Latest leaked Marlins financial figures are kinda weird

Reporters from the Miami Herald have been granted a peek at internal Marlins financial documents — literally a peek, as they were only allowed to take notes and not make copies — and some of what they report finding is … well, odd:

  • In 2003, when the Marlins won the World Series, the team’s audited financial report shows that they lost $43 million. The team payroll that year: $54 million, which while high for the Marlins, was still only 23rd in the league.
  • The Marlins turned a $110 million profit from 2006 through 2009, thanks to about $280 million in revenue-sharing payments from MLB that the team received over that four-year span.
  • The team lost $47 million last year, after spending nearly $120 million on payroll, an amount too high to make up for with those $75-85 million a year in revenue-sharing checks.

If you’re like me, you’re wondering a bunch of things:

  • What are the Marlins spending money on, if not players? It’s really, really tough to spend $54 million on payroll and take a $43 million loss, given that payroll usually represents at least half of team expenses, and even the Marlins get some money from fans buying tickets.
  • How well does this match with other data we have on Marlins finances? The leaked documents that Deadspin obtained in 2010 showed the Marlins making about $24 million a year in 2008 and 2009, pretty much in line with both Forbes magazine’s projections and the figures in today’s Herald report. Forbes, though, estimates the Marlins to have lost only $7 million last year, so either there’s something that the magazine isn’t taking into account, or there’s something funny about the figures that the books that the team provided to the Herald.
  • Are these real losses or, you know, “losses”? The Herald articles doesn’t indicate whether these figures are EBITDA (earnings before interest, taxes, depreciation, and amortization, as Forbes uses) or include such gimmicks as depreciation of player contracts, which can easily turn a real profit into a paper loss. They do indicate that the Marlins are paying off $155 million in stadium debt (though that can’t amount to much more than $12 million a year, unless they got a truly horrible loan rate), as well as that Marlins owner Jeffrey Loria is paying himself about $3 million a year in “management fees,” plus interest on loans that he himself made to his own team.
  • Why did the Herald’s source show these documents to the paper in the first place? The Herald doesn’t indicate whether this was a team official or what, but if it was, then you have to wonder if there’s an element of spin here, as Loria and his staff try to justify their salary-dump trades of last winter as necessary to keep the team from losing money hand over fist. While the Herald calls the documents it perused “audited financial statements,” it doesn’t indicate whether this was the team’s actual internal records, or a set of books for more public consumption.

If there’s anything we can take away from this, it’s that the Marlins’ spending spree last year didn’t go well, and the new stadium isn’t really doing much to boost the team’s bottom line. Both of which we pretty much knew already, and given how things are going so far this year, it doesn’t look likely that matters will improve much in the near future. Possibly the most pointed bit of information in the Herald article, in fact, is its closing quote from Stanford economist Roger Noll: “So far there is no reason to be optimistic about the future of baseball in Miami. But you have never had a team managed by someone who knows and understands Miami.”

6 comments on “Latest leaked Marlins financial figures are kinda weird

  1. More serious crimes are committed under the aegis of “Audited Financial Statements” than any other I think. Right now I am dealing with a partner who just sent me a clean bill of health from their auditor on some regulatory issues. I am pretty sure it would stand up in court.

    But, these are very specific and technical issues and it happens that I know them much more intimately than their auditors. So I know for a fact that they are not in compliance (I am the one who ordered the audit when I saw problems). But auditors only have so much time, aren’t experts on everything, and mostly look at what you provide them.

    So now I have do decide if I do the easy thing and just let it all be now that I have the cover of the audit, or whether I stand my ground and show the auditors what they missed. I suspect you can tell which way I am leaning since I am posting about it online.

  2. Loria could leave a gold bar on each seat and still beg for folks to show up. Of course this was spin job, born out of desperation by someone who would have no problem showing off cooked public books like any other crook.
    As different as the Rays management may be from this circus, the fact that an mlb franchise in southeast Florida has to beg for customers shoud be a cautionary tale for laying out big bucks in the other Florida marginal MLB market.

  3. Sure they lost money last year. All they had to do was have enough in reserve from previous years when they made money and then pay off the debt service early. Helps in the long run and shows as a loss in the current fiscal year. Don’t forget any MLB loans out of the new/renovated stadium fund.

    I suspect Loria’s fellow MLB owners are not too pleased that he opened the books. I wonder if the player’s association would like the same opportunity as the Herald? Although, giving MLB credit, they certainly seem to have the best labor relations of the big 4 sports.

    The funny thing about this is that I can’t think of a reason to open the books, even a slight bit. It’s not like most fans think, “well, I’d go to a Marlins game if only Loria would show me he was losing money.” He’s not going to get sympathy when he made money in many of the years. Only thing I can think of is this is the result of his wiz-bang PR firm that sent him on the media tour disaster. I know where Loria can save some money…

  4. Maybe the Herald should do a piece on how much of a disincentive having an owner who most fans would like to see dead is to the ballclub?

  5. ALK:

    It’s a good point. I don’t know what Loria hopes to gain by doing this (I won’t call it opening the books because that isn’t what he did, really).

    I have to assume it’s just more Loria hubris: “If fans only knew how tough it is for me, they’d love me and come see games. So I’ll hastily throw together some flimsy lies and show them”.

    He actually doesn’t understand how utterly despised he and his halfwit stepson are. This is sad for the Marlins, because it might be that if he and Samson were to tragically expire in a ballooning accident, more fans would turn up to support the team.

    By the way, has anyone tried to file criminal charges against the former mayor yet?