Forbes: O’s had $83 mm in operating income in 2021, but team value is down 4%

[Frobby]

2 minutes ago, DrungoHazewood said:

My guess is because most of those expenses are not expenses.  As I said in the other thread, I think that fans wouldn't recognize most of that as operating expenses.   Things like depreciation of tangible assets as well as players.   Other things that they probably have some discretion as to how they're categorized and taken credit for.  With the information we have access to we have no idea how that $102M is broken down and what it's comprised of.  It's possible infrastructure and analytics investment went up $20M and other things offset that.

I agree with the last point.  We know they cut down on traditional scouts, for example.   There could be many things like that.   

FWIW, the Forbes operating income numbers are before depreciation, amortization, interest and taxes.   So, non-payroll expenses exclude all that.   I’m not saying there aren’t all kinds of other bizarre “expenses,” but apparently not those ones, in the Forbes numbers.   And, who knows where they get their numbers anyway.  
 

[DrungoHazewood]

2 hours ago, Can_of_corn said:

True, but they are probably pulling enough cash out of the team to make up for it.

That says something about the owners' position of being in hard financial straits.  You can explicitly not try to win for 4-5 years, have your attendance drop to the lowest levels in many decades, and the franchise valuation still more-or-less holds steady.  There's almost nothing an owner could do short of being Jeffrey Loria that would cause his team's value to fall appreciably.

[Can_of_corn]

2 minutes ago, DrungoHazewood said:

That says something about the owners' position of being in hard financial straits.  You can explicitly not try to win for 4-5 years, have your attendance drop to the lowest levels in many decades, and the franchise valuation still more-or-less holds steady.  There's almost nothing an owner could do short of being Jeffrey Loria that would cause his team's value to fall appreciably.

Loria bought the Marlins for 158M and sold them for 1.2B.

McCourt was an even worse owner and he also made out like a bandit.  430M --->2.15B.

 

[DrungoHazewood]

Just now, Can_of_corn said:

Loria bought the Marlins for 158M and sold them for 1.2B.

I was thinking more of his systematic destruction of the Expos.

[Can_of_corn]

2 minutes ago, DrungoHazewood said:

I was thinking more of his systematic destruction of the Expos.

He bought into the Expos for 50M and sold them for 120M.

So he even made out there.

It's evidently really hard to manage a team so poorly the value goes down.

Way to go Orioles!

[DrungoHazewood]

2 minutes ago, Can_of_corn said:

Loria bought the Marlins for 158M and sold them for 1.2B.

McCourt was an even worse owner and he also made out like a bandit.  430M --->2.15B.

 

Those both prove my point, that you can be almost purposefully malevolent and make a killing on a baseball team.  If you did this with an EPL team you'd get relegated and half your revenues would disappear overnight and along with it a good chunk of franchise value.

[Can_of_corn]

Just now, DrungoHazewood said:

Those both prove my point, that you can be almost purposefully malevolent and make a killing on a baseball team.  If you did this with an EPL team you'd get relegated and half your revenues would disappear overnight and along with it a good chunk of franchise value.

I wasn't trying to disprove your point.

[DrungoHazewood]

Just now, Can_of_corn said:

He bought into the Expos for 50M and sold them for 120M.

So he even made out there.

It's evidently really hard to manage a team so poorly the value goes down.

Way to go Orioles!

Angelos bought the Orioles for $173M.  After nearly three decades of incompetent management he'd get well over $1B for them today.  

[DrungoHazewood]

3 minutes ago, Can_of_corn said:

I wasn't trying to disprove your point.

I didn't say you were.  We're in agreement.  If you invest in a Major League team you would probably make a profit on the sale even if you set the stadium on fire and traded all the players for an army of ferrets.

[Can_of_corn]

3 minutes ago, DrungoHazewood said:

Angelos bought the Orioles for $173M.  After nearly three decades of incompetent management he'd get well over $1B for them today.  

I was talking about the sons' stewardship.

[Too Tall]

3 hours ago, Frobby said:

   Here’s what it shows for the O’s:

Revenue $251 mm

Gate receipts $20 mm

Player expenses $66 mm (includes benefits)

Operating income $83 mm

Non-major league payroll expenses $102 mm*

Team value: $1.375 bb (down 4%)

Sorry, but this tells me little. It tells me the Orioles had Revenue of $251 million of which I assume $20 million came from Gate receipts. I assume Forbes just noted gate reciepts separate to indicate attendance level or lack there of. I assume, it tells me the 40 man roster cost $66 million and operational costs (ie Warehouse plus I guess) was $83 million. Then  are we to assume the balance covers all else including minor leagues, draft pools, international bonuses, debt, profit, etc? I have no idea!!!!!

