Comments on: The Current State of Baseball Economics

By: Sam K

Sam K — Sun, 22 Nov 2009 03:02:25 +0000

This must be the reason I never got past one semester in Accounting.

And with mental gymnastics like that going on to make these franchises appear unprofitable, I have to say, it's amazing people don't loathe accountants as much as they do lawyers. Probably because most people aren't aware of the shenanigans …

By: bob

bob — Fri, 20 Nov 2009 23:02:37 +0000

astute breakdown, I highly doubt that teams are hurting terribly, baseball certainly isn't hurting as bad as the NBA. As you illuminated, teams have been understating their true value for years and its even more so these days when you consider that the Red Sox, Yankees, Mets and a few others have their own media empires essentially which add significant value to their holdings. Even the teams that don't work the system very well, for example the Marlins are definitely a team that is weak in terms of organic revenue, however, they keep payroll at bare bones and then pocket a big revenue sharing check every year, making them actually one of the more profitable teams.

Is the system broken? I actually don't think so, and I think the fact that baseball has such an extensive minor league network allows the current system to function fairly well in terms of competitiveness. Adding a salary cap or floor would probably make things worse.

That said, there needs to be more transparency so that we can see that these teams are making money and the whole tax money to stadiums garbage stops. Teams continually argue that building new stadiums builds their revenue which in turn increases tax revenue greatly. While teams do make a killing on the new stadium, the cities that fund them don't see that much for the reasons that you've detailed above. Furthermore, teams often argue that new stadiums= new jobs which is always a political winner, however most of these are low-skill low-wage jobs with high turnover rates, so they don't really help improve the overall situation that much more.

Long comment I know, but I thought this was a great post and I wanted to put in my two cents.

By: Mike_Silver

Mike_Silver — Fri, 20 Nov 2009 19:55:50 +0000

Haha. You're damn right he did. All those OWLs paid off.

By: Shane

Shane — Fri, 20 Nov 2009 16:50:34 +0000

Very interesting article and something I don't think is every talked about in much detail. Well done.

By: Dave L

Dave L — Fri, 20 Nov 2009 16:16:31 +0000

Mike,
David Tyler just crapped his pants.
…In a good way

By: Wooden U. Lykteneau

Wooden U. Lykteneau — Fri, 20 Nov 2009 14:13:40 +0000

Excellent post, Mike. The figure I like to pass along is from an investor who considered purchasing a Hi-A franchise in the Mid-Atlantic region. With no radio contract, in a county-owned stadium with no luxury boxes, this franchise was *still* able to clear seven figures a season. Attendance isn't boffo – about 2,800-3,000 per gate, so it doesn't take a genius to figure out why minor-league baseball is so profitable (and likewise, why municipalities have gotten wise to the shell game).