Checking in on a few MLB teams…
- Athletics owner John J. Fisher made the widely panned decision last week to stop paying minor leaguers at the end of May. Industry sources told Susan Slusser of the San Francisco Chronicle they’re of the belief that “the front office was tremendously disappointed” in A’s ownership’s call. It’s a choice that Slusser notes could have a negative effect on the A’s after next week’s five-round draft, as various minor leaguers and agents told Slusser the A’s would not be their No. 1 choice. However, as Slusser writes, Oakland still has a chance to land talent if it’s willing to pay enough, and if it presents the best opportunity to the player.
- With no season underway yet, the Phillies are in cost-cutting mode. Owner John Middleton told full-time employees in an email Monday that the team’s projecting losses of “substantially more than $100 million” in 2020, Scott Lauber of the Philadelphia Inquirer reports. As a result, anyone in the team’s business department who’s on a $90K salary or above must take a pay cut. The Phillies will continue to provide health insurance, pension and 401(k) benefits to their full-time staff. However, because there may not be fans in the stands this year, the team’s facing “an enormous financial challenge” according to Middleton, who wrote that “approximately 40% of our total annual revenue is generated by attendance — tickets, food and merchandise concessions, parking and sponsorships.” Of course, the lack of fans is one of the reasons the owners have pushed for a far smaller schedule this year. They and the players have not been on the same wavelength in negotiations, though.
- Teams are expected to have a few extra rosters if there is a season in 2020. Between that and likely a lack of a minor league campaign, Kristie Ackert of the New York Daily News has been profiling Yankees pitching prospects who could get to the majors sooner than expected this year. Right-handers Deivi Garcia (link) and Clarke Schmidt (link) are among them. Garcia (No. 3) ranks a bit below Schmidt (No. 2) on Baseball America’s list of Yankees farmhands, and the scouts Ackert spoke with are optimistic they’ll turn into capable major league contributors.
- The Mets have reopened their spring training complex in Port St. Lucie, Fla., to players for the first time since late March, Anthony DiComo of MLB.com writes. Four to six players, including catcher Wilson Ramos, have resumed training at the facility. It’s an encouraging sign that they’re getting back to work, though DiComo points out that the players must follow “MLB, CDC, and local and state safety protocols.”
As long as the billionaires don’t lose money I’ll be able to sleep at night.
You must not have to buy your own game tickets
I feel you may have missed the sarcasm in his comment.
That sarcasm was bitterness.
Well placed bitterness
Not when you’re from Jersey.
I guess people still just don’t get it.
Legally speaking, there’s a big number of reasons why a business owner, ANY business owner, whether they’re a middle class contractor or a billionaire shouldn’t and wouldn’t just open their personal pocketbook and start paying company bills/debts. And it goes beyond just having liquid assets.
Liability wise there’s something called the corporate veil that holds personal and business assets separate and prevents your personal property from being seized by creditors or subject to lawsuit losses/judgments. If you ever start to comingle and blur those things – such as using personal wealth to pay ball club liabilities – you lose that protection.
If a ball club doesn’t have cash on hand to pay the losses of 2020 it’s S-O-L. The only choice is to cut those costs and limit the losses.
I am pretty sure many here “get it”.
We also understand that when small business owners took out loans and depleted their retirement money to keep their staff paid in the early days of the pandemic, that it was also possible for a MLB team with a book value measured in excess of $1B at minimum to take loans to cover the payroll for MiLB players earning a very modest $400/week, the front office staff (not the GM, but the clericals, scouts, analysts, etc), even the stadium personnel. Something to show generosity and a sense of appreciation for the many people who make the billion-dollar asset worth that much in the first place.
The guy with the sports franchise also gets a far more preferential loan rate than the woman who owns the corner bakery. The revenues for the next years would easily cover the repayments needed for the loan. Likewise, the loan would be taken by the team, so it doesn’t blowback on the owner’s assets.
It can be done, it should be done, but the owners would rather cry poverty.
@GeoKaplan- generally I agree about loan terms for a MLB franchise.
HOWEVER, I also think you’ve got a somewhat rosy picture of humanity in that scenario. Some small business owners did what you say, however, those were poor long term business or personal finance moves likely to lead to the business folding by placing unnecessary debt load.
In some cases the businesses did that to try and keep those employees locked up due to unique skills. Others did it as a pr move. Others still probably haven’t thought through the longterm ramifications. I’d expect some even planned on rolling those costs into one of those forgivable SBA loans that turned into a debacle.
After the Mets payroll debacle needing to borrow from MLB, and the Dodgers running up debtload, MLB placed rules on how much debt a team can carry and how they do it.
We don’t know all of what teams carry for existing debt loads. I DO know that mlb franchises have a limited window of revenue stream (not unlike retail businesses) that run/fight a loss most of the year.
