2012 Twins Total Revenue and Operating income figures released

[Thrylos]

by Forbes (as well as their perception of the franchise value). Details here.

 

20/30 Franchise value (whatever)

Revenue 2012: $214M

Operating Income 2012: $10.8 M

(not sure if that already subtracts MLB and MiLB FO & operations costs or not. If it does it is equivalent to "profit".)

 

Pretty impressive numbers for an "off" year methinks.

[JB_Iowa]

I don't really understand "operating income" so it's hard for me to judge. I saw team's with much higher values & revenues with losses and teams with lower revenues with higher operating incomes so I really need someone to explain the concept.

 

One thing I did note was that the Twins' estimated revenues were right in the middle of the pack (I think 16th but within 2 million of Seattle and Chicago so very close).

 

I also noted that Houston's new TV deal will be about $80 million/year -- more than double the Twins' TV revenues. You can have a really bad team for a number of years but you still get the TV revenues based on market size. That's a disparity that seems hard to solve -- a real gap between the "haves" and "have nots".

[glunn]

I don't really understand "operating income" so it's hard for me to judge. I saw team's with much higher values & revenues with losses and teams with lower revenues with higher operating incomes so I really need someone to explain the concept.

 

One thing I did note was that the Twins' estimated revenues were right in the middle of the pack (I think 16th but within 2 million of Seattle and Chicago so very close).

 

I also noted that Houston's new TV deal will be about $80 million/year -- more than double the Twins' TV revenues. You can have a really bad team for a number of years but you still get the TV revenues based on market size. That's a disparity that seems hard to solve -- a real gap between the "haves" and "have nots".

 

Here is what I believe is a good definition of operating income, from Investopedia:

 

"The amount of profit realized from a business's operations after taking out operating expenses - such as cost of goods sold (COGS) or wages - and depreciation. Operating income takes the gross income (revenue minus COGS) and subtracts other operating expenses and then removes depreciation. These operating expenses are costs which are incurred from operating activities and include things such as office supplies and heat and power. Operating Income is typically a synonym for earnings before interest and taxes (EBIT) and is also commonly referred to as "operating profit" or "recurring profit.""

 

I am surprised that the operating income is so low -- less than 6% of gross revenues. However, I suspect that the cash flow is much higher than the operating income, because the Twins LLC probably has been taking lots of deductions for depreciation. Such depreciation deductions reduce operating income, but not cash flow.

 

I would also note that the effect of empty seats on operating income seems huge. If the Twins have 5,000 empty seats per game, their costs are basically the same as if those seats were filled. If they can fill such seats, the incremental revenue is almost pure profit. Assuming that each seat nets $30 (ticket price plus net revenue from concessions -- this is a PLUG # and the real # may be much higher or lower), then 5,000 more fans per game increases the bottom line by $150,000 per game. So there is an economic incentive for the Twins to spend money to fill seats, but such incentive has limits.

 

As for the Astros' TV deal, maybe we can only hope that global warning will eventually cause millions of people to seek cooler climes.

[SweetOne69]

Here is Forbes' footnote regarding Operating Income: Earnings before interest, taxes, depreciation and amortization.

[SweetOne69]

What I am curious to know is where did the $6M loss in operating income from the year before. If you compare Forbes' list from last year the Revenue and Player Expenses were almost the same, yet Operating Income went down $6M

[Brock Beauchamp]

As for the Astros' TV deal, maybe we can only hope that global warning will eventually cause millions of people to seek cooler climes.

 

What makes you think we want a bunch of Texans muckin' up our state?

 

We'll take the Mexicans. Somebody else can take the Texans.

[DaveW]

As those deadspin articles have pointed out in the past, all these numbers need to be taken with a HUGE grain of salt, you can do a lot with a sharp accountant etc.

[Brock Beauchamp]

As those deadspin articles have pointed out in the past, all these numbers need to be taken with a HUGE grain of salt, you can do a lot with a sharp accountant etc.

 

Yep. These companies do a masterful job of spinning out "daughter companies" to hide profits. For example, many teams "outsource" parking revenue to a company also owned by the same org that owns the team (or a family member or something). The same could be done with certain vendors in-stadium. All of that revenue would not factor into this number.

[James]

by Forbes (as well as their perception of the franchise value). Details here.

 

20/30 Franchise value (whatever)

Revenue 2012: $214M

Operating Income 2012: $10.8 M

(not sure if that already subtracts MLB and MiLB FO & operations costs or not. If it does it is equivalent to "profit".)

