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2013 Forbes Numbers

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#1 Highabove

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Posted 26 March 2014 - 04:20 PM

[FONT=arial]2013 was a very profitable year for the Minnesota Twins. [/FONT][FONT=arial]
[/FONT][FONT=arial]
2013 earnings came in at $30.2 million dollars. This ranks 6th in Major League Baseball.
[/FONT][FONT=arial]
The Twins nearly tripled their earnings from a 2012 figure of $10.8 million dollars.
[/FONT][FONT=arial]
2013 Revenue totaled 213 million dollars. This figure ranks 14th in Major League Baseball.[/FONT]
[FONT=arial]
[/FONT]The Business Of Baseball - Forbes

Edited by Highabove, 26 March 2014 - 04:43 PM.


#2 Marta Shearing

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Posted 26 March 2014 - 04:43 PM

I've heard there's no law that forces teams to make their financial records public.

#3 Willihammer

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Posted 26 March 2014 - 04:47 PM

Sometimes you can't give your money away

#4 Highabove

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Posted 26 March 2014 - 04:54 PM

I've heard there's no law that forces teams to make their financial records public.


Estimating company revenues is not Rocket Science, especially for Forbes.
Franchise valuation is much more open to opinion. At times, Forbes has been off on this.

Edited by Highabove, 26 March 2014 - 04:59 PM.


#5 Rosterman

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Posted 26 March 2014 - 05:27 PM

And that is after everyone has been paid, from ownership to front office to bat boys and trainers in the low minors, right?
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#6 Winston Smith

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Posted 26 March 2014 - 06:11 PM

Payroll dropped around 18. According to Cotts 100m in 2012, 82m in 2013.

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#7 Guest_USAFChief_*

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Posted 26 March 2014 - 07:27 PM

Lets keep this thread civil, on point, and off other posters please.

And that's coming from someone who wishes the Twins would spend more on payroll.

EDIT: Two posts have already been moderated, including one after this post.

Its quite OK to have strong opinions about Twins ownership and management. It's not OK, per the site comment policy, to resort to name calling or worse about same.

Edited by USAFChief, 26 March 2014 - 08:32 PM.


#8 howeda7

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Posted 26 March 2014 - 10:53 PM

The FSN contract and national contracts went up. The payroll went down. This more than offset the lost ticket/concession revenue. I'm not mad, but the payroll shouldn't be $85 million again. Spending even $8-10 million on a bat, any bat, would help this terrible offense immensely.

#9 glunn

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Posted 26 March 2014 - 11:47 PM

If Forbes is correct, and the earnings before interest/taxes/amortization and depreciation were $30.2 million and the fair market value of the franchise was $605 million, then the rate of return was in the range of 5%.

It seems to me that a rate of return of 5% is not very high compared with most private businesses. Yes, $30 million is a lot of money and might have purchased 5 or 10 more wins last year, but a 5% return seems reasonable to me. My sense is that regulated public utilities generally are allowed profits in this range.

Am I missing something? Is there some reason to believe that keeping enough to result in a 5% return is in itself wrong?

I understand that there are many who feel that the Twins should be spending at least 52% of revenue on payroll, and I am not trying to resurrect that argument in this thread. I am just wondering if a 5% rate of return seems unreasonable. I would note in this regard that based on the Forbes numbers, the most profitable teams were the Cardinals, Astros and Giants, and the highest rate of return by far was the Astros, at over 10%. Also, again assuming that Forbes is correct, the Dodgers, Phils, Yankees and other high spenders all LOST money. I wonder if this is because certain categories of revenues are being excluded.

Can we have a friendly, respectful discussion of what these numbers might mean?

#10 Guest_USAFChief_*

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Posted 27 March 2014 - 07:18 AM

If Forbes is correct, and the earnings before interest/taxes/amortization and depreciation were $30.2 million and the fair market value of the franchise was $605 million, then the rate of return was in the range of 5%.

It seems to me that a rate of return of 5% is not very high compared with most private businesses. Yes, $30 million is a lot of money and might have purchased 5 or 10 more wins last year, but a 5% return seems reasonable to me. My sense is that regulated public utilities generally are allowed profits in this range.

Am I missing something? Is there some reason to believe that keeping enough to result in a 5% return is in itself wrong?