Typically, such a business has some cash reserve from the previous cycle, then borrows to pay its employees and expenses until the next revenue infusion hits. Some of that infusion repays what was borrowed, the rest retained. In a for profit setting what’s left is paid out as dividend and used as capital improvement.
Mlb/teams were at the end of the lean times when the virus hit. They were also faced with an unknown extended window of no revenue that doubled as cutting away the profit window/amount. THAT means less money retained into the next off cycle with likelihood of needing to borrow in next offseason due to lack of retained revenue.
Forget the yankees dodgers and redsox. Think marlins, rays, royals. I’m sure mlb wanted teams to take a unified approach to ensure viability for the league. How much can you ‘borrow’ against the rays business model? Or add to the marlins debt?
It’s easy to say ‘take a loan’… it’s harder to actually use up that capacity, let alone have the fractured ownership interests agree to do it – and I mean even within some teams, not just 30 ownership groups in general.
Spoken like a proud Democrat (socialist)
AtlSoxFan = bootlicker
Well, perhaps that billionaire has no business whatsoever owning for example a baseball club like the A’s… Sale it to others who have a fresh related perspective on sports matters…
A lot of those billionaires you guys speak about are only so on paper. That status is anointed on them based on assists they hold, such as the team itself, which they inherited or bought decades ago. Are those owners rich? yes, but not rich enough to absorb significant losses or not in a position to infuse the business with large amounts of cash without going into massive debt.
But enough about the Wilpons…
Can’t forget the poor millionaires who could lose money. How else could they afford to tell baseball fans how stupid they are and that their lives are worthless compared to the superior Major Leaguers.
Except they are better than we simple folk. They have achieved a mastery of a skill that we could never in a lifetime or more ever achieve. Their reward for that is to be paid millions and receive whatever other benefits come w/that.
Not to mention they have a very short window where they can cash in on this skill, whereas the owners and their descendants will cash in for doing nothing in perpetuity
This is off topic, but how will the expansion draft event be laid out tomorrow? Will it be live on youtube, or an MLBTR post or what? I’m just curious how it will be laid out. Thanks.
Middleton’s percentage figure seems to be much more accurate than Cubs owner stating they generate 70% of revenue directly from game day. Maybe Cubs owner was factoring in TV deal prorated with respect to fee per game included. Still 70% seems to be grossly overstated figure that is not disputable due to non-transparent book keeping by MLB teams
The cubs are yet to get a bonafide tv deal. Don’t try to calculate something that you truly have no idea what goes into it. Can we take players or owners 100% at their word? Hell no. If 70% figure was thrown out, then you can readily assume that includes +/- 5-10%. The cubs are also one of the few teams that haven’t taken taxpayer money to fund their renovations. People need to not be upset at teams like Yankees, cubs, Red Sox, Dodgers, etc. be mad at the penny pinching organizations like the pirates, Athletics, blue jays, Braves etc. also just because owners make quite a bit of money, the good ones tend to reinvest and spend that back onto the team. I will always respect the Yankees because they go out and spend $$ like there’s no tomorrow. If not for these high payroll big market teams, the small ones wouldn’t get revenue sharing or be in business.
Decent
Oh please if you lived in Chicago you would know Ricketts is no different than any other billionaire. Using tax money to make his billions. He received bail out money because he is a huge GOP donor. Cubs get a lot of tax breaks and free tax money like every club. Defending a billionaire is like defending a oil company that just released a bunch of pollutants in the air. They could care less what damage they do only about the money they can make for their owners.
Tom Ricketts doesn’t donate to anyone. If you look on Opensecrets you’ll see the only donations he makes are to Major League Baseball Commissioner’s Ofc. His family includes Republican donors AND Democratic donors.
of course, that ignores the hundreds of millions spent to get his kid a governorship (after failing to buy a senate seat).
man, if you are gonna swallow whatever the ricketts tell you as gospel, at least get paid to be that out of touch with reality.
While you may be correct, they do not allow media to show their games free. The Cubs generate top dollars from TV for teams in MLB. In fact, they are contractually 5th in MLB for 2020. That will play out should it get prorated. Look it up.
Don’t take tax money? I am sure you should look into things before talking out of mouth. Oooh the stands. You know that issue and the fact that they want less city input on those and out of stadium arrangements. Billionaires do not get that way by turning away money, unless there is an underlying reason. Tax money or not.
Arrogant brown nosing Cubs fan
You did not state one argument for the cubs taking tax money for the reservations. I forgot the Mets in my list of cheap teams. I feel bad for Mets fans since they have the crappy wilpons. Hopefully for your sake, they get better, new ownership.
True. If he is trying to be accurate at all. A big if.
If 70% of the revenue was from game-related income (tickets, parking, and the portion of food and souvenirs the team receives), then there is no way any sane person would pay $1B for the Royals or $1.2B for the Marlins, with their pitiful home attendance.
