Post-Fire Sale, Marlins Are Losing Money (Seriously)

Sunday, March 31, 2013

Way back in November, after the dust had settled from the massive fire-sale trade between the Marlins and Blue Jays, we looked at the motives behind the trade (and others that helped the team cut its 2013 Opening Day payroll to around $39 million (according to the AP). We wrote:
The Marlins can profit without competing so long as they keep payroll low (the Kansas City Royals have been doing this for years). This was the team's strategy in the years leading up to the opening of Marlins Park; it is 100% more insidious now that they have opened a new stadium financed largely by local governments. The fans are legitimately outraged, and calls for Loria to sell the team are entirely justified.
But it looks like even with a bare-bones payroll the Marlins will still lose considerable money in 2013, according to a report from the Miami Herald. The Herald's Barry Jackson was able to look at (but not photocopy) ten years worth of team financial documents, and gave us the following tidbits:

  • The Marlins lost $43 million* in 2003, the season they won a World Series.
  • The team earned a combined $110 in profit from 2006-2009, when payroll was very low. That followed a four-year period in which the team lost $60 million.
  • MLB revenue sharing payments ranged from $65 million to $75 million per year through 2009
  • Loria gets paid via management fees disbursed to another company of his. The team paid $3.2 million in management fees in 2009. Loria also collects interest on money he has loaned the team (of which he is the controlling shareholder).
  • The Marlins only get $17 million per year in local TV money (their contract expires in 2020), well below contracts of even teams in much smaller markets.
  • The Marlins lost $47 million in 2012, and expect to lose money in 2013, even with a 60% reduction in player payroll.
A common theme expressed by fans after each of the team's three big fire sales (1998, 2005, 2012) is that if only the high-salaried players were allowed to stay, fans would flock to the ballpark and ticket sales would rise to the level necessary to support their payroll. That clearly did not happen in 2004 and 2005, when the core of the 2003 team was (for the most part) kept together and the Marlins continued to lose money. And last season's bump in attendance was not nearly enough to pay for the high salaries of Jose Reyes, Hanley Ramirez, and others. The Herald notes that David Samson recently claimed the team needs to sell over 30,000 tickets per game if it wants to break even on a payroll of $80 million. These numbers back up that claim (though MLB's national TV revenue will rise significantly this year, and the team clearly hamstrung itself by agreeing to such a cheap and long-term TV deal during the aughts).

But don't cry for Loria. His team is losing money, but Forbes values the Marlins at $520 million, over three times the $158 million price Loria paid for the team in 2002. He is vastly richer now than he was a decade ago, and he is still doing well enough that he apparently feels no pressure to sell his team and cash out.

*It should be noted that these are operating profits/losses, which by definition include some non-cash expenses like depreciation. So the actual cash earnings in those years are likely a bit higher, but that is just speculation on my part.


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