Major League Baseball’s team owners, bless their hearts, are once again trying to convince the public that owning a baseball team isn’t all that profitable. Never mind the $15 beers and the $6 sodas and the $10.7 billion revenues that MLB reportedly brought in for 2019.
Owning a Major League Baseball team in 2020, says another billionaire owner, just isn’t that profitable.
On Tuesday, it was Bill DeWitt Jr., owner of the St. Louis Cardinals, adding himself to the list. He told 590 The Fan in St. Louis, “The industry isn’t very profitable to be quite honest,” which is perhaps true if you compare it to growing trees that have $100 bills for leaves.
Arizona Diamondbacks owner Ken Kendrick was on local radio Tuesday too — sense a pattern here? — talking about how MLB needs a salary cap and revenue sharing. Last week, Cubs owner/chairman Tom Ricketts said the losses that MLB teams are facing because of the COVID-19 shutdown are “biblical.”
It makes sense that all the often-quiet billionaires are suddenly speaking up. Their showdown with the players over restarting the season is beginning to turn into a who’s-less-greedy public relations campaign. Fans are getting increasingly frustrated by the do-si-do and neither the players nor the owners want to be the villains in the public’s eye.
But MLB owners crying poor? Nobody’s buying that.
Here’s the point where we pause and say this: Nobody in Major League Baseball is poor. (Except minor leaguers, please pay them more). Players and owners are both making stacks and stacks of money. People on both sides are very capable of the ol’ Scrooge McDuck dive into a pool of cash.
But if MLB owners are looking for sympathy over their sad bank accounts, there are a few things we have to remember:
• Major League Baseball brought in $10.7 billion last year, according to Forbes. Player salaries were expected to reach $4.03 billion in 2020, per calculations from Beyond the Box Score. Players are certainly the largest expense on any franchise’s P&L, so it’s hard to imagine there are $6 billion worth of expenses sitting around. Unless the grounds crew has Bryce Harper-like contacts and we just don’t know it.
• Owners won’t open up their books. Players have asked for it. In fact, Max Scherzer asked recently. Owners have offered a lot of counter-proposals, but none of them have included showing the players or the public their books.
• The average MLB ticket price has risen from $22.21 in 2006 to $32.99 in 2019, per Statista. Even as MLB attendance declines every year, the league is still generating record revenues every year.
• Why? Well, because ticket sales are just one source of a team’s revenue these days. There are new-age revenue streams like stadium naming deals and cable rights, in addition to age-old things like $10 programs, $6 sodas and all those overpriced beers.
All that being said, is anybody buying this woe-is-me baseball owner act? Are we really supposed to believe these owners — who are all very accomplished business people — would waste their time owning baseball teams if they’re only sorta profitable? That’s baloney.
It’s especially laughable when you look at the valuations of some of these teams. Even the ones that aren’t all that successful or don’t have the biggest fanbases.
Forbes, in its annual valuations of MLB teams, says the average franchise is worth $1.85 billion. You have to consider a little bit of a Yankees curve on that, since they’re worth $5 billion. But even the Kansas City Royals recently sold for $1 billion. And for what it’s worth: David Glass bought the team for $96 million in 2000.
When the Royals’ value appreciates 900% in 20 years, MLB owners are going to have a hard time convincing the public that they’re not that profitable. Likewise, DeWitt and his partners bought the Cardinals for $150 million in 1995. Twenty-five years later, they’re valued at $2.2 billion.
Yes, the business of baseball costs a lot. Players salaries, stadium costs, operating 81 events every year for tens of thousands of people — all these things are expensive. But that doesn’t mean teams aren’t making their money back and then some.
Don’t confuse businesses being expensive to run with businesses not being profitable. Those are two very different things. Yet it seems like we’ve reached the stage of MLB negotiations where owners are hoping fans see big player salaries and don’t ask too many questions about the owners’ side.
That works sometimes. But don’t fall for it.
If this baseball salary standoff continues and owners really think crying poor is the best way to win, there’s still one thing they can do to convince everybody.
Open their books and prove it.
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