Reinsdorf’s U.S. Cellular Field Lease In Jeopardy?

[Milkman delivers]

Their profit margin is pretty consistently towards the higher tiers annually. They also do reinvest those profits, so they really aren't profits in the traditional sense. They usually pull in $20 to $25 million a year, but that money goes right back into the team, so the profit numbers are very misleading.

 

I guess I don't fully understand it. We talk about how the Sox reinvest most of their profits back into the team, and they're also one of the most profitable teams in the game. Does that mean other teams are always working at a loss or consistently lowering their payroll?

[southsider2k5]

I guess I don't fully understand it. We talk about how the Sox reinvest most of their profits back into the team, and they're also one of the most profitable teams in the game. Does that mean other teams are always working at a loss or consistently lowering their payroll?

 

There are two things you can do with profits. As an investor you can take them and go home, or you can reinvest them. Say the Sox had a $25 million profit in 2010. If they walked away, they would be gone from the organization. If they get reinvested, the capital in the Sox goes up $25 million, which shows up as $25 million more that is out there for the team to use. Instead of starting from a position of $0, they start from $25 million.

 

Honestly I am not familiar with the way other organizations are run, but I would imagine most teams reinvest their profits. Most people make their money when their organization sells, not on a year to year basis when it comes to professional sports.

[Milkman delivers]

There are two things you can do with profits. As an investor you can take them and go home, or you can reinvest them. Say the Sox had a $25 million profit in 2010. If they walked away, they would be gone from the organization. If they get reinvested, the capital in the Sox goes up $25 million, which shows up as $25 million more that is out there for the team to use. Instead of starting from a position of $0, they start from $25 million.

 

Honestly I am not familiar with the way other organizations are run, but I would imagine most teams reinvest their profits. Most people make their money when their organization sells, not on a year to year basis when it comes to professional sports.

 

That is what I was getting at. We seem to blow our owners for reinvesting like it's some unheard of occurrence in the baseball world, but it seems to be the norm.

[Soxfest]

Tickets to the Sox are on the lower end of the scale in MLB, far lower than across town in the same city.

I agree they are lower than the Cubs, but with the new premium seating the price is not lower scale in MLB anymore.

Edited October 25, 2011 by Soxfest

[southsider2k5]

That is what I was getting at. We seem to blow our owners for reinvesting like it's some unheard of occurrence in the baseball world, but it seems to be the norm.

 

I think the reason they get more credit for it, is that we are looking at a consistently big number, which would make it much easier to take a share of that out, much like a dividend. Most teams don't have that predictability, and may well need that reinvestment to avoid years where they would have to do a capital raise.

[Balta1701]

That is what I was getting at. We seem to blow our owners for reinvesting like it's some unheard of occurrence in the baseball world, but it seems to be the norm.

Really though...the White Sox have been in the bottom half of MLB in attendance every year for the last 5 years (last year they were in the top 10 was 2006)...and yet they've been in the top 7 (or higher) in payroll every year since the Series win except for 2009.

 

That behavior is not the norm.

[NorthSideSox72]

I have no idea how big the Sox's ownership group is...has there been any turnover in people owning sections of the team since 05? I'd have to imagine that cashing out some of that equity would have been a smart move in 06-07.

Not sure, but equity is still not profit. They are seperate things.

 

Also FYI, JR is not the biggest owner of the team by financial stake. He represents the group as the President of sorts, but he is not the #1 guy in terms of how much of the team he owns.

 

[Milkman delivers]

Really though...the White Sox have been in the bottom half of MLB in attendance every year for the last 5 years (last year they were in the top 10 was 2006)...and yet they've been in the top 7 (or higher) in payroll every year since the Series win except for 2009.

 

That behavior is not the norm.

 

But, is it also not the norm to have such an incredibly low rent and such a large profit from parking?

[Milkman delivers]

Not sure, but equity is still not profit. They are seperate things.

 

Also FYI, JR is not the biggest owner of the team by financial stake. He represents the group as the President of sorts, but he is not the #1 guy in terms of how much of the team he owns.

 

I've been aware of that for a long time, but I've always wondered who was the biggest shareholder.

[Steve9347]

The Sox are being Theo'd out of Chicago.

[NorthSideSox72]

I've been aware of that for a long time, but I've always wondered who was the biggest shareholder.

I can't say for sure now, but at one time I think it was Einhorn.

 

[Texsox]

Getting back to the stadium lease, if the Sox pay more, good for Illinois taxpayers, bad for Sox fans. Which are there more.

[caulfield12]

Really though...the White Sox have been in the bottom half of MLB in attendance every year for the last 5 years (last year they were in the top 10 was 2006)...and yet they've been in the top 7 (or higher) in payroll every year since the Series win except for 2009.

 

That behavior is not the norm.

 

 

Which is all balanced out by the immense media rights (WGN/Comcast), higher average ticket prices (#4-6 in MLB across the board), parking, access to the Chicago market for advertising/sponsorship/marketing/promotions, etc.

[max power]

Never mind, caufield has it covered.

