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Forbes’ annual look at the most valuable teams in MLB posted on Thursday, and it’s, as always, worth opening up and perusing. Seeing that there are increases in team valuations and the like is always fascinating — even if they’re just estimates — especially when they’re balanced against this idea that teams just aren’t making all that much money: an idea perpetuated by Forbes’ own report, even.
For instance, does it seem believable that the Phillies, who went to the World Series in 2023 and earned all kinds of extra revenue from doing so, actually lost money during the year? Forbes reports a $3.7 million operating loss; Philadelphia, of course, is not the only club with an eyebrow-raising figure to cite, nor the most eye-popping. The Mets posted an operating loss of $138.5 million, per Forbes. Which, to be frank, seems pretty unlikely! The Mets aren’t the Yankees, and they don’t have YES powering them, but would they be setting themselves up to have to pay a 110 percent tax on their payroll in the near future — the tax nicknamed for owner Steve Cohen — if they were bleeding nine-digit figures before even getting to that point? Cohen is rich, but we are talking about a guy who notably balked at paying for a couple of players with physicals the Mets didn’t agree with in the past couple of years in first-round pick Kumar Rocker and premier free agent, Carlos Correa: he’s got more money than he could ever spend, but he’s also not willing to spend it all without hedging at least a little bit.
Much more likely is that Forbes is working on incomplete information, and by “more likely” I of course mean that’s the case. It’s worth remembering that the books of MLB’s teams are closed, with the exception of those that have to open them up because they’re owned by a corporation instead of by a private group of people who get even more freedom to cook their books and cry poor in public. This doesn’t make the Forbes report useless or pointless by any means, but it does mean that Forbes is a great source of incomplete information on MLB’s revenues, losses, profits, etc.
Consider, too, that the razor-thin margins these operating income estimates suggest just don’t add up from a logical point of view, as they imply all the money for clubs that aren’t behaving like the Athletics — that is to say, running out a team with a payroll so low that you’re perpetually in the news for how much of an embarrassing cheapskate you are — is in the eventual sale of a team. There would be far more minority owners going in and out if that were the case, because otherwise, they’d be participating in a loss or barely any profit each year. And plenty more principal owners saying good day and taking off, too. And yet, you’ve got owners like Arte Moreno changing their minds and deciding they actually want to hold on to their club, despite getting offers that would have meant significantly bumping up his already impressive net worth. Or that Jerry Reinsdorf, an owner so notoriously cheap that it’s not even a little bit of a secret that he was the one pushing for reduced spending in the draft for years, isn’t trying to sell the White Sox even though they lost over $50 million in 2022, per Forbes. Just think about all of these sorts of things for a moment, and then consider what repeating everything as gospel without caveats might mean.
There’s reason for MLB to maintain their incomplete information, which is why they blinked when the Players Association demanded, back in 2020, to prove that they would be put under undue financial hardship if they had to pay the prorated salaries they had already agreed to pay during the pandemic-shortened season. Not opening their books is worth basically any price, even if it leads to a strike or the cancellation of the 2020 season, because they’ll make more money in the long run by keeping how much money they actually make a secret. The league isn’t trying to carve out exemptions for minor-league pay in Florida because they need the help. They’re doing it because they will do whatever it takes to save a buck to keep it for themselves.
We had reporting just last year about how the Pirates were making far more money than they were spending, and far more than was being reported on by outlets like Forbes, to boot. When commissioner Peter Ueberroth, for whatever reason, handed the books over to the union in the 80s, they learned this, per John Helyar’s Lords of the Realm:
As the Lords presented it, twenty-one of twenty-six teams lost money in 1984, for a combined operating loss of $41 million. As Noll saw it, baseball had made $25 million.
He found bookkeeping tricks at every turn. [Ted] Turner’s Braves were paid only $1 million for TV rights by Turner’s SuperStation WTBS. They should have been getting at least the league average of $2.7 million. The Cardinals reported no revenue from parking and concessions, but another Anheuser-Busch subsidiary was raking in $2.5 million from that. The Yankees’ $9 million loss included [George] Steinbrenner’s real estate investments in Tampa and $500,000 worth of charity contributions.
Do you think that sort of thing isn’t going on now, when even more of the business of MLB teams is tied up in their real estate deals and other ventures powered by money earned from MLB? Remember, too, the tax loopholes available to people with as much money as MLB’s owners: thanks to the reporting of ProPublica, we should all be well aware of how easy it is for any sports owner to make a profit look like something else entirely, and make additional money off of that lie, too. And, as is always relevant, it’s worth considering what Rob Mains wrote about how debt for MLB teams works differently than debt for you or I. Their debt will make them money, which is why they take it on in the first place, but with the right bookkeeping, it can also look like a loss in the present. Which can then in turn be used for whatever woe is me story they want to run out there to make it look like the players are bleeding them dry.
The Forbes’ report is valuable, but it’s not gospel. It’s incomplete, the valuations themselves are estimates, and MLB does their damndest to make sure the true nature of the business isn’t out there for anyone to see, not even the Players Association that has to consider what kind of money is available out there when it comes time to sit at the bargaining table. Just keep all of that in mind while wondering how it is that the Phillies could have lost money in a year they made it to the World Series, or how the Mets can sustain themselves in the long run if they’re losing this much even before Cohen got really mad about Jacob deGrom leaving the team.
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