August 30, 2010

MLBleakgate Watch: More outrage over Marlins' profits

The Florida Marlins financial document firestorm just won't die. In the latest flareup, the Miami Herald reported on Saturday that, shockingly, the Marlins have been turning a profit solely on revenue-sharing payments from the rest of baseball:

The Florida Marlins reaped more from Major League Baseball's revenue sharing than the team paid for player salaries the last two years -- a disparity fueling the $52 million in operating income the franchise pocketed in that time, previously secret financial records show.

The team secured its profit -- which exceeded that of five other franchises whose books have also been leaked -- as it won hundreds of millions of dollars in public money for its new stadium, the records show.

Now, there are two potential reasons to be upset about this. One would be if you're opposed to low-revenue teams profiting by getting a share of high-revenue teams' cash - but then, this is all that the revenue-sharing plan was ever reasonably expected to accomplish, as it was never going to do much to reduce disparities in how much teams were willing to pay for players. As I wrote for Baseball Prospectus at the time:

Baseball is left with what might be called the "Don't make Bud come in there rule": Teams are supposed to make every reasonable effort to compete, and not just sit back and collect revenue-sharing checks. (Not too obviously, anyway.) It's a typically old-school approach for the old-boys cabal: Don't sweat what the rules and regulations say; we'll handle our own.

We'll know more about the full effects of the new CBA once the lawyers actually finish putting the general agreements made at the negotiating table into hard-and-fast rules. (There have already been some reports of things that were agreed on by the negotiators, but scrapped once they couldn't be translated into legalese.) But if you're a Royals fan hoping that "overhaul of the revenue-sharing system" means your team will finally have an incentive to spend with the big boys, don't hold your breath.

The more legitimate gripe is that Marlins owner Jeffrey Loria covered up his profits in order to cry poor in stadium negotiations with the city of Miami. Unfortunately, it seems unlikely that there's much to be done about that now after the fact, though some local electeds are trying.

South Florida Sun-Sentinel columnist Michael Mayo, meanwhile, goes so far as to say that the fault lies not with Loria's shrewd bargaining on the stadium deal but with the government "enablers" who let him get away with it:

The Marlins simply did what every sports team — and any shrewd business — could do. They milked the public to the max. They'll pay a fraction of the overall cost yet keep nearly every dollar in revenue from the stadium, which will ultimately cost taxpayers billions in bond repayments. ...

"The Marlins aren't to blame for this," said Norman Braman, the Miami auto magnate who sued unsuccessfully to stop the project. "The fault lies with the politicians."

Politicians like Miami-Dade Mayor Carlos Alvarez and former Miami Mayor Manny Diaz, who could have at least demanded to see the Marlins' books before agreeing to such a lopsided deal.

"If you read the depositions in the suit, you'll see they never even asked," Braman said. "Alvarez said, 'I didn't think it was necessary.'"

That's just bad business, and bad leadership.

While I get Mayo's point, there's plenty of blame to go around here; one doesn't have to let Loria off the hook just because all the other kids were doing it. There's plenty of blame to go around here, both for those who hid their finances, and for those who didn't think to look at the books.

Meanwhile, Marlins president David Samson's insistence that the team's profit wasn't really profit — it was for improved minor-league facilities, see, and saving up for the team's share of stadium costs — rings increasingly hollow as more news outlets uncover line items in the team's finances that make it look like Loria was simply pocketing money. The Herald reports that in addition to $16 million in cash that Loria took out of the team in 2008 and 2009 (Samson insists this was repayment of a loan), the Marlins paid $5.4 million over those two years to the Double Play Company, a separate company owned by Loria and Samson.

All this is likely to raise eyebrows not only at Miami city hall, but in Major League Baseball, whose other teams can't be happy that they're sending money to Florida just so that Loria can fatten his wallet. Normally I'd say that you'd expect the other teams would have had access to this information already — if the insurer who's thought to be the source of the document leak had it, then surely it was available to baseball insiders — but as we've seen this week, sometimes people have to be slapped across the nose with numbers before they notice what they mean.