M’s report a profit
I’m not sure why I still read the Times. Today’s Times and P-I each have a story about the M’s reporting an $8.5 million profit in 2004, according to documents they’re required to file with the Public Facilities District. Go read Angelo Bruscas’ article on the subject. Than go read Finnigan’s take.
Bruscas’ column comes across like a Dragnet report. Just the facts, ma’am. He says the M’s made a profit, talks about the debt service and how the team is about halfway to paying off their initial cost of Safeco, and attributes a comment to spokeswoman Rebecca Hale about the team’s profit coming largely in part due to Kazuhiro Sasaki’s retirement.
Finnigan’s article, by comparison, looks like someone desperately trying to spin a story they were hoping never became public. The second sentence sets the tone:
They did have an excess of $8.749 million, which is listed as profit.
Okay, so they made money, but its not profit, its excess, which is apparently different because it wasn’t revenue, it was money not spent. Seriously, they didn’t really make a profit, they just had an excess! Ignore the man behind the curtain!
Then there’s this gem:
Beyond the profits created by those player movements, the Mariners would have lost money, except that Seattle fans set a record. With a large number of tickets bought in advance, attendance was 2.9 million last year, best ever for a team that lost 99 times.
Attendance was down 10 percent from 2003, thanks to the miserable on field performance of the club. So, apparently, the M’s would have lost money if attendance was down 30 percent, or maybe 40 percent. But that just doesn’t happen. When the Florida Marlins stripped apart their 1997 World Championship team and essentially lost on purpose, their attendance only dropped 26 percent.
Finnigan also mentions that the team expects to operate at a loss this year because they’re projecting attendance of 2.5 million this year, a 14 percent decrease from last year and a 22 percent decrease from 2003. That just isn’t going to happen. But, of course, if they were projecting 2.8 million in attendance, they couldn’t claim they were going to operate at a loss, so, 2.5 million is what they tell Finnigan.
The entire article keeps with Finnigan’s long time premise of being a puppet for management. Its not profit, its excess. And they only had that excess because Sasaki retired. And even at that, it was only possible because the fans were amazing and came to the park in record numbers.
Its all lies. Its a shame that the Times is willing to be the Mariners personal PR machine. As for me, I think I’ll just stop reading Finnigan. He’s bad for my health.
Comments
39 Responses to “M’s report a profit”
I’m glad I’m not the only one who read that Times article and thought “What the…?”. My background is in accounting, so that line about it not being profit because it was “money not spent” was high comedy. My thought at the time was that Finnigan was either to the Mariners what Jeff Guckert/Gannon was to the White House, or he was completely ignorant of basic business finance. Then I realized those are not mutually exclusive options.
“they’re projecting attendance of 2.5 million this year”
Of course that would be thier public figure. It’s sort of a half-arsed mea culpa (“We don’t blame people for staying home because we sucked last year”) without actually saying “we sucked.” Then when figures come in above projection, they heap praise on the city of Seattle and hope to buy some goodwill for next year. It’s a no-lose number.
Of all the baseball-related topics discussed here, this is the only one that really makes me mad. Just because you’re a sports-reporter doesn’t mean you can abandon all of the principles of journalistic ethics you ever knew, does it?
Actually, guys, before we get out the pitchforks and torches, let me point out the projected attendance numbers for 2005 may not be drawn out of a hat.
If you divide 2.9 million (last year’s attendance) by 19,700 (last year’s season tickets according to Finnigan), and multiply the results by 17,000 (season tickets sold so far for this year, according to Finnigan)…you get a little over 2.5 million.
Of course, the team only sold about 19,000 season tickets in 2003, and they drew 3.3 million fans. The difference is in the walkup crowd, which, for obvious reasons, was nonexistant last year.
If the M’s win 80+ games this year, they’ll get significantly better walkup crowds than they did last year. If they’re in contention for the majority of the season, 3 million fans is easily realistic.
It would take another awful, awful season for the M’s to come in at 2.5 million.
In this ballpark, in this city, 2.5 million fans is crazy talk and they (the front office) know it. Even a 78-84 record this season and they push 2.8-2.9 mil.
Finnigan probably should have stated something like: “The Mariners have estimated that they will draw 2.5M fans in 2005, although it is unclear how they derived this estimate.” But that’s not really the issue.
The issue is that *everything* in that article is spin, as if Finnigan were actually being paid by the Mariners to market for them a la Jim Street. Taken in isolation, any one of his lines isn’t so bad, but collectively the article is obviously and completely biased.
