Cool- I get what you are saying. Totally and completely. And this isn't meant to argue with you at all it's just some further thoughts on some of what's gone on in the game press when talking about the negotiations. Lets use those numbers that are most fair to the players association argument. In 2019, the Braves, a top 10 franchise in the game, in a year where they won their division winning 97 games and were in a new stadium that was less than 5 years old, turned an operating profit of $50,000,000. OK. Got it. Their payroll that year was $126,000,000.00. The CBT that year was $208,000,000.00 If they would have spent up to the CBT they would have lost $35 or $40 million dollars. That's not making the point that the players association seems to think it's making. The owners aren't killing it (maybe outside of a couple big market franchises that are in huge and awesome markets) and drowning in profits. The small market clubs that don't spend dick and free ride on national deals and revenue sharing are probably doing ok financially as well. Mid tier markets competing up to the tax line have got to be stretched. This just isn't a hugely profitable industry regardless of what the players want you to believe. As far as valuation goes Drayton bought the Astros in 1992 for 117 million. He sold in 2011 for 615 million. That's an annualized return of 9.04% The annualized rate of return from 1992- present (30 years- the time frame when Drayton owned the team?) 10.72% Jim Crane bought the team for $615,000,000.00 The rate of return over the last 10 years is 13.55% If Jim Crane wants to see a rate of return on his money greater than what he would have gotten by sticking it in the Nasdaq index fund he would need to sell the Astros for more than 2.1 billion. Could he? Maybe. Maybe not. I'm sure he has zero regrets buying the Astros. It's fun. It raises your profile. It makes you matter to the public more than most billionaires. But, when Manfred talks about it not being a great investment and not outperforming the stock market he's not lying and there's not some unreasonable pot at the end of the rainbow out there.
Yeah, but it's more complex than this too. It's an investment that's both increasing in value AND generating yearly profits. Plus it can be financed by debt because it's an asset that consistently grows in value. If you buy the Astros for $600MM and put up $200MM and finance the rest, your $50MM in annual profits is a 25% return. And then when you sell it 10 years later for $1B, you made a 200% return on your $200MM investment ($400MM in profit; $400MM paying back debt). And $1B is conservative. (edit: in this scenario, you'd have turned $200MM into $900MM in 10 years, combining annual profits and valuation increase) Beyond that, MLB has a new bigger national TV deal starting this year that distributes $60MM to each team, so that's another boost in revenues. I'm not siding with either side - but MLB has been a massively profitable venture. Players have also made a fortune. Who should get bigger cuts of additional fortunes? That's for them to hash out.
I've missed the last few pages and only read the posts on this page. Great discussion points from you two. Thanks.
No doubt. Just like with the taxes I'm trying to keep things really simple and at their most basic, and there is 9 and 10 figures involved (11 for the entire industry) so it's obviously not that simple. You could also view it like buying a stock that has a dividend and re-investing it- that's one thing owners could do. I'm a mortgage guy (if you ever need help buying or refinancing a house I'd love to help!) so I will talk housing because that's simple and basic and everyone can understand it. Crane could have taken his $200,000,000 in 2011 and leveraged that to buy something like $1,000,000,000.00 worth of houses (for point of comparison for people around town that would be about 3600 median houses in the Houston area). That's probably about the size of Shadow Creek Ranch maybe? OK- so lets say Crane decides he wants to buy all of shadow creek ranch, finance the deal and turn it into Crane-ville. He'd have likely paid the $800,000,000 he borrowed down to about $600,000,000 through debt service, and his valuation would probably be what- $1,8,000,000.00 if comparing to 2011 when he would have been buying the housing at a pretty distressed price? And, he would have made 8-10% off the investment in a yearly manner (that's the typical number that those REITS use for their calculations). Nobody would know who he was. He would have probably made more money. He would have probably had a safer investment b/c the fundamentals would be there for valuation, as opposed to relying upon the greater fool theory as they call for in MLB. I'd rather own the Astros. That has nothing to do with it being a better investment or more financially rewarding. I join you in not caring how they divide up their money. If the players were fighting for some principle (like taking care of their younger members- raising everyone up that makes minimum- helping the minor leagues- safe guarding the game for the fans- any of that ****) I might be able to get more involved on their side. They aren't. They are asking for more money. That's their right. But, they can't take all the value out of the business or it won't be sustainable going forward. The owners have to be able to run a profitable business in every market (if they do a good job) if the game is to be stable and healthy. I don't know that any of the players asks would have made that unworkable, but when they started asking for 250 in year 1, after 2 pandemic years, that's a pretty inherently unreasonable ask form my perspective. I ain't mad at them. I'm just going to apply some critical thinking skills that useful idiots like Jeff Passan don't. I don't know if that's ideological, intellectual, if it's about access, or if he's just that damn dumb, but he's published some really stupid stuff throughout this whole saga. I'm a labor guy at heart. It's my roots. I come from immigrant stock. My grandparents didn't graduate high school. My parents worked their way from union jobs up to professional jobs while I was alive. I saw them go back to school, sacrifice, start over, move etc. I've got strong labor feelings and I'm out for the little guy in most situations (the players here are as little guy as it gets). But I also recognize that it's good for "the little guy" to have a stable system that is dependable and doesn't crash. And making owning a team a break even proposition in yearly profit and loss isn't a recipe for long term stability.
