What happened to the $300 mil...

by foulpole on Nov 17, 2008 10:48 PM EST Comment 16 comments

(or so)...that "MLB" made on the sale of the Expos?

http://mlbcontracts.blogspot.com/2005/01/washington-nationals_01.html

A group led by Ted Lerner bought the Nationals for $450M in May, 2006.
Major League Baseball had purchased the franchise formerly known as the Expos for $120M in 2002.

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Only about 2 1/2 years late, aren't we?

The other teams will make a profit on their investment in the Expos/Nationals, but Bob DuPuy, baseball’s chief operating officer, said the amount hasn’t been determined because operating profits or losses during Major League Baseball’s ownership have not been totaled.

— USA Today, 5/18/06

by Jim McLennan on Nov 17, 2008 11:30 PM EST reply actions 0 recs

Thanks for your input??? I really don’t see how your post shed any light on how much the D-backs FO made on this monopolistic deal.

Does anyone else know what happened here and why the MLB FOs (and MLB) are always quick to cry poor and yet pay hundreds of millions for teams that lose money year in and year out? If the D-backs or any other club was such a losing proposition then why would the “new FO” have ever considered buying in?

They are either lying about their true return on investment or just plain stupid.

by foulpole on Nov 18, 2008 12:24 AM EST up reply actions 0 recs

For once, I'm going to try answering you seriously,

rather than sarcastically, even if it doesn’t get read. It’s an interesting question.

The short answer is, there was a one-time payment to all 30 MLB clubs. (Source)

The answer to your follow-up question requires a slightly closer look.

Firstly, let’s consider inflation: using the CPI, the $120 million original buying cost in 2002 would be about $134.5 million in 2006 dollars, so the net profit in adjusted value is $315.5 million in 2006 dollars.

Secondly, the $315 million profit was distributed among the 30 teams. I assume that it was distributed evenly, so each team claimed $10.5 million off the sale. (Minus overhead for MLB. Let’s ignore DuPuy’s comments for the sake of simplicity)

So, the Arizona Diamondbacks took in, at most, $10.5 million. Forbes estimated their 2006 aggregate value to be $305 million, but with a franchise debt of $240+ million. (Source)

An extra $10 mil isn’t really a lot to work with, when you’re still in debt at nearly 80% of your franchise’s value.

Finally, you would assume (but it might not be true) that the $10 million would be incorporated into the franchise’s operating income — which, according to Forbes, has actually DROPPED from the 2005 amount of $21.8 million (first time the Dbacks had generated a profit in years) to $6.4 million in 2006 to $5.9 million in 2007. So, it doesn’t really sound like the franchise just took the money to make a profit. Sounds like it went towards paying down the debt and was reinvested.

I’m sure there are plenty of holes in my explanation, and like I said, I’m relying on Forbes’ numbers without knowing for sure how they’re calculated. If anyone would like to add anything, please do.

"If the government's nuclear football ever were to fall into the wrong hands, Chris Horton would be called upon to intercept it on behalf of the Pentagon." -Kissing Suzy Kolber

by DbacksSkins on Nov 18, 2008 2:46 PM EST up reply actions 0 recs

And the R&G just sold the rest of their interest in the club as well?

So, the current ownership group is losing their ass but is buying a greater interest in a losing business??

Bullshit.

They need to spend more on players, both current and future.

Cry me a river D-backs’ ownership.

LMAO!!!

by foulpole on Nov 18, 2008 3:20 AM EST reply actions 0 recs

I can't for the life of me

understand why you’d be laughing at the end of this post.

by Azreous on Nov 18, 2008 4:19 AM EST up reply actions 0 recs

No, they're not "losing their ass". Not anymore.

They’re still turning a profit, but like I pointed out earlier, they’ve made less and less of a profit each year while paying the debt.

As far as spending more, their total player expenses (including the Manatee, etc.) for 2007 were $97 million, and their revenue stream was $165 million. That means that 59% of their revenue went to player expenses.

Compare that, for example, to the Cubs, whose 2007 revenue is listed at $214 million yet their player expenses were “only” $130 million, for 61, or the Dodgers, at $224 million and $132 million, and 59, respectively. They’re spending just as much on players as those two big-budget teams. The big issue is in the deferred salaries.