I’m not entirely convinced that the walkup will be that good. If they are around .500 but 10 games out by September (which is a very feasible scenario), I expect the walkup attendance to be pretty dead, unless someone (Ichiro) is challenging for a record.
Also, keep in mind that attendance also tends to be pretty low in April because the weather can be “meh” and school’s in session (though this year might be a bit different because of the drought)- and their season tickets will be down significantly, which is a fair amount of their April attendance.
Are they lowballing? Well, I’d say their turnout’s pretty conservative- but conservative might be called for if they really think they have a .500 team that’s very iffy for being in the playoffs (and based on the pitching, I’d have to say that’s about right for the M’s), a team where they might be looking at offering Moyer or Boone at a fire sale come July if they aren’t particularly close to the division race or wild card. I also recall (from a newspaper article I’m not digging up) their single game ticket presales were down this year from last year as well.
It’s official, Pocket Lint is worse than Street. At least there I can get a chuckle out of his rediculous mailbags and Bloomquist propaganda. I’m actually surprised the M’s turned a profit from all the money they must be paying Finnigan.
As I’m 3,000 miles away from Seattle, I can’t really judge the walkup crowd. What I’m wondering, though, is how much was it affected by Ichiro’s pursuit of Sisler? That had to be a boost to the walkup crowd total that (probably) will not be present in 2005.
Re 2.5 million. My impression is that on the margin, ticket sales are driven by scarcity, which is why Safeco only seats 46,000 — the team wants to create ticket scarcity, which in turn drives people to buy tickets way in advance rather than waiting for the day of the game, because otherwise you will get shut out. A few years ago, when the team was the hot ticket, many games (Yankees, Red Sox) would sell out the same day that tickets went on sale — no doubt some large number of those were purchased by speculators (scalpers) — and then these speculators would buy tickets to the next most marketable games, etc. Needless to say, the folks holding these tickets got seriously burned last year when they couldn’t unload them at any price, let alone a profit. This year, there appear to be much less speculation — there are tickets available, even to the Yankees and Red Sox (Saturday May 14, you can still get 300 level tix), and there is less urgency on the part of the general public to buy them in advance. The difference between the 2.9 attendance figure and the 2.5 attendance figure is less than 5,000 tickets per game . . . and I would think that much of that can be attributed to marginal speculators exiting the market. If the team does well in April and looks like a contender, my guess is that a lot of tickets will get sold because demand will heat up . . . but if they suck, or look like they will suck, then 2.5 million (average of 31000 per game) is certainly possible.
It’s fine to compare 19,700 season tickets last year to 17,000 season tickets sold this year. But the better question would be how many season tickets had they sold last year AT THIS TIME. Aren’t they likely to sell a few more season tickets before this season actually starts?
In the New York Times Sunday edition (13 March) there was a harrowing article about the extent to which the White House controls the tone and even content of the news attributable to it, beyond mere spin. Finnigan’s piece is of course not so serious, but absolutely the pinky finger of the same beast. Reading journalism of this stripe is distasteful…all demonstrative boot-licking is…
Someone should remind him that a journalist should be better than the mouthpiece of the establishment; should do more than cry out whatever the press-releases whisper to him/her. Love the truth, not the favor.
I think Anthony in post #10 brings up a very good point … without Ichiro’s pursuit of the hits record (and Edgar’s Farewell Tour announcement, I might add) there was literally no reason to go to M’s games last year, that is, if you enjoy watching a competitive professional baseball team… If the team tanks for whatever reason, unless the team plans on doing the same maudlin buh-bye for Dan Wilson and perhaps Jamie Moyer the walkup numbers could be significantly affected.
Even if they’re way out of the wild card race by July, I’m sure they’ll ask Moyer & Wilson to announce their retirement together in early August so they can play the nostalgia/appreciation card for the last two months, a la Edgar last summer.
Something else to consider is that there hasn’t been a really good Sonics team since the M’s have moved to Safeco- which is not true this year. The M’s are the team in the down cycle now, and the Sonics might go deep in the playoffs. That’s not going to help attendance either (in terms of there being another outlet for the casual fan + more publicity sent the Sonics’ way).
I still think Finnigan’s a tool…but the attendance numbers don’t look like total fabrications:
2004 team attendance and W-L record
Baltimore 2,744,018 78-84
Texas 2,513,685 89-73
Now, granted, both teams have had more extended periods of preceding misery than the M’s have, before turning into .500 teams- but they also play in nice, modern ballparks, so the comparison’s not completely unmerited. (Also note that Baltimore has a better, deeper history in MLB than Seattle does).
