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Saturday, March 01, 2008

The Biz of Baseball: Brown: The Florida Marlins Love Living on Welfare

Calling Mister Selig it’s an emergency
Hand me some of that welfare cheese

Forbes estimated that the Marlins posted $43.3 million in operating income last year. That operating income included earnings before interest, taxes, depreciation and amortization. How did the Marlins rate in terms of operating income – a measure of profit – compared to their other 29 counterparts? They were first with the Dodgers in second at $25.5 million, a difference of 41 percent.

Cut your margins enough (low player payroll) and regardless of whether you have embarrassingly low attendance by rolling out a team of made up with what can best be described as replacement level players, take in a healthy level of revenue-sharing, and what you have is a prime example of Jeffrey Loria and David Sampson living on corporate welfare.

This author is opposed to a salary floor, but the Marlins make it hard for me to keep that position year after year. Pathetic.

Repoz Posted: March 01, 2008 at 08:56 PM | 48 comment(s)
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   1. Rough Carrigan Posted: March 01, 2008 at 10:35 PM (#2704003)
And #2 is undercapitalized Dodgers owner Frank McCourt. How lovely. It must make it so much better for Dodger fans to know that their prodigious attendance doesn't get put back into the team. Congratulations Generalissimo for Life Allen H. your toady Loria is a suitable owner but Mark Cuban is beyond the pale.
   2. Jim Wisinski Posted: March 01, 2008 at 10:36 PM (#2704004)
The Marlins’ payroll for 2008 is projected to be around $20 million


That's actually at least 50% higher than what a lot of people thought it would be. It would have surprised nobody if they tried to go out there with $15 mil or less.
   3. Huston Streets of Ben Francisco (CSC) Posted: March 01, 2008 at 10:41 PM (#2704008)
It's stories like these that actually make me feel sympathy for Reggie_Vision.
   4. Yankee_Redneck (was ReggieVision) Posted: March 01, 2008 at 11:06 PM (#2704020)
It's stories like these that actually make me feel sympathy for Reggie_Vision.


I appreciate your sympathy, but what baseball needs is your outrage to save it from the insidious forces of Budshovism. Frankly, I don't know how the heck anybody could be surprised that a redistribution scheme proposed by a used-car salesman ended up being abused so shamelessly by his bazillionaire cronies.
   5. Dan Posted: March 01, 2008 at 11:30 PM (#2704031)
Red Sox fans really dodged a bullet when Henry's group ended up getting the winning bid instead of McCourt. And at the time, we all feared Henry was going to be the undercapitalized type like McCourt has turned out to be in LA.
   6. Maury Brown Posted: March 01, 2008 at 11:30 PM (#2704032)
Frankly, I don't know how the heck anybody could be surprised that a redistribution scheme proposed by a used-car salesman ended up being abused so shamelessly by his bazillionaire cronies.
Just as a point of clarification, Bud never was a used-car salesman.

On the other matters... Dodgers are making a profit, but player payroll was up there last year (Opening Day was sixth, and EOY was third). We can all debate whether the money was well spent, but at least they spend. I give the McCourts a pass based on that.

Look, even David Glass looks like the Steinbrenners compared the Loria and Sampson. I'm sure Bud winces when he hears of Loria doing this (again). I have talked to more than one that does, or has worked in the Commissioner's Office, and when this type of activity happens, it doesn't exactly bring smiles to their faces. You know it doesn't for Don Fehr.
   7. Larry Bowa Approves of The Justin Upton (1k5v3L) Posted: March 01, 2008 at 11:40 PM (#2704041)
How much did Loria and Sampson pay for the Marlins? $120m or so? At this rate, they will have completely recovered their investment by the time they enter their brand new money making stadium. Not a bad gig if you can get it.
   8. Maury Brown Posted: March 01, 2008 at 11:57 PM (#2704058)
More figures to take in...

Now, I don't subscribe to the Forbes figures wholly. But, they are certainly a good barometer for MLB finances.

