The Idiots Guide to Profits!

prof·it/ˈpräfit/ Noun: A financial gain, esp. the difference between the amount earned and the amount spent in buying, operating, or producing something.

It seems that some attorneys recently have had a hard time understanding what the word profit means.  So much so that it's beginning to make us question what they are teaching kids in college nowadays.  We decided to concentrate on this word in today's blog post to give those that don't understand it, a little accounting lesson they must have missed out on while getting their law degree.

We wanted to give everyone a broad range of definitions for the word profit so the could see how it is used in the different worlds in Accounting and Finance.  In the Finance world, profit is the financial return or reward that entrepreneurs aim to achieve to reflect the risk that they take.  The accounting definition is simply the difference between revenue and costs.  Here is the mathematical representation of the equation.

REVENUE - COGS (Cost of Goods Sold) = PROFIT

Why do we feel we need to spend our valuable time explaining this?  Well, it's come to our attention that the Town of Southwest Ranches is pretty sore about not getting the detention center pick and now wish to create even more havoc in our lives by dragging the City of Pembroke Pines and the Town of Southwest Ranches into a lawsuit because they say they lost out on "profits".   At the time of the deal being killed the Town had not presented anyone with any type of contract that delineated any profits but we'll get back to the profits discussion later. 

Mediation has failed over the last several months between the two municipalities and now the Town is coming out GUNS BLAZING!  Who is pulling out the guns?  None other than Town Attorney Keith Poliakoff of Becker & Poliakoff along with CCA's attorneys (AKA "DEEP POCKETS") Sam Poole and Leonard Samuels of Berger Singerman, who will probably say they will fund the lawsuit just to stick it to Pines for not going along with their prison plans.

An interesting quote from Susannah Bryant's Sun Sentinel article,

Southwest Ranches officials accuse Pembroke Pines of breach of contract for reneging on an agreement not to 'interfere'

OK, If we remember correctly the Town cancelled the Roadways Agreement first and all the City of Pembroke Pines did was honor their wishes.  They wanted to cancel it and the City did just that.  Now they want to turn and sue because they honored their wishes?  This enabled the Town to expeditiously close roads in the west side of Southwest Ranches on 199th, 202nd and 205th Streets.  They were SO happy to be able to do this, they were quoted by Doug McKay to be "Happier than Pigs In Slop!", but they wouldn't have been able to do this with this agreement still intact.  In it, was a hidden non-interference clause forbidding the City from interfering with the Town's prison plans thus enabling them to continue to get increase after increase in the bed counts with Pines having it's hands tied behind it's backs unable to speak up for the residents nearby and the schools that were there prior and after this plat became a prison parcel.  SO that's the agreement about the roads and "non-interference." 

Now we turn to the Fire/EMS agreement...  This had the last minute addition that Pines would provide water/sewer to the prison while almost the entire Southwest Ranches is on a well system.  The addition that Mr. Dodge took approximately a WHOLE SIX MINUTES to consider before conceding the water addition in the Fire/EMS agreement to Southwest Ranches.  Also, Jeff Nelson has been quoted many a times as saying that the CCA could just dig a well on many occasions and why would Pembroke Pines not want to get the profits from selling water to CCA for the prison.  ??  Yes, Profits.  Revenue minus Costs.  This agreement was cancelled for convenience (9 months), a provision that the Town agreed to.  This final cancellation completely severs any ties that Pembroke Pines might have had with the prison property.  They were no longer enabling a project that would only have put the community at grave risk.

SO now we are present day where mediation seems to have failed and now the Town Attorney is pushing this along with CCA's attorneys as they were in attendance at the most recent mediation.

They [ICE] don't want controversy," Southwest Ranches Mayor Jeff Nelson said. "They don't want to read about this in the newspaper. -- Sun Sentinel, July 31, 2012

Maybe ICE realized they were dealing with a bunch of amateurs and decided it wasn't a right fit seeing as everything the Town does ends up in some sort of controversy one way or another.  Name an issue: Road Closures, Land Deals, Fire Contract conflicts with Weston, Davie and Pembroke Pines...  ICE must have realized to put a prison in this municipality would bring alot of scrutiny to the project and decided against it.  No one really knows... How would a Judge know what ICE was thinking when they decided to pull the site selection?  Only one person TRULY knows.

In addition to the Town being sore, there has been "posturing" in the press from both the Town Attorney Keith Poliakoff of Becker & Poliakoff and CCA's hired gun, Leonard Samuels of Berger Singerman.  They claim that the Town & CCA has lost out on this huge amount of PROFITS!   Profits that they seem to calculate in some "New Math" that they must have taught in them fancy law degree schools.

Had the detention center come to town, Southwest Ranches was to have been paid $1.6 million a year plus $350,000 in annual property taxes, Poliakoff said.  -- Sun Sentinel, July 31, 2012

In what contract was this stipulated?  That's RIGHT!  There wasn't ever a contract from ICE.  In addition, what was it going to cost the Town to have this prison for increased police, bonding, indemnity, hire new staff to oversee millions of dollars of transactions that were going to be going through the town coffers, etc that would then have to be taken from the prison "income" that would then equal the profits.  Again, this attorney doesn't seem to understand how to calculate profits... We hope he can balance his checkbook, let alone the mounting legal bills he's charging the Town of Southwest Ranches for!  We think the Town needs to take a longer look at who they are hiring to represent them and see if they have had problems in math during their educational background.   Did we mention he just talked the Town Council into voting to sue Pembroke Pines so they can discuss strategy in the shade... once he's gotten this ball rolling it's going to be a tough bell to un-ring in the courts.  Poor Freddy didn't even know what he was voting on as he had to get things clarified for him twice.  KA-CHING for Poliakoff...  Bad News for our Town Budget!!
   

REVENUE - COGS (Cost of Goods Sold)/COST = PROFIT
**Attorney's Cliff Notes on how to calculate PROFITS** 

Do you think Keith Poliakoff is giving the Town bad advice?  Chime in on the discussion HERE!