I also believe that attendance is a LAGGING indicator to win-loss record. Note that the terrible (even more so than the M’s) Arizona Diamondbacks drew 2.5 million last year, and typically the year AFTER you win a World Championship is your peak draw year. Expecting some dropoff is reasonable. Hell, the 1995 M’s weren’t drawing all that great in terms of walkup until the last few weeks of September…
The big difference between the Times and the P-I on this is the people they put on the story: the P-I called on a business beat writer and printed the article on the sports page. The Times left it up to a sports writer, who could never get anything printed on the business page. Different attitudes, different philosophies and just a world of difference period.
Aren’t they likely to sell a few more season tickets before this season actually starts?
Possibly- but the renewal for existing season ticket holders has come and gone already (says a season ticket holder). I doubt there’s going to be a lot more purchased.
Bottom line- I don’t find the M’s tickets projections as unreasonable as Dave apparently does. But I would clarify that even if those are real numbers, they’ll be losing lots of money- simply because I expect them to salary dump a million or three come July if they aren’t in the race, and Mariner salary math has always been a bit wacky- what they say is “$95 million” really isn’t. A difference of 300K in attendance, assuming you realize $30 in revenue from each attendee, is about 9 million dollars. They might lose $5-7 million or so on worst case projection- which would mean 2004 and 2005 were closer to a wash.
Er, that should read:
“But I would clarify that even if those are real numbers, I doubt they’ll be losing lots of money…”
I should have been clearer. Bruscas is a sports business writer, and that’s what his column used to be titled: Sports Business.
I let my season tickets lapse and didn’t renew and then picked them back up after the deadline, so it’s certainly not outside the realm of possibility.
We have to take Finnigan for what he is, a tool for the M’s Front Office.
What I really want to know, and which nobody has mentioned, is how did we get all of Kazu’s money back? Wasn’t it Finnigan who wrote an article last year about how the Mariner’s really didn’t have that 8 million to spend on players? Then how’d it come back as a profit?
Another thing real quick. $92,166,000 divided over 4 seasons is over $23 million a season. If you use the 4.5 years they used thats still $20 million a season. They only made 10 of that last year. Now the business side of me says thats great fiscal responsibility.
The fan side says that Finnigan just messed up and showed all of us that the one power bat we needed from 2001-2003 to go to the WS was easily affordable. The more I read this stupid little article the more it is upsetting me.
20 million freaking dollars! Thats one hell of a power bat.
I can’t believe it took 23 comments before anyone noticed this. All last year the Times (well, Finnegan more than anyone else) quoted the party line — “We have no money, because we spent all the Sasaki money on salaries” — without even attempting the math. Now, the M’s have come right out and said they always had the money, confirming what anyone with sixth grade math and/or a basic accounting course knew all along. And what did they do with the money? They pocketed it. What. A. Surprise.
OK, maybe they really didn’t “pocket it.” The M’s spent more than that on Adrian Beltre, so one could argue it was a “cost-savings carryover.” (But wait! At the end of the fiscal year, the M’s bank is completely bereft of money! That’s the way operating budgets work! And GAPP is where Howard Lincoln buys his t-shirts! [Only accountants got that joke.])
Still, it bothers me that the local sportswriters do nothing to cut through the BS that MLB and the Seattle Baseball Club, Inc spew from their rectum-like mouths. A lot of the problem is in sportswriters not understanding business, accounting, math, basic arithmetic, or what BS looks/sounds/smells like. Still, can’t they at least ask about the $8M repeatedly until the M’s finally crack and admit they’re just going to pocket it?
Sports accounting is not dissimilar to movie accounting, the complexity and trickery is so substantial that mere mortals (much less a sports “journalist” like Bobby F.)have absolutely no chance of divining the truth. It would be fun to actually see the internal audited numbers of the M’s, but there is no chance. Remember, under GAAP players are allowed to be depreciated (like any other long term asset) and thus the disparities between cash flow and actual income can be substantial, but in this case unknown. I have posted these comments before, and I will repeat them: The number one goal of the M’s owners is to NOT have to put any new money into the franchise. Their second goal is reduce their liability (read: Safeco) as quickly as possible. Consider this, the stadium is half paid off already. Where do you think all that excess cash flow has gone?
The first three sentences of Finnagan’s piece is some of the worst journalism I’ve ever read. He asserts that while they made $8M they really broke even.
