Forbes and Miller articles: Twins financials

[amjgt]

http://www.forbes.com/teams/minnesota-twins/

 

That's the Twins' new value according to Forbes.

 

Up from $605M last year (a 48% increase)

[amjgt]

Owner: James Pohlad
Championships: 3
Price Paid: $44 M
Year Purchased: 1984
Revenue: $223 M
Operating Income: $21.3 M
Debt/Value: 25%
Player Expenses: $106 M
Gate Receipts: $71 M
Wins-to-player cost ratio: 99
Revenue per Fan: $43
Metro Area Population: 3.5 M

[jokin]

The recurring debate in Twins Daily got some added grist this morning as Phil Miller casually mentioned the Twins financial situation, deep in his "Twins Update" piece.    Despite their 4th dreadful year- in the won-loss department as well as in plummeting attendance at Target Field and TV viewership, the operation still netted a tidy $21.3M profit, on an estimated $223M in revenues.  

 

Even more significantly, the value of the franchise continues to approach the $1Billion level, jumping "an astonishing 48%" year over year, to $895M. 

 

 

 

 

 

Money ball

The Twins turned a profit of $21.3 million in 2014, Forbes magazine asserts in its latest issue, and the franchise’s value jumped an astonishing 48 percent over last year, to $895 million, by the magazine’s estimation.

Forbes’ annual franchise valuation issue ranked the Twins the 18th most valuable organization in Major League Baseball, up from 19th last year, but noted the team is benefiting from the extraordinary growth in television revenues that have caused franchise values to soar in the past decade. The Twins’ revenues reached $233 million last year, the magazine estimated.

Still, the Twins’ worth is less than the MLB average of $1.2 billion, and less than a third that of the New York Yankees, which leads the sport at a valuation of $3.2 billion, Forbes said.

 

[SweetOne69]

FYI, that $21.3M is NOT profit.

 

It is labeled as Operating Income and if you look at the footnote it says: Earnings before interest, taxes, depreciation and amortization.

[nytwinsfan]

Imagine when the team is actually good, selling out games, and selling out of Buxton and Sano jerseys.

[James]

 

FYI, that $21.3M is NOT profit.

 

It is labeled as Operating Income and if you look at the footnote it says: Earnings before interest, taxes, depreciation and amortization.

Someone always seems to post this Forbes article every once and a while here.  It seems like I'm always explaining that operating income and profit are not the same things.

 

It seems like Phil Miller fell into the operating income/profit trap this time around.

[Squirrel]

I've merged two threads here. Amjgt posted the original Forbes article, while jokin posted the Phil Miller article that referenced the Forbes article in part of it. So, thought they belonged together. And I tried to come up with a collective title to cue you all in. 

[jokin]

 

FYI, that $21.3M is NOT profit.

 

It is labeled as Operating Income and if you look at the footnote it says: Earnings before interest, taxes, depreciation and amortization.

 

Someone always seems to post this Forbes article every once and a while here.  It seems like I'm always explaining that operating income and profit are not the same things.

 

It seems like Phil Miller fell into the operating income/profit trap this time around.

 

 

Heh.  Miller definitely isn't a financial writer.  Here's the Investopedia definition of "Operating Income", perhaps here's where the confusion lies:

 

Operating Income is typically a synonym for earnings before interest and taxes (EBIT) and is also commonly referred to as "operating profit"

 

But even Forbes is apparently confused, as Investopedia continues, removing the "DA" from EBITDA:

 

Operating Income = Gross Income - Operating Expenses - Depreciation & Amortization

 

 

Regardless, it's common knowledge that the Twins have concentrated on using their excess revenues towards paying down the debt on Target Field. 

 

Anyways, the most interesting take-away's were Forbes' quantification of the ever-increasing revenue streams and the skyrocketing estimated net value of the club.  Despite all of the on-field futility over the last four years, the Twins are still in the Sweet Spot in regards to where MLB as a whole is headed.

[jay]

The implied implication from some folks using these numbers is that they either show or prove that the Twins should be spending more on MLB payroll.

 

The franchise valuation and revenues in comparison to MLB (higher-teens) is consistent with what we heard directly from DSP not long ago. In line with that, we can expect MLB payroll to consistently be in that range with some obvious year-to-year or periodical fluctuation based on the current market and team performance.

[jokin]

 

 In line with that, we can expect MLB payroll to consistently be in that range with some obvious year-to-year or periodical fluctuation based on the current market and team performance.

 

Except they haven't been consistently in that range in 2012, 2013, 2014.

[Benchwarmerjim]

 

 

Regardless, it's common knowledge that the Twins have concentrated on using their excess revenues towards paying down the debt on Target Field. 

 

 

 

I wouldnt even know where to begin to look for this information, but do we know how much Target Field debt is paid off? Are the Twins ahead of schedule?

[Hosken Bombo Disco]

Owner: James Pohlad

Championships: 3

...

 

Did we win the World Series last year and I missed it?

[Otto von Ballpark]

 

Owner: James Pohlad
Championships: 3

1924 World Series?

 

$/WAR Championship?

 

Fortuitous family of origin championship?

[amjgt]

 

I wouldnt even know where to begin to look for this information, but do we know how much Target Field debt is paid off? Are the Twins ahead of schedule?

 

The debt/value % seems to indicate that the Twins share of the stadium is not paid off.

 

Based on that number the Twins have $225M in future liabilities.

 

[USAFChief]

 

The debt/value % seems to indicate that the Twins share of the stadium is not paid off.

 

Based on that number the Twins have $225M in future liabilities.

Wouldn't "future liabilities" also include contracts signed with players?  For example, the money owed Mauer, Santana, Nolasco, etc?

[jokin]

 

Wouldn't "future liabilities" also include contracts signed with players?  For example, the money owed Mauer, Santana, Nolasco, etc?

 

Yup.

[jay]

Except they haven't been consistently in that range in 2012, 2013, 2014.

Except where were they the 3 years before that? 13th, 9th, 11th.

 

I think that is almost exactly what a reasonable, realistic person would want to see. Push the payroll budget above your comparable mid-point when appropriate to extend a competitive window. Bring your payroll below that comparable when appropriate to rebuild the young talent base.

 

For a team below the median in revenues (and most others for that matter), that's your realistic competitive strategy. Build, window, rebuild.