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It’s hard not to turn a profit running a baseball team

Mar 13, 2013, 8:50 AM EDT

Image (1) mariners%20logo.gif for post 4250

Geoff Baker reports that the Mariners, despite many losses and low attendance, turned a profit last year: $5.86 million to be exact. And that they’ve been profitable just about every year since they moved into Safeco Field, save one year when profits were offset by a large investment in stadium improvements. All of this despite the fact — at times anyway — the Mariners have had pretty significant payrolls.

Two takeaways here: (1) it’s pretty hard not to turn a profit running a baseball team, it seems; and (2) it’s pretty nice when these numbers are reported.

With most teams we have no idea about how much money they’re making, but the Mariners are required to do some financial reporting as part of their stadium deal. With almost all other teams we are forced to take the representations of the owners at face value. And as history has shown us, baseball owners can and often do claim dramatic losses when it suits their purposes, even when those losses are pure fiction and/or the product of funny bookkeeping.

 

 

  1. gza385 - Mar 13, 2013 at 9:04 AM

    Can someone please forward this article to Fred Wilpon?

    • heyblueyoustink - Mar 13, 2013 at 9:16 AM

      And CC that schifozo in Miami while we’re at it.

      • sdelmonte - Mar 13, 2013 at 9:59 AM

        I don’t think Luria has lost any money. Just credibility.

        As for Wilpon, it’s that stadium and his overall financial picture. The Mets make less money than he owed on ballpark bonds. The downside to not having NYC pay for all of the new park, no doubt. And I don’t think he ever recovered from the recession. (I don’t think he’s a bad owner. He is, however, a bad businessman.)

    • chill1184 - Mar 13, 2013 at 9:54 AM

      THIS x 10000

    • mianfr - Mar 13, 2013 at 12:56 PM

      It seems like Wilpon has a problem of cash flows, not revenue (although he would probably like more revenue).

      The lesson: Don’t use incredible leverage in every financial decision you make, and always do some independent backchecking when investing in a fund, even if your best friend runs it.

  2. jm91rs - Mar 13, 2013 at 9:09 AM

    It would be great to be able to compare teams overall profits. I’d love to see relationship between winning and profit, name brand and profit (yankees, red sox), etc.

    Also, at just 5.86 mil profit last year, Seattle better hope for some better attendance this year. Didn’t King Felix get a raise of at least that much?

    • Alex K - Mar 13, 2013 at 9:53 AM

      Methinks that they used some slick accounting to get that number down to $5.86 million. Like when NBA owners were saying they were losing multiple hundreds of millions of dollars before the last lockout.

    • jwbiii - Mar 13, 2013 at 11:36 AM

      This is obviously unaudited, etc. but it’s the best we’ve got
      http://www.forbes.com/mlb-valuations/list/
      The 2013 list should be out soon. Note that the Phillies lost $11.6M but the franchise value increased by 19%. Teams that have been sold recently have generally sold for 15%-25% higher than the valuations Forbes lists, but they generally included partial ownership of regional sports networks.

  3. albertmn - Mar 13, 2013 at 9:17 AM

    Given the way that values of the teams rise so quickly, if teams even break even every season, the owners can eventually cash out big time when they sell the team.

    • Glenn - Mar 13, 2013 at 9:21 AM

      … and often get tax breaks and public funding along the way.

    • jm91rs - Mar 13, 2013 at 9:38 AM

      I agree, if you have the money to support it would be just fine to break even every year because when you cash out to sell you should have plenty of profit. But 5.6 mil per year seems pretty measly compared to NFL teams.

      By contrast, the Carolina Panthers are a pretty inept NFL team and they turned a reported $112 million profit over the past 2 years. Couple that with the fact that the value of the team is over a billion now and cost 230 million when they started, there’s some serious profit. And of course the Panthers like most of these other teams turning big profits are looking for public funding for stadium upgrades.

    • sportsdrenched - Mar 13, 2013 at 11:32 AM

      I thumbed you down because while yes a team value rises…you still need cash flow to run the operation. Team Value is theoretical number and gets more play than it probably should.