That said, the BS the Mariners are feeding him sounds the same as CEOs and CFOs at many companies. We lost $20M this past quarter, but really we turned a $10M profit after we account for “one-time” expenses of $30M. It’s sort of true in that if you were to repeat last quarter, you’d have a profit, but it’s also an outright lie since you DID spent the money.
As for attendance, I think 2.5M is reasonable. In my 12 years here, I’ve seen that Seattle fans are fickle. There won’t be much walk up in April unless it stays unseasonably warm (heck, I don’t even like to use my season tickets). And if the Mariners are near or well below .500 at the end of April, I don’t see fans rushing back to see this team. They sold a lot of September tickets because people bought early hoping for a playoff race or they bought late to see Ichiro and ‘Gar. The former hasn’t happened and the latter is unlikely. Of course if this team overachieves and wins 90+, you could see 3M.
I know that the fans used to be fickle. Especially while I was growing up in Seattle. However, after a decade of decent teams are the fans really still that bad? Are they really going to go running away because of one bad season? One that, sadly, was actually closer to our norm before 1995?
Unless this team pitches extremly bad I don’t see them under .500 at the end of April.
Not to puppet the team line but when I read comments like #24 I hear you saying that the team should make no profit. I can’t agree with that. While they should certainly be honest about their profits (which Finnigan wasn’t), the fact that they made a profit doesn’t mean they’re holding back money from players. The owners have invested a huge amount of money in the team and they are entitled to a return on that. $8 million doesn’t seem to me like an unreasonable profit on an investment of hundreds of millions.
The problem isn’t that they’re making a profit. The problem is the poormouthing they do when they say they can’t afford to pick up a midseason acquisition to make the playoffs. Or to win in the playoffs.
There is a relationship between the quality of journalism and stock value. I think Blethen and Co. knows this law very well. They probably have it sprayed in gold and framed in their offices.
Ownership has every right to make a profit. Especially considering where the M’s are in terms of revenue right now (even with reduced ticket sales)it would be foolish for them not to.
What’s galling is the constant assertion that they do not make a profit, which is picked up and repeated by the more tooly memebers of the local press…who are read (mostly uncritically) by many, many fans.
It seriously frosts my hide…
The problem is the poormouthing they do when they say they can’t afford to pick up a midseason acquisition to make the playoffs. Or to win in the playoffs.
Well, that and claiming “We’re spending 95 million on salaries!” when in fact, they are doing no such thing, unless you use Mariner Bizarro Math.
Back to 26- the stadium is NOT half paid for. What is about half paid for is the “cumulative loss” the ownership group has taken since purchasing the team…which I would wager is mostly on paper. Once that comes off, profit is supposed to be shared with the PFD (I would assume they’d set the money aside for things like capital improvements to Safeco).
Okay… since I’m retyping this again. Is there anyway to make it so each user only has to answer the spammer question once?
#29 If you choose to believe the numbers ownership just gave out then that means they made a profit of $90 million over the last 4 years with only $10 million of it coming from last year. Thats a profit of almost $30 million a year between 2001-2003. With that much money they could have easily signed I-Rod for one season in 2003 for $10+ million and made a run for the WS. And they’d still have made $10-20 million in profits.
Yet they have constantly made it sound like they were just barely making a profit. For three seasons we were one player away. And just like many of us thought there was no reason at all that they couldn’t have signed that player and still been very fiscally responsible.
$30 Million is too high.
Trust me, I know.
I tempted to say that the PFD does a decent job of auditing the numbers, given what they have. I’m sure the M’s get away with some shenanigans, perhaps including expenses which belong to televison or something like that. The article mentions “an independent accountant”. My gut says it isn’t one of the Big 4 and it isn’t the firm which does their tax returns. But I can’t verify that.
92 – 10 = 82/3 = 27.3
The Mariners are the ones who stated that they were half way to 200 million in 4.5 years. Or do they just report those numbers and not actually pay it? Their words and what they reported. This isn’t from Forbes or anyone else.
I already said in my first comment that the business man in me says this is being responsible. However, the fan in me says that its crap that we were one player away for three seasons and they could have easily brought that guy in.
However, the fan in me says that its crap that we were one player away for three seasons and they could have easily brought that guy in.
With all due respect, the “one player away” argument is overrated. Lessee, HOW many times has George Steinbrenner traded for the “one player away” since 2000?
Could they have spent more money to maximize their chances? Sure. But if it was all about “one player away” and trading/signing that player, the Yankees would be working on their 8th consecutive title this year.