I understand that there are many who feel that the Twins should be spending at least 52% of revenue on payroll, and I am not trying to resurrect that argument in this thread. I am just wondering if a 5% rate of return seems unreasonable. I would note in this regard that based on the Forbes numbers, the most profitable teams were the Cardinals, Astros and Giants, and the highest rate of return by far was the Astros, at over 10%. Also, again assuming that Forbes is correct, the Dodgers, Phils, Yankees and other high spenders all LOST money. I wonder if this is because certain categories of revenues are being excluded.

Can we have a friendly, respectful discussion of what these numbers might mean?

I think it's fair to also consider franchise value when factoring rate of return. That has more than doubled since TF opened, and has gone from $45M ( if memory serves) to an estimated $600M since purchased from Griffith.

#11 JB_Iowa

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Posted 27 March 2014 - 07:41 AM

Can we have a friendly, respectful discussion of what these numbers might mean?


I didn't again want to quote your whole response..... but I get very confused by the Forbes numbers.

Why in the world do a third of these teams show an operating loss?

Should we look at operating income compared to current value OR compared to investment???? Because many/most of these owners have benefited substantially from appreciation of their investment.

Should we be looking at operating income as a % of revenue where the Astros show a whopping 55.9 million on revenues of 186 million (30%)? No wonder they were (slightly mistakenly) called the most profitable team in baseball.

On amounts of operating income, I also wonder if something is omitted. I look, for example, at the difference between the Twins and the Rays. $40 million. As I recall, that is approximately the amount of the Twins' local TV deal (about $39 million annually if I remember correctly). Yet, when I looked at the Rays' TV schedule it is almost non-existent so their TV deal shouldn't be much. Minnesota's attendance was 967,000 more than Tampa's in 2013 (http://www.baseball-...2013-misc.shtml) One would think that there would be more of a difference between the Twins and the Rays except, of course, for revenue sharing.

I find all of these numbers to be quite confusing. And I admit that I hated accounting (probably due more to the fact that I took it at 8 a.m. than the subject matter itself) -- so I am just not sure what to make of the numbers.

#12 tobi0040

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Posted 27 March 2014 - 07:44 AM

I think it's fair to also consider franchise value when factoring rate of return. That has more than doubled since TF opened, and has gone from $45M ( if memory serves) to an estimated $600M since purchased from Griffith.


I agree. I rent out a second home. Last year I made about $200 on a cash flow basis. Home prices went up 10-12% and I could sell the house for $20k more than I could have a year prior. Or walk into a bank and get a loan for $20K I could not have received a year prior.

The value of the team was $178M in 2005. The twins have made about $179M in profits since then and invested about $150M into the stadium. I have them ahead about $550M in 8 years ($179M profits - $150M investments in the stadium + 522M in value change). I am using the recent $700M value from Bloomberg, which added about $130M to each team to account for the new cable deal.

The value of the team is what bankers or investors would go off when wanting to purchase a share of the team or secure financing.

No name calling, just facts.


The Forbes values are typically a combination of comparable sales , operating income, and year over year increases in value. The Dodgers were recently sold for over $2B dollars for example. Granted a bigger market, but a $700M valuation for this team seems reasonable.

[COLOR=#0066cc]http://www.bizjourna...00-million.html[/COLOR]

http://www.forbes.co...innesota-twins/

Edited by tobi0040, 27 March 2014 - 07:56 AM.


#13 mike wants wins

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Posted 27 March 2014 - 07:49 AM

Return and cash flow are not the same thing. As pointed out above, there are many factors in the financial return realized, or unrealized, in business. Certainly the cash flow and operating income are part of that. Certainly an increased value of the team is part of that. Remember, the team can be worth $600MM, but that doesn't mean the owners invested $600MM in the team.

Regardless, they are a business. They can run it like they want. customers and taxpayers can also react how they wan to how that is done.
Lighten up Francis....

#14 tobi0040

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Posted 27 March 2014 - 08:19 AM

Regardless, they are a business. They can run it like they want. customers and taxpayers can also react how they wan to how that is done.


I don't think a team like the Twins can be compared to 3M, Medtronic, or Target. Taxpayers did not, without a vote, provide $300m in funding for any of these companies. You may get a suburb that offers limited tax increment financing. But I have seen some of these contracts, they typically amount to under $2m dollars over a span of a few years and have very strict covenants. For example, if you spend x million on construction and have x salaries that make over $50K a year by x date, you can get a short term tax break.

So I think it gets more complicated than "they are a business and can do what they want". What the answer is I am not sure, but I don't like the comparison.