      • blacksables - Mar 13, 2013 at 2:28 PM

        Are you Dan Glass?

  4. alang3131982 - Mar 13, 2013 at 9:21 AM

    Is this surprising? I mean these teams are worth a ton of money — do you think the interest would be substantial if they were complete money-sucks?

    • kopy - Mar 13, 2013 at 10:37 AM

      Yes.

      Although pro sports teams make money, they’re thought of as luxury items for the rich to brag about at parties.

      No one says, “I’m going to invest in the Mariners and see if I can turn the team around and make some money.” It’s more like, “I’m so f*cking rich, I own the Mariners.”

  5. escapingexile - Mar 13, 2013 at 9:23 AM

    Unfortunately, we will never see profits being reported widespread with any kind of transparency. The players union would have a field day with that and start griping about how they aren’t paid enough.

    • jwbiii - Mar 13, 2013 at 10:33 AM

      The Players Association does see the audited financial statements of the teams and the financial information questionnaires submitted by the teams under the Revenue Sharing portion (Article XXIV) of the CBA. If you don’t read tax code or financial accounting regulations, you’ll probably find this to be 20 pages of bad road. There’s an extensive confidentiality statement, which is why it doesn’t get leaked. The MLBPA did gripe about this, which led to Josh Johnson’s extension with the Marlins.

  6. voteforno6 - Mar 13, 2013 at 10:06 AM

    The one year that the team didn’t turn a profit was when they spent a lot of money on stadium improvements? My guess is that they wrote those expenses off, and actually did make money that year.

  7. sophiethegreatdane - Mar 13, 2013 at 10:33 AM

    $5M sounds WAY low to me. That’s next to nothing in terms of profit margin for a company with annual revenues like a baseball team. So either it actually is quite hard to make money as a baseball team (which is a position I cant honestly defend) or there is some slick accounting going on here.

  8. churchoftheperpetuallyoutraged - Mar 13, 2013 at 11:05 AM

    Anyone know the specific rules of the stadium agreement? If they just have to report P&L, there’s a lot more accounting going on in the background that we may not be aware of. As alluded up above, the Panthers’ report on deadspin is a clear example of what teams can do to write down numbers.

  9. Chris Fiorentino - Mar 13, 2013 at 11:31 AM

    It doesn’t matter what they report…if anything at all. If they say they earned a profit of $5.86 million, then Craig will say it’s nice but it would be nicer to see everyone’s profits. And there will always be at least half the people who will say “there’s some shenanigans going on with the accounting and this isn’t the real number”

    I would love to see what bloggers earn yearly, but that’s Craig’s business. Wonder why he thinks it is his business what owners of baseball teams make?

    • sportsdrenched - Mar 13, 2013 at 11:39 AM

      “but the Mariners are required to do some financial reporting as part of their stadium deal.”

      This. If you don’t want that type of stuff in public they should have financed their stadium with 100% private funds. People forget that when you’re on the public dole, whether you’re a baseball team, on down receiving unemployment…you lose a little bit of your freedom and privacy.

      • Chris Fiorentino - Mar 13, 2013 at 11:54 AM

        But clearly from what Craig wrote, he wants to see transparency of all teams and not just the “ones on the public dole”. Like nolan writes below…why do bloggers and hardcore baseball fans always seem so interested in what the owners are making? Play ball!!!

      • churchoftheperpetuallyoutraged - Mar 13, 2013 at 1:00 PM

        why do bloggers and hardcore baseball fans always seem so interested in what the owners are making? Play ball!!!

        It’s possible that many are directly affected by what these teams are (under)reporting. I live just north of charlotte, where we’re still experiencing high unemployment due to all the banking jobs that have disappeared. The owner of the Panthers is trying to extort money from the city/state that is constantly cutting teachers each year because they are running under budget. Why should I have to pay high taxes to fund this ex-restaurant mogul’s stadium when he’s making a ton of money each year?

  10. nolanwiffle - Mar 13, 2013 at 11:41 AM

    This side of the sport has never much interested me. Play ball!

  11. coryfor3 - Mar 13, 2013 at 12:47 PM

    The Mets disagree with this.

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