Edited October 26, 2011 by MAX

[ewokpelts]

But, is it also not the norm to have such an incredibly low rent and such a large profit from parking?

you seem to forget that your parking pass allows you to TAILGATE. so there may be insurance, security, and cleanup costs associated with tailgating.

 

go take a look at bears parking prices, especially on the secondary market. the sox seem like a deal then.

 

[ewokpelts]

Getting back to the stadium lease, if the Sox pay more, good for Illinois taxpayers, bad for Sox fans. Which are there more.

the stadium is financed by the hotel tax, which brought in 30 million dollars in 2010. assuming that ammount is split evennly to cover the sox and bears stadium bonds, hotel visitors(mostly out of towners) pumped 15 million into paying off the cell.

 

the sox rent payment goes to isfa. and that money is then used for improvements and other work.

[jwmann2]

The lease is not in jeopardy. He pays very little rent. They are wanting to increase the rent he. The new opening of the Barcardi Club was strategic to this effect. Taxpayer funded, going to allow him to make even more money.

[mcgrad70]

If they can get away with it, i am sure they'll try and change it. They know the Sox wont be leaving anytime soon.

 

They weren't leaving in the 80's either.

Reinsdorf would have been out of baseball a long time ago had he actually moved the Sox to Florida.

It was just a big bluff by a master con artist.

 

 

[mcgrad70]

That's probably right, they are looking for any vague clause they can potentially use to extract more money. They may find one, who knows.

 

Also, just to make sure this is clear... the ISFA only gets $1.5M annually in rent, but the state also gets all the taxes generated from ticket sales, concessions, etc. for the team to stay in town. If ISFA doesn't exist and the stadium isn't built, the team is gone entirely.

 

 

And that would have necessarily been a bad thing?

We would have had another team.

[mcgrad70]

Do you know anything about running a business? I ask because you don't seem to see the full picture. Tickets to the Sox are on the lower end of the scale in MLB, far lower than across town in the same city. And payroll is very high. The Sox simply don't make much profit, less than a lot of clubs, though they at least aren't losing money. Most of the money is plowed back into payroll enhancements, and the payroll has risen from about 50M to about 120M in 6 years.

 

Also just as advice... one can always park somewhere else and take the train to the park if you don't like that level of cost for parking.

 

The blind loyalty to this owner is astounding.

What what would these people act like if they got an owner in here that was in it to win it.

Sports ownership is supposed to be a rich man's toy - not their meal ticket.

We have the same problem with too many of the owners in this city.

[mcgrad70]

Haven't the Sox been named one of the most profitable sports franchises? I like to think that they put a lot of their money back into the team, but I've always suspected that they're making money hand over fist.

 

And given the fact we've made to the World Series once in the 30 years that he's own the Sox tells me not much is put back.

I don't recall us being All-In in 2005.

We won because we got career efforts by a lot of marginal ballplayers.

There is a grand total 1 ballplayer from that team that is bound for HOF.

And he didn't even participate in the post-season except the parade.

 

 

[mcgrad70]

Really though...the White Sox have been in the bottom half of MLB in attendance every year for the last 5 years (last year they were in the top 10 was 2006)...and yet they've been in the top 7 (or higher) in payroll every year since the Series win except for 2009.

 

That behavior is not the norm.

 

Since this isn't translating to more regular trips to the playoffs, it sure says a lot about the people who run the team....

Edited October 30, 2011 by mcgrad70

[ewokpelts]

I dont think Emil Jones knows how good of a negotiator Jerry is. Jerry is Bud's enforcer. Who do you think got the Nationals a sweetheat deal with Washington DC on Nationals Field? A deal that some say is BETTER than the white sox deal with ISFA?

 

That stadium deal helped the nationals sell for $450 million, netting the other 29 clubs a sizable proft(team was purchased for 150-200 million from Loria in 2002)

 

The bic scary part in this is if illinois wants to force a lease renegotiation, Jerry might say " f*** you, i'm out of here." and void the lease.

[jenksycat]

And given the fact we've made to the World Series once in the 30 years that he's own the Sox tells me not much is put back.

I don't recall us being All-In in 2005.

We won because we got career efforts by a lot of marginal ballplayers.

There is a grand total 1 ballplayer from that team that is bound for HOF.

And he didn't even participate in the post-season except the parade.

 

What does that have to do with anything? The Cardinals just won the WS with only 1 lowly HOF'er. Had Texas won, they would have had 0 future HOF'ers.

[Marty34]

I dont think Emil Jones knows how good of a negotiator Jerry is. Jerry is Bud's enforcer. Who do you think got the Nationals a sweetheat deal with Washington DC on Nationals Field? A deal that some say is BETTER than the white sox deal with ISFA?

 

That stadium deal helped the nationals sell for $450 million, netting the other 29 clubs a sizable proft(team was purchased for 150-200 million from Loria in 2002)

 

The bic scary part in this is if illinois wants to force a lease renegotiation, Jerry might say " f*** you, i'm out of here." and void the lease.

 

I think the Sox and the state leaked the sweetheart deal to make the Cubs negotiations more difficult. Chairman Reinsdorf will make some minor concessions and it will be done. The last thing they wanted was Ricketts to bring up the Sox lease when he can't get his deal done.