Revenues:

Marlins: $122 million (30 out of the 30 clubs)
Royals: $123 million (29 out of the 30 clubs)

OK, here's the big difference. The Royals have an operating income of $8.4 million compared to the Marlins $43.3 million. Even if you give the Marlins a pass on Dolphin Stadium and paying Wayne H., you still can't account for skewing that far to ownership's favor. Plain and simple, they're pocketing money, and not just revenues they make, but the revenues of the Steinbrenners, Henry, Werner, and Lucchino, to name but a few.
   9. Justin Zeth Posted: March 02, 2008 at 12:04 AM (#2704063)
Well, it's almost like a farm team relationship, Maury. The big-money teams get together and pay all the Marlins' expenses plus some extra, and whenever the Marlins develop a talented player, one of the big-money teams gets him. The Pirates were supposed to be going along with this too, but their ownership cleverly evaded the scheme by taking care to never develop any talented players.
   10. Charter Member of the Jesus Melendez Fanclub Posted: March 02, 2008 at 12:20 AM (#2704071)
Did we ever determine whether the Marlins might even better off by not opening the park to any fans for their home games?
   11. Yankee_Redneck (was ReggieVision) Posted: March 02, 2008 at 12:33 AM (#2704079)
Well, it's almost like a farm team relationship, Maury. The big-money teams get together and pay all the Marlins' expenses plus some extra, and whenever the Marlins develop a talented player, one of the big-money teams gets him.


This is an excellent argument in favor of contracting these welfare teams. Running a farm club shouldn't be costing costing successful teams tens of millions of dollars annually, and the executives at farm clubs shouldn't be drawing enormous salaries. This is the type of hapless inefficiency that can't help but occur when free money is bandied about so casually.
   12. TVerik Posted: March 02, 2008 at 12:46 AM (#2704082)
This would be a much better argument if the Marlins hadn't won two World Series the last ten years. Welfare or not, I think Bud would have trouble coming up with a set of criteria that signals a contraction situation that kills a team like this but not any of those other teams that haven't seen .500 in quite some time.
   13. Mister High Standards Posted: March 02, 2008 at 01:02 AM (#2704087)
But central planning works is the bestest. Ask HRC and BHO!
   14. Mister High Standards Posted: March 02, 2008 at 01:24 AM (#2704088)
I cannot believe Anderson Silva just choked out Dan Henerson in round 2. Unfricking believable.
   15. Yankee_Redneck (was ReggieVision) Posted: March 02, 2008 at 01:28 AM (#2704091)
AUGH! I was planning on avoiding the MMA boards until I could watch it tomorrow!

Well, at least I won a steak dinner from my accountant.
   16. Mister High Standards Posted: March 02, 2008 at 01:33 AM (#2704093)
Sorry reggie... I wasn't thinking and was completely ####### shocked it happened. Bad manners on my part. FYI the rest of the card was really good. Much better than the earlier cards this year from top to bottom.
   17. Carmona My House (Crispix Attacks) Posted: March 02, 2008 at 01:39 AM (#2704095)
But central planning works is the bestest. Ask HRC and BHO!

Yes, they are communists. Whatever you say.
   18. Mister High Standards Posted: March 02, 2008 at 01:45 AM (#2704097)
I didn't say they were communists. I said they believe in central planning, far more than I comfortable with. YMMV.
   19. MSI Posted: March 02, 2008 at 02:58 AM (#2704107)
Is the argument that if they spent money and/or won they'd bring fans in? Because they've done a little bit of that in the last few years and still no fans.
   20. akrasian Posted: March 02, 2008 at 03:07 AM (#2704110)
And #2 is undercapitalized Dodgers owner Frank McCourt. How lovely. It must make it so much better for Dodger fans to know that their prodigious attendance doesn't get put back into the team.

As Maury pointed out, the Dodgers have one of the higher payrolls in baseball. They also have a privately owned stadium, one that the Dodgers have spent tens of millions of dollars renovating over the past few seasons. And for what it's worth, the Dodgers do not have a good cable contract given their popularity and their media market - that was the price that Fox demanded when McCourt bought the team (and the condition that chased away better capitalized bidders).

I don't like much of what McCourt has done - but he's actually been brilliant in his fiscal management of the Dodgers. After a couple of years of payroll dropping down while he was renegotiating loans, payroll has soared. Free agents are gone after, with the generally wise policy of paying higher per season in exchange for shorter contracts (see Furcal, Schmidt, and Andruw Jones). The Dodgers are now in the position again of being owned by a family instead of a corporation, yet having plenty of money. I wish McCourt were savvier in terms of managing employees, but at least he has shown a desire to win AND an awareness of how to make money in the LA market. Not ideal, but a far better owner than many give him credit for. He definitely is NOT a guy just out to make a quick buck, at least.
   21. Barry (not that Barry) for President! (arkitekton) Posted: March 02, 2008 at 05:34 AM (#2704120)
But central planning works is the bestest. Ask HRC and BHO!


I'm trying to think how the Repugs, with their love for corporate welfare and no-bid contracts, escape MHS's sarcasm...
   22. kevin Posted: March 02, 2008 at 07:13 AM (#2704122)
Red Sox fans really dodged a bullet when Henry's group ended up getting the winning bid instead of McCourt.