The problem is, the Dbacks AREN’T spending on players “both current and future”. They’re spending on players “both current and past”.

"If the government's nuclear football ever were to fall into the wrong hands, Chris Horton would be called upon to intercept it on behalf of the Pentagon." -Kissing Suzy Kolber

by DbacksSkins on Nov 18, 2008 3:05 PM EST up reply actions 0 recs

I have still watched more then 150 games a year on the TV but…since the “new ownership group” took over, I have not paid for one single ticket to a D-backs game for either myself, friends or family..I used to organize group outings more than a few times a year.

They can either start paying for a solid team or kiss my ticket money good-bye.

by foulpole on Nov 18, 2008 3:45 AM EST reply actions 0 recs

bu-bye!

I’d say it’s been fun knowing ya, but I’d be lying

It's a job that's never started that takes the longest to finish.

by unnamedDBacksfan on Nov 18, 2008 9:54 AM EST up reply actions 0 recs

Yeah,

the team that lead the NL in wins in ’07 and was in first place in the NL West for most of this year was obviously not a “solid team”.

(Especially given that, based on your GameDay comments, your definition of “solid” seems to be “anything remotely or slightly good.”)

Also, how could they be “kiss[ing your] ticket money good-bye” when you’re already not buying tickets?

"If the government's nuclear football ever were to fall into the wrong hands, Chris Horton would be called upon to intercept it on behalf of the Pentagon." -Kissing Suzy Kolber

by DbacksSkins on Nov 18, 2008 11:30 AM EST up reply actions 0 recs

Also

I like how this post has gone from “Where’s the money MLB made” to “Where’s the money Kendrick made.”

"I'm here to advise you on dispensing horror in this modern military climate. I understand you're a demigod, that's fantastic!"

by kishi on Nov 18, 2008 12:30 PM EST up reply actions 0 recs

I think

I’ve now answered that.

….And I owe my employer 30-40 minutes of company time.

"If the government's nuclear football ever were to fall into the wrong hands, Chris Horton would be called upon to intercept it on behalf of the Pentagon." -Kissing Suzy Kolber

by DbacksSkins on Nov 18, 2008 3:07 PM EST up reply actions 0 recs

Le Sigh

Nothing like getting behind your team is there? :(

So...time for another drink then?

by Wimb on Nov 18, 2008 5:34 AM EST reply actions 0 recs

Part of my point was that a team that was bought for $120 mil in 2002 was sold for $450 mil in 2006.

That’s an ave of $80 mil per year increase in “value.” I realize that they were moved to a more “favorable market” but still?

The owners have never opened their books and until they do I refuse to believe anything they say about how much money they are losing.

The owners are the ones that keep increasing the player’s salaries by out bidding each other.

by foulpole on Nov 20, 2008 6:07 PM EST reply actions 0 recs

About a 60% return on investment every year?

Wow! I want a piece of that action.

by foulpole on Nov 20, 2008 7:43 PM EST up reply actions 0 recs

Who said they're "losing money"?

The Dbacks lost money for years, until Ken-Ken overthrew JCo — and that’s why they’re still in debt. They still owe 54% of the total franchise value, according to Forbes. (Not that I posted links to any of this stuff already, or anything…..)

About a 60% return on investment every year?

Wow! I want a piece of that action.

Um…. if it were a 60% return every year, after 4 years they would have sold the team for $786.4 million, NOT $450 million….

If it were pure profit, it’d be slightly under 40% APY. However, that’s extremely misleading; the franchise didn’t simply grow in value on its own. MLB spent millions of dollars to rebrand the Expos into the Nationals, market the new team to its new city, physically move the team to Washington, revamp RFK Stadium, set up the Mid-Atlantic Sports Network, bribe Tony Williams, (jk, I think) etc., etc.

"If the government's nuclear football ever were to fall into the wrong hands, Chris Horton would be called upon to intercept it on behalf of the Pentagon." -Kissing Suzy Kolber

by DbacksSkins on Nov 21, 2008 1:13 AM EST up reply actions 0 recs