Do Nfl Teams Play Players With Non Football Injuries Conceptual Parallels Between Football Free Agency and Cost Accounting

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Conceptual Parallels Between Football Free Agency and Cost Accounting

Cost accounting is designed to help managers understand the costs of doing business and making decisions, but it is a concept that is not strictly limited to, and need not be, traditional business models. In the National Football League (NFL), general managers (GMs), team presidents, and owners must make similar financial decisions about extending contracts to their current players, releasing their players, and offering new deals to prospective free agents. The cost accounting system is the result of the decisions made by the managers of the organization and the environment in which they are made, and there is no doubt about the multi-billion dollar professional business it has become.

Instead of materials and machinery, NFL executives should evaluate the depreciation of their direct labor force and whether their current and future value justifies the cost of paying that person what they are looking for or realistically accepting. But the reason it’s so subjective is because we’re dealing with real people, not things or products. Although it’s not necessarily tax-free, an NFL team can value its personnel according to adjustments for current expenses (ie, the salary cap) and depreciation of assets that a football player is depreciating.

There’s also the issue of accelerated depreciation, especially for the running back position, based on the number of hits, injuries and physical wear and tear a player has over the course of a career. In addition, older players (for example, 30 years and older) are considered at a significant disadvantage, while younger players are valued as assets, especially if they are signed to new contracts at a reasonable price. The need to remove any inherent biases in these front-office evaluations is critical, but still perceived as trivial (offending a released player or making an “offensive” offer) when they are made as a business decision. , not as a personal decision. one

Activity-based costing (ABC) is a system of assigning costs to products based on the activities they require. In the case of NFL free agency, activities are those football plays performed on the field that lead to yards, touchdowns, and then wins. Executive management can then use the operating cost data to determine where to focus their operational improvements in order to achieve maximum value in order to achieve the ultimate goal: winning championships and satisfying the fans. hard To achieve such success, alternative methods of internal accounting, such as the balanced scorecard, can help the GM make better short-term decisions and also help provide better long-term performance metrics for the organization as a whole, thereby making the GM coordinate. and owner interests.

When making the final trade decision regarding a player’s futures, it is important to consider all of the above variables. For example, in the recent case of Thomas Jones, the New York Jets decided to part ways with the 31-year-old running back after the 2009 season, which was his most productive season in rushing (over 1,400 yards and 14 touchdowns). to protect the cell. the team from paying an upcoming bonus of $3 million on top of a base salary of $2.8 million. In addition to his age, he had 331 career carries in the regular season and appeared to be wearing down a bit as Sean Greene just started getting the majority of the carries. As an organization, the Jets couldn’t rationalize paying a player that they calculated would be less than that amount, and decided to move in a different direction. Jones would later sign a two-year, $5 million contract with the Kansas City Chiefs in March 2010, a clear example of the two principles of accounting and the proper analysis of each team; As it turns out, Jones had a productive first year with the Chiefs before having a down season last year at age 33.

The above example is one of hundreds that occur in a given season and illustrates the team’s use of multiple levels of accounting systems to evaluate, judge, and ultimately award or reject contracts. It is for these reasons that teams hire master contract negotiators and why individuals who develop the exact formula are so sought after and the franchises that hire them are usually successful.

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