Pirates financials leaked

[kramnoj]

A somewhat interesting story in that someone who had access to the Pirates financial report leaked it to the AP. Here is one story, there are plenty others out there: http://www.bizofbaseball.com/index.php?option=com_content&view=article&id=4648:pittsburgh-pirates-financial-info-shows-everything-from-revenue-sharing-to-tv-money-and-more&catid=30:mlb-news&Itemid=42

I haven't been able to find the full report yet, that could be an interesting read. I also checked the yearly profits discussed in the report and compared them to the annual Forbes reports. Forbes had the Pirates with $15M operating income for 2009 compared to the Pirates saying they were at about $5M, but for the two previous years, Forbes was within a mil or so

[Invader3K]

Well, I read the story; and if the numbers are to be believed, they aren't making money hand over fist like people believed. Still, as the saying goes, winning usually cures everything.

[Flood Pants]

So $51 million for player salaries with about $15 million profit. That maxes out their payroll in the $60 million range without an increase in revenue (taking into account associated increases in other costs). Granted, if they build a winner their revenue will increase but I have a hard time seeing it increasing by too much. I wonder if this is similar to the Brewers financial situation and Mark A is significantly overspending.

 

Hopefully they're saving the surplus now so they can use it when they're ready to compete. (provided they're allowed to do that. I don't understand all of MLB's financial rules)

[jeffy]

...gate receipts for 2008 were $32,129,368...

 

In a sign that concessions are not as profitable as they are often seen to be, the Pirates pulled in $8,283,870 in 2008. That year, the club drew attendance of 1,609,076, meaning the Pirates averaged $5.15 per fan on concessions.

 

If they drew 2.5 million, about a 50% increase from 2008, then gate and concessions would go up approximately proportionately adding about $22-23 million. Then they'd about break-even at player payroll of 51 + 15 + 22 = $88 million

 

Boost attendance to 3 million (to estimate the Brewers max) and payroll could go to about $100 million.

[PrinceEatMeat]

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

Thought this was interesting, given that the Pirates are a struggling team as the Brewers had been for many years.

[jhart05]

Yeah, that's not very much at all.

 

$15M of "profit", also usually means before taxes. Which is probably in the 30% range for them.

[greendaler]

Profit-after taxes-

Profit (after taxes)

$14,408,249

$15,008,032

[jhart05]

All right. Well it's still not very much, even after tax.

[endaround]

All right. Well it's still not very much, even after tax.

No its huge The pirates are worth what, at most $200m? A $15m yearly return before we talk about appreciation of value is a lot of money.

[kramnoj]

Deadspin now has the financial reports for a number of teams for those curious.

 

This does make me wonder, who is leaking this info? At first, I thought it might be one of the minority Pirates owners who is upset that they weren't getting any dividends but still have to pay their taxes on their ownership.

 

But now that more teams are being revealed, it makes me think that someone is doing this as an opening shot for the CBA that will be expiring in a year or so.

[LouisEly]

No its huge The pirates are worth what, at most $200m? A $15m yearly return before we talk about appreciation of value is a lot of money.

Where is there any appreciation of any value of anything in this economy?

[endaround]

Sports teams always go up in value, its just how fast that changes.

[MJLiverock]

$15MM on a $200MM is 7.5% per year. Not bad but not some panacea of incredible returns either. I'd still like to see the actual cash return as well since the taxable income is perverted by tax codes. Someone mentioned their payroll was $51MM so even with bumping that payroll up to the mid $60's and eating all profits it still doesn't buy the club a whole lot more cometitiveness. Also further cements by thoughts that the Brewers are pretty much tapped out financially for payroll at around $90MM which will likely go down as the attendence dwindles this year and next.

[Never Outhustled]

The Pirates have spent massive money on the draft the last few years. If they ever get competitive, they'll use more of that money on MLB payroll.

[danzig6767]

I heard this being talked about on the radio and from team to team, some can do various things to make it look like they made less money than they really did. It was mentioned that when the McCourt's bought the Dodgers, the sale included Dodgers Stadium. Well, even though they own the stadium, i guess on their records they say that the team pays 14 or 15 million each year in rent. For a lot of sports franchises, i'd assume there are various avenues to cooking the books that are beneficial to the owners and make it look like they made less money than they actually did. I'm no accountant though and could very well be way off base in my assumptions.

[endaround]

The McCourts also had the entire family on no-show 6 figure jobs.

[RightFieldCoder]

Or when you sell your tickets to a ticket broker. The ticket broker jacks the prices higher. And you own the ticket broker.

[RobertR]

Or you can make your daughter president of the team.

 

Robert

[Principessa21]

One of my biggest pet peeves is when a fan complains about the Yankees spending money but has no problem with a team like the Pirates profiting over 20 millions while having the lowest payroll. I wouldn't mind seeing a salary cap since it would have to bring a salary floor, but none of the owner would have any of that.

[Invader3K]

Actually, if I'm not mistaken; in the past the owners did propose a salary floor, but the player's union was against it because they assumed it would eventually lead to a salary cap as well.

[Principessa21]

Actually, if I'm not mistaken; in the past the owners did propose a salary floor, but the player's union was against it because they assumed it would eventually lead to a salary cap as well.

I would like to see a link, because I find it very hard to believe that the owners would agree to a salary floor since a third of teams would have to add 50% of their current payroll (assuming the floor would be 80% of the cap).

