It’s as though George Bailey was able to go back in time, Inception-like, and place a hidden camera in the offices of Old Man Potter and then get to play his misdeeds back for everyone to see. You can probably hear the citizens of Bedford Falls now, ‘why you lying sack ….’
The Florida Marlins lost their best defense against the accusation of profitability yesterday when the web site Deadspin produced financial statements involving four major league teams, including the Marlins. Previously, despite absurdly low payrolls, team valuations which were consistent with Forbes analysis and the complaints of revenue sharing payee teams, Jeffrey Loria, through David Samson, would deflect criticism of their pocketing revenue sharing monies by asking if anyone could produce financial statements which would substantiate the claims of the Marlins profitability. Today the answer is yes.
I was most interested in how the Deadspin financials compared to the previous Forbes reporting. Here are the highlights [numbers in millions]:
- Operating Profits for the years 2008 and 2009 combined – $90 million according to both Forbes and the Deadspin – no difference
- 2009 Revenues – Forbes higher by 8
- 2009 Expenses – Forbes lower by 1
- 2008 Revenues – no difference
- 2008 Expenses – Forbes higher by 9
At first glance, there would appear to be material differences between the Forbes estimates and the Deadspin reported actual numbers. However, I believe the differences are attributable to certain accounts being classified as operating expenses on the Deadspin [i.e. the actual Florida Marlins] financials but classified differently by Forbes. I state my assumptions about why Forbes may have done so. Those expense accounts are:
- Ownership Payments [account reads Administration -- about $10 million each year by the way -- hey you thought Loria watched the games for free?]
- Management Fee – Related Party
- [New] Ballpark Expenditures
The reason why the actual financials can treat “Ballpark Expenditures” as operating expenses has a lot to do with the New York Yankees and New York Mets. Both teams have been revenue sharing payer teams for many years. In addition both teams recently built new stadiums. MLB, by allowing the new Ballpark Expenditures to be treated as affecting operating expenses, in effect creates an incentive for building the stadiums by reducing the amounts the teams would have had to contribute to revenue sharing.
Think of your own small business taxes. MLB basically allowed a new warehouse investment to be treated as repairs and maintenance. See the effect it has in the case of the New York Yankees.
In an attempt to deflect the bad news and ensure their fans that this proof of their lack of veracity would not change how they do business, yesterday the Marlins released one of their more popular players, Cody Ross.