Highly questionable or in the tank?

Graphics by G. Costales

Dan Le Batard’s recent column makes various assertions about the finances of the Miami Marlins which echoes what Jeffrey Loria would have us believe. I don’t know when Le Batard would ever reach the point of skepticism about his Marlins sources, but his patience is impressive. While he is critical of Marlins management on non-financial issues, what he accepts as fact about their finances just doesn’t add up. He wrote:

The team overspent assuming we’d fill the ballpark [#1], which we didn’t, and that meant losing about $40 million [#2] in that calamity of a season…. Unlike Micky Arison, who lost money every year he owned the Heat except last year, Jeffrey Loria doesn’t have enough money [#3] to keep losing $40 million a year even as the ballpark appreciates his and the franchise’s value [#4].

  • #1 – Depends on the meaning of the word ‘fill.’ Marlins stadium capacity is 37,442. To have sold it out, or filled it, would have meant drawing 3 million fans. David Samson is on record with ESPN’s business reporter Kristi Dosh noting that they expected attendance of 2.7 million [89% capacity], or about 500,000 higher than the 2.2 million [73% capacity] it turned out to be. Noting 89% vs 73% capacity may not be sexy, but it sure is more useful for the purposes of determining expected revenues.
  • #2 – The lower than anticipated attendance would not even come close to accounting for a $40 million loss. It is misleading to imply that the 1st year attendance is to blame for dramatically altering the Marlins business model in year 2 of the stadium. Here’s why.

Marlins revenues from gate receipts, as per Forbes, averaged between $15.1 & $16.3 per fan [gate receipts divided by attendance] between 2007 and 2011 [click on spreadsheet within blog post]. Assuming a healthy 25% increase in per fan revenue to $20 per fan in the new ballpark, multiplied times the missing 500,000 fans, equals a nice round $10 million in missing revenue. A more accurate description of what had to occur to make up for the missing fans was to dump Heath Bell’s contract.

On the positive side, its good to know the Marlins are back to discussing the results of their yearly operations. Let’s hope it’s not a 1 year thing, given that 2013 is looking a lot like 2006 through 2009.

  • #3 – Sloppy and misleading. Does Le Batard know how much money Loria has? Does ‘money’ refer to cash flow as opposed to assets? When exactly would Loria run out of ‘money,’ given the assumed losses? Answering any of those questions would be useful information. Or is Le Batard suggesting that 1, 2, or even 3 lean years would affect the net profitability of Loria’s MLB investment, given the Revenue Sharing fat years which preceded it and the new ballpark which came after? Here’s what is known:

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Marlins fan pesadilla draws to an end?

Graphics by Gabriela Costales

Graphics by G. Costales

Pesadilla is the Spanish word for nightmare and a feminine noun. For Miami Marlins fans, pesadilla is a particularly accurate description for having our MLB team owned by a Manhattan bred arts dealer who made his bones running Expos out of Montreal. But this nightmare is likely coming to an end soon, since selling the team now constitutes Jeffrey Loria’s best option.

While I believe selling the team makes business sense, personal factors also point to a sale. Being the Marlins owner in 2013 appears to be a miserable use of septuagenarian millionaire’s time. This without even considering potential health issues and whether his spouse–on whom he appears to have about a quarter-century of life head start on–has an opinion about being married to a locally despised figure.

In addition, the Non-Relocation agreement’s penalty for early sale is not significant enough to deter the sale. The additional amount due the County if the team is sold between now and the next operational phase [April 2014], would be around $2 million — assuming a sale price of $450 million — or roughly the equivalent of what a typical Babalao would earn for not managing your team for one season.

Business reasons to sell sooner rather than later:

  1. No factors which would increase that the value of the franchise over the next few years. The ballpark was a great success, with potential parking and traffic issues proving to be manageable in the 1st year. The expected significant increase in national broadcast contracts would already be factored into any sale negotiation.
  2. No long-term, heck, no commitments period on the team’s payroll. A team paring down salary for profit, would still have keep at least one of their free agent signings for appearances sake if nothing else. When they all were shipped out, that’s how ‘dead’ owners roll.
  3. Attendance – The Marlins drew 2.2 million in the new ballpark and that figure is widely described as both inflated and disappointing for a 1st year stadium. However, Guillen’s Castro comments stifled enthusiasm that the Marlins should have enjoyed at the beginning of the season. Despite that, the Marlins averaged 28,988 during the 1st half of the year [thru July 1st] when their record was at 38-40 — average attendance ended up at 27,400 for the year. Soon afterwards, the trades of Ramirez, Sanchez and Infante signaled that ownership had given up on the season. The point is that a case can still be made that MLB in this market is *viable, in comparison with overall MLB attendance. Owning the team past the coming season, could begin to undermine that argument.
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