Forbes Florida Marlins Valuation was 97.4% Accurate

I thought I had been following this issue closely, but in preparing a longer post regarding the stadium deal, I came across an amazing number in the Florida Marlins Ballpark Project Report issued on January 22, 2008 by Miami-Dade County Manager, George Burgess. In section 22 (i), Community Benefit Obligations, the Florida Marlins assumed team value is stated at $250 million.

Forbes estimated the team’s value back in March of 2008 at $256 million. In doing so for every MLB team, Forbes estimates each team’s operating profits, non-operating expenses [depreciation and the interest associated with their debt] and then applies its internally developed metrics [i.e. the hard part] to arrive at the team valuations. The point is that the revenues and expenses are the most straight forward aspects of the data they provide. The valuations themselves are subjective, short of a sale which would provide a benchmark. Or in the case of the 2008 Florida Marlins, a publicly issued document which was negotiated between local governments and the Florida Marlins in which the team ties itself to a reasonable valuation.

End of manufactured controversy. In being off just 2.4% [256/250], Forbes basically nailed the number on the head. Contrast that with Marlins President David Samson’s comments to the Sun-Sentinel’s Juan Rodriguez at the time the Forbes 2008 numbers were publicized:

‘Every year I continue to be surprised at the absolute inaccuracy that a so-called reputable magazine is willing to print,’ Marlins President David Samson said. ‘We’ve never gotten called by them. 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.’ 

Left unsaid is the fact that if Forbes had called, they would have been denied any information or confirmation as have all the local writers, that’s just how MLB & the Loria’s roll. Anyways, I had earlier posts which delved into why the Forbes numbers are credible and how Mr Samson has the unenviable task of trying to debunk perceptions as to the Marlins recent profitability. No need to speculate now. The Marlins, through Samson, are purposely being misleading about their finances and the county manager’s memo is the proof.

It would be too easy and counter-productive to conclude that Mr. Samson is a liar. In his role as Marlins President, it’s basically his job to deny what some casual fans may think and what is obvious to people who have familiarized themselves with MLB finances. The ‘why’ the Marlins, and most other MLB teams, with the recent notable exception of the Pittsburgh Pirates, feel it’s in their interests to mislead, even if it causes them to make absurd comments [e.g. Marlins have the highest marketing budget in MLB and (#2 on my fav 5) Forbes assumes that the Marlins don’t have any non-player expenses], is more interesting to me.

I think there are a couple of reasons:

The main reason I believe is that the job of asking for public monies [albeit not local taxpayer dollars] to build a new facility would be much more difficult if the public knew unequivicably that the Marlins, according to those wacky kids at Forbes, were in terms of operating profits, the most profitable team [$43 million] in 2006 and the 2nd most [$36 million] in 2007 – despite having the lowest revenues in MLB for both years. FYI, 2008 is looking good too. Toss in that the owner, Jeffrey Loria, recently gave a $20 million donation to Yale University, and you have the makings of a tough sell.

Now, once teams already have their stadiums built the incentive to mislead is significantly lessened. But to drop the facade has implications to their fellow owners, as I’m sure the Pirates recently found out.

The second reason is what they do with the revenue sharing [RS] dollars they receive from other MLB teams. What RS was meant to do, especially in the eyes of fans, was to help smaller market [lower revenue] teams compete with the larger market teams in being able to sign players. The language in the collective bargaining agreement, even states that it is intended to “improve on-field performance.”

But that language has proven to be no obstacle for owners like Bob Nutting in Pittsburgh or Jeffrey Loria here. In the case of the Pirates, paying down team debt was considered, and the MLB Commissioner’s Office and the Players Union implicitly agree [no protest has ever been filed as to the use of RS monies], to be a legitimate interpretation of “improving on-field performance.”

So who is left to complain if the Marlins financial strategy since 2006 is to attempt to break-even while ignoring the RS monies they are receiving in the equation. Instead they are accumulating those RS monies to fund their portion of the planned stadium construction costs of $120 million. From the incentives angle [i.e. who has the most to lose], it should be the Player’s Union, but they have been silent. Perhaps their silence is the last side effect from the steroids era.

Anyways, how does a MLB team remain very profitable despite having the lowest revenues? In 2008, a year where they can expect to receive around $75 from MLB [at least $35 million in Revenue Sharing and around $40 million in Central Revenues], their opening day salaries totaled $22 million. Imagine selling that at FanFest and you then have a better idea of why Mr. Samson makes nonsensical remarks regarding the Marlins finances and Forbes’ credibility.

About Jorge Costales

- Cuban Exile [veni] - Raised in Miami [vidi] - American Citizen [vici]
This entry was posted in Marlins Ballpark & Finances and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s