Blinded By The Loria?

Jack Woltz quote in G1 prior to gaining [not getting] a head:

Johnny Fontane ruined one of Woltz International’s most valuable proteges. For three years we had her under contract, singing lessons, dancing lessons, acting lessons. I spent hundreds of thousands of dollars. I was gonna make her a big star. And let me be even more frank, just to show you that I’m not a hard-hearted man, that it’s not all dollars and cents. She was beautiful, she was innocent…. And then Johnny Fontane comes along with his olive oil voice and guinea charm and she runs off. She threw it all away just to make me look ridiculous. And a man in my position can’t afford to be made to look ridiculous.

From a business perspective, Jack Woltz’s personal animus towards Johnny Fontane, caused to him to do a poor job of assessing risk for Woltz International. Similarly, Jeffrey Loria’s spectacularly profitable investment in MLB franchises, has not gone unnoticed by his unwitting benefactors. A few examples of their frustration over being made to look ridiculous:

  • 2008 – Hank Steinbrenner remarks: I don’t want these teams in general to forget who subsidizes a lot of them, and it’s the Yankees, the Red Sox, Dodgers, Mets,” he said to The New York Post. “I would prefer if teams want to target the Yankees that they at least start giving some of that revenue sharing and luxury tax money back. From an owner’s point of view, that’s my point.
  • 2009 – John Henry remarks: … seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits, had received over $1 billion in revenue sharing money.
  • 2010 – First ever criticism of the revenue sharing abuse by the Florida Marlins from the Major League Baseball Players Association and the Office of the Commissioner of Baseball.
  • 2011 – Revealed that the New York Yankees had contributed about $130 million between revenue sharing and luxury tax in 2010.
  • 2011 – Revealed that the Boston Red Sox had contributed about $86 million between revenue sharing and luxury tax in 2010.
  • 2011 – Revealed that MLB had fined John Henry $500K for his 2009 complaints about the current revenue sharing structure.

No truth to the rumor that Loria asked MLB if the John Henry fine could be direct deposited into his bank account.

Thoughts on Florida Marlins management

I have 2 problems with the Marlins management.

The 1st is that they are taking monies clearly intended for player salaries [“improve onfield performance” says the CBA] and using it for other purposes [stadium]. But they are not the only team doing it [just the most consistently blatant] and MLB and the Players Union are complicit in that abuse, since until this week, no team had ever been publicly called out on that strategy, other than occasional grumblings by some of the more aggrieved owners who realized they were unintended sugar daddies [Hank Steinbrenner & John Henry].

But even if the Marlins were ‘allowed’ to break the spirit of the CBA on revenue sharing, given certain MLB political and financial intrigue, it’s still wrong, especially to a fan base which has been told that the Marlins couldn’t afford to spend more.

That’s my 2nd problem. The Marlins, as well as most MLB franchises, are intentionally misleading about their finances. So while I believe that being intentionally misleading is part of David Samson’s job description, not some character flaw, it still does not change the fact that he states things which are not true. Loria’s & Samson’s problems are that the Marlins finances are among the least complicated in MLB, since they do not own a Regional Sports Network [RSN].

When teams have RSN’s — most of the big market teams have them, i.e. Yankees and Yes Network — then what they are earning in local revenues from cable rights can be manipulated since they can set the rates to be the most advantageous for each of the companies who share the same owner.

On a yearly basis Forbes gives us a pretty good idea of what MLB [actually they do the same for all major sports] teams are earning and their estimated worth. In the case of teams with no RSN’s, Forbes basically gives us an excellent idea, because the numbers they put out are more straightforward. What I have done with the Forbes numbers is to fill in some of the detail blanks to show it as a Profit & Loss financial statement.

The public slap down of the Marlins spending also serves as an official confirmation that Forbes estimates of the Marlins operating profits since 2006 are accurate. Below are Forbes operating profits and my estimates [which tie into the Forbes numbers] of revenue sharing [RS] the Marlins have received:

2006 – $43 operating profits / received $38 in RS
2007 – $36 operating profits / received $35 in RS
2008 – $44 operating profits / received $38 in RS

The revenue sharing system intended that low revenue teams like the Marlins could compete with higher revenue teams. The Marlins deserve to be called out for keeping that money [$111 over the past 3 years] and then attempting to mislead others that they did not.

To be fair, if the Marlins had not secured a stadium deal, then those $111 would have remained in their pockets, instead of going towards the stadium. The Marlins without a new stadium could have probably gotten MLB to agree to relocating them. After all, Loria already has experience in running down a franchise and forcing MLB into a relocation. see Montreal Expos.

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