Big Lead Sports Bar

8/23/2010

Deadspin Unveils the Pirates' Books


Ever wanted to look at the books of a Major League Baseball team? Specifically Pittsburgh's MLB team? Then today is your lucky day.

Deadspin.com has released the Pirates' 2007 and 2008 financial statements, the Pirates' 2009 quarterly financial statement, and financial statements for the Rays, Angels, and Marlins. From their site:
We'll have some analysis later, not to mention another set of statements. For now, take a look at the documents below, paying close attention to the teams' operating income, their revenue-sharing figures, the size of their TV deals, and the amortization of player contracts (a neat trick of accounting pioneered by Bill Veeck that allows an owner to turn his team into a lucrative tax shelter). If there is a thread running through all of these financial statements, it is the incredible ability of baseball teams — whether they're winners or losers, big market or small, "rich" or "poor" — to make their owners a fat pile of money.
On the heels of the AP article that the Pirates fretted so much that they headed it off at the pass, this looks like an incredible week for those who enjoy peeking behind the curtain at the bean-counting side of big-league ball. Conversely, it's probably going to be a very stressful week over at Pirate headquarters. 


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18 comments:

BurressWithButterflyWings said...

I would like to say that, as someone who deals with financial statements such as these on a daily basis, they are not as conclusive as we might like.

Certain account classifications are not itemized in detail and in some instances, actual cash investments and interests in some of the entities being reported may not accurately reflect tangible losses.

I do not see a detailed account of the large amount of revolving notes payable or long term payables. I also do not see an interest rate on the loan that was repaid as a part of the $20M distribution.

Although dividends are not being paid and distributions to shareholders are uncommon, this does not mean that the ownership group isn't receiving interest payments on the aforementioned receivables. It also does not mean that they are.

BurressWithButterflyWings said...

Also, I guess this little gem is no longer accurate:

http://www.post-gazette.com/pg/09341/1018961-63.stm

Add that to the Frank Coonelly Hall of Lies.

Steve said...

So in 2007 -- based on the numbers showing a total income of $146 million -- when you look at the total expenditures number minus the player salaries, it cost the Pirates over $73 million in other, or “operating” expenses to run the team. This could be anything from the janitors wages at PNC Park, money spent on draft signings, to the toll reciepts for Nutting's trips to and from work.

I agree with Burress, there's not enough of a detailed breakdown of expenditures to say they are not putting enough money back into the team with the goal of creating a winner.

I will say that $73 million is a lot of money when compared to the players salaries. One would think that the players salaries would/should be the greatest expense a MLB team would suffer. Guess not.

The Mad Bubbler said...

"The Pirates issued a statement Sunday, saying it was wrong for the financial statements to have been released to the AP" Of course it was, it shows what freaking crooks you are. I love how only the local media, the same local media that defends them, was invited to the briefing and the AP wasn't. And of course MLB would defend the Pirates, when's the last time a league threw one of it's own teams under the bus?

Steve said...

I guess it's not ironic the the Pirates made a statement about a "Meaningful" payroll increase for 2011 only a day before but I'm sure these 2 events aren't related at all.

Steve said...

Sorry, my comment earier was for the 2008 numbers not 2007.

BurressWithButterflyWings said...

I also find it convenient that some of the non-cash expenses such as Depreciation and Amortization are not itemized and are likely included somewhere in the operating expenses.

There is also the infamous check form the Pirates to Seven Springs which Coonelly says was absolutely NOT for anything suspect. I know he may look like Ray Liotta, but I think Coonelly should be played by the Jon Lovitz pathological liar character from SNL, Tommy Flanagan. He was married to Morgan Fairchild.... " Yeah, that's the ticket".

Scott said...

Steve,

I did some comparing of your numbers for the 2008 season with number of Los Angeles using a fluid definition of operating expenses.

