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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