The Loria and short of it…

In South Florida MLB stands for Moral Limbo Business as in ‘How low can you go?’ Once again, these two tornadoes with roosters caught in their updraft have proven that they are the scourge of the sport.

Indeed the duo is celebrating its upcoming new stadium in typical fashion by announcing that the Marlins’ payroll for 2008 projects will be about $20 million.

Hmmm.

In 2005, they received over $20 million in revenue sharing. In 2006, it topped $30 million and did so again last year. This year, they’re slated to receive $25 million. This is the eighth year of their ownership of the Marlins. Each year, they’ve received at least $20 million in revenue-sharing subsidies. We can assume that the average subsidy Loria has received as owner of the club is around $25 million.

My point?

At the end of 2008, the Marlins have received about $200 million in revenue sharing.

MLB bought the Expos from him for $120 million and in turn sold the Marlins (to him) for $158.5 million, including a $38.5 million no-interest loan from MLB. Since the Marlins didn’t get a new stadium within five years, MLB forgave $15 million of the loan and charged no interest on the remainder.

Total cost of the Florida Marlins—$143.5 million.

What has transpired, in effect, is this: MLB gave the Florida Marlins to Loria gratis with a $50 million-plus housewarming gift. Granted, that’s pretty simplistic and doesn’t account for inflation/value of the dollar etc., but still.

(BTW, for those who wonder about minor league costs remember this: for the most part, these teams are supposed to be fairly self-sufficient. The new-park-on-the-public-dime phenomena is even more rampant in the minors. Many of these operations are quite profitable.)

Of that $143.5 million, 50 percent of it was written off in years one through five of Loria and Samson’s screwardship. In short, of those annual $20 million “losses” bandied about, almost $15 million were merely a book entry, a tax gimmick. Loria and Samson’s salaries could easily make up a good chunk of the rest. It’s not an exaggeration—over 20 years ago, in the mid 1980’s, then-Dodgers owner Peter O’Malley was drawing a seven-figure salary.

Think about this—the Florida Marlins are paying about $5 million more for their entire roster than MLB is paying Bud Selig (including bonuses) to be commissioner!

Ahhh Budshovism … tell the workers to take less for the common good while the leaders feather their nests.

I think it’s safe to say that the new digs will not increase spending a whole lot when it finally goes online. The public is being carefully primed for this particular outcome. Note Loria’s remarks about the current payroll:

It’s a function of revenues, and we were not really able to derive any revenues out of this facility, as we get closer to the (new) stadium, those things will change. We need to be in that facility.”

Seems pretty straightforward—right? Not so fast, a couple of years back the boy blunder said of a new stadium:

Some Physics of Ballpark Demolition
When a ballpark goes boom, how exactly does it work?

“It depends what the deal looks like. In cities where the public has fully built the stadium, I can understand the expectations for the payroll to be high. In a community where right now we’ve offered the fourth-largest contribution in the history of new stadiums, there is certainly a correlation between that contribution and what the payroll can be. So if we have to go even higher to get a deal done here, it will impact our payroll.” (bolding mine)

Well, surely the commissioner’s office will insist the Marlins spend their new money on retaining talent, right? After all, that’s what was supposed to be done with all that revenue-sharing moolah (which to date has been more than enough to cover the purchase price of the franchise with a large chunk of change left over). Well, Captain Avarice Bud Selig sent his—his—sidekick (looking for free) Buckys (for clubs’ new) Barn(e)s to issue the traditional absolute, final, no turning back, now or never, last chance, bottom-of-the-ninth, two-minute warning, fourth overtime, buzzer beating warning of yet to be determined consequences should they say no after the last 25 absolute, final, no turning back, now or never, last chance, bottom-of-the-ninth, two minute warning, fourth overtime, buzzer beating warnings have come and gone and been disregarded to no consequence (inhales).

What did Mr. Bob Dupuy say about the deal? One, he said that the Marlins’ contribution was at “the higher end” of what teams had to pay as their share of the stadium project. Loria and Samson have consistently refused to open their books to public scrutiny. If they decide to pocket the extra revenue the park generates and claim that their share of the stadium (especially cost overruns) hinder their ability to significantly raise the payroll—guess what kids?

You’re regally consummated!

They won’t open their books and the region cannot unbuild the ballpark. They can do exactly what they want—just as they have with their revenue-sharing subsidies. Rest assured however…

“This agreement is subject to all Major League rules and requirements, all teams operate under the Major League constitution. The Major League constitution requires every team to make best efforts to put a competitive team on the field. We sell competition. That’s what we sell.

We are in the business of selling competitive baseball. We’re confident that this ballpark will provide the resources for this team to be competitive.”—Bob Dupuy

Where was this pledge when the Marlins’ payroll was barely 50% of their revenue-sharing money? Where is it this year? The only rules and requirements they enforce are the unwritten ones: take as much free money as you can blackmail your region for, bend over backward for corporate seating, give the back of the hand to you and me and keep as much money from the players as possible.

At least that’s what their actions have demonstrated.

This much is clear, current revenue sharing is a bad joke. If baseball were serious about Dupuy’s pledge it would do something about its abuses. Ideally, revenue-sharing money goes into a fund jointly administered by the commissioner’s office and the MLBPA, with any disputes subject to binding arbitration. A team receiving money in this manner cannot touch the fund unilaterally—the team can have a set limit it can submit invoices for each year that can be banked in the event the team builds towards a playoff run and blows the wad then. In the meantime, a club invoices the fund when it signs/extends a player/drafts so it has access to the money.

Just get rid of leaving revenue sharing to the discretion of the team receiving it.

I am happy for Marlins fans, it should be noted, just as I am for Twins fans. They have not deserved the abuse heaped upon them by their corporate welfare Lords of Baseball. Anything that reduces face time for these purulent infections on the hemorrhoid that is the business of Major League Baseball is a good thing.

However folks, don’t be surprised if you don’t see the promised spending materialize. A new stadium will not turn a skunk into a rose nor can it turn a sleaze into a decent owner.

Fun with numbers…

Let’s suppress our gag reflex, put on protective gloves and spend a moment in Loria’s pocket:

Marlins cost $143,500,000, so this much money is out of his pocket. This is offset by the $120 million from the Expos sale.

-$143,500,000
 $120,000,000
-------------
 -$23,500,000

Now, let’s factor in the savings of amortizing 50% of the purchase price (which comes in handy for any taxes that may be incurred from the Expos sale) over the first five years:

-$23,500,000
 $71,750,000
-------------
 $48,250,000

…and toss in eight years of revenue sharing…

 $48,250,000
$200,000,000
-------------
$248,250,000

…and equity, in 2007 the Marlins were valued at $244,000,000 an increase of $100,500,000…

$248,250,000
$100,500,000
-------------
$348,750,000

…and for what it’s worth, Forbes estimates that the value of the club can expect to jump at least $40 million in value in the new stadium’s first year of operation.

Therefore, using these few numbers without selling a ticket or hot dog, yet alone receiving national TV money, local TV and radio revenue, or a nickel for MLBAM over eight freaking years do you think they’re starving in South Florida? These numbers aren’t hard and fast obviously, but they do demonstrate that Loria and Samson have been made incredibly wealthy by simply owning the team.

Thanks to the generosity of South Florida, they’re going to become a lot wealthier—just keep this in mind when they claim that the expenses from a new stadium hinder them from having a payroll as high as they’d like to have. If they have a problem with these numbers it’s easy to counteract them—just open the books. I’m sure Andrew Zimbalist and Maury Brown wouldn’t mind taking the time to analyse them, right guys? I’ll post the results here.


Comments are closed.