Their total income was $240,824,000. Take out their player salaries and money paid to revenue sharing, which the Pirates don't pay, and their "operating" expenses are only $54,074,000.

I am not sure I understand how it can cost $20 more to run a team in Pittsburgh than it does in LA.

I agree with Plax, I think we need a more in depth breakdown of how this money is moved around.

BurressWithButterflyWings said...

I am with Steve and Scott here.

Looking at the operating expenses, we have $12.6 M for Team Ops, $17M for Ballpark and Game ops, and $17M for marketing, PR, and G&A.

That's nearly $47M in expenses derived from relatively indistinguishable categories. But that is the general point of AFS, a mere snapshot.

How are we netting less than $2 in gate for every $1 in marketing $?

I could go on all day...

I would also like to know what is all included in the Player Development numbers and how that pertains to our Minor League Affiliates. I believe that Minor League teams are indepedently owned, thus we would only be paying the minor league teams the player's salaries?

Charlie Hildbold said...

Some Minor league teams are owned by their parent companies. I believe the Pirates actually own the Bradenton SAL team, purchased for $2M in the offseason.

As far as expenses incurred by the parent team for the minor leagues - you're looking at equipment and player salaries.

travel, uniforms, stadium upkeep, etc are handled by the individual teams, unless owned by the parent team, or a special deal was worked out.

There would also be the small expenses incurred in moving a player up or down, and the travel associated with that.

At least that's the way things ran when I worked for the Rays Single-A SAL team in Georgia.

Scott said...

2008 TV and Radio Revenue

Pirates $39,007,164

Angels $42,967,000

Marlins $15,900,000

Rays $13,444,475

Mariners $64,365,000

It seems like the pirates are making more than we thought in TV and radio. I thought they were at the bottom of the league, but it looks like they are right in the middle of the pack.

JW said...

I almost minored in Econ. Thank God I didn't.

To me, the biggest news to come out of all of this is just the fact that they opened their books at all. The misery of all of this -- the performance on the field, the fans' griping off of it -- is clearly, finally hitting home. Although, I'd feel a bit better about it if it didn't seem that the financial allegations are much more impactful to ownership than the horrific on-field play.

Scott said...

They didn't open the books, somebody leaked out this information. As seen on the front page of the team website, they don't want us to have this information.

JW said...

Darn Wikileaks.

Nate said...

"How are we netting less than $2 in gate for every $1 in marketing $?"

Because nobody is watching games at PNC Park?

Dallas Mike said...

Scott,

With regard to the broadcasting revenue, you have to go to Note 4 of the financial statements to understand the details of that line item. Most of the other clubs separated Local Broadcast Revenue from MLB Central Fund (Sharing of National TV/Broadcasting Rights), but the Pirates consolidated the two revenue sources. The Pirates actually received $18.7 million in Local Broadcast Revenue and $20.3 million in MLCF Revenue. The Angels' $43.0 million is attributable to local broadcasting only. They had an additional $38.8 million in MLCF revenue. Contrast that with Seattle (with no competition in the regional market), which brought in $64.4 million in Local Broadcasting....

Burress, nice point. However, I would venture to guess that there is a larger percentage of G&A expenses versus actual marketing expenses in that $17,1 million. Those bobbleheads are cheap when you buy them in bulk! As you know, G&A can encompass a ton of other stuff and that is probably where the D&A sits. Although it would probably be a fun exercise, I don't have the time and energy to analyze common size financial statements comparing the Pirates operating expenses with the other clubs, on a percentage of revenue basis.

Scott said...

I see. Its pretty interesting to see how all this stuff is reported.

BurressWithButterflyWings said...

Dallas,

I am fairly sure you are correct in regards to where the D&A expenses are reported.

As we have all said throughout the process of examining these, there is no way to know if anything is being hidden unless we were able to see what accounts are included under certain categories.

I would love to see some of the AR and AP accounts to see if there are any intercompany recs and anything on the books with 7 Springs.