[monty57]

While interesting, I think it's a shame that the media finds it necessary to report the financials of a private organization just because someone criminally "leaks" the reports to them. Where are ethics in journalism? The Pirates did nothing wrong. Whoever had the reports was under contractractual fiduciary responsibiliy not to give these reports to anyone. Therefore, the media is encouraging a criminal act simply for their own financial gain (sell more papers/advertising). What they should have done (as is what's going on with the Disney employee at this time) is to report that a Pirates employee was trying to perform a criminal act.

 

Again, if someone was leaking that the Pirates were cheating on their taxes, or doing something else illegal, then go with the story. This is an invasion of privacy and the paper is essentially harboring a fugitive under the guise of "protecting a source" for no ethical reason.

 

If it is true that this is becoming pandemic, and other teams' financials are being leaked, then I think it's pretty safe to assume that some money is exchanging hands somewhere to get this private information. That's the real story, but I don't hold much hope that anyone will ever look into that.

[GAME05]

i don't see it as an ethical problem for newspapers to report this at all. plus that would really limit reporting if they can only publish information that's already available to the public.

 

i'm really happy about all this, but then i'm in favour of a shared system to begin with. i'm hoping the additional information will help to cause more of a stir with fans to put something in place.

 

i always agreed with Steinbrenner when he complained that he was paying out revenue sharing checks to all the smaller clubs like the Pirates when it seemed clear that those teams were just pocketing the money. with more transparent revenue and spending, i think any new system that's in place would actually be better for the players.

 

but is a system with both a cap and a floor even less realistic? we already had the top-half teams complaining about a cap and not being allowed to spend to their limit (taking away their big advantage), but then we'd just be telling the other half of teams that they'd have to spend more and therefore dig into their profit margins. and any chance of compromise on it all is just made less likely by baseball not having any representative who is independent of both ownership and the players union.

[MJLiverock]

One of my biggest pet peeves is when a fan complains about the Yankees spending money but has no problem with a team like the Pirates profiting over 20 millions while having the lowest payroll. I wouldn't mind seeing a salary cap since it would have to bring a salary floor, but none of the owner would have any of that.

Should the Pirates lose money every year? They spent money on things like scouting ,amatuer drafting, international players, instead of overpaying for MLBers that werent' going to make them any better. Probably a good decision on their part. If the team banks the money for when they actually had something good to spend it on all the better but I'm not going to say they actually went that far or thought ahead but if the ownership is willing to pay more in the future when it will matter while thinking in their head that yeah I made $15MM in 2008 or whenever so I can afford to lose $10 MM this year and get that Free Agent that takes me a chance to get over the top or take on that big contract in a trade at the deadline.

 

Spending that $15MM on signing Randy Wolf and a $5MM 2nd baseman this year wouldn't have made the Pirates any more of a contender or raised their hopes to drive ticket sales.

 

The problem with the Yankees is that the defenders of their largess, which is rightfully earned, complain that the other teams would somehow have that much money if they just spent more. Or that the Yankees just care about winning more and that is why they spend so much. Ignoring their population is 10x most of the competing teams driving their TV revenues much higher and giving them the war chest to spend. Conveniently ignoring that if the Yankees didn't have the Royals, Orioles, Twins, Rays, etc. to play agains there would be a serious decline in interest in watching televised Yankee intrasqaud scrimmages.

 

If the Pirates have $80 Million to spend and spend $60MM on MLB payroll and $20MM on farm systems and scouting that may be a much wiser use of money to help improve the team for furture MLB growth when the team may be better and the attendence/intersest grows leading to more TV and merchandising revs to make the pot grow to $100MM to spend an then their MLB payroll can be $80MM and the lower level stuff still $20MM.

 

Meanwhile the Yankees may have $250MM to spend of which they may have to pay $50MM to the other MLB teams still leaving them $150M for MLB numbers and $30MM for all of the scouting stuff. And taking home a $20MM profit. No one complains that the Yankees may spend more on scouting in Asia or the Dominican and says they should spend more on the MLB team since they made a profit. The Yankees have so much more money to spend and are such an outlier in comparison to the other teams through just pure demographics. The fact that they aren't complete idiots, along with running a good international scouting department, and have a tremendous history drawing in fans from all over allows them to maximize their advantage. But it doesn't mean every team should run thier organzation the same way especially when it comes to budgeting for each year's MLB payroll.

 

If the Pirates were forced to spend all their money or even some high percentage like 80% on the MLB payroll - - how long before they stunk again as their minor leagues suffered from lack of investment and the team was forced to sign aging Free Agents to bad contracts just to spend the money. Teams need to have the ability to spend the money where their management determines the best use may be with the understanding there will always be bad management in baseball so it won't work out for every team. The Pirates have stunk for a long time but maybe with their empahsis over the last few years of improving talent in the lower levels instead of floundering around at the MLB level they may actually improve. The Rays struggled for years before fixing things. The Brewers were horrible before they finally stopped signing the Jeffrey Hammonds of the world and focused on improving from the bottom up. Eventually, the Pirates may get it right and some team like the Rays or Twins will be horrible again and payroll will fall and they will be the new whipping boy of why can't they spend like the Yankees.

[kramnoj]

If the Pirates were forced to spend all their money or even some high percentage like 80% on the MLB payroll - - how long before they stunk again as their minor leagues suffered from lack of investment and the team was forced to sign aging Free Agents to bad contracts just to spend the money

 

Nobody important or intelligent is complaining that the Pirates are spending money on development. However, if the Pirates take the handout money and then the owners pay themselves with that handout, there's a problem.