 

Pretty impressive numbers for an "off" year methinks.

If those cost are part of the operations of the team, then those cost would be included. MiLB costs are usually independently run business, I believe. But, as others have pointed out, that $10.8M is not profit.

[jokin]

As for the Astros' TV deal, maybe we can only hope that global warning will eventually cause millions of people to seek cooler climes.

 

Hate to snow on your parade but there's this to consider:

 

Scientists Warn Of Ice Age | The Global Warming Policy Foundation (GWPF)

[powrwrap]

I am surprised that the operating income is so low -- less than 6% of gross revenues.

 

What would you consider to be a typical percentage for operating income?

[jokin]

Here is Forbes' footnote regarding Operating Income: Earnings before interest, taxes, depreciation and amortization.

 

Ask any accountant, it's all about the EBITDA, especially the "DA". Bottom line, the cash is flowing just fine, and will continue to do so, even with the looming decline in revenues.

[JB_Iowa]

Well, I spent some time this morning going through the numbers:

2012_Baseball_Revenue | Flickr - Photo Sharing!

 

To my chagrin, I have to apologize to the Twins for being so p*ssy over the 50% "rule". Apparently most other teams abandoned it long ago -- or never honored it. So, if the Twins don't talk about it if they go over 50%, I'll stop talking about it now that they are likely to be significantly under 50%.

 

The salary figures were opening day 2012 figures based on Cot's baseball contracts. I'm sure they changed for all teams over the course of the year but I doubt if the changes were so significant that they would change the rankings very much.

 

The top 10 teams in % of revenue devoted to player salaries were: Angels, Phillies, Tigers, Red Sox, Marlins, Rangers, Giants, Brewers, Twins whereas the Padres, Pirates, A's and Astros were all only spending about 30%. (I'm assuming that Forbes' figures compare "apples to apples" and that one team isn't significantly better at hiding revenues than another).

 

It did surprise me that the top 10 teams in operating income were the Cubs, Orioles, Padres, Nationals, A's, Pirates, Astros, Red and White Sox. And the ones with "losses" being the Angels, Rangers, Marlins, Mets and Tigers (not totally surprising except for the Rangers).

 

Overall, I guess I'd conclude that the Twins are still being more honorable with their fans than are the majority of teams in baseball.

 

I apologize for any mistakes -- I was putting the info in a spreadsheet at 6 a.m. so there may be some errors.

[ThePuck]

Cots had the Twins payroll at, what, 100M last year? Other than pointing out it was a dropoff from 2011, are there people really raging about the Twins payroll LAST year, or is it more focused on the 20M or so cut THIS year?

[jokin]

Cots had the Twins payroll at, what, 100M last year? Other than pointing out it was a dropoff from 2011, are there people really raging about the Twins payroll LAST year, or is it more focused on the 20M or so cut THIS year?

 

How about both years?

[jokin]

by Forbes (as well as their perception of the franchise value). Details here.

 

20/30 Franchise value (whatever)

Revenue 2012: $214M

Operating Income 2012: $10.8 M

(not sure if that already subtracts MLB and MiLB FO & operations costs or not. If it does it is equivalent to "profit".)

 

Pretty impressive numbers for an "off" year methinks.

 

Here're the 2011 numbers:

 

 

Team Value $490 mi

 

 

[TABLE]

1-Yr Value Chg.

21%

Ann. Value Chg.

9%

Debt/Value

20%

Revenue

$213 mil

Operating Income

$26.5 mil

[/TABLE]

Player Expenses $112 mil

Gate Receipts $100 mil

 

 

Versus the numbers from 2012 (both from Forbes):

 

Team Value $578 M

1-Yr Change 13%

Annualized Change 8%

 

 

 

 

• Revenue² : $214 M
  
• Operating Income³ : $10.8 M
  
• Debt/Value⁴ : 17%
  
• Player Expenses⁵ : $122 M
  
• Gate Receipts⁶ : $90 M
  

 

Their appear to be some accounting gimmicks in the amortization of long-term salaries (or medical calamity writedowns?), which year-over-year were actually cut, not raised to $122M. And they appeared to not pay down debt.

 

Significantly, in a disastrous cost-cutting and declining attendance year, revenues actually increased marginally (higher ticket and concession prices and more media money, I presume).

[70charger]

What would you consider to be a typical percentage for operating income?

 

 

There isn't any. The thing is, EBITDA is sort of a blunt instrument if you're comparing one company to another in a completely different industry. For example, a manufacturer which replaces an expensive machine every 5 years is going to have quite a lot more depreciation than a services company. That "D" in the EBITDA is going to have a big effect.

