We're basically getting 50-60 man MLB rosters with the taxi squad

[vcsgrizzfan]

Oh okay. Sure thing. Call it fantasy when you’ve been proven blatantly wrong. Tampa spends almost nothing on payroll and receives a good chunk of revenue sharing, in fact it’s pretty easy to see why they’re profitable. But I guess according to you, all owners are benevolent beings and aren’t in the game to make tons of money. Could you be any more naive?

Dude. I've made my living analyzing companies, industries and balance sheets for over 35 years. I'm not the naïve one here. I can do mathematics.

So, as in the Twins case I referenced earlier... is the family's payday only when they finally sell the team for $1.29B more than they paid for it?

YES. It's pretty much always been the case with sports franchises. Values are absurd relative to any other industry based on profit metrics. It's about ego. For example, when Ballmer bought the Clippers for a couple of billion back in the day, the Clippers probably weren't making jack shit playing in someone else's barn. But he didn't give a shit.

The Forbes article I referenced above had EBITDA of around 30mm per team. An older, slow growth business might trade at an enterprise value to EBITDA ratio of 6-7 times. That means that business' total value would have a value of 180-210mm. That value is split between the debt and the equity in the business. If debt is $50mm, then the equity value would be $130mm to $160mm.

In a sexy business like software as a service with fast growing revenues and almost all recurring revenues, a successful business in that industry might trade at an Enterprise Value to EBITDA multiple of 20x or even higher these days as tech values have gotten ridiculous, especially for big bellweather stocks. Even then, that would imply a total value of only $600mm a 20x.

The values ascribed to sports franchises have always been more a function of ego and the greater fool theory. Someone will be willing to pay more than I paid in the future, and it's always worked. I used to question how sustainable that model was, but I don't any more.

To be fair, I think the NBA, NHL and NFL with the collective bargaining agreements they have with the players, they are basically protected from themselves so they can't be stupid and they know they will be profitable. Even the Grizzlies, if they aren't dumb, should be able to not have red ink, or at least very little. In baseball, an owner can still be a moron and choose to lose a lot of money if he wants to because the mechanisms aren't there to protect them from themselves.

[Kevin]

Oh okay. Sure thing. Call it fantasy when you’ve been proven blatantly wrong. Tampa spends almost nothing on payroll and receives a good chunk of revenue sharing, in fact it’s pretty easy to see why they’re profitable. But I guess according to you, all owners are benevolent beings and aren’t in the game to make tons of money. Could you be any more naive?

Dude. I've made my living analyzing companies, industries and balance sheets for over 35 years. I'm not the naïve one here. I can do mathematics.

So, as in the Twins case I referenced earlier... is the family's payday only when they finally sell the team for $1.29B more than they paid for it?

It definitely isn’t. Profitability has never been better for MLB franchises over the last decade. I think it’s absolutely absurd to think that teams don’t make money yet when one goes on the market, they often sell well above what they’re valued at. Of course the very limited supply of teams would drive the selling price up, but they aren’t doing that if they don’t see some year to year profits.

[Kevin]

Salaries have stayed flat for a couple years while revenues have gone up at least $1 billion. I think that alone should tell you that most teams are now making yearly profits.

[Shill Jackson]

A lot of talk about the financial risk, but little about the physical risk to the players.
Flying, staying in some hotel, dining. Touching a ball handled by many.
Also, we’ve all seem the injuries that come up after a long layoff. Bad enough injury and you’re cut.

I will say, we’re so starved for sports that I’ll likely start watching baseball regularly for the first time. Heck, even Bundesliga is becoming intriguing.

[AbeVigodaLive]

Dude. I've made my living analyzing companies, industries and balance sheets for over 35 years. I'm not the naïve one here. I can do mathematics.

So, as in the Twins case I referenced earlier... is the family's payday only when they finally sell the team for $1.29B more than they paid for it?

YES. It's pretty much always been the case with sports franchises. Values are absurd relative to any other industry based on profit metrics. It's about ego. For example, when Ballmer bought the Clippers for a couple of billion back in the day, the Clippers probably weren't making jack shit playing in someone else's barn. But he didn't give a shit.

The Forbes article I referenced above had EBITDA of around 30mm per team. An older, slow growth business might trade at an enterprise value to EBITDA ratio of 6-7 times. That means that business' total value would have a value of 180-210mm. That value is split between the debt and the equity in the business. If debt is $50mm, then the equity value would be $130mm to $160mm.

