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Remember: never believe a thing a team says about its finances

Nov 19, 2012, 1:30 PM EDT

Jeffrey Loria AP

Dan Le Batard has a takedown of the Marlins which pretty much squares with my view of things too.  This passage piqued my interest, however:

The Marlins last offseason were like a gluttonous fat man at the all-you-can-eat buffet, stacking the plate with his eyes and appetite without regard to practicality or the oncoming food coma. The team overspent assuming we’d fill the ballpark, which we didn’t, and that meant losing about $40 million in that calamity of a season. Even though management didn’t have to serial-killer slash the payroll, there were going to have to be cuts, so the team decided to take a wrecking ball to the blueprint and just start again.

I’m not sure what the source is for that $40 million loss, but it is worth remembering as we enter free agent season that a baseball team’s claims of profit and/or loss are almost always pure science fiction when compared to the numbers that are reported for most other types of businesses.

Baseball accounting is profoundly opaque, and the only glimpses we ever see into the finances of a baseball team are either wither accidental or are partial-truths released by the team in order to further some specific end such as either proving or disputing that the owners are broke, depending on whichever story suits their purposes at the time.  And even then, we almost never get much above the bottom line number (Team X lost $Y last year). A number which tells us nothing about how much the ownership group extracted from the team above the line.

For example, we’ve learned in the last year that Jeff Loria at one time and may still pay himself an annual salary of some $10 million. And that there is a team “managing general partner” called Double Play Company which takes $8.5 million more. Oh, Double Play Company is owned by Loria and its president is Marlins team president David Samson.  Do other teams have that kind of setup? Don’t know! Because no one ever gets to see the finances of baseball teams! Indeed, teams and the league go to great lengths to avoid ever having to release their finances to the public, be it under pressure from politicians, in the course of litigation or anything else. They DO NOT want you to see the books, folks.

So call me crazy or call me paranoid, but I will never take a team’s statement about its profits or losses unless and until they show me the books to prove it. And that goes for the $40 million-losing Marlins too.

  1. Chris Fiorentino - Nov 19, 2012 at 1:41 PM

    Why is it any of your business or mine what the Marlins bottom line was?

    • deadeyedesign23 - Nov 19, 2012 at 1:43 PM

      the Marlins made their bottom line a public issue when they leveraged it to get a new stadium 86% financed by tax money.

      • Chris Fiorentino - Nov 19, 2012 at 1:54 PM

        If the public didn’t want to pay for the stadium, they could have let the team move. Period. They have NO ONE to blame but themselves. And to now cry that the Marlins “leveraged” them is as dumb as it is naive. The NFL’s Carolina Panthers Owner built his own stadium. Know what that means? He can leave whenever he wants, provided the NFL owners allow him. Why? No local lease. The people of Miami paid tax money to build that stadium and you are going to whine about them paying 86%? Like somebody broke their politician’s backs? Whine about the politicians. Whine about whoever. Don’t whine about the owner. He’s just taking what he can get from the sucker politicians. You guys are always blaming the wrong people around here.

      • cur68 - Nov 19, 2012 at 2:04 PM

        Chris, you should read up on what happened in Miami to get that stadium built. Pretty much every single politician that approved that thing was recalled. NO taxpayer wanted it built and they took the government to court to try to stop it. They lost in court, thing got built on their dime, they got rid got rid of the politicians behind it.

      • Chris Fiorentino - Nov 19, 2012 at 2:12 PM

        cur, then tell me how that is the owner’s fault? I know the story and I know that each and every one of us would do the exact same thing that Loria did when getting that stadium built. It amazes me how much people want to spend other people’s money and how everyone wants to run other people’s business without knowing a damn thing about how to actually run their business.

        Same thing with the MVP voting…blame everything but the process.

        Same thing with McCourt…blame everybody but the fools who let him into the league.

        Same thing with the big trade the Marlins just made…blame everybody except the league that allows the trade

        Same thing with Loria himself…blame everybody except the owners who let him get a team.

        No, let’s intrude on the private business of all owners of baseball teams because you don’t like that the Marlins claim they lost $40 million last year. Why is it ANYONE’S business what they made or lost? Why is it anyone’s business that Loria paid himself a $10 million salary last year. He’s the owner…what should he do? Donate his time? LOL. Please. This isn’t Green Peace.

