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Thursday, February 20, 2020

Brewers owner claims team “had an operating loss” in 2019

PHOENIX (AP) — Milwaukee Brewers owner Mark Attanasio claims his team “had an operating loss” in 2019 but that isn’t why the club’s projected payroll has dropped nearly $30 million.

Attanasio says the Brewers are down from last season’s franchise-record $132.6 million payroll because president of baseball operations David Stearns didn’t find any splashy free-agent fits, instead preferring to rely on depth, versatility and manager Craig Counsell’s knack for balancing options.

“There’s nothing that David didn’t do this offseason that he wouldn’t have done if we’d have had a different budget number,” Attanasio said. “He’s always free to come to me and say, ‘I want to do ‘fill-in-the-blank.’ I want to acquire ‘fill-in-the-blank.’”

Milwaukee was fifth in the National League last year in attendance at 2,923,333 and has been in the top-6 each of the past three seasons, yet it was 11th in the NL in payroll. Only the Pirates and Marlins spent less than $100 million among NL clubs, which is roughly where Milwaukee projects for 2020.

As always, good luck interpreting this in a world where the figures in question are held very close to the chest.

 

QLE Posted: February 20, 2020 at 12:49 AM | 15 comment(s) Login to Bookmark
  Tags: brewers, finances, mark attanasio

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   1. bfan Posted: February 20, 2020 at 04:04 PM (#5925712)
"Quotes in the headlines"; such fair journalism for a news piece. And of course he didn't state it; he claimed it (which is what a litigant does in a disputed court case-those are the claims made).
   2. Jeremy Renner App is Dead and I killed it Posted: February 20, 2020 at 05:37 PM (#5925733)
fWIW MA is getting crushed by Brewer fans on social media with only people like the Brewers beat writer saying "Absolutely".
   3. snapper (history's 42nd greatest monster) Posted: February 20, 2020 at 05:42 PM (#5925735)
Yeah, they get $200M from shared revenue sources, no way they had an operating loss unless the owner is paying himself and members of his family tens and tens of millions of dollars.
   4. Misirlou cut his hair and moved to Rome Posted: February 20, 2020 at 05:49 PM (#5925739)
In the Rewatchables podcast episode on Butch Cassidy and the Sundance Kid, they had a guest co-host, Aaron Sorkin, who was a mentee of William Goldman, who wrote the screenplay. Sorkin said Goldman was offered either $425,000 or $400,000 and a piece of the net for the screenplay. Goldman took the cash. Sorkin went on to explain how no Hollywood movie ever makes money. He gave an example from his own career. He wrote the screenplay for A Few Good Men, and went on to say that the movie cost $50 mil to make and to date has grossed $500 million, and still has yet to show a profit.
   5. Barry`s_Lazy_Boy Posted: February 20, 2020 at 08:51 PM (#5925757)
Thank you GAAP or EBITDA or something
   6. snapper (history's 42nd greatest monster) Posted: February 20, 2020 at 10:44 PM (#5925768)
Thank you GAAP or EBITDA or something

Any accounting that is not strictly cash based is just a mutually agreed fiction.
   7. Walt Davis Posted: February 21, 2020 at 01:13 AM (#5925782)
Yes, well known that in Hollywood accounting, you insist on a piece of the gross or cash up front. This is partly why these days you so often see the stars as "producers," especially on TV series. Near as I can tell, accounting in the old school music biz was even worse ... most major-label musicians probably still owe their record companies money.