In a sexy business like software as a service with fast growing revenues and almost all recurring revenues, a successful business in that industry might trade at an Enterprise Value to EBITDA multiple of 20x or even higher these days as tech values have gotten ridiculous, especially for big bellweather stocks. Even then, that would imply a total value of only $600mm a 20x.

The values ascribed to sports franchises have always been more a function of ego and the greater fool theory. Someone will be willing to pay more than I paid in the future, and it's always worked. I used to question how sustainable that model was, but I don't any more.

To be fair, I think the NBA, NHL and NFL with the collective bargaining agreements they have with the players, they are basically protected from themselves so they can't be stupid and they know they will be profitable. Even the Grizzlies, if they aren't dumb, should be able to not have red ink, or at least very little. In baseball, an owner can still be a moron and choose to lose a lot of money if he wants to because the mechanisms aren't there to protect them from themselves.

HUNH?!?!? I don't know about all that... a lot of it is beyond me. Remember, I'm secretly sorta dumb.

So to summarize... the Twins owners are probably making a few million every year to make it worth their while (while feeding their egos) with the knowledge that the real deal payday is when they eventually decide to sell the team. So guys like Carl Pohlad and Rooney don't really cash in ever for themselves like they could... but they definitely set the stage for the family to do so down the line...?

[vcsgrizzfan]

Salaries have stayed flat for a couple years while revenues have gone up at least $1 billion. I think that alone should tell you that most teams are now making yearly profits.

We are all guessing at profitability, including Forbes, but they thought average EBITDA was only $29mm, and that is a long way from an after tax profit figure. That's operating earnings before taxes, depreciation, amortization and interest charges.

I think it's fair to say that most teams are probably making a profit, but I also think that on average, that profit is quite modest relative to revenues. But the profits don't come close to justifying franchise values. That's about ego.

[vcsgrizzfan]

So, as in the Twins case I referenced earlier... is the family's payday only when they finally sell the team for $1.29B more than they paid for it?

YES. It's pretty much always been the case with sports franchises. Values are absurd relative to any other industry based on profit metrics. It's about ego. For example, when Ballmer bought the Clippers for a couple of billion back in the day, the Clippers probably weren't making jack shit playing in someone else's barn. But he didn't give a shit.

The Forbes article I referenced above had EBITDA of around 30mm per team. An older, slow growth business might trade at an enterprise value to EBITDA ratio of 6-7 times. That means that business' total value would have a value of 180-210mm. That value is split between the debt and the equity in the business. If debt is $50mm, then the equity value would be $130mm to $160mm.

In a sexy business like software as a service with fast growing revenues and almost all recurring revenues, a successful business in that industry might trade at an Enterprise Value to EBITDA multiple of 20x or even higher these days as tech values have gotten ridiculous, especially for big bellweather stocks. Even then, that would imply a total value of only $600mm a 20x.

The values ascribed to sports franchises have always been more a function of ego and the greater fool theory. Someone will be willing to pay more than I paid in the future, and it's always worked. I used to question how sustainable that model was, but I don't any more.

To be fair, I think the NBA, NHL and NFL with the collective bargaining agreements they have with the players, they are basically protected from themselves so they can't be stupid and they know they will be profitable. Even the Grizzlies, if they aren't dumb, should be able to not have red ink, or at least very little. In baseball, an owner can still be a moron and choose to lose a lot of money if he wants to because the mechanisms aren't there to protect them from themselves.

Yeah. I don't know about all that... a lot of it is beyond me. Remember, I'm secretly sorta dumb.

So to summarize... the Twins owners are probably making a few million every year to make it worth their while (while feeding their egos) with the knowledge that the real deal payday is when they eventually decide to sell the team. So guys like Carl Pohlad and Rooney don't really cash in ever for themselves like they could... but they definitely set the stage for the family to do so down the line...?

You're anything but "secretly dumb", not to flatter your ego. This just isn't your field of expertise.

But I think the gist of what you are saying is correct. The Twins profitability is probably a lot more difficult to assess than the Rooney's because like I mentioned above, the NFL has it such that the Rooneys can't be stupid even if they want to be and are essentially guaranteed decent profitability. The Twins owners, if they want to be stupid, can run at a breakeven or at a loss. More likely though, they run it to make a "decent" profit (although low single digits on a return on Investment basis) knowing the real thing is about the franchise value. The NBA, NFL and NHL have made it much, much easier for smaller market teams to make some money because of the collective bargaining agreements they've negotiated. MLB will still allow an owner to be dumb if he wants to be.

[Kevin]

Salaries have stayed flat for a couple years while revenues have gone up at least $1 billion. I think that alone should tell you that most teams are now making yearly profits.