From this how can anyone gauge the status of this enterprise? 

What I do get, is some teams in MLB have Player (40 man roster) expenses over $200 million. 

I'm not saying the Oriole owners arn't pocketing money but I'd need a heck of a lot more than this to come down on either side of the ledger.

The best thing I got from Forbes is their guess at valueation of the Orioles. $1.375 billion - up from $173 million nearly 30 years ago. 

 

 

 

 

[Frobby]

7 minutes ago, Can_of_corn said:

I was talking about the sons' stewardship.

Per Forbes, in the spring of 2019 the team was worth $1.28 bb compared to the current $1.375 bb, up $95 mm or 7.4%.   So, that’s the sons’ stewardship, though frankly, we don’t really know when their stewardship began, just that it became more public at the time of the Elias hiring.   

The value of the Yankees has increased from $4.6 bb to $6.0 bb in that timeframe.   
 

[Too Tall]

3 hours ago, Frobby said:

   

The best thing I got from Forbes is their guess at valueation of the Orioles. $1.375 billion - up from $173 million nearly 30 years ago. 

And, $173 million invested in 1993 compounded annually at 6 percent is roughly the $1.375 billion noted above.  You draw your own conclusions. 

 

 

 

 

[JimGinSP]

12 hours ago, Frobby said:

One thing I find interesting is that non-payroll expenses are up only $5.5 mm from 2018.   That’s despite all the investment in technology, whatever has been spent so far on the Dominican conplex, increase in personnel devoted to analytics, etc.   So, when we hear that reductions in major league payroll are being used to fund infrastructure etc., well maybe, but the  vast majority of the savings is going to the bottom line.   That isn’t a surprise, but it does surprise me that the non-payroll expenditures have not really increased that much, especially when you consider that our spending on foreign amateurs has increased significantly since 2018.

No reason is given why the team valuation is down, but I suspect it’s due to declining attendance and brand deterioration derived from all the losing.

Team page here: https://www.forbes.com/teams/baltimore-orioles/?sh=2a0534db76db

MLB overview page here:  https://www.forbes.com/mlb-valuations/list/

 

 

 

 

Since the comparison goes back to 2018 possibly non-payroll expenses haven’t risen that much due to the elimination of one affiliate during that time plus a whole minor league season wiped out due to COVID.  I note that payroll category specifically states major league payroll. 
A smaller factor may be the contracts for Buck Showalter and Dan Duquette ran through 2018 and I imagine Brandon Hyde and Mike Elias are less expensive.

Of course no Joe Angel, Jim Hunter and Gary Thorne is most of it! 

[DrungoHazewood]

7 hours ago, JimGinSP said:

Since the comparison goes back to 2018 possibly non-payroll expenses haven’t risen that much due to the elimination of one affiliate during that time plus a whole minor league season wiped out due to COVID.  I note that payroll category specifically states major league payroll. 
A smaller factor may be the contracts for Buck Showalter and Dan Duquette ran through 2018 and I imagine Brandon Hyde and Mike Elias are less expensive.

Of course no Joe Angel, Jim Hunter and Gary Thorne is most of it! 

How much do minor league teams contribute to these expenses?  I think that has to be quite small.  I think we've seen numbers thrown around by the owners like 4-5% of revenue goes to non-MLB salaries, signing bonuses, pensions, health insurance and the like.  The Orioles' 2021 draft bonus pool was $11M or so.  I'd guess total minor league salaries aren't that much.  A single A player can make as little as $500 a week, and that's up significantly from 2020.  That's five months (no pay for offseason or spring training), so about $11k a year.  So Aberdeen's 26-man roster would be paid a minimum of $280k a year.  Even if many of the players are paid above minimum (and I don't really know) that's under $500k in payroll a year.  The AA minimum is $600 a week, AAA $700. 

Even if you assume average pay of 50% higher than minimums, the Orioles' total player salaries for their four full-season affiliates would work out to $1.8M a year.  Or about 2% of what we're calling operating expenses.  They're getting 100 minor leaguers for about the cost of Pedro Severino.

There may be some nuance I'm missing, but in general terms cutting Frederick was like eliminating one league-minimum MLB player.