Put differently, from Forbes’ estimates of each team: Marlins had revenues of $222M in 2019, and Gate Receipts of $20M. That is math anyone can ballpark in his head, 10%. Since revenues from food and souvenirs are only a portion of the money, there isn’t $30M still to be accounted for in parking, food and souvenirs..
Rays: Revenue of $264M, Gate of $31M.
A’s: Revenue of $225M, Gate of $38M.
Phillies: Revenue of $392M, Gate of $108M (that could be 40% with concessions)
Cubs: Revenue of $471M, Gate of $200M (that is 42%, and is on the old TV deals)
Dodgers: Revenue of $556M, Gate of $185 (probably closer to Cubs new TV deal)
None of these are coming close to touching 70%. In addition, some teams separate the stadium from the team as a different corporation, which can more greatly isolate the cost of the stadium and the revenue it brings (like the parking and concessions) from the actual costs of the team itself. I don’t know if the Cubs did that, but the Dodgers certainly did.
It’s a bit weird that the teams hurt most by the current situation aren’t the low revenue teams who probably have lower profit margins. It’s some high revenue teams that are heavily dependent on the gate. If Florida allows the Marlins to be at 50% of capacity they probably won’t fill it.
Why should a business have to show there books to a greedy players union?
If the A’s are willing to pay enough? There’s a $20K cap after the 5 rounds end. There is no “enough”. Only best-pathers & nobody else wants mes will pick the A’s. Maybe a few childhood A’s fans. An organization publicly exposed.
Funny, did Ricketts of the Cubs say 70% of revenue comes from gameday ops? Now Middleton says it’s only 40% for the Phils? Doubt the huge disparity is just the difference between teams. Philly is pretty big, and its sports fans kinda like their teams, too. Looks like Ricketts (as many suspected) was full of crap. No wonder the players want to see the books before they buy the “we lose $5 billion by playing games, so you must take a 70% pay cut or no baseball ” line.
Every team’s revenue percentage would be different. That is normal. Your argument is very weak at-best as to whether or not Ricketts was telling the truth.
What the A’s are doing should not come as a shock. Hasn’t this been the norm for that organization for over 20 years? And yet you praise them to no end? They have no desire to be a great success and does not deserve your credit.
It is understandable the draft class is wary of the A’s. They know full well they are playing for an organization stuck in mediocrity with no desire to win and a President more concerned about image by pushing his alleged mastery in a book that was turned into a fictional movie over a moderately successful baseball team built mainly by his predecessor. Yes, I understand why a draft pick would not want to sign on with the A’s.
Middleton isnt cheap, that’s for sure. And he is one of the owners who does reinvest his personal money back into the club. Really ashame what this pandemic has done not only to sports, but to the working class American. The world is a very shaky and uncertain place right now, it’s kind of scary if you have young children.
Is this an example of Moneyball?
The biggest problem for the A’s is not the Draft ( they can still pay millions for signing draft picks, but those not drafted and are willing to take $20,000 from a team, and even worse; IFA’s starting in 2021, and even a possible new Ballpark in Oakland. The only option ( besides selling, contraction and moving), might be renovating the Coliseum. Why? They just strengthened the hand of those who oppose a waterfront ballpark ( such as the Longshoresman Union and the Giants).
Hey, billionaires, my investments took a dive, too, but, I’m not whining and crying about it like you are. Your numbers have a lot more zeroes behind them than my numbers, so shut up already.
Wouldn’t you do something about your losses if you could? Of course you would! So why criticize someone else for doing something you would do?
You are technically whining about it now
Some could view your comment as a “whining and crying” moment.
Phillies worth $2B. Bought for $30M. Whiny babies.
Worth 2 billion on paper. Show me the buyer willing to pay that.
While the club was bought for $30 million in 1981 none of the current ownership participated in that. The Bucks and Middleton bought their shares later and have since bought out the other owners. I don’t know what they paid but I’m sure it’s considerably north of $30 million.
i understand the financial nightmare this is for the teams, but if billionaire team owners can’t absorb this year’s losses perhaps they should think about selling the team to someone(s) who can
on top of that, if the losses are as disastrous as the owners and league imply, I’d like to see the evidence. let’s see exactly what we’re dealing with here
When you can afford to purchase a MLB franchise then you’ll be able to see some of the leagues financial statements, until then keep trolling.
Correct
It’s not a sellers market, as there are no buyers at the moment.
If the losses are indeed $100 million there are few people who can absorb something like that and pretty much none who would want to. Right now you’d get a buyer who’d want to pay a fraction of last year’s valuation.
NBA coming back. NHL coming back. NFL coming back. MLB still negotiating. Baseball is over.
What the Phillies really need to do is exorcise Matt Klentak from the payroll permanently. Phillies are no better than a .500 team this year, at best. Plain vanilla seems to be the Dartmouth grad’s calling card: The Gentleman’s C that offends no one.
Doubt Philly fans will wanna put up with another season like the past two. Teams were decent enough but had no finishing kick. JMHO, but Klentak has to wear his poor performance as a GM.