Pirates financials leaked

[jeffy]

If all the teams want to start charging less for tickets and concessions and pay the players less, it's okay by me. Hey, if they stopped over-paying the players maybe these "businesses" could even start paying for their own "workplaces", instead of demanding free ballparks from the taxpayers.

 

Do you think that a lack of operating profits would mean no one would be willing to own a baseball team? Do you think if MLB player's pay was, say, $200,000-$5,000,000 that there'd be no players?

[kramnoj]

Should players then be told to take less money since they can just make it up in endorsement deals or autograph shows after they retire?

 

Do you really think this is the same thing? Players get what their contracts say they get. Owners don't have a contract that guarantees they will get money from their business every year.

 

With zero owner profits and lower player salaries tickets would be cheaper.

 

Tickets are based on supply and demand, not player salaries.

[jeffy]

Just to put some perspective on this, even with no operating profit there would be a bit of profit for owners upon the sale of the asset. The Rangers were sold for $570 million, 12 years after being purchased for $250 million. That comes out to about a 7% return for enduring the burden of being an MLB owner.

 

http://sportsillustrated....rangers.price/index.html

 

On top of that this owner was recently paying himself $180K per year.

 

http://sports.espn.go.com...lb/news/story?id=5344313

[MJLiverock]

There is no gurantee of an operating proft for the owners but it isn't a crime to have one. I have shown how miniscule the profits are and easily washed away by variances of less than 100,000 in attendance. Budgeting is not an exact science and hitting it so they make no money or lose no money would be next to impossible given the high fixed costs of the team. They can jettison some costs as the year goes on but that isn't easy either nor is suddenly spending more if the team's attendence is a little higher.

 

Yes most of the money is made from selling the team but there is no reason to expect zero income from the business each year. The sums we are talking about are terrible profit margins if they are even profits. I've already been through the points that EBITDA does not in any way shape or form equal profits and tax payouts to the owners of an LP are common and really just a shifting of the tax bill to the proper place, otherwise the owers would just make it a C corp and have the tax bill hit the team directly and at a higher rate.

 

In the end I really don't care that the teams make a profit or not. I dont' see why it is such a big deal for the owners to make a profit equal to a decent middle infielder considering a couple hundred million dollar investment. Nor should they be expected to wait until the team is sold to see anything in terms of cash flow. I would rather have a stable ownership group than see the team flipped every 5 years.

 

 

The owerns may be baseball fans but they are still running a business and taking care of an investment. Getting attendence up is one way to make more money and improve values but it can't happen overnight on a limited budget. I'd say let them run the team according to their plan to try and maximize it's value since putting a better product on the field will be correlated to that. Worrying about a few million dollars here or there isn't a big deal in a realm of hundreds of millions of dollars year in and year out.

[jeffy]

We are not talking about EBITDA in regard to the Pirates. The team's press release said: the Club made two separate payments in 2008 totaling $10.8 million to cover a portion of the taxes partners were required to pay for the 2006 and 2007 tax years. Taxes are not due on money that was spent on interest, etc. If the taxes were 10 million that should mean taxable income was probably in the range of $30 million. This agrees with the $15 million per year in net income that was reported in the article. These are truly profits and can not be explained away by 100,000 in extra attendance.

 

It is the totality of the circumstances that make this very questionable. The team has one of the smallest payrolls, they have been dumping salary, they have one of the worst records, have not even had a winning season in 18 years (or whatever it's been), they can't blame their problems on the venue they play in, and they have presumably been one of the bigger recipients of shared revenue.

 

It certainly seems reasonable to question whether teams like the Pirates have chosen to profit by losing.

[snyttri]

There are various consequences to electing a form of ownership. It doesn't seem unreasonable for clubs to experience some of the disadvantages as well as the advantages of the form of ownership they choose. C corporations may be too public. I don't know if all of the characteristics of an S corporation make it a realistic alternative for MLB clubs.

[MJLiverock]

We are not talking about EBITDA in regard to the Pirates.

 

Just read the whole thread and you'll see the reference. I'm done here anyway this is just getting repetitive and rehashing the same arguments. I'll just agree to to disagree and leave it at that.