Two bullets. Or rather, one bullet and a 20 megaton nuclear weapon.

Remember when James Dolan put in the highest bid? Do you think the Sox would have won 2 titles with Isiah as the GM? Every time I read a Knicks boxscore, I think "There but for the grace of God go I..."
   23. kevin Posted: March 02, 2008 at 07:18 AM (#2704123)
How much did Loria and Sampson pay for the Marlins? $120m or so?


levski, with the new ballpark deal in place, you could already argue they've recovered their investment and then some. If they sold the team today, they could probably get twice what they paid for.

Maury, nice work. I think a lot of people around here moan and groan about the owners too much, but you hit the nail on the head when it comes to Loria and Sampson. What they're doing is disgraceful.
   24. Justin Zeth Posted: March 02, 2008 at 07:55 AM (#2704126)
This is an excellent argument in favor of contracting these welfare teams. Running a farm club shouldn't be costing costing successful teams tens of millions of dollars annually, and the executives at farm clubs shouldn't be drawing enormous salaries. This is the type of hapless inefficiency that can't help but occur when free money is bandied about so casually.


I would find this argument, and likewise the argument for a minimum player payroll, more compelling if this were actually an industry-wide problem. But what we actually have is two teams--the Marlins and the Pirates--whose owners are stealing the revenue sharing money and putting it in their pocket.

The ideal solution would be to force those two owners to sell their teams, or, more drastically if the owners refuse to sell, kick them out of the league. However, in the real world, Loria and Nutting could and would sue the tar out of MLB and easily win their cases, so we can't do that; plus, while nobody would miss the Marlins, the Pirates have a 100+ year history and, for whatever reason, some loyal fans, and you'd hesitate to summarily eliminate them.

I don't like the salary floor concept for the simple reason that it doesn't really solve the problem. The Pirates--and I still believe their ownership is intentionally fielding losing teams--have already shown us what they're prepared to do with a salary floor: Acquire contracts like Matt Morris. A salary floor would just encourage dumb spending, and no spending at all is better than that.

There's really no way out of this. It sucks to be a Pirates fan, but the reality is that the Pirates are going to continue to field bad teams ad infinitum while the Nuttings pocket the revenue sharing money, and there isn't much to be done about it. I imagine that eventually some form of salary floor will be implemented--if not an actual hard 'salary floor', some way of requiring a certain minimum payroll to receive a full share of the revenue sharing money--but I'm not at all convinced that will solve the problem. Loria and Nutting are the problem.

Basically, the Marlins and Pirates have proven that MLB's structure is able to support several teams--and it can probably support more than two--that basically don't play home games and don't need any home-based revenues whatsoever to operate and turn a profit.
   25. Never eat the calamari at a bris Posted: March 02, 2008 at 08:31 AM (#2704133)
I appreciate your sympathy, but what baseball needs is your outrage to save it from the insidious forces of Budshovism. Frankly, I don't know how the heck anybody could be surprised that a redistribution scheme proposed by a used-car salesman ended up being abused so shamelessly by his bazillionaire cronies.


Budshovism ... that's freakin' awesome. Mind if I use it Reggie? I'm doing a THT column on this situation.

Best Regards

John
   26. jolietconvict Posted: March 02, 2008 at 12:36 PM (#2704189)
I cannot believe Anderson Silva just choked out Dan Henerson in round 2. Unfricking believable.


Thanks you ####### #######. I'm going to watch it this afternoon and this the only site I came to because I didn't want it spoiled.
   27. Mister High Standards Posted: March 02, 2008 at 12:57 PM (#2704197)
I'm trying to think how the Repugs, with their love for corporate welfare and no-bid contracts, escape MHS's sarcasm...


I have no love for them either. If Huckabee was getting any support I would be making fun of him as well.

Say Joliet. Won't happen again. Bad manners.
   28. snapper Posted: March 02, 2008 at 12:59 PM (#2704201)
I would find this argument, and likewise the argument for a minimum player payroll, more compelling if this were actually an industry-wide problem. But what we actually have is two teams--the Marlins and the Pirates--whose owners are stealing the revenue sharing money and putting it in their pocket.

All the league needs to do is mandate that all revenue sharing money go towards player expenses (salaries, bonuses, scouts). If it doesn't, reduce the revenue sharing. This would pass about 27-3 among the owners.
   29. Misirlou is the new market inefficiency Posted: March 02, 2008 at 01:11 PM (#2704203)
All the league needs to do is mandate that all revenue sharing money go towards player expenses (salaries, bonuses, scouts). If it doesn't, reduce the revenue sharing. This would pass about 27-3 among the owners.


