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A’s Basically Break Even

January 27, 2012

There was a story today in the San Francisco Chronicle written by John Shea that had this interesting comment after talking about the A’s 2012 payroll (it will be around $50M) – and one thing about this entire article that was strange was this was all under the header of “Rounding out roster” – he wrote that,

“the A’s initially reported a loss in 2011, [but A’s owner Lew] Wolff revealed they made a slight profit because the World Series extended to seven games.

‘We made $370,000, and that’s after revenue sharing, not before,’ said Wolff, who confirmed last year’s revenue-sharing check was $32 million.’I have to admit, without revenue sharing, we’d have a huge loss, and we don’t want revenue sharing. We’d like not to be a receiver if we could.’

Thus, the ballpark pursuit.”

To all the people who complain about how the A’s payroll is low, this is the reason why. Owning a baseball team is ultimately end of the day a business. It is not an expensive hobby or civic pursuit and one must look no further than the disastrous ownership situation in Los Angeles where it clearly was treated an expensive hobby to the detriment of one of the sport’s most storied franchises. This number however is minuscule and also it only was in the black because of the World Series going seven games! $370K does not get you a league minimum salaried player. It represents well less than 1% of the total organization’s payroll obligations. It isn’t a profit at all, it is for all intents and purposes merely breaking even.

I don’t know that a new stadium is exactly the situation that remedies this, television contracts seem to be the way clubs truly rake in the cash these days and moving from Oakland to San Jose does not change whatever arrangements the A’s have with CSNCalifornia but to argue that the A’s should hemorrhage money (which is exactly what they’d do with a much more significant payroll) doesn’t make any sense for any owner of any team.

Also, as an aside myself and my TarpTalk: An Oakland A’s Podcast colleague David Spencer (@oakfaninva) appeared on the Curse of Benitez podcast on Wednesday. It is now up and downloadable and listenable here. While it is a Giants podcast, it is a good listen and I heartily recommend making it a part of your regular podcast rotation along with TarpTalk. 

5 Comments leave one →
  1. MogulMan permalink
    January 27, 2012 9:39 pm

    The team was purchased in 2005 for $180 million. Forbes valuates the franchise today at $307 million.

    EBITDA (according to Forbes, at least) averaged < $8 million from 2002-2005, was about $15 million each year from 2006-2008, and has fallen between $22 and $26 million in the last three years.

    • January 28, 2012 3:21 am

      Interesting. My take on it is simply this is a business. There is no civic obligation or higher moral calling to take a loss. I understand why this upsets fans, but that’s just my take on it.

      There was that interesting discussion that the Pirates have profited off of losing and that there was a disincentive to success. I don’t think that is the case here but it nonetheless is a fascinating read:

      • MogulMan permalink
        January 28, 2012 10:34 am

        I don’t disagree. Yes, the Pirates are listed as the least valuable MLB franchise at $304 million but have a total EBITDA for the last six years of $122 million! Compare to the Tigers at a value of $385 million and an EBITDA of -$84 million for just the last three years combined (that’s what happens when you increase payroll by $50 million but don’t get even $20 million more in revenue out of it).

  2. Dangerous Dean permalink
    January 30, 2012 10:17 am

    Yes it is a business. If I was in Wolff’s shoes I would say what he is saying “poor me” regardless whether I was making $370,000 or $37 million. That is simply trying to tilt public opinion in your favor.

    But my question was if his payroll sharing check was $32 million and his payroll was $50 million it means he is only making $18 million in team revenue. That would include tickets, TV,, merchandising, parking, concessions, etc.

    If he is ONLY making $18 million from all those streams, he REALLY needs to get some better marketing people.

    If you figure that the As likely draw 20,000 people per game at $20per ticket that is 400K per game. 81 home games would mean $32.4 million in revenue on tickets alone.

    Generally, I spend about $50 per game on concessions, parking, merchandise (my kids are obsessed by foam fingers or the little bats perfect size for whacking each other).

    So if you figure that you are making $10 on each butt in the seats that is an additional 200K per game for another $16.2 million.

    If those numbers are even close that would give him over $48 million BEFORE that $32 million in revenue sharing. So unless his overhead costs are crackhead high, I can’t imagine that he is only breaking even.

    Now again, if I owned the team, I would be trying my hardest to get those numbers WAY up. Not only for my bottom line, but for the sake of the franchise.

    But I still doubt he is being nearly honest when he claims that he is barely scraping by.

    • January 30, 2012 9:13 pm

      Yeah I don’t know what to make of it. Don’t know how much an FO costs or the stadium lease etc. A’s draw less than 20K (18,232 per in 2011) but thats not a big diff. I have no idea how he came to that figure and only took it as face value. Last year’s payroll was just north of $65M so that eats little into your figure.

      We shall see… it makes sense however to cry poverty (as any owner would) to get a move. Unlike other owners, the stadium is not a “city pays half or more” deal either, so the owner welfare meme doesn’t entirely apply.

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