One more point I see made all the time is that the players provide all the value. This is fundamentally untrue. There are generations worth of value created by the league and the team, and the infrastructure provided. We root for laundry. If the players started their own league there would be plenty of people that wouldn’t follow that league because they wouldn’t be rooting for the “houston Astros” that their grandfather rooted for and that they grew up rooting for. At the end of the day we are rooting for laundry.
Not entirely true. If the league went on solely with replacement players, it would not be as successful. The players are the product. The sum of the product + the TV contracts + the stadiums + nostalgia = value.
What was the value of the franchise before they lost that 50 mill, and what could it be sold for now? Owners aren’t losing money, players are getting rich. Except right now
That is absolutely correct about replacement players. Your equation is absolutely 100% correct. Media is constantly saying “the players are the product, there’s no game without them blah blah blah. I’m pushing back against the idea that it’s all the players. It’s not. My suspicion is of all the best players formed their own league and all the players were replaced by replacement players both leagues would be pretty similar in value, scope and I might bet on there being more value in MLB after 10 years as opposed to a players break away league. But neither side would thrive without the other.
Not entirely true cause the TV deals would follow the players Truth is they don’t have the money to do that though, not even close
We still have people that root for the houston rockets even though we suck. Some people followed Harden out the door but most stayed rockets fans even though we aren’t even trying to compete or win and honestly maybe 1 or 2 guys will ever be a part of a relevant Rockets team. It’s pretty ingrained to root for laundry out of sense of normalacy, nostalgia, inertia etc. I’m not pro owner. I’m not pro player. Theses guys are negotiating over money and that’s fine. They need each other at the end of the day. They would do well to remember that I think.
Replied before I read I do agree that both sides need each other. Neither seem smart enough to realize that I, more than most, think baseball is taking a HUGE risk cancelling games and the chances of this causing a lot of people to turn away from the game is great. It happened to a fair extent in 94, and today not only are there many more entertainment options but people are much more emotional
I agree people root for the laundry But it’s a totally different situation when a player is traded to an opponent than if all the players started their own league. I could easily root for Correa playing for the Houston Bulls, but the Texas Rangers? Not so much
Cancelling games isn't great. If they played a 154 game schedule (doubtful) or a 144 game schedule or something like where all the games are missed on the front end of the schedule I don't think there will be a huge hit. What was so bad about 1994 was that the fans got invested in a pretty awesome season and then there was no playoffs or world series. That's the worst way to make it happen. That was worse than when hockey cancelled the entire year. The NBA has had multiple shorter seasons over labor disputes and nobody seems to care all that much (except maybe that 50 game season) because it's just time missed at the beginning of the season when only the die hards would be plugged in. But yeah, there is absolutely no doubt they are playing with fire.
Not just that. I think there is much more public sentiment for the players today because they have a more direct avenue to the fans via social media.
I don't know. From my perspective it's the journalists leading the charge and I don't think that has anything to do with social media from the players. As with anything (including this negotiation!) the answer is never all of one thing or all of another. Lot of factors are present.
"If somehow that's not enough, consider the other, more-prominent leverage point left for the players: rebates paid out to the regional sports networks that carry local broadcasts for games not played. Depending on the team, avoiding rebates necessitates between 138 and 150 games broadcast. It provides the basis for a widely shared view among players: that because of the rebate threshold and low April attendance, teams are perfectly fine missing the first month of the season." --ESPN
You mean fans aren't able to connect with old, crumdgen billionaires? The Mets owner is pervasive on social media... I don't think that buys much sentiment.
Journalists are leading the charge because they want to put pressure (from a fan backlash standpoint) to force an agreement. They have to choose a side to get that. They ultimately want a resolution so they'll still have jobs.
That sounds about right. The owners for sure care less about gate and TV in April than the players do about their salary. June 1 is my guess. That will suck. Should I plan to blow my $3,000 refund I will probably have coming back to me from season tickets at the casino this weekend? Magic 8 ball says? Probably.