Why? Why would the owners of say the Reds, Brewers, Twins, or A's to name just a few, want to make the Royals or Pirates, or Marlins more competative?
   30. Justin Zeth Posted: March 02, 2008 at 01:19 PM (#2704206)
Agreed. Plus, just because David Glass isn't as flagrant about it as Loria or Nutting doesn't mean he's not also pocketing some of the revenue sharing money. Likewise the ownership of the A's, Twins, Brewers, Reds, Padres, Braves, Blue Jays, etc. I don't think there's any solid group out there that's particularly dissatisfied with the present revenue sharing system, and I don't think many, if any, of the other owners mind that the Marlins are a AAA team and the Pirates' ownership is intentionally losing.
   31. greenback06 Posted: March 02, 2008 at 01:31 PM (#2704213)
Baseball's salary structure is screwy enough that using payroll as a proxy for "trying to win" doesn't work with a medium or small market team.

It's weird to see all the criticism here of the way Loria's running the Marlins. Maybe he should start throwing out a few buzzwords like "arbitrage" and "market inefficiencies." That complete lack of regard for PR consequences is the biggest difference between what the Marlins are doing and what Beane's been doing.
   32. 洋基's Biggest Fan! Posted: March 02, 2008 at 01:41 PM (#2704219)
I'm unconvinced... as Chris Russo would say, "If the Marlins were really pocketing their revenue-sharing money and not using it on their roster, wouldn't Fred Wilpon and Bud Selig complain about it openly?"
   33. Justin Zeth Posted: March 02, 2008 at 02:07 PM (#2704234)
Not necessarily. Uncle Bud certainly wouldn't, and to the Wilpons (and Steinbrenners, and Henrys) of the world, it's really not that terrible a thing. If revenue sharing has to exist, those guys are perfectly happy with the owners receiving the welfare keeping the money while their team stays horrible. Less competition = more wins = even more money, for the big boys. Wilpon is certainly inclined to favor anything that keeps the Marlins at the bottom of the NL East.
   34. kevin Posted: March 02, 2008 at 02:15 PM (#2704238)
Matt, you like UFC too? I can't get enough of it. It's way better than boxing.

I was watching the Paulo Finha/Cale Sonnen match. Sonnen was completely kicking his ass but lost by letting Finha get him in an armbar. Even in winning, Finha looked totally deflated when they raised him arm in the air.

If they fight again, Finha is toast.
   35. Yankee_Redneck (was ReggieVision) Posted: March 02, 2008 at 02:37 PM (#2704252)
All the league needs to do is mandate that all revenue sharing money go towards player expenses (salaries, bonuses, scouts).


And if the owner wants to pocket the money he would otherwise be dedicating to "salaries, bonuses, scouts" were he not receiving his billionaire welfare?

If the league has to pay owners to maintain a baseball team, as would be the case in your scenario, we should just drop all this presence and have MLB, Inc. own all the teams and assign middle-mangers to run them all for the collective good. Budski's lordly annual compensation is already more in line with what we'd expect from a corporate CEO.
   36. Leo Rosales' #1 Fan (Robert S.) Posted: March 02, 2008 at 02:49 PM (#2704265)
And for what it's worth, the Dodgers do not have a good cable contract given their popularity and their media market - that was the price that Fox demanded when McCourt bought the team (and the condition that chased away better capitalized bidders).

How bad is their contract? Are they going to be in a position anytime soon to start their own RSN?
   37. ValueArb Posted: March 02, 2008 at 04:17 PM (#2704299)
A salary floor would just encourage dumb spending, and no spending at all is better than that.


This is untrue. A salary floor forces more spending, but it doesn't have to be dumb spending. How it's spent is a function of management skill, not whether it's forced. In the case of the Marlins, you can argue that Beinfest would have spent it fairly intelligently. Saying the Marlins get to keep the cash because they'd spend it poorly.

The idea of the floor is to prevent teams being run purely to maximize cash flow at the expense of fielding competitive teams. Baseball exists because fans believe their teams have some sort of chance to compete and it's in MLB's interest to encourage that. Otherwise you might as well eliminate revenue sharing and see how excited the fans of a bunch of $30M payroll teams are to play the yankees dozens of times a year when they have a tax free $300M payroll.

