MLB team financial documents

[Gregory Pratt]

I guess Deadspin's getting into the journalism business:

 

Part 1

Part 2

 

The site has published team financial records for the Mariners, Angels, Pirates, Rays, and Angels. I hope they have the White Sox and publish them later this week, or the Cubs.

 

Quoting Deadspin:

 

If there is a thread running through all of these financial statements, it is the incredible ability of baseball teams — whether they're winners or losers, big market or small, "rich" or "poor" — to make their owners a fat pile of money.

[SoxFan562004]

Saw this in the A.M. and was interested in it. Even though they do not have the White Sox posted yet, and maybe if they do my theory will be shot out of the water with the White Sox, but using the ones they have posted as some support for a belief I've had for awhile, it's not a surprise when JR finds money to sign players. Going by attendance, public statements by team officials, and some other info that is out there is not the most definitive way to determine any teams financial situation, those can be used as a good base analysis, however there are many creative ways a team can save/make money that are basically impossible to realize unless docs like these are leaked.

Edited August 23, 2010 by SoxFan562004

[kitekrazy]

This was interesting. http://sports.espn.go.com/mlb/news/story?id=5484947

[Gregory Pratt]

The Rangers are up on Deadspin now, too.

 

I'm surprised there isn't more coverage of this, or reaction.

[Chisoxfn]

I've read all of them. Very interesting stuff and it is getting HUGE HUGE play out on Florida sports talk.

[LittleHurt05]

I've read all of them. Very interesting stuff and it is getting HUGE HUGE play out on Florida sports talk.

 

I've haven't had time to look at them, but I thought I heard that the Marlins made like $50 million one year. How ridiculous is that?

[Balta1701]

I've haven't had time to look at them, but I thought I heard that the Marlins made like $50 million one year. How ridiculous is that?

How much did they lose during the previous couple years after that series run though?

[LittleHurt05]

Jeff Passan lays it on the Marlins

[SoxFan562004]

How much did they lose during the previous couple years after that series run though?

which one? the last one or the 90s one... two different sets of ownership I believe for those two runs... anyway, how much could they have lost after the 03 one? They traded away their players right away.

[Gregory Pratt]

How much did they lose during the previous couple years after that series run though?

 

I'd doubt they had losses.

[SoxFan562004]

I'd doubt they had losses.

The Rangers one has analysis in it. They have a 68m broadcast deal, the White Sox own 1/4 of Comcast, I wonder what the Sox get from that.

 

The Rangers one is interesting to look at because it shows how much they make from littler things like jumbotron announcements and mascot appearances.

 

However, overall the amortization of player contracts, explained near the bottom of the Rangers financial docs, is extremely clever!

 

 

[caulfield12]

I would think one of the contracts that got the Rangers into the most trouble was the Michael Young deal....not sure how they structured that one from an accounting standpoint.

[Balta1701]

which one? the last one or the 90s one... two different sets of ownership I believe for those two runs... anyway, how much could they have lost after the 03 one? They traded away their players right away.

The 2003 one. They sold right away after the 97 one, they held onto guys for a while after the 2003 series. Beckett, for example, wasn't traded until after the 2005 season. They also added expensive guys like Delgado while they were at it. Baseball-Reference has their 2005 salary somewhere in the range of $80 million, which i might add, was more than the White Sox were spending at the time I believe. They cut back to less than $20 million within a couple years.

[Balta1701]

I would think one of the contracts that got the Rangers into the most trouble was the Michael Young deal....not sure how they structured that one from an accounting standpoint.

2 words. Alex. Roidriguez.

[SoxFan562004]

The 2003 one. They sold right away after the 97 one, they held onto guys for a while after the 2003 series. Beckett, for example, wasn't traded until after the 2005 season. They also added expensive guys like Delgado while they were at it. Baseball-Reference has their 2005 salary somewhere in the range of $80 million, which i might add, was more than the White Sox were spending at the time I believe. They cut back to less than $20 million within a couple years.

Ah OK, I thought Beckett was moved quicker, but stuck around through the'05 season, however he made 1.5 in '04 and 2.4m in '05 with the Marlins, than roughly double that and beyond with the Red Sox and Delgado made 4m for the year he was there.

 

The Cubs series went 7 games, meaning the Marlins got 3 home games out of that, and I believe they got 3 home games out of the WS, so they made a ton of extra revenue in '03, but again that's kind of the point of these documents and the analysis of them, it's hard just to strictly use obvious income sources and compare it with a raw payroll number, these teams have a lot of sources and accounting tricks to make money. Look at the link a few posts up about how the Marlins owners got the citizens of Florida to pay a large portion of the new stadium when they were pocketing money, I have no doubt that they weren't losing money hand over fist after winning the WS

Edited August 25, 2010 by SoxFan562004

[HuskyCaucasian]

This was interesting. http://sports.espn.go.com/mlb/news/story?id=5484947

While $15 million profit sounds good, this is the bleak point: without rev. sharing the team would have been $-24,638,063 in the red in 2008.

[HuskyCaucasian]

Could MLB change the rules to not allow teams to make a profit if they haven't fully spent the revenue shared with them?

[Balta1701]

Could MLB change the rules to not allow teams to make a profit if they haven't fully spent the revenue shared with them?

Almost anything could be collectively bargained...so the Union could certainly make an issue of that. The question is...what would the Union give up to get that?

