Some Notes From Bram's Blog

[Mc2guy]

Originally Posted by Rajmahal33

After reading that, it leaves me with the uneasy feeling that the pendulum might actually start swinging the other way. Are we gonna be one of those penny-pinching franchises now that screws up good deals? I hope not but it seems like we would have still been underpaying for Hackett.

I know i know, we are still the washington redskins and just cuz we have had back-to-back frugal Free agencies, doesn't mean that we have completely changed our ways. I guess i'm just being paranoid and if you are dan snyder and the skins FO, u are damned if u do and damned if u don't...

It might seem that the pendulum is on the other side this year, and frankly, there could be some serious truth to the idea that Synder is having cash flow issues.

If you follow the credit markets, and who couldn't right now with the amount of media play they're getting, you would know that the era of cheap cash borrowing is over. Synder, and others like him, made their fortune through HIGHLY leveraged buy-outs. In other words, they borrow heavily to purchase assets, and then recapitalize (by selling) after they have restructured the asset to be more profitable and more valuable. The only way this business model works is when you have access to lots of cash on the cheap. NO ONE on Wallstreet is offering cheap cash right now, so the cost of borrowing money is very high, and your leverage ratio (the amount you owe, vs. the amount of assets you have) must be much lower than in the past.

Synder has historically carried a very high leverage ratio, and if you recall, the league actually made him pay down his debt on the team to a ratio that was more solvent. I would not be surprised at all to find that Snyder is having problems getting access to cash for all of his businesses. That doesn't mean he is insolvent, just that he has to limit his spending to the cash his businesses are bringing in as opposed to spending the banks money and paying it back.

This is all pure speculation, but it seems very reasonable given Snyders previous business dealings and modus operandi.