P6 – What do the Locals say?

April 18, 2008

It’s a rite of spring: Forbes comes out with its team value estimates and tells the world the Marlins are raking in a huge profit … and the Marlins insist those numbers are pure fantasy.

Here’s what team president David Samson told our Juan Rodriguez: “Every year I continue to be surprised at the absolute inaccuracy that a so-called reputable magazine is willing to print. We’ve never gotten called by them (at Forbes). We’ve never been asked to verify, deny, confirm, nothing. It’s just a shame their readership is forced to read numbers that aren’t true. I know the number they have for the Marlins is simply wrong. They have no information of any kind on which to base that article.”

Maybe not, but it’s not like Forbes is Deadspin or The Onion or Jo-Jo’s Baseball Blog. A magazine that covers financial news better than almost anyone else can’t possibly be off by $36 million on this one, can it?

Mike Berardino – Sun-Sentinel

April 2, 2008

“Marlins owner Jeffrey Loria has a big, wonderful, unique opportunity this season to build a ton of goodwill with South Florida. He can substantially grow his club’s oft-disappointed fan base.

He can make amends for the embarrassingly low player payrolls. He can help alleviate grumbling over the Orange Bowl site chosen to build the at-long-last-approved stadium. He can even ease the sting if this season proves to be the long, losing campaign most seamheads believe it will be.

He can do all of that by committing publicly to keeping his best players and making sure they are a part of the future beyond the new park’s 2011 opening.”
Greg Cote – Miami Herald

April 1, 2008
“This leads to the predictable wailing about the team’s payroll — the lowest in the sport. But it is hard to fault ownership. What’s the point of doubling the payroll if the team isn’t close? The Royals are wasting $55 million on Gil Meche with no chance of competing. If you were running a business and could lose for $40 million or lose for $21 million, wouldn’t you choose the latter? This is a better alternative than the path of Mr. Marlin’s [Jeff Conine] Orioles, who keep spending dumb money and haven’t had a single winning season in more than a decade.”
Dan Le Batard – Miami Herald

Good point about not spending just to spend, but why deal with a hypothetical when Hanley Ramirez is right in front of us? As Lloyd Benstsen [were he alive] might say, Hanley Ramirez is no Gil Meche. But it’s the same argument made in greater detail on JC Bradbury’s Sabernomics blog.
Jorge Costales

April 1, 2008
“That’s probably why New Haven is home to the Jeffrey Loria Center for the History of Art. It only took a $20 million donation – made to finance construction which will be completed by July 2008], which could have bought another two years of Dontrelle Willis in a Marlins uniform, but everything can’t be about baseball, can it?”
Mike Berardino – Sun-Sentinel

I include the quote about the donation for two reasons:

  1. There seems to a question about Mr Loria’s personal finances and whether he has sufficient capital to operate a MLB team – why else would have MLB provided Loria a $38 million interest-free loan [conditional on resolving the stadium issue] at the time of the franchise purchase? A casual googling only turned up one article which estimated his wealth at $400 million 3 years ago.
  2. A general interest question. If someone gives away $20 million, what would be a reasonable estimate of their private wealth? Let’s use the tithing criteria, I think we can agree that it would be unusual to find someone who gave away more that 10% of their wealth, especially if it does not relate to a tragic incident or an end of career legacy-insurance move.

Jorge Costales

March 31, 2008
“The Marlins got $600 million in public money for a new stadium and amenities. They can’t just brush the subject of their embarrassing payroll under the carpet anymore and hope no one notices. As much as they want to, they can’t just keep saying, “This is all we can afford until we get our new stadium.”

These owners get $30 million in revenue sharing from other teams, which neither H. Wayne Huizenga or John Henry got in their tenures. They also get $30 million in local and national TV money. All that before selling a ticket.”
David Hyde – Sun-Sentinel

About Jorge Costales

- Cuban Exile [veni] - Raised in Miami [vidi] - American Citizen [vici]
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6 Responses to P6 – What do the Locals say?

  1. You’re the accountant so correct me if I am wrong but my impression is that large Charitable donations are not usually made in lump sums but rather in a stream of payments over several years. MLB players like Dontrelle Willis on the other hand usually don’t allow payment plans (the only player I can think of that did was Pudge Rodriguez when he signed a 1-year deal with the Marlins for $10 million to be paid over three years).

  2. Jorge Costales says:

    Good point – from the article it was not clear how or when the donation was received – if you see anything, let me know

  3. Douglas says:

    The best part about this whole thing is that while operating revenues are *marginally* positive, actual net gain is through the roof. Why? Because the value of an MLB franchise grows over time fast enough that a teams can afford to deficit spend. Add to that a new stadium (which makes team value skyrocket) and the Marlins are sitting pretty on a heap of cash.Loria is going to make millions when he sells the Marlins.

  4. Jorge Costales says:

    fair to say that the operating income is only a part of the benefits – aside from the value of the franchise – from a tax standpoint, special law re sports franchises allows them to deduct 50% of the cost of the franchise over the first 5 years – approx a $79 million tax break in the case of the Marlins

  5. Agreed that the value of the franchise has increased and will increase but that’s not liquid that Loria can tap into to pay salaries. And this all about whether or not the Marlins can have higher payroll.

  6. Jorge Costales says:

    I added a link which indicates that the $20 million were monies used for the construction of the Center scheduled to be completes by July 2008. The Yale press release further notes that Mr Loria has “has long been a generous benefactor to Yale.” The $400 million wealth estimate in the other linked article looks reasonable.

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