We are all guessing at profitability, including Forbes, but they thought average EBITDA was only $29mm, and that is a long way from an after tax profit figure. That's operating earnings before taxes, depreciation, amortization and interest charges.

I think it's fair to say that most teams are probably making a profit, but I also think that on average, that profit is quite modest relative to revenues. But the profits don't come close to justifying franchise values. That's about ego.

I can definitely see your point about the profits not justifying the franchise values. But that should make the owners more wary of taking a hardline stance with the players here, I’d think. As pointed out the players are the ones taking the actual physical risk here, and they also don’t get more money when the league does better than expected. The players have already given up half their pay. Is it really worth it to the owners to damage the long term value of their investments over a one year loss?

[kobeunderbite]

Kevin, is this not a simple math equation to you?

1/2 games = 1/2 pay, ok, I think we can all agree on that being a reasonable compromise (as did MLB, hence the original agreement). But why would 1/2 games minus ~50% of all revenue streams or more = 1/2 pay? How do franchise values increasing in recent years factor in at all, especially now that franchise values are likely crashing back to earth across the board?

The players absolutely do get more money when the league does better than expected, even if it's not necessarily agreed upon. The better the league performs the more money players get over time, which is why we've seen like 20 contracts over $200m in the last 5-10 years and that's why the average salary now is 50% more than what it was 10 years ago. There's a direct correlation between the league doing better and the players earning more.

[lettherebehouse]

Salaries have stayed flat for a couple years while revenues have gone up at least $1 billion. I think that alone should tell you that most teams are now making yearly profits.

We are all guessing at profitability, including Forbes, but they thought average EBITDA was only $29mm, and that is a long way from an after tax profit figure. That's operating earnings before taxes, depreciation, amortization and interest charges.

I think it's fair to say that most teams are probably making a profit, but I also think that on average, that profit is quite modest relative to revenues. But the profits don't come close to justifying franchise values. That's about ego.

I can definitely see your point about the profits not justifying the franchise values. But that should make the owners more wary of taking a hardline stance with the players here, I’d think. As pointed out the players are the ones taking the actual physical risk here, and they also don’t get more money when the league does better than expected. The players have already given up half their pay. Is it really worth it to the owners to damage the long term value of their investments over a one year loss?

Oh boo fucking hoo, welcome to the real world. Their contracts are already overbloated as is, which is a result of the “profit sharing” or “trickle down” process you pretend doesn’t exist. Grizz is right, much of ownership stake in pro franchises is mostly ego driven. Their yearly net profits at the end of the day is crumbs compared to the other industries they’re engaged in (oil, advertising, food, pharma, steel, etc). It’s an investment where their real profit won’t be realized until they cash out 18 years down the line.

[vcsgrizzfan]

Let's just a freaking deal done. However the pain is apportioned between players and owners, at the end of the day, I don't give a shit.

I just want to watch the fucking Blue Jays take a giant shit on the Los Angeles Angels.

That is all.

[AbeVigodaLive]

Shortened season or not... I'm ready for a non-Lynx championship parade through the desolate, barren streets of downtown Minneapolis...

[lettherebehouse]

Let's just a freaking deal done. However the pain is apportioned between players and owners, at the end of the day, I don't give a shit.

I just want to watch the fucking Blue Jays take a giant shit on the Los Angeles Angels.

That is all.

I’m not taking the first bait, but this got me into a quick lather. Please stop referring to them as the Los Angeles Angels, please. Everything else is in-bounds, but please, do not go there with me on this.

[AbeVigodaLive]

Let's just a freaking deal done. However the pain is apportioned between players and owners, at the end of the day, I don't give a shit.

I just want to watch the fucking Blue Jays take a giant shit on the Los Angeles Angels.

That is all.

I’m not taking the first bait, but this got me into a quick lather. Please stop referring to them as the Los Angeles Angels, please. Everything else is in-bounds, but please, do not go there with me on this.

Is Brian Downing and Bobby Grinch back? Are we calling them the California Angels again? I can't keep up with all these failed Cali franchises...

[vcsgrizzfan]

Let's just a freaking deal done. However the pain is apportioned between players and owners, at the end of the day, I don't give a shit.

I just want to watch the fucking Blue Jays take a giant shit on the Los Angeles Angels.

That is all.

I’m not taking the first bait, but this got me into a quick lather. Please stop referring to them as the Los Angeles Angels, please. Everything else is in-bounds, but please, do not go there with me on this.