As my dad put it:
“The Finnigan story was convoluted. What really ticked me off was it didn’t mention that amortization and depreciation was something like $18
million-plus, which the P-I reported. That’s like adding $18m+ to the $10 million profit to get $28 million left over. That means they’ve got cash flow out the ears.”
That article by Bruscas is a _goldmine_, to me. It has enough ‘facts and figures’ to both: a) nail the Ms owners as mealy mouthed liars, and b) read the play in the case of the disappearing team profits. First of all, it quotes team spokesperson Rebecca Hale as saying that the team’s actual player payroll last year was $81M. Now, we knew that had to be the case. There was no way that they were spending $90+M last year, all their claims about what they’d ‘budgeted’ notwithstanding: they continued to cite a ‘budget’ for public attribution which included Kazu’s numbers even though he was off the payroll before spring training ’04 began—so their ‘budget’ was a stone lie to the fans from Day One. I definitely recall citations of this phony $90+M ‘budget’ figure at the time of the All-Star break ’04 as a reason why the Ms “couldn’t take on any salary” in a deadline deal. Despite the obvious fact that the team knew that there actual budget was only $81+M. The team simply didn’t want to throw more money after bad in a sour season by being compelled through public pressure to take on an expensive player in a mid-season deal in an attempt to get better—so they lied to their fan base, but kept asking us to come out to the park and pay to see a sub-par product.
The next interesting item in Bruscas’ article is a sweet little sentence tucked in a lower paragraph, that the owners “took no personal distributions” from team revenue last year. The obvious intent of that phrase is for the reader to assume that the owners ‘took no $’ out of the revenue stream—but wait, it says _personal_ distributions. Something like half the team is owned by Nintendto of North America: that’s a corporation, not a person. Similar dodges can be played by many of the Ms other bitty owners: do we know whether some of these guys hold their shares in their own name—i.e. whether they own the shares ‘personally’—or do the hold them under corporate or trust control—i.e. they do not ‘personally’ own their shares? One little weasel word in that statement, carefully buried at the bottom of the article, does more to exercise my suspicions of these guys than it does to dispel said concerns. I’ll just _bet_ they took no ‘personal’ distributions, ’cause they’d have to pay some stiff taxes on the revenue if they did. But whether they took some _corporate_ slice of the team revenue stream, that remains unclear. I’m supposed to assume this from the information in the article, but the information exactly doesn’t say the owners took _NO $_ from team revenues in any form. I smell a lie here, I just don’t know where the body is stashed in the bracken.
Then Bruscas pulls the weasel out of the hat ratty hat at the end of the article: the owners have to distribute profit shares to the Public Utilities District if they _ever_ show a profit. So they’ve never shown a profit yet, have they, hey? The ownership guys got an extremely generous clause on the profit-share trigger, allowing them to pad their cumulative total loss for _years_ which, of course, MUST be made good before the PUD gets dime one—but to take a brief aside into fairness here, the Ms had lost money from their inception, and the Kingdome was a blackhole for any potential profits which crossed its event horizon, so when the ownership group bought in in ’92 it’s not unreasonable for them to work in language giving themselves some protection from unending losses. That said, we now have the first solid motive I’ve seen yet for the kind of “payroll is maxed at $90+M” baldfaced lie we’ve come to know and loathe since Safeco turned into a moneytree for the current ownership group: if they show a proftit, they have to cut in the PUD. So they’ll never show a cumulative profit, it’s that simple. When they start getting close, we’ll see more fakery with the payroll numbers, and various ‘set-aside’ funds (which divert money that would otherwise go to pay down those cumulative losses). Don’t be surprised in the least if the Ms manage to show a ‘paper loss’ this year—and they’ll tell us it was “all those new salarys we took on to ‘build a winner’ for the fans.” I’ll just _bet_ that the Ms financial statements released to the PUD this year were not as informative as in past years, in Bruscas’ delicate phrase—’cause that ‘info-tainment’ in years past was probably riddled with ‘hide the money’ dodges which the ownership may be feeling a little nervous about putting in a statement under their name in the present accounting environment. So they simply said less rather than put deliberately misleading information in a public financial disclosure. Or so I do suspect.
To me, whether the PUD is getting stiffed or not isn’t a matter of huge moment: if they can’t be bothered to care, it’s not my prime beef. But the artful dodging by press release of the Ms ownership is simply an insult to their fans. At this point, if the team’s representatives are talking, and there’s a $ sign in it anywhere I simply assume the statement is an invitation to get in a game of three card monte.