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Wednesday, February 26, 2020

Braves’ revenue rose to franchise-record $476M in 2019; expenses up, too

The Braves’ revenue increased to a franchise-record $476 million last year, up 8% from $442 million the year before, according to financial results disclosed Wednesday by team owner Liberty Media. The company attributed the increase to higher attendance and growth in local and national broadcast rights fees. But Liberty Media also said the increased revenue “was more than offset by growth in operating expenses.” Thus, the Braves’ operating profit before depreciation and amortization — the most commonly used measure, along with revenue, of a pro sports franchise’s financial performance — was $54 million last year, down from $94 million in 2018. 

Liberty attributed that decline to “higher player salaries, increased baseball operations costs related to the new spring training facility and higher player development costs, increased obligations under MLB’s revenue sharing plan and higher concession-related costs due to increased attendance.”

RoyalsRetro (AG#1F) Posted: February 26, 2020 at 06:37 PM | 11 comment(s) Login to Bookmark
  Tags: braves

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   1. Walt Davis Posted: February 26, 2020 at 09:42 PM (#5926680)
Cots put them at $136 for season-end 40-man and $160 for CBT (i.e. doesn't matter) ... which means the Braves managed to find, give or take, ways to spend $300 M beyond player salaries to operate a baseball team. If I understand the Wiki right, the Braves put a whopping $18 M into CoolToday Park (and signed a 30-year lease) so we're down to a mere $282 M. But at least that $18 M is a new cost that didn't generate revenue. The "higher concession-related costs" are tied to higher concession-related revenues due to increased attendance so, unless they're doing it way wrong, those cost increases were more than offset by concession-related revenue increases leading to an increase in profit. Also according to Cot's the "higher player salaries" were only $10 M higher.

So last year it was $442 in revenue and about $350 in costs (somehow). This year it was $476 in revenue and about $420 in costs. Payroll up $10 plus $18 M on the park so we've got $42 M in cost increases left to explain. Attendance was only up 4% so hard to see how extra concession staff, box office staff, etc. costs could have risen more than maybe 5%. So even if that costs them $100 M (how?), that would explain another $5 M in costs. The gap between what they received out of the shared revenue presumably did close, maybe even be negative -- I'd think that would also be roughly proportional to attendance changes (barring a big new TV deal) so I'll WAG $6-8 M on that. Still $30 M in increased costs to explain and that's assuming the baseline of $350 is actually sensible. Inflation on $350 M costs another $10 M I suppose.

Anyway, our good friends at Forbes should have their numbers out in a month or so.

EDIT: Grr ... inflation, %age increases, etc. should be based on $350 - $127 in 40-man payroll but I don't have time to go back and fix it.
   2. Dr. Vaux Posted: February 27, 2020 at 12:44 AM (#5926699)
The travel and accommodations is in there somewhere. Maybe when they give comp tickets, they charge the full price of each one to themselves as an expense. What about insurance on the contracts? (And on everything, for that matter?)
   3. Walt Davis Posted: February 27, 2020 at 01:05 AM (#5926703)
I'd guess the only contract the Braves might have insured is Freeman's. It's usually only the really long, really expensive ones. But sure, I wasn't trying to exhaustively list all the costs.

But again we're looking for sources of cost increases. Travel and accom wouldn't have increased much at all between 2018 and 2019 beyond inflation; not clear insurance costs would have gone up substantially; not clear why they would have given away substantially more tix than 2018, etc. Unless you're trying to justify the baseline of $350 M in which case carry on.
   4. Dr. Vaux Posted: February 27, 2020 at 01:23 AM (#5926705)
Oh, increase. I didn't read good.
   5. snapper (history's 42nd greatest monster) Posted: February 27, 2020 at 09:14 AM (#5926727)
Still $30 M in increased costs to explain and that's assuming the baseline of $350 is actually sensible. Inflation on $350 M costs another $10 M I suppose.

Isn't the simplest explanation that they're all fictitious numbers meant to help in negotiations with the players? There just isn't $200M of stuff for a team to do besides pay the players.
   6. bfan Posted: February 27, 2020 at 09:32 AM (#5926729)
I am not saying this accounts for all of it, but as the technical advances have progressed, I would imagine the spend on the technical side has gone up dramatically. No one just builds a batting cage any more.

Add to that item that each team is hiring their own PhD's in physics to analysis spin rates and launch angles and all of the other matters that seem to create advantage in how players play the game. Your average physics PhD is going to cost you more than a scout looking at 16 year olds in Arizona.

I am also guessing there is administrative bloat, because where there is large industry and money, there is always bureaucratic bloat.
   7. dlf Posted: February 27, 2020 at 09:35 AM (#5926731)
Liberty Media is a publicly traded company, but its 10Qs and 10Ks aren't sufficiently transparent to figure out exactly where the money is coming from or going to. But I *think* that a significant part of the increased costs are related to the real estate development in Cobb County.
   8. snapper (history's 42nd greatest monster) Posted: February 27, 2020 at 09:37 AM (#5926733)
But I *think* that a significant part of the increased costs are related to the real estate development in Cobb County.

So, investments, not actual costs. That's a neat trick. I wish the IRS would buy that on my taxes.
   9. Ron J Posted: February 27, 2020 at 09:44 AM (#5926736)
#8 Not that it's news to you but Paul Beeston's old line seems applicable:

“Under current generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss, and I can get every national accounting firm to agree with me.”
   10. snapper (history's 42nd greatest monster) Posted: February 27, 2020 at 09:50 AM (#5926742)
#8 Not that it's news to you but Paul Beeston's old line seems applicable:

“Under current generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss, and I can get every national accounting firm to agree with me.”


Oh definitely. To re-purpose another famous quote "Accounting is a lie generally agreed upon."
   11. Walt Davis Posted: February 27, 2020 at 05:13 PM (#5926912)
I am not saying this accounts for all of it, but as the technical advances have progressed, I would imagine the spend on the technical side has gone up dramatically. No one just builds a batting cage any more.

Add to that item that each team is hiring their own PhD's in physics to analysis spin rates and launch angles and all of the other matters that seem to create advantage in how players play the game. Your average physics PhD is going to cost you more than a scout looking at 16 year olds in Arizona.


That's chump change ... and it's chump change they would have been spending in 2018. Even if we assume MLB is not hiring mainly entry-level data scientists, that they are actually hiring data scientists as opposed to data analysts, that chumps aren't so enamored with working in MLB that they'll work for a discount ... the average data scientist salary (not starting) is estiimated around US$110-115 (and flattened/shrinking). Add on-costs and that's $150 K per data scientist and you've got 6 of them for a million. So if the Braves added 6 new DS positions between 2018 and 2019, that would soak up a million.

Presumably any new fancy training equipment would be filed under stadium improvements or similar and if that was a big total, Liberty would have mentioned it alongside the $18 M for the spring training facility. But sure, it's possible there are major line items that the article didn't mention.

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