Marlins Finances: Pigs get fat, hogs get stadiums?

Please click on the spreadsheet to enlarge or print.

While most have heard of the Forbes reporting on the valuation and profitability of MLB and the Marlins, I think having their work summarized in a P&L financial statement format will help us fans understand this issue better. For those who really want to get into it – Free pocket-protector anyone? – please see the related postings on the right side of the page under Florida Marlins Finances.

Back in April 2008, we got some attention at 2 of the more serious baseball blogs: Sabernomics & The Hardball Times [THT]. Then in June, an interview with me was posted in THT. Aside from an initial concern over being labeled a ‘fiend’ on a web site whose title includes the word ‘hard,’ I am very appreciative to John Beamer from THT for the opportunity.

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Hanley Ramirez signing: Change in strategy?

Please click on spreadsheet to enlarge or print.

At first glance, the signing of Hanley Ramirez appeared to signal a shift in philosophy for the Florida Marlins management. If there was going to be a shift, this would have been the logical first step.

But as the numbers in my spreadsheet above indicate, this signing by itself does not represent any commitment of the $105 million in Revenue Sharing [RS] monies the Marlins will probably receive over the next three years prior to the planned new ballpark opening. The RS estimates are based on the statements by Pittsburgh Pirates President, Frank Coonlley, who disclosed that the Pirates would be receiving $35 million in RS monies in 2008. That level of RS monies are consistent with the Forbes estimates regarding Florida Marlins revenues from 2002 through 2007 – see the Marlins Profit and Loss statement I have compiled [link to updated version]. By any criteria of how RS monies are allocated – Marlins have less Local Revenue and lower Payroll – the Marlins should receive a greater share of RS monies than the Pirates.

Put another way, in 2006 & 2007 the Marlins pocketed 100% of the Revenue Sharing monies received [about $72 million]. In the case of the 2007 season, they did so with a major league salaries level of $30 million. They then reduced their major league salaries by $9 million for the 2008 season. So even after the new Ramirez deal kicks in for the 2009 season [$5.5 million], they would still be under their 2007 salary levels – levels at which they were able to pocket all RS monies. Think about it, even after the Ramirez deal, the Marlins are currently on track to be under their 2007 major league salaries level of $30 million for the three years [2008 thru 2010] prior to their stadium opening.

Why is that important? Because part of the company line the Marlins will put out as valid reasons for not spending money on other players is that due to their low revenues and the Ramirez deal, they can not afford to do much else. The Ramirez deal, as of today, does not even bring them back up to their 2007 level of salaries, let alone dip into using their Revenue Sharing monies for the first time since 2005.

A recent article by Juan C. Rodriguez from the Sun-Sentinel [link expired] points out that Ramirez was worried about making a mistake by not holding out for an additional $30 million dollars. An ESPN article addresses how Ramirez would have benefited from the Ryan Howard arbitration awarded salary of $10 million for 2008. My spreadsheet provides a reasonable scenario under which Ramirez could have made an additional $30 million by going the arbitration then free agency route. But that route entailed a risk of injury and or sub-par performance. This is a good example of how to quantify the cost of avoiding risk when it comes to professional athletes salaries.

The joy in South Florida over the Ramirez signing is probably the latest example of the Societal Stockholm Syndrome, the scenario whereby victims begin to feel sympathy for their captors.

Do all MLB Teams have to lie about their finances?

Question: Do all MLB Teams have to lie about their finances?

Answer: Only before they get their stadium built.

In attempting to deny profitability, Florida Marlins President David Samson ends up stating obvious lies as I document in my posting [Why Silence is Golden]. But apparently, it doesn’t always have to be that way.

Pittsburgh Pirates Team President, Frank Coonlley, states the following in an April 18th article by Bob Biertempfel of the Pittsburgh Tribune-Review:

  • The Pirates are profitable.
  • The Pirates have chosen to broadly define “on-field performance” to include paying down team debt.
  • Therefore, the Pirates don’t believe that using Revenue Sharing monies to pay down their debt violates the CBA provisions on how they must spend their Revenue Sharing monies.
  • The Pirates expect to receive $35 million in Revenue Sharing monies in 2008.

Two things to note regarding the statements:

  • No one who follows MLB finances will be surprised by the things being admitted to.
  • All of the above is largely true of the Florida Marlins as well, except that the Marlins are accumulating revenue sharing monies to pay for their portion of the planned stadium constriction costs instead of the debt in the case of the Pirates.

Now Pirate fans can make informed opinions about their team’s ownership and their current actions vs their promises when they were attempting to secure public monies for a stadium.

I wonder what us Florida Marlin fans will get first, a completed stadium [opening 2011] or a similar admission as to the real use of RS monies?

A Catholic Man

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