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. . .1). Celebrate that the team I follow has some aggressive aspirations, and 2). Be happy that they are doing so selectively on younger players with prime years ahead of them rather than on older aging players whose best years are behind them, and 3). Celebrate that it would seem logical that a Trout extension would soon follow.

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5 hours ago, Stradling said:

Obviously because the value of the team increased by that much.  

You guys can joke about this all you want but the actual, real world reality is he has easy access to that capital with all sorts of fairly simple structures with private investors or investment groups.

It can be structured as debt (like most teams DO have) or equity or amlny combination.  He can even structure it where Arte has the option of it ultimately being converted to debt or equity at ana fed upon future date or upon a financial event, whatever.

The fact is the vast majority of other owners have less equity and more debt.  Nobody is asking Arte to do anything stupid.  Lots of teams are considered 100% sound financially carrying some debt.

Debt is not bad if it achieves an important objective and does not threaten the health of the orgainzation.

So it isn't unreasonable at all to consider something along these lines to achieve something worthwhile.

It is Arte's team, so it is up to him.

But if you bought a house for $180k, and you have it paid off (no debt) and it is now worth $2 million. .  (Arte bought team for 180m and it's worth realistically about 2b). .  .If you wanted to use a little equity to build a $200k pool it is not going to hurt you financially.

And if the value of the franchise is increasing at a rate higher than the cost of the debt service expense, you are STILL getting wealthier every year.

People freak out over debt as if all debt is bad, but smart wealthy people like to use debt against equity instead of selling equity if they want to continue to own more of the investment.

All this presumes Arte doesn't have ample available cash on hand to increase salary expense.

I personally have to believe he isn't cash poor and he would not have to use any debt against equity or sell any equity at all to be a little more aggressive in securing premium players.

Unless Arte is personally cash poor, an annual negative cash flow for this team is not necessarily even a problem to solve when the value of the investment is crushing it year over year.

Does a real estate investor get upset over a $500 a month negative cash flow on a property that is increasing in value by more than $20,000 every year?

Does a car collector get upset of it costs him $5,000 per year to store and maintain a 1962 Ferrari when the value goes up $50k per year?

The question is do they or dont they have the cash to keep going.  If they do, no issue.  If they don't it is an easy problem to solve as long as you have the capacity for properly used, useful debt.

 

 

 

 

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32 minutes ago, Dtwncbad said:

You guys can joke about this all you want but the actual, real world reality is he has easy access to that capital with all sorts of fairly simple structures with private investors or investment groups.

It can be structured as debt (like most teams DO have) or equity or amlny combination.  He can even structure it where Arte has the option of it ultimately being converted to debt or equity at ana fed upon future date or upon a financial event, whatever.

The fact is the vast majority of other owners have less equity and more debt.  Nobody is asking Arte to do anything stupid.  Lots of teams are considered 100% sound financially carrying some debt.

Debt is not bad if it achieves an important objective and does not threaten the health of the orgainzation.

So it isn't unreasonable at all to consider something along these lines to achieve something worthwhile.

It is Arte's team, so it is up to him.

But if you bought a house for $180k, and you have it paid off (no debt) and it is now worth $2 million. .  (Arte bought team for 180m and it's worth realistically about 2b). .  .If you wanted to use a little equity to build a $200k pool it is not going to hurt you financially.

And if the value of the franchise is increasing at a rate higher than the cost of the debt service expense, you are STILL getting wealthier every year.

People freak out over debt as if all debt is bad, but smart wealthy people like to use debt against equity instead of selling equity if they want to continue to own more of the investment.

All this presumes Arte doesn't have ample available cash on hand to increase salary expense.

I personally have to believe he isn't cash poor and he would not have to use any debt against equity or sell any equity at all to be a little more aggressive in securing premium players.

Unless Arte is personally cash poor, an annual negative cash flow for this team is not necessarily even a problem to solve when the value of the investment is crushing it year over year.

Does a real estate investor get upset over a $500 a month negative cash flow on a property that is increasing in value by more than $20,000 every year?

Does a car collector get upset of it costs him $5,000 per year to store and maintain a 1962 Ferrari when the value goes up $50k per year?

The question is do they or dont they have the cash to keep going.  If they do, no issue.  If they don't it is an easy problem to solve as long as you have the capacity for properly used, useful debt.

 

 

 

 

You’ve spelled this out perfectly.  There’s no doubt that the Angels can afford to sign Machado or Harper and keep Mike Trout.  This is probably true for all of the MLB clubs. 

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