      • cur68 - Nov 19, 2012 at 2:23 PM

        I’m taking issue with your first line “If the public didn’t want to pay for the stadium, they could have let the team move”

        The public DID NOT want to pay for the stadium. They weren’t given a choice on the team moving. Politicians made that choice. Given what happened to the politicians, letting the team move was an option that the people of Miami might have sided with IF THEY’D BEEN GIVEN THE CHANCE. As I understand it, the option was never really explored. In fact, I’m going to bet that if it had come to Loria attempting to move the team because he couldn’t rook the Miami taxpayers, the other owners would have stepped on his fat neck and said “no way, fat boy”. People keep calling this “free market” & “capitalism”. Its not. Its the Billionaire Boys Club and the club members set the rules as to who goes where. None of them would want Loria carving a chunk off their market, not when he had one to exploit already.

      • Chris Fiorentino - Nov 19, 2012 at 2:30 PM

        Couple things cur…first, who voted those politicians into office? The same people you are talking about, right?

        Second, without public funding, MLB would NOT have forced Luria to stay in the Miami area. The politicians didn’t want to lose the team so they gave Luria…and MLB by the way…everything they wanted.

        Either way, I stand by my original point that none of us have any business looking at the books of a baseball team.

      • cosanostra71 - Nov 19, 2012 at 2:39 PM

        A team like the Panthers who own there own stadium may technically have leverage to leave at any time, but it is naive to believe they would. Why would the owner just move the team and leave his stadium empty? He still has to make money off the stadium. Teams are more likely to leave when they have publicly financed stadiums, as they have no committment not to the stadium.

      • cur68 - Nov 19, 2012 at 2:40 PM

        Sure they voted them in. They handed them a mandate to look after the public trust. They saw that wasn’t happening and tried every legal means to stop them then voted them out. I think had the public share of the stadium not been so lopsidedly against the taxpayer this wouldn’t have been the screwing that it turned out to be. Had the politicians played hardball with Loria, realizing that he really had no where to go, it would have been a much more reasonable split. This would have forced Loria to curb expenses, build a reasonable stadium and try and re-coup his expenses by fielding a team people would paid to see. Instead the public wound up with nearly 90% of the bill.

        Look, I’m not against your main point (Loria is allowed to get away with exactly what he can get away with), but blaming the Miami taxpayer is pretty rich. They voted for best candidates running I presume. That’s the thing with a democracy: sometimes you wind up with good people, sometimes not so good. When you get the latter sort, ditch ‘em. Sometimes though, the damage is done. This is one of those times.

      • deadeyedesign23 - Nov 19, 2012 at 2:52 PM

        Cur is right on pretty much every point, but even still that’s all irrelevant. Even if every single citizen of the county was happily willing to pay that money to keep the Marlins in town, the fact remains that the reason that money was put up was because Loria asked for it because he said he couldn’t afford to stay. He consciously made his bottom line a public issue when he asked for tax money. That’s really not up for debate.

      • Chris Fiorentino - Nov 19, 2012 at 3:05 PM

        He asked for money because, well, let’s be honest…which is better, paying for something yourself or having someone else pay for it for you? Obviously, having someone else pay for it for you. But you lose control…there are consequences…like he can’t just up and move the team…there’s a lease the team had to sign for probably 20-25 years.

        And cur, somebody needs to be blamed here, right? Do you want to blame the politicians or the majority of taxpayers who voted them into office? The politicians obviously gave Luria a sweetheart deal…..should he have turned it down? Isn’t he kinda like A-Rod…got the big deal because it was out there and offered. Don’t we always ask “What a guy like A-Rod supposed to do…ask for less money?”

        And to the person who asked about the Panther’s owner…you are right, when it was a new stadium. Now it is almost 20 years old and he wants to local people to pick up some of the tab to renovate the stadium. If they say now, he can easily pick up and take the Billion and move to LA. He could always rent out the stadium and make money or sell it to a local investor. Don’t forget we are only talking about 10 dates when the football team is gone.

        But again, at the heart of the entire argument is whether a baseball’s owner’s books should be open to the public, as Craig thinks they should. My disagreement was with that basic point because it is none of our business.

      • deadeyedesign23 - Nov 19, 2012 at 3:32 PM

        You’re right, it’s obviously better to get other people to pay, but it’s not like he found 600 million dollars in the back of a cab. There are consequences to taking public money and if the foundation of your argument was your bottom line then your bottom line becomes the public’s business. In that same vein if you take that public money and, in turn, use it to line your pockets, then part of that deal is being vilified by the people who’s money you took.

      • shynessismyelguapo - Nov 19, 2012 at 8:20 PM

        I think Chris is dangerously close to arguing that murder is okay as long as you get away with it.