#15 mike wants wins

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Posted 27 March 2014 - 08:21 AM

Taxpayers give money to companies all the time. IMO, it is naive to think that pro sports teams are somehow more beholden to taxpayers than other businesses. Maybe they should be, but they aren't.
Lighten up Francis....

#16 Willihammer

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Posted 27 March 2014 - 08:27 AM

I don't think a team like the Twins can be compared to 3M, Medtronic, or Target. Taxpayers did not, without a vote, provide $300m in funding for any of these companies. You may get a suburb that offers limited tax increment financing. But I have seen some of these contracts, they typically amount to under $2m dollars over a span of a few years and have very strict covenants. For example, if you spend x million on construction and have x salaries that make over $50K a year by x date, you can get a short term tax break.

So I think it gets more complicated than "they are a business and can do what they want". What the answer is I am not sure, but I don't like the comparison.


$300 million, that's pretty close to the increase in the value of the franchise since they broke ground less than 10 years ago, isn't it?What a coincidence. Seems like they ought to have been able to finance it themselves.

Edited by Willihammer, 27 March 2014 - 08:31 AM.


#17 tobi0040

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Posted 27 March 2014 - 08:30 AM

Taxpayers give money to companies all the time. IMO, it is naive to think that pro sports teams are somehow more beholden to taxpayers than other businesses. Maybe they should be, but they aren't.


Can you give one example of a Minnesota tax payer funding $100M or more of a business project? That represents 2/3 of the total funds? Keep in mind I am asking for one example that represents 1/3 of what the Twins got.

The only one I can think of is the Mayo clinic or another hospital, but that is certainly more complex as a place like the Mayo clinic provides a public good and is involved with medical research.

Here is one that is often cited. Brooklyn Park gave up to $5M for Target to expand their HQ there. This was a gift over multiple years. Target funded the contruction themselves and had a series of conditions they needed to meet in order to get those funds. I can assure you very few have been met. Do you really think this is on the same level?

The Twins had no conditions on the $300M they received.

http://www.startribu.../204311811.html

Edited by tobi0040, 27 March 2014 - 08:32 AM.


#18 mike wants wins

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Posted 27 March 2014 - 08:41 AM

Best Buy. Mall of America. It isn't the dollar amount that matters, imo. Companies get so many different tax breaks in so many different ways, that there is hardly a company that doesn't get breaks. We are bordering on a discussion I'm not sure is allowed in this forum, though.....

Again, you can want the team to be "more accountable", but are they really? I see no evidence of that. They moved their games to pay tv. They increased ticket prices. They cut payroll. I see no evidence that they, or any pro sports team, is accountable at all to taxpayers.
Lighten up Francis....

#19 CRArko

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Posted 27 March 2014 - 08:45 AM

In my younger days I made a pretty decent living working for a large local defense contractor. Guess who was ultimately paying the bill?

#20 tobi0040

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Posted 27 March 2014 - 08:46 AM

Best Buy. Mall of America. It isn't the dollar amount that matters, imo. Companies get so many different tax breaks in so many different ways, that there is hardly a company that doesn't get breaks. We are bordering on a discussion I'm not sure is allowed in this forum, though.....

Again, you can want the team to be "more accountable", but are they really? I see no evidence of that. They moved their games to pay tv. They increased ticket prices. They cut payroll. I see no evidence that they, or any pro sports team, is accountable at all to taxpayers.


Mall of America received a $250M tax break on a $1.5 billion dollar project (16% versus 66%). That was a break on future property taxes if conditions were met, versus the Twins being handed $300M. These types of deals are structured to the point where future property taxes go up, not down. So a break doens't really exist. I would guess Best Buys is similar to Targets, peanuts.

But ultimately I agree. They have not been accountable. They are unwilling to pay a market price for certain players and did nothing in 2012 or 2013 to rebuild.

Edited by tobi0040, 27 March 2014 - 08:51 AM.


#21 tobi0040

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Posted 27 March 2014 - 08:48 AM

In my younger days I made a pretty decent living working for a large local defense contractor. Guess who was ultimately paying the bill?


Do you not see a distinction between national defense and baseball?

#22 CRArko

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Posted 27 March 2014 - 09:10 AM

Do you not see a distinction between national defense and baseball?


From a business perspective? Not really. One may have larger and more costly boondoggles than the other.

#23 tobi0040

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Posted 27 March 2014 - 09:18 AM

From a business perspective? Not really. One may have larger and more costly boondoggles than the other.