I was a fan on the Angels when Frank Tanana was their star, hard luck pitcher. Probably before you were born. Nate Pearson will strike out Mike Trout of the Los Angeles Angels four times for a Golden Sombrero in their first matchup.

That is all.

[lettherebehouse]

Let's just a freaking deal done. However the pain is apportioned between players and owners, at the end of the day, I don't give a shit.

I just want to watch the fucking Blue Jays take a giant shit on the Los Angeles Angels.

That is all.

I’m not taking the first bait, but this got me into a quick lather. Please stop referring to them as the Los Angeles Angels, please. Everything else is in-bounds, but please, do not go there with me on this.

Is Brian Downing and Bobby Grinch back? Are we calling them the California Angels again? I can't keep up with all these failed Cali franchises...

Haha I loved those guys. Going to the Big A as a kid in my little league uniform and glove begging for autographs as they took BP. Downing, Bobby Grich, Carew, Doug Decinses was a family favorite (I think he’s in prison now for some white collar crimes). But the name California Angels was too general. When the name briefly changed to Anaheim Angels it should’ve stuck. The change to “LA” was an Arte Moreno gimmick the year he came in after buying club from Disney, assuming it’d steal some latino baseball fans from Dodger county, along with the addition of 4 prominent latino free agents that offseason (Orlando Cabrera, Bartolo Colon, Vlad Guerrero, and I forget the last guy). I don’t like it.

[Da Stars.]

I’m not taking the first bait, but this got me into a quick lather. Please stop referring to them as the Los Angeles Angels, please. Everything else is in-bounds, but please, do not go there with me on this.

Is Brian Downing and Bobby Grinch back? Are we calling them the California Angels again? I can't keep up with all these failed Cali franchises...

Haha I loved those guys. Going to the Big A as a kid in my little league uniform and glove begging for autographs as they took BP. Downing, Bobby Grich, Carew, Doug Decinses was a family favorite (I think he’s in prison now for some white collar crimes). But the name California Angels was too general. When the name briefly changed to Anaheim Angels it should’ve stuck. The change to “LA” was an Arte Moreno gimmick the year he came in after buying club from Disney, assuming it’d steal some latino baseball fans from Dodger county, along with the addition of 4 prominent latino free agents that offseason (Orlando Cabrera, Bartolo Colon, Vlad Guerrero, and I forget the last guy). I don’t like it.

Carew, houseboy is 40?

[vcsgrizzfan]

Is Brian Downing and Bobby Grinch back? Are we calling them the California Angels again? I can't keep up with all these failed Cali franchises...

Haha I loved those guys. Going to the Big A as a kid in my little league uniform and glove begging for autographs as they took BP. Downing, Bobby Grich, Carew, Doug Decinses was a family favorite (I think he’s in prison now for some white collar crimes). But the name California Angels was too general. When the name briefly changed to Anaheim Angels it should’ve stuck. The change to “LA” was an Arte Moreno gimmick the year he came in after buying club from Disney, assuming it’d steal some latino baseball fans from Dodger county, along with the addition of 4 prominent latino free agents that offseason (Orlando Cabrera, Bartolo Colon, Vlad Guerrero, and I forget the last guy). I don’t like it.

Carew, houseboy is 40?

Whoa! Good catch. If he remembers Carew in an Angels uni, he's pretty old and he definitely should have also remembered Frank Tanana, but the hurt must be too much for his weak soul.

[lettherebehouse]

Is Brian Downing and Bobby Grinch back? Are we calling them the California Angels again? I can't keep up with all these failed Cali franchises...

Haha I loved those guys. Going to the Big A as a kid in my little league uniform and glove begging for autographs as they took BP. Downing, Bobby Grich, Carew, Doug Decinses was a family favorite (I think he’s in prison now for some white collar crimes). But the name California Angels was too general. When the name briefly changed to Anaheim Angels it should’ve stuck. The change to “LA” was an Arte Moreno gimmick the year he came in after buying club from Disney, assuming it’d steal some latino baseball fans from Dodger county, along with the addition of 4 prominent latino free agents that offseason (Orlando Cabrera, Bartolo Colon, Vlad Guerrero, and I forget the last guy). I don’t like it.

Carew, houseboy is 40?

40? I’m a stout 43, grandpa. Old enough to remember Donnie Moore’s HR given up to Dave Henderson in the ALCS game 5 vs Boston, marking the 2nd saddest memory over a sporting event from childhood, with the first obviously being the Marcus Allen TD run vs Washington in Super Bowl XVIII.

[Bartman]

Baseball is a major yawn. That sport needs to die already.