 

The Union is probably going to make something of an issue about teams like Florida that don't spend their revenue sharing dollars on salary...but they're never going to push for anything resembling a salary floor...because the logical demand from the owners in return is a salary cap.

[HuskyCaucasian]

Jeff Passan lays it on the Marlins

Marlins Message Board Reactions

[HuskyCaucasian]

Almost anything could be collectively bargained...so the Union could certainly make an issue of that. The question is...what would the Union give up to get that?

 

The Union is probably going to make something of an issue about teams like Florida that don't spend their revenue sharing dollars on salary...but they're never going to push for anything resembling a salary floor...because the logical demand from the owners in return is a salary cap.

good point. There needs to be some sort of a check and balance here though. THe whole idea of revenue sharing is to help prop up teams that arent financially stable to make the league more competitive. But, some of that money isnt being used that way. If I were Boston or NY, I'd be super pissed right now... to know that their money is being used to lien the pockets of other owners.

[Iwritecode]

Could MLB change the rules to not allow teams to make a profit if they haven't fully spent the revenue shared with them?

 

But will we ever know when they make a profit?

 

This is from one of the links above:

It brings to mind the famous quote from Paul Beeston, the former president of MLB who now runs the Toronto Blue Jays: “Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss, and I can get every national accounting firm to agree with me.”

[Chisoxfn]

I don't believe it. Someway, somehow, the numbers will eventually hit the financials. I'd have to see the situation, but I can walk through the logic. I've put together/audited quite a few financials of large institutions in my young career.

[SoxFan562004]

I don't believe it. Someway, somehow, the numbers will eventually hit the financials. I'd have to see the situation, but I can walk through the logic. I've put together/audited quite a few financials of large institutions in my young career.

Not sure what you mean. Obviously revenue sharing is helping for a lot of these teams, but also interesting numbers like the 60m+ broadcast rights for the Rangers and jumbotron revenues is what it is, they're not being tricky, it's just being disclosed. There's a reason, even in a bad economy, that there were at least 2 groups going for the Texas Rangers ownership, and it wasn't to have an opportunity to loose money. Obviously it has to do with each individual ownership group and how they run it once they get the team, because I have no doubt that it is possible to turn a MLB team into a financial disaster, but it's also possible to turn it into a moneymaker and have the public perception be you're breaking even or even operating at a loss... I think the Marlins stadium example is a good example of that.

 

(Please don't take this post to mean that I'm questioning your analysis of it, obviously your career involves this sort of thing, I am just asking you to elaborate, I am always intrigued by pro sport finances.)

Edited August 25, 2010 by SoxFan562004

[Chisoxfn]

Not sure what you mean. Obviously revenue sharing is helping for a lot of these teams, but also interesting numbers like the 60m+ broadcast rights for the Rangers and jumbotron revenues is what it is, they're not being tricky, it's just being disclosed. There's a reason, even in a bad economy, that there were at least 2 groups going for the Texas Rangers ownership, and it wasn't to have an opportunity to loose money. Obviously it has to do with each individual ownership group and how they run it once they get the team, because I have no doubt that it is possible to turn a MLB team into a financial disaster, but it's also possible to turn it into a moneymaker and have the public perception be you're breaking even or even operating at a loss... I think the Marlins stadium example is a good example of that.

 

(Please don't take this post to mean that I'm questioning your analysis of it, obviously your career involves this sort of thing, I am just asking you to elaborate, I am always intrigued by pro sport finances.)

I was only commenting on the person that said an accountant can take something that was a 4M profit and turn it into a 2M loss and vice versa. That is utter crap. Certainly there are regulations that enable you to capitalize certain things or you can get some beneficial one time write-offs, but at the end of the day, ultimately, it all will ultimately make its way into the financials.

 

I also should point out that we don't know what exact debt covenants the Marlins had to reach to ensure they had access to funding, but that is a whole nother story.

 

I think the Marlins made money, I just questioned the person who had a quote talking about what accountants good do. Sure, one year we might impact the financials one way or another (by capitalizing an item, thus delaying a chunk of the expense from hitting the P/L or by expensing the item, thus taking a 1 time hit which might allow future Net Income to apear higher). But one way or another the amount is still going to flow through the financials.

 

And people are forgetting, teams can make a lot of money by seeing there franchise value increase significantly as well.

[Harry Chappas]

one year we might impact the financials one way or another (by capitalizing an item, thus delaying a chunk of the expense from hitting the P/L or by expensing the item, thus taking a 1 time hit which might allow future Net Income to apear higher). But one way or another the amount is still going to flow through the financials.

 

And people are forgetting, teams can make a lot of money by seeing there franchise value increase significantly as well.

 

You are exactly right. The key thing with these are not the P&L you can get these to look however you choose. The Balance Sheet is where everything lies. What is the debt on the books and what is the equity of the franchise those are goign to determine where you stand.

 

A football bonus is an expense in year 1 for tax purposes yet it can be accounted for a couple of different ways and I am not even referring to the fictious salary cap. Eventually though it all comes through the P&L. Julio Cruz just came of the Sox books a couple of years back. He resided on teh Sox B/S for almost 15 years and hit their P&L annually. You can not really hide anything unless you have a holding company....or own the television/radio station that broadcasts your games. That is where you hide revenue from the team.