Originally posted on Waiting For Next Year  |  Last updated 1/20/12

After a Thomas Ott story on Cleveland.com yesterday, the world was abuzz about how bad the Browns are at public relations.  At this point, I don’t really think that criticism can be disputed very much.  The Browns are a huge business that isn’t always expected to run like a business.  Exhibit A would be the various number of years of service Randy Lerner has paid for so that people could talk on ESPN (Eric Mangini,) sit at home for a year (Romeo Crennel,) broadcast on the Crimson Tide network (Phil Savage,) just to name a few.  As those millions have piled up while more untold millions are spent desperately trying to turn the team around with Mike Holmgren and his multi-layered organization the team appears to nickel and dime the city of Cleveland with their general counsel Fred Nance.  Let’s unwrap this thing a bit, shall we?

First of all, since the story came out, Fred Nance has disputed that the Browns wanted their money up front.  He claims that the team was just letting everyone know that they are going to spend $5.8 million right now and that it is designating these repairs as the same ones that they will be re-imbursed $850,000 a year according to their lease contract with the city.  If that is the case, then the Browns are getting a raw deal with the media report.

However, if the Browns changed their stance after the bad press hit, then they botched things yet again.  The Cleveland Browns should be a savvy enough business to know that asking for all that money up front is inappropriate.  Anyone with elementary levels of financial knowledge knows that future payments can’t be added up for a present value.  $850,000 over seven years when added up is $5.95 million bucks.

Not to go all finance geek on you, but I’m going to use that major from Boston University when I have the chance.  If the Browns want their money fronted to them and you assume a round number of 5% for interest rate then that $5.95 million bucks that the Browns would collect in annual installments of $850,000 for the next seven years is actually only worth $4.92 million today.  If they truly were asking for their money up front, then they were taking city government and its constituents for dummies.

In defense of the Browns though… well maybe not in defense, but in explanation of the Browns motives, many are asking today, “Why won’t the billionaire business man Randy Lerner just say he’s got this one?”  This is usually preceded or followed by some kind of statement about the quality of the product on the field.

In this conversation the quality of the product on the field is irrelevant.  Obviously it isn’t irrelevant to you or me, but trust me when I tell you it is to Fred Nance and league attorneys.  If the Browns go against a lease that they signed with the city and achieve a P.R. victory, it becomes a domino effect.  Just like the Browns moving to Baltimore was (allegedly?) leveraged into NFL franchises holding cities hostage for new stadiums with the threat of moving, so too could cities hold rich teams and their owners up to violate lease agreements in favor of cities in dire straits financially.

Roger Goodell and all the fellow owners around the country would be livid with a capital “L” if Randy Lerner stepped in and told the city that he was going to let them off the hook with regard to their financial commitments to the stadium.  I can’t type the word LIVID in caps or bold enough.

Now, I don’t expect anyone to be sympathetic to the Browns or the NFL on this.  It can certainly be argued pretty effectively that this, among other things, is an absolute abuse of power by the NFL.  At minimum, you are free and clear to find it utterly despicable, should you want.  That being said, if I’m right and that is a big part of the situation, it is important to at least understand the dynamics that could be at play.

But yeah.  That whole P.R. point of view?  The Browns seemed to drop the ball on that one yet again.

 

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