I can't argue about the boondoggle part, but I would argue having no national defense versus no baseball has alternative negative consequences. In one case, we watch another sport. In the other this thread is in German.

#24 ChiTownTwinsFan

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Posted 27 March 2014 - 09:21 AM

I find it commical that posts are being moderated becasue people are complaining one way or the other about financial management of the team. Let the people speak! I believe the Twins are a successful business, and that, at the end of the day, is the name of the game. They will be a successful baseball team once again, but they are a successful business now.


Moderator note: I would suggest you read this part of the Comments Policy, then after doing so, read the whole policy.
http://twinsdaily.co...ll=1#post164885

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#25 CRArko

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Posted 27 March 2014 - 09:25 AM

I can't argue about the boondoggle part, but I would argue having no national defense versus no baseball has alternative negative consequences. In one case, we watch another sport. In the other this thread is in German.


Ich spreche ganz gut Deutsch. :)

But don't confuse the purpose of something (like defense, or baseball) with the business of that thing. They are two very different animals.

And with that, much to the relief of our hosts, I'll drop this line of conversation.

#26 mike wants wins

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Posted 27 March 2014 - 09:25 AM

I can't argue about the boondoggle part, but I would argue having no national defense versus no baseball has alternative negative consequences. In one case, we watch another sport. In the other this thread is in German.


No idea how the moderators feel about where this is going, but that made me lLOL.
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#27 tobi0040

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Posted 27 March 2014 - 09:36 AM

Ich spreche ganz gut Deutsch. :)

But don't confuse the purpose of something (like defense, or baseball) with the business of that thing. They are two very different animals.

And with that, much to the relief of our hosts, I'll drop this line of conversation.


I think it is difficult, if not impossible to separate the two. We have private defense companies because they can produce better weapons than the governemnt would be capable of producing. For example, give Uncle Sam $10 billion dollars to produce a new line of bombers and give the same amount to Boeing. I think we can all agree that Boeing would produce a product that is better capable of defending our country. So I believe the salary of the Boeing employee is not the same to the salary of a Twins employee.

The broader point is related to the Twins and this thead about the Forbes value. I don't think the it is a business argument, therefore they can do what they want really works. They produce baseball games and T-shirts. Not medical research or national defense. Those are the only companies that get anywhere near the type of public funding the Twins get. So I think they should be accountable for getting a stadium and not putting players on the field in 2012 and 2013.

I will drop this thread as well.

#28 diehardtwinsfan

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Posted 27 March 2014 - 09:43 AM

Best Buy. Mall of America. It isn't the dollar amount that matters, imo. Companies get so many different tax breaks in so many different ways, that there is hardly a company that doesn't get breaks. We are bordering on a discussion I'm not sure is allowed in this forum, though.....

Again, you can want the team to be "more accountable", but are they really? I see no evidence of that. They moved their games to pay tv. They increased ticket prices. They cut payroll. I see no evidence that they, or any pro sports team, is accountable at all to taxpayers.


What we are bordering on is a discussion that might need to get moved to the sports bar :)

What isn't allowed has already been discussed. Let's keep the thread civil, and if this moves more in a political or general baseball discussion, the mods will move the thread. That's not really a big deal.

#29 Highabove

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Posted 27 March 2014 - 09:48 AM

It appears that the the extra revenue generated from a high ticket price structure is making up for a bad TV contract. Despite the low amount that the team receives from TV, the total revenue remains competitive.
In 2010, the Twins had the 7th highest average ticket price (non premium seating) in Major League Baseball.
The Twins moved up to 6th in 2012 and 2013.

www.fancostexperience.com/pages/fcx/blog_pdfs/entry0000021_pdf005.pdf


https://www.teammarketing.com/public/files/2011_mlb_fci.pdf

Edited by Highabove, 27 March 2014 - 09:56 AM.


#30 JB_Iowa

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Posted 27 March 2014 - 09:52 AM

The broader point is related to the Twins and this thead about the Forbes value. I don't think the it is a business argument, therefore they can do what they want really works. They produce baseball games and T-shirts. Not medical research or national defense. Those are the only companies that get anywhere near the type of public funding the Twins get. So I think they should be accountable for getting a stadium and not putting players on the field in 2012 and 2013.


I don't want to further take this thread off into another realm because I hope that people will respond to some of the posts, questions and discussions earlier in the thread.

The only thing I wanted to say in response to your point is that it isn't just the Twins. Public funding of sports stadiums is a nationwide issue.