    • stevejeltzjehricurl - Nov 19, 2012 at 2:08 PM

      Agreed that it’s not normally the public’s business. But the taxpayers gave up plenty of cash to finance the stadium. I hear your argument that this is the public’s own fault, although I’d note that we’re in a democracy and I’m guessing a not-insignificant number of folks in the Miami area opposed the financing of the stadium. Their only recourse at the present time is to vote out the idiots who let them get fleeced.

      However, I think it would make sense to require disclosure of the books by sports teams if/when they receive public funding for a stadium or renovation. Our regulatory state already gives a often-unnecessary and definitely unpleasant rectal exam to businesses that actually provide a real benefit to the public, in some cases without even giving them the benefit of a massive public subsidy. In the case of sports teams who feed at the public teat, I think their books ought to be laid open to public analysis.

    • richyballgame - Nov 19, 2012 at 2:19 PM

      Chris,hate to break the news to you bud,but that $10 million Loria makes is now 2 times more then the highest paid player on the Marlins makes :P That being said,you do make sense,in a way. But Loria should be investigated because it is what it is, and the matter deserves to be deeply investigated.

    • richyballgame - Nov 19, 2012 at 2:20 PM

      Chris, hate to break the news to you bud,but that $10 million Loria makes is now 2 times more then the highest paid player on the Marlins makes :P That being said,you do make sense,in a way. But Loria should be investigated because it is what it is, and the matter deserves to be deeply investigated.

  2. illcomm - Nov 19, 2012 at 1:46 PM

    working in tax finance, the report they are losing money is prob true given they just built a new stadium an have considerable writeoffs that will make them look they are red on the books. gotta love tax law in the US

  3. cur68 - Nov 19, 2012 at 1:47 PM

    I have no inside knowledge of what Loria is up to or what he made last year, personally or through his team, BUT after the way he gutted my Expos, how he snookered the people of Miami to get his Xanadu stadium built, and his blowing up the team after a season? Yeah, I’m gonna say that the Fat Cane Toad made an assload of dough personally at the expense of the product on the field. He is Frank McCourt East.

  4. paperlions - Nov 19, 2012 at 2:38 PM

    There is only one reason teams never make their books public when asking for public money….and it isn’t because they are losing money or only make tens of millions of dollars each year in profits….but because it would show exactly how many hundreds of millions are taken off the top above the line.

    The owner of the worst run team still makes more than the highest paid player.

    • Chris Fiorentino - Nov 19, 2012 at 3:08 PM

      and more power to them…God Bless them for being successful businesspeople. Without them and entrepreneurs(for the most part) like them, there would be far less jobs floating around this great nation of ours.

      • paperlions - Nov 19, 2012 at 3:14 PM

        Yep, that’s exactly how it works. Successful businessmen creating jobs for Mexicans, Indians, and Chinese….it’s the American way.

        FWIW, “successful” business people generally do a lot of things they would never want people to know about…because business is about system manipulation now….what it is not about is job creation, production, product quality, or serving a market. What you are supporting is a guy lying to the public in order to defraud local tax payers.

      • gibbyfan - Nov 19, 2012 at 3:36 PM

        Chris,
        Your last point is a good one –and it could be expanded to say if not for the captains of industry there would be no teams to employ our highly compensated sports hereos —
        Having said that –I think it does become the business of the taxpayer when one of these titans uses public money to promote a private interest—- Fom what I have read it’s probably the same old story that the private interests of the public officials involved were probably well facilitated to by the ownership. In some way you can bet there was a quid pro quo and that should be everybodys business –

      • js20011041 - Nov 19, 2012 at 4:46 PM

        Yes, god bless our “job creators.” God bless the people that rig the system in their favor so that they and their companies pay only a fraction of the taxes that the common man does. God bless the people who ship jobs over seas so that they can hire virtual slaves to be abused and discarded as they like. God bless the people that lobby against welfare for the poor but have no problem accepting millions in taxpayer money for themselves. God bless the people that find ways to lay off workers by the hundred so that they can continue to see record profits. God bless this country’s owners.

      • seeingwhatsticks - Nov 19, 2012 at 5:24 PM

        Can we stop with this “sports owners are just successful business people” thing? They are in a business that is guaranteed to turn a profit by its very structure, either on an annual basis or at least in the valuation of the franchise. Even if they lose money for a year or for a period of years, they’re going to make that money back (and more) when they eventually sell the team (see: Mets and Dodgers). There is no financial risk involved for them individually and they don’t really have to do anything to earn their money. Most of these guys are smart business people because they were able to earn enough money to buy a baseball team, but let’s stop pretending that the way they run their teams is somehow proof of their talent in business.

