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Thread: 2013 Forbes Numbers

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    Senior Member Big-Leaguer Highabove's Avatar
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    2013 Forbes Numbers

    2013 was a very profitable year for the Minnesota Twins.

    2013 earnings came in at $30.2 million dollars. This ranks 6th in Major League Baseball.

    The Twins nearly tripled their earnings from a 2012 figure of $10.8 million dollars.

    2013 Revenue totaled 213 million dollars. This figure ranks 14th in Major League Baseball.


    The Business Of Baseball - Forbes
    Last edited by Highabove; 03-26-2014 at 04:43 PM.

  2. #2
    I've heard there's no law that forces teams to make their financial records public.

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    Senior Member Big-Leaguer Highabove's Avatar
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    Quote Originally Posted by Marta Shearing View Post
    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.
    Last edited by Highabove; 03-26-2014 at 04:59 PM.

  6. #5
    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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    Senior Member All-Star Winston Smith's Avatar
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    Payroll dropped around 18. According to Cotts 100m in 2012, 82m in 2013.
    This comment brought to you from the Rosedale Mall studio by Hamm's Beer, brewed in the land of sky blue waters.

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    Twins Moderator MVP USAFChief's Avatar
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    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.
    Last edited by USAFChief; 03-26-2014 at 08:32 PM.
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    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.

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    Head Moderator MVP glunn's Avatar
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    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?

  11. #10
    Twins Moderator MVP USAFChief's Avatar
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    Quote Originally Posted by glunn View Post
    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.
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    Senior Member All-Star JB_Iowa's Avatar
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    Quote Originally Posted by glunn View Post

    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-reference.com/le...013-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.

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    Quote Originally Posted by USAFChief View Post
    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.

    http://www.bizjournals.com/twincitie...0-million.html

    http://www.forbes.com/teams/minnesota-twins/
    Last edited by tobi0040; 03-27-2014 at 07:56 AM.

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    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....

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    Quote Originally Posted by mike wants wins View Post
    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.

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    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....

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    Senior Member All-Star Willihammer's Avatar
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    Quote Originally Posted by tobi0040 View Post
    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.
    Last edited by Willihammer; 03-27-2014 at 08:31 AM.

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    Quote Originally Posted by mike wants wins View Post
    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.startribune.com/local/north/204311811.html
    Last edited by tobi0040; 03-27-2014 at 08:32 AM.

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    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....

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    Senior Member All-Star crarko's Avatar
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    In my younger days I made a pretty decent living working for a large local defense contractor. Guess who was ultimately paying the bill?

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    Quote Originally Posted by mike wants wins View Post
    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.
    Last edited by tobi0040; 03-27-2014 at 08:51 AM.

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