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Monday, September 11, 2023

A’s Financial Details Reveal John Fisher’s Claim Of $40 Million Losses For 2023

While attendance is projected to be up for 2023, ticket and suite revenue is projected to be down more than $5 million compared to 2022. This likely comes in two forms: the number of season ticket holders or suite holders has dropped in favor of lower ticket sales. The A’s also donated the entire gate from the June 13 game against the Rays – one of the “reverse boycott” games – to charity.

To add, the A’s sponsorship revenue is projected to take a hit dropping from nearly $10 million in 2022 to $6 million in 2023.

On the plus side, local media rights from their deal with NBC Sports California will be $67.988 million for 2023, up from $66.275 million.

When accounting for all local operating revenue streams the A’s are forecast to reach $114.561 million compared to $121.635 in 2022….

But what’s old is now new again: revenue sharing. The financial information shows the A’s being phased into it with $9.210 million for 2022 and $27.075 million for 2023. They will receive more still in 2024 when their disqualification rate drops to 25%. All told, from 2017 to 2023 projected the A’s have received $100.503 million in revenue sharing which is remarkable given they actually paid $26,000 in 2020 as part of the pandemic, and received none in 2021.

When accounting for local and league revenues – including revenue sharing – the A’s are projected to see an increase in total operating revenue from $191.845 million in 2022 to $200.626 million for 2023.

RoyalsRetro (AG#1F) Posted: September 11, 2023 at 10:24 AM | 12 comment(s) Login to Bookmark
Tags: athletics, revenue sharing

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1. James Newburg Posted: September 11, 2023 at 01:27 PM (#6141020)

Operating expenses actual for 2022 totaled $190.195 million. They are projected to be $225.012 million for 2023, a whopping 18.3% increase. The industry insider said this was likely due to having to fill holes in the front office staff after laying off staff during the pandemic.

Sportrac lists the A’s payroll at $59 million. Just how the hell could the rest of operating expenses add up to $166 million?

2. Colonel Samuel B. Sternwheeler Posted: September 11, 2023 at 01:39 PM (#6141022)

Creative accounting?

3. NaOH Posted: September 11, 2023 at 02:05 PM (#6141026)

They are projected to be $225.012 million for 2023, a whopping 18.3% increase. The industry insider said this was likely due to having to fill holes in the front office staff after laying off staff during the pandemic.

$35M seems like a lot for front office staff, but let's assume it's true.

$35M front office
$16.5M Player benefits (Spotrac)
$14.2M Draft Bonus Pool
$7.3M MiLB contracts (Spotrac)
$1.67M Pre-arb Bonus Pool (Spotrac)

That's $74.6M. Team travel expenses are a few million a year. Figure all the lawyer work for Oakland/Vegas negotiations are a few million more. Maybe you're at $85M.

There's a lot missing. But... And I never see this mentioned... When we talk about operating expenses, no one ever notes that every team's revenue sharing contribution counts as an expense. In the $80M or so missing from the napkin math here on the A's, that expense would take up a lot of it.

So the $166M may seem absurd, but when it comes to actual expenses (e.g., player benefits) and things classified as operating expenses, the math kinda looks legit.

4. Never Give an Inge (Dave) Posted: September 11, 2023 at 04:01 PM (#6141038)

Marketing, overhead, I don't know if they directly pay the cost of operating and maintaining the stadium, or just pay rental fees to use it but that has to be a lot.

5. Starring Bradley Scotchman as RMc Posted: September 11, 2023 at 05:33 PM (#6141050)

Sportrac lists the A’s payroll at $59 million. Just how the hell could the rest of operating expenses add up to $166 million?

Those politicians don't bribe themselves, you know.

6. McCoy Posted: September 11, 2023 at 06:01 PM (#6141052)

Is debt service part of "operating expenses"?

7. NaOH Posted: September 11, 2023 at 07:33 PM (#6141063)

Is debt service part of "operating expenses"?

Yep. Pretty much any business expenditure counts as an operating expense. There are some exceptions, but they're usually on the smaller side of things.

For example, your local florist has a delivery van. The florist has a one-time choice when adding the van to the business whether to take mileage or expenses as a tax deduction each year. If the florist chooses mileage, it's an annual deduction of miles driven x federal deduction rate (currently 65.5 cents per mile). Choosing this means gas and maintenance are not business expenses and not tax deductible. If the florist chooses expenses over mileage, then gas and maintenance costs are operating expenses and can be deducted.

8. McCoy Posted: September 11, 2023 at 07:44 PM (#6141065)

So there's your 100+ millions in operating expenses

9. NaOH Posted: September 11, 2023 at 08:05 PM (#6141066)

Pretty much any business expenditure counts as an operating expense. There are some exceptions, but they're usually on the smaller side of things.

My example of a florist van may have demonstrated what I said in the quote here, but it's not quite true. The big difference—and it can be huge—is that many exceptions to "operating expenses" are large, but they get classified as capital expenses.

For an MLB team, player salaries will be an operating expense. This is typical of employee wages. Same with stadium rent. But a $300M stadium renovation will be a capital expense. The difference to the IRS generally falls along the lines of operating expenses are the costs of putting out a product/service in a given year. A capital expense is often one that will create or extend the use of something beyond a single tax year, like a stadium renovation or new parking garage.

Of course operating and capital expenses are both business costs. The practical difference is in how they affect a business's tax strategy. Operating expenses can be used as tax deductions only in the year the expenses occur while deductions for capital expenditures can be spread across years.

10. Never Give an Inge (Dave) Posted: September 12, 2023 at 12:11 AM (#6141102)

Debt service, for a non-financial company, typically would not be considered an operating expense. Maybe the A’s are including it here.

11. GregD Posted: September 12, 2023 at 10:53 AM (#6141122)

Wow with those huge losses and his family’s declining fortune he must be desperate to sell. Too bad there’s no billionaires in the area campaigning for a chance to pay him billions to take this burden off his hands

12. NaOH Posted: September 12, 2023 at 03:59 PM (#6141152)

Is debt service part of "operating expenses"?

Coming back to this, and regardless of IRS interpretations of expenses, I can't think of any significant debt service the A's would have on the books. They haven't built/renovated a stadium, no upgrades to the spring training complex that I recall, and they haven't started their own RSN. What else could they have done that necessitates a large loan that would dramatically alter their balance sheet?

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Monday, September 11, 2023

A’s Financial Details Reveal John Fisher’s Claim Of $40 Million Losses For 2023

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