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.”