The idea of forcing all revenue sharing to be spent on player expenses (presumably including expenses such as latin american academies) seems like a fair compromise. Teams could still break even or make a profit on their other revenues. Otherwise, what is revenue sharing for? So the Marlins get a free ride on Yankee marketing prowess?
   38. Mister High Standards Posted: March 02, 2008 at 04:58 PM (#2704309)
Kevin,

That was a good fight. They are going to have a rematch, last I heard was from Filho's camp and it would be in march. Don't underestimate Filho, while he got beaten up pretty good he is well regarded as the top middleweight not nammed Anderson Silva, or Dan Henderson... and he has sick Jitz, so him arm bar'ing someone shouldn't be a shock.

Drop me an email, and i'll send you some DVD's I've got tons and tons of them.
   39. Maury Brown Posted: March 02, 2008 at 05:45 PM (#2704326)
On the salary floor... Don't agree with it as technically there is a salary floor... it's called the minimum salary. Putting all of the revenue sharing into the major league payroll isn't always the best. The Nationals had had their development system so depleted from the Loria and MLB tenures that they have had to completely rebuild it.

Maybe something like this is in order... player payroll at the major league level must not be below a threshold, or the club receiving the revenue-sharing risks losing a part, or all, of their payout from the system as a recipient. Even then, it creates problems as you are forcing clubs to spend money when just the act of spending isn't what makes a team good at the major league level. Note, Exhibit A: $55 million for Gil Meche by the Royals.
   40. Carmona My House (Crispix Attacks) Posted: March 02, 2008 at 06:05 PM (#2704338)
Gil Meche has been good so far.

Exhibit A: $whatever for Danys Baez by the Orioles.
   41. Jimmy P Posted: March 02, 2008 at 06:30 PM (#2704345)
Even then, it creates problems as you are forcing clubs to spend money when just the act of spending isn't what makes a team good at the major league level. Note, Exhibit A: $55 million for Gil Meche by the Royals.

While I agree with you, I think you should use a better example. Meche was decent last year, and compared to other free agent deals, his is a pretty good signing.
   42. RMc is the President of the United States Posted: March 02, 2008 at 06:53 PM (#2704349)
Matt, you like UFC too? I can't get enough of it. It's way better than boxing.

And that was when RMc realized he was no longer in the Primate demographic...
   43. Swedish Chef Posted: March 02, 2008 at 06:54 PM (#2704350)
Raising the minimum wage to a million would give a nice salary floor and would also help free agents in getting jobs when their bonded colleagues are lesser bargains.

Of course, relegation would be the proper Darwinian way to get rid of deadbeat franchises, though I understand Americans are too queasy for nature red in tooth and claw.
   44. Yankee_Redneck (was ReggieVision) Posted: March 02, 2008 at 07:11 PM (#2704354)
Raising the minimum wage to a million would give a nice salary floor and would also help free agents in getting jobs when their bonded colleagues are lesser bargains.


Raising the maximum wage to a million would do an even better job of negating the advantage enjoyed by popular and profitable teams. I mean, if we're going to completely dispense with any notion of real competition, let's no do it half-assed.
   45. Russ Posted: March 02, 2008 at 07:24 PM (#2704356)
Of course, relegation would be the proper Darwinian way to get rid of deadbeat franchises, though I understand Americans are too queasy for nature red in tooth and claw.


As always, the problem with relegation is the minor league development system, not any sort of American hemophobia.
   46. Rough Carrigan Posted: March 02, 2008 at 07:24 PM (#2704357)
Kevin. You're forgetting the absolute nightmare scenario that was avoided. The Jacobs family put in a bid in the first round. Imagine if that franchise crushing clan had gotten hold of the Sox! They took over the Bruins with Bobby Orr still part of the team and they've made them *totally* irrelevant in the Boston sports landscape.
<shudders>
Better yet, don't try and imagine it. You won't sleep well.
   47. BourbonSamurai Posted: March 02, 2008 at 08:34 PM (#2704393)
Someone who actually got to see the Silva/Henderson fight tell me, did it look decisive? I can't really tell when looking at the round by rounds if it was a lucky fluke or just an inevitable end...

my roommate and I (although it is hard to call him my rommmate when I've been on tour for four months) are big MMA fans and I had the Spider all the way...
   48. jolietconvict Posted: March 02, 2008 at 10:03 PM (#2704433)
Someone who actually got to see the Silva/Henderson fight tell me, did it look decisive? I can't really tell when looking at the round by rounds if it was a lucky fluke or just an inevitable end...

my roommate and I (although it is hard to call him my rommmate when I've been on tour for four months) are big MMA fans and I had the Spider all the way...


Hendo controlled the first round. He took Anderson down but Anderson held him in half guard and did a pretty good job. 2nd round Anderson came out and started blasted Dan. It went to the ground and Anderson ended up getting his back. Silva is just at another level right now.

MHS sorry if I was a little harsh earlier.
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