 

EBITDA can be useful, but it has to be viewed in the proper context. Frankly, I think it's most useful in the context it was originally used in, which was to determine whether distressed companies could timely pay their debts, or whether a company that you were planning to pile debt on top of in an acquisition (leveraged buyout) would be able to service that debt going forward. I don't tend to like it in other contexts, at least not without having a lot more information.

[old nurse]

Forbes estimates the income. They estimate the expenses. The only number you can really believe is the players salary, money from television, how much debt from the purchase of the club, and attendance numbers.

[JB_Iowa]

Forbes does have to estimate -- but I'm assuming that they use the same model for estimating for every team. Some teams may be better able to "hide" revenues and maybe there are flaws in Forbes' formula but it is still the best data available to us. And I do think it allows us to compare teams to each other.

 

Maybe the Twins aren't quite as honorable as I stated above. If one assumes an $81 million opening day payroll, that would have put them right along with the Rockies with the 23rd highest salary based on last year's numbers. Even though the Marlins will also drop significantly going into 2013, it seemed like some other teams were already spending the anticipated $25 million in extra TV revenues. So my guess is that the Twins payroll this year will be about the 22-24 position on payroll -- a pretty significant drop from #12.

 

And, if payroll is at $81 million, revenue will have to drop from $214 million to about $173 million to stay at 47% of revenue devoted to payroll.

 

Time will tell. I never thought they'd go this low with the opening day payroll. I always believed it would be $91-$94 million. I should never underestimate TR's conservatism.

[bird]

One thing to keep in mind is that the Twins never promised us they'd spend 50% of revenues each and every year without exception. The way I have heard it expressed is within the context of their self-proscribed financial guidelines and discipline. In that context I would expect that, over time, payroll will pretty much average out to that 50% figure, sometimes lower, and perhaps sometimes higher. I'd also guess, without much to back up my hunch, thatin a year where MLB payroll is below that threshhold, we couls expect some expenditures to increase in other parts of the operation, such as facilities improvements here and in the minor leagues.

[Seth Stohs]

I haven't looked at the payroll specifically cuz it's not a big deal to me, but does it include Butera and Blackburn's contracts? Does it include the guys on the DL (which combined are barely over $1M). There's an extra $7.2M.

[Mike Sixel]

We paid millions for a new stadium....if the payroll isn't significantly higher (after baseball inflation, not normal inflation) than $71MM or whatever it was the last year of the dome, then why did we buy them a new stadium, exactly? They get $25MM in free money next year, anyone think the payroll is going up by any percent of that?

[Guest USAFChief]

One thing to keep in mind is that the Twins never promised us they'd spend 50% of revenues each and every year without exception. The way I have heard it expressed is within the context of their self-proscribed financial guidelines and discipline. In that context I would expect that, over time, payroll will pretty much average out to that 50% figure, sometimes lower, and perhaps sometimes higher. I'd also guess, without much to back up my hunch, thatin a year where MLB payroll is below that threshhold, we couls expect some expenditures to increase in other parts of the operation, such as facilities improvements here and in the minor leagues.

Serious question...are you a paid Twins PR rep? I really can't come up with another plausible reason why you'd be here so reliably to spin. Seriously.

[ThePuck]

Serious question...are you a paid Twins PR rep? I really can't come up with another plausible reason why you'd be here so reliably to spin. Seriously.

 

He's already claimed to know three generations of Pohlads...remember?

[bird]

He's already claimed to know three generations of Pohlads...remember?

Believe what you want to believe, Puck.

[jokin]

I haven't looked at the payroll specifically cuz it's not a big deal to me, but does it include Butera and Blackburn's contracts? Does it include the guys on the DL (which combined are barely over $1M). There's an extra $7.2M.

 

Yes

[jokin]

We paid millions for a new stadium....if the payroll isn't significantly higher (after baseball inflation, not normal inflation) than $71MM or whatever it was the last year of the dome, then why did we buy them a new stadium, exactly? They get $25MM in free money next year, anyone think the payroll is going up by any percent of that?

 

No.

[TheLeviathan]

In that context I would expect that, over time, payroll will pretty much average out to that 50% figure, sometimes lower, and perhaps sometimes higher.

 

Tell ya what, when the "higher" time happens - I'll apologize for being critical of the lower times. But until that day, I'm going to be upset that I keep forking over big money to a team unwilling to do the same.