  5. Old Gator - Nov 19, 2012 at 4:10 PM

    Much as I detest Scrooge McLoria and the political bagmen who did his dirty work, I have to agree with Chris on this much: the voters of Macondo have since I can remember – and I can remember back about forty five or fifty years – have been making one awful selection after another, voting straight ethnic tickets (and I don’t just mean Cuban) instead of figuring out who the most competent candidates were, re-electing kinsmen who had been indicted, or even convicted, of various forms of chicanery, voting for the ones who hated Castro most instead of the ones who actually knew much about finance or infrastructure – and as a community we thoroughly deserved to get our asses wiped with our faces on the stadium deal. Although I know that Chris will cringe at this thought, the fact that nearly half of our ethnic Cuban-Americans voted for Obama in the past election was a good sign, not so much for any particular ideological leaning, as much as an indication that these people are finally starting to think independently out of their box and make their own considered choices. How much the stadium debacle had to do with that I don’t know, but after the recall massacre I suspect it was definitely a factor.

    However, as far as whether the Feesh’s books should be open to the public, sorry, when they take public money, they’re not a purely “private” business anymore – they’re our partners, and we have a right to know with whom we’re in bed, even if in this case it would be preferable to put a bag over their heads in the morning.

    • cur68 - Nov 19, 2012 at 4:54 PM

      The stadium fiasco and Miami voter trends would provide a basis for an interesting case study on cultural norms, paradigm shift and capitalism. Someone could write a book on the subject, I bet. It would serve as a cautionary tale to voters to select the best people for the job as opposed to the loudest flashiest asshole who knows how to pander.

      It could be called The Macondo Banana Massacre Field Fiasco and the Politicians That Made it Happen. Alternative title How The Cane Toad Screwed Miami

      • Old Gator - Nov 19, 2012 at 7:39 PM

        A book, eh? Well, what in intriguing idea. I wish I knew somebody who wrote books n’ stuff, don’t you?

      • cur68 - Nov 19, 2012 at 7:41 PM

        You lemme finish this thesis (chapter 4 of 5 is in the can. Chapter 5 is at 40%) then I’m down for the research ion this one. I want Brad Pitt to play me in the movie.

    • scratchnsniffnblog - Nov 19, 2012 at 7:34 PM

      Citizens (and fans and players) in the business bed with Loria do not require bags, as they are in the bent over position.

  6. buddaley - Nov 19, 2012 at 4:27 PM

    Chris, let’s say I agree with your premises (I don’t, but leave that aside). And additionally, let’s ignore the process by which the Miami stadium was procured. The question you raise is why should any of us know about the details of a team’s books.

    Here is one response. I am a Rays fan. Sternberg wants a stadium and wants public moneys for it. I don’t want the Rays to move, and I want them to be competitive, but I also am leery about allowing billionaires to build stadiums using public money, especially because I don’t think the promises of economic benefits ever come to fruition.

    I want a say in it, whether it is by voting or by trying to influence my representatives. But how can I make a rational decision if I don’t know the facts? If Sternberg tells me the team is losing so much money it will not be able to function without a new stadium, and if that is true, it might overcome my reservations. On the other hand, if it is not true, or only partially true, my vote-or my effort to influence representatives-will be different. Since it is public money being considered, I have a right to have all the pertinent information. Asking me to vote blindly, to turn down the stadium if I am uncertain, for example, is not proper. The information about the club’s financial situation, since that is part of the argument for using public money, is crucial.

  7. jlovenotjlo - Nov 19, 2012 at 7:22 PM

    Chris I’ve got you at 465 thumbs down at the time of writing this. That has to be HBT single thread record, right? Also, everything you write is garbage.

    • dondada10 - Nov 19, 2012 at 7:53 PM

      There once was a man named cepts…

  8. mojosmagic - Nov 19, 2012 at 9:40 PM

    Chris forgot to mention that his last name is Loria.

  9. davidpom50 - Nov 20, 2012 at 12:16 PM

    We got some decent insight into the finances of the Dodgers under McCourt, thanks to filings in divorce & bankruptcy courts. As he claimed to be bankrupt, on the verge of failing to meet payroll, Frank was paying a 16 million dollar per year lease to play at Dodger Stadium and use it’s parking lots – property that was owned by the team when Frank bought them and then spun off into a separate company wholly owned by the McCourts. That’s significantly higher than any other team pays to lease their stadiums, including all the teams who don’t actUally own theirs. He split of ticket sales & revenue to a separate company. He payed himself and his wife $7 million per year in salary. I’m guessing Loria uses many of the same schemes.

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