For 2018 (i.e. their pre-2019 valuations), Forbes estimated the Brewers at $288 M in revenue with an operating income of $66 M and $113 M in player expense. What they managed to spend the other $109 M on I can't imagine. Given the purchase price in 2005 was $233 M, I'd imagine having annual revenue of $288 M is a nice thing.
   8. Ron J Posted: February 21, 2020 at 08:07 AM (#5925798)
#3 When we've seen the books we've seen all sorts of creative accounting going on. Revenue shuffled off to different companies. Non baseball expenses from parent companies run through the team's books. Zimbalist had some interesting examples (the As for instance were at one point paying parent company brokerage fees or something similar. Don't recall the specifics and don't have my Zimbalist handy)
   9. Jose Is Absurdly Chatty Posted: February 21, 2020 at 10:12 AM (#5925826)
Open the books to a public audit by the MLBPA. Then I’ll believe it.
   10. dlf Posted: February 21, 2020 at 10:54 AM (#5925837)
I used to have a copy of the Indians' records that were released as part of a law suit related to The Jake maybe 15-20 years ago. Those have long since disappeared in an effort to declutter, but my recollection matches Ron's in #8: lots of related party transactions where ownership was either paid salary or provided services at above market rates that caused the bottom line numbers to be less than a true reflection of the returns on capital invested.
   11. Tom Nawrocki Posted: February 21, 2020 at 11:30 AM (#5925851)
In the Rewatchables podcast episode on Butch Cassidy and the Sundance Kid, they had a guest co-host, Aaron Sorkin, who was a mentee of William Goldman, who wrote the screenplay. Sorkin said Goldman was offered either $425,000 or $400,000 and a piece of the net for the screenplay. Goldman took the cash. Sorkin went on to explain how no Hollywood movie ever makes money. He gave an example from his own career. He wrote the screenplay for A Few Good Men, and went on to say that the movie cost $50 mil to make and to date has grossed $500 million, and still has yet to show a profit.


Aaron Sorkin writes fiction, you know. It's an old example, but Alfred Hitchcock deferred his entire director's salary for "Psycho" in exchange for 60% of the profits, and ended up with $15 million. That was only nine years before "Butch Cassidy." Warren Beatty got 40% of the profits from "Bonnie and Clyde," and although I can't find any definitive dollar figure for how much he ended up earning, I know he's never complained about it.

What the smart players do is take a percentage of the gross, not the net. Tom Hanks got a piece of the gross from "Forrest Gump," and supposedly made $60 million from it. Jack Nicholson famously got a piece of both the gross and the merchandising from "Batman," giving him a cut of every Joker action figure they sold, and made $50 million.
   12. Ron J Posted: February 21, 2020 at 11:56 AM (#5925862)
Just took a look at the latest Forbes report on the Brewers. Franchise value went up 14% (to 1.175 B) last year. And while teams count debt service as part of their expenses, the debt is only in the 70M range (6%). I'm sure Snapper can work out the per year cost of a 70M debt. But it's obviously not huge unless they got it as a series of payday loans. (Not that we as fans have any reason to care about the team's debt.)

Forbes gets their operating income (IE profit before debt service, taxes, depreciation, etc) as 66M and that's before considering the increase in franchise value.

If the ownership is eating Kraft Dinner it's because they like it.

EDIT: Corrected some mangled stuff
   13. RoyalsRetro (AG#1F) Posted: February 21, 2020 at 12:04 PM (#5925866)
Here is the financial documents on the Marlins and Pirates Deadspin got their hands on a decade ago.

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.



Here's the Marlins
, who had $37M in operating income in 2008.
   14. snapper (history's 42nd greatest monster) Posted: February 21, 2020 at 01:13 PM (#5925899)
Just took a look at the latest Forbes report on the Brewers. Franchise value went up 14% (to 1.175 B) last year. And while teams count debt service as part of their expenses, the debt is only in the 70M range (6%). I'm sure Snapper can work out the per year cost of a 70M debt. But it's obviously not huge unless they got it as a series of payday loans. (Not that we as fans have any reason to care about the team's debt.)

A/AA corporate bond yields are less than 3%. Their interest cost is about $2M. Even if you fully amortized the debt over say 20 years, we're talking $5M. It's chicken feed.
   15. Never Give an Inge (Dave) Posted: February 21, 2020 at 01:26 PM (#5925906)
The Indians actually were a publicly traded company before they were sold in 1999. Here is a copy of their last annual financial statements filed with the SEC, before being taken private.

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