Let's Be Fair

While the Browns are getting jabbed in the media for some of their recent moves, there's another point of view that should be expressed.

As free agency kicked off, the Cleveland Browns engaged in the exciting act of, um, not much. The team dealt Kellen Winslow, of course, and is chasing a number of players, as we've detailed in our Insider Blog.

That's the fun stuff, and Lane Adkins and John Taylor are doing an incredible job of chasing it.

Which member of the OBR team, then, will take over the onerous job of boring our readers into a semi-comatose state by endlessly delving into the details of salary cap machinations and the operating expenses of NFL franchises?

(Sheepishly raises hand)

Bear with me, though. I'll try to make this painless, and it also deals with the way that the Cleveland Browns are being perceived by their fans.

* * *

FACT 1: In a nice bit of investigative journalism, the Cleveland Plain Dealer's Tony Grossi reported this morning that the Cleveland Browns have invested money on the team's facility in Berea at the request of head coach Eric Mangini.

We had heard some similar rumors of these expenses, but the specifics of them were denied by the team, so we never ran a story. Kudos to Tony for nailing this down. There have been other reports of facility changes, including those by the Akron Beacon-Journal's Pat McManamon.

Grossi and McManamon are terrific reporters, so let's just assume that these stories are on the money.

FACT 2: It's well known that the team laid off a number of people last month. We had heard it was seventeen people, and the Plain Dealer's Tony Grossi this morning says that it's eighteen.

It's a painful thing for the people laid off, and for those who remain behind.

* * *

Those are two facts. That's what we know. The team is spending some money on their facility, and they laid off a bunch of people.

Now, let's talk about where this information leads us, and where fans are being led.

It's hard – if not impossible – to write about these facts and not contrast them. A number of local reporters and columnists have taken the effort to do this since the first of the year, including yours truly.

Let's be honest. Highlighting these two facts side-by-side doesn't do the team any favors.

Someone reading these two facts presented back-to-back might conclude that the team is uncaring about their employees, disrupting their lives while engaged in possibly frivolous spending elsewhere.

Or the reader might conclude that the team is hopelessly disorganized, heading in one direction in one part of their business while the other wanders off in another.

From a reader's perspective, it's thought-provoking, at the very least, and not in a good way for the Cleveland Browns organization.

* * *

While this all makes for a good story, a couple of things nag at me. Other than my kids, I mean.

The first is Randy Lerner's frequent remarks about needing to be a "caretaker" for the franchise.

The other is something you would have learned in a high-school business class.

If you've ever run a business or worked in the back office of one, you undoubtedly understand the difference between "capital expenditures" and "operating expenses".

Capital expenditures can be defined as one-time costs to purchase an asset or enhance the production environment. Operating expenses are the on-going costs to create your product*.

For example, if you purchase a car with cash, that's a capital expenditure to acquire an asset. The gas you put into the car, insurance you pay each month, etc, are all operating expenses for running the car.

Likewise, in the case of the Browns facts presented above, the facility changes are capital expenditures. The personnel costs associated with the people who were laid off were operating expenses.

There's a big difference. The first is a one-time cost that you bear and then can generally depreciate. The second is a cost that never goes away. You have it each and every year.

Apples, meet oranges.

* * *

If you view yourself as a caretaker of a business, wouldn't it make sense to both invest in the product while insuring that the operating expenses were reasonable?

Let's say you owned a business, for example, an an ice cream stand. Let's further say you wanted to hand that business off to your son next year.

When you took a step back and looked at your ice cream stand, you realized that your ice cream dispenser was breaking down sometimes and wasn't capable of producing those new yogurt smoothies that all the kids love these days.

You also noticed that you were order twice as many ice cream cones as you needed each month, and were throwing a bunch of unused cones away every few weeks.

As a business owner, wouldn't it make sense to invest a little money in your ice cream machine, upgrade it perhaps, while ordering fewer ice cream cones each month?**

That would be the right thing to do if you were planning on leaving the ice cream store in good shape to hand off to your son.

You're being a good caretaker.

* * *

Your steps to straighten out your ice cream store is, of course, similar to what the Browns have done. They are making one-time capital expenditures to upgrade their facility, while at the same time bringing operating expenses down by eliminating on-going costs they don't think they need.

A difference between running the Cleveland Browns and running an ice cream store, of course, is that ice cream store owners don't have 20 full-time writers and eighteen billion bloggers endlessly regurgitating every known fact about your operation.

Another difference between what the Browns have done and the example above is that it's a lot easier to cut back an order of ice cream cones than it is to lay off a bunch of friends and fellow human beings.

From the cold-hearted business perspective, however, the long-term interest of your business may lie in cutting back operating expenses while still making some capital expenditures to improve it.

From where I'm sitting, that seems to be what the Browns have done.

You can question whether the capital expenses are really worth it, or whether the operating cost reductions were smart ones. You can certainly question whether what the team has done is smart from a PR perspective.

At another level, though, what the Browns have done is simple, common sense business strategy.

The coverage of the team's business decisions, always a questionable avenue for sports journalists, should point this out in order to be fair.

So I'm pointing it out.

* * *

Fellow citizens, thank you for tolerating this digression into Business 101.

Now that I'm done, I can reveal that the true purpose of this exercise was to see if I could write an article about the Cleveland Browns that included the phrases "yogurt smoothie" and "capital expenditures".

I would like to also like to put out there a standing offer of a free beer for any other journalist or blogger who can work these two phrases into a single Cleveland Browns article.

In addition, I will purchase a free small order of chicken wings if you can also work in contextually appropriate uses of the phrases "exothermal", "swordplay", and "Large Hadron Collider". Good luck!


NOTES:

* I'm not an accountant. Real accountants make fun of me and put pencil shavings in my coffee because they have such little respect for my casual definitions of these terms. They're mean.

** This is a rhetorical question. The correct answer is "Yes, and please try to make future analogies less pedestrian, el Bore-zo"


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