Mariners "lose" money
Over at the Puget Sound Business Journal we hear the Mariners are reporting a loss for the 2008 season- link
Over at the PI- we get a little more info- link
We know the Mariners have been playing a PR game with the public for years, and the local newspapers and media outlets are only too willing to play along. So the Mariners say they lost money? Well by golly, that's what the local papers are going to report.
I'm a little more "cynical" than the local writers, so I tend to want more answers beyond just taking Lincoln and companies word for it.
The first thing that jumps out at you when you read the PFD reports from prior years is how little actual information they contain. Is there a special report posted elsewhere that actually contains real data, because the pdf snapshots they have on the site offer so little detail as to be completely useless. For example, it would be impossible to know the Mariners claimed to make $17.8 million in 2007 by looking at the PFD annual report. As explained in the PI, this number is calculated by a "special" formula. Why then can't the PFD more clearly explain this in the final report? Can't they produce a report that is actually readable and relevent? I guess not.
Just look at the breakdown of the agreed upon profit determiner: (how can you not laugh)
Input A= Number the team claims they made or lost for a given year
Input B= The claimed Depreciation/Amoritization of assets
Input C= Player signing bonuses (!??)
Input D= Capital Expenditures on ballpark (i.e. ballpark expenses)
A + B - C - D= Yearly Total Profit
Just look at how absurd this formula is. The Mariners are telling you for Input A, they lost $4.5 million in 2008. This is what a reader of the PI sees in the morning = "Mariners report losing $4.5 million in '08"
Except this number doesn't include all money they pay to players in 2008! When they sign a player like Ichiro to a new contract, often times a signing bonus is involved. (Same thing for draft picks- Josh Fields would be a perfect example when the team paid $1.75 million to bring him to camp.)
You can already see how to the common person the reported number is getting fishy as shit. The Mariners are telling you they lost $4.5 million last year, yet the simplest glance at the figure reveals even simple, annual expenses like signing draft picks are not even calculated when reaching the number.
What about normal upkeep like refreshed paint, carpet, changing the giant poster of Willie Ballgame out front etc... Most reasonable people would expect the Mariners to incur real, legitimate upkeep expenses for keeping Safeco open. Just like a homeowner who needs to replace a door knob or paint the house, this is a perfectly reasonable expense the Mariners are paying, so surely this is part of the debt that led to $4.5 million in losses, right?
Nope- The Mariners are reporting $4.5 million in losses and this number does NOT count for things like money out of pocket for keeping up Safeco.
This is where the dirty little secret is hiding, you just need to read beyond the headlines. Here is what the team is claiming-
2008 Mariner income: -$4.5 million
2008 Signing bonuses: $14.6 million
2008 Safeco capital expenditures: $2.5 million
That is $21.6 million the Mariners are claiming they lost last year by playing the full season, signing players and draft picks and keeping Safeco clean and beautiful. Yet in the end, they actually end up with a $1.9 million profit for 2008. Not what the head lines read, not what the Mariners want you to believe, but thanks to that little old depreciation calculation the team is actually doing just fine.
Here is a real world example of how the Mariners play games with our money. Say you have a friend who has a great job and makes good money- $100,000/yr
He's single, has no debt and at the end of the year he tells you he is broke and lost money last year. Puzzled by this, given he still has a good income you ask how he became broke.
Simple, he says- I started the year with $4,000 in my bank account, but at the end I only had $3,000. Therefore, I lost $1,000 working last year.
You then ask him if he has a 401k he contributes to every month. Yep.
Didn't he buy a new car with cash? Yep
Didn't he put in a new bathroom that will make the value of his house rise? Yep
Doesn't he declare his mortgage interest on his taxes and expects a big refund this year? Yep
So in this example, our sample friends net worth might have risen by $20,000 during the year. Yet by focusing purely on one number (bank account statement) he can claim he lost money. It's a total bullshit, wouldn't pass muster in any Accounting 101 class, but if it makes him feel better or worse so be it.
The Mariners are doing the same thing to the public. They are not outright lying when they say they lost $4.5 million in 2008. Not in a legal sense. They are creating a very arbitrary view of how they define profit or loss, and it's not until the PFD applies even basic accounting principles that we see the Mariners did, in fact actually make a profit last year.
For 2009, the Mariners are cutting the team budget by $20 million. If attendence stays reasonable close to last year, they will do just fine.
Count on them making money in 2009, but don't count on any remaining papers from truthfully reporting it in 2010, at least from the headlines.
Over at the Puget Sound Business Journal we hear the Mariners are reporting a loss for the 2008 season- link
Over at the PI- we get a little more info- link
We know the Mariners have been playing a PR game with the public for years, and the local newspapers and media outlets are only too willing to play along. So the Mariners say they lost money? Well by golly, that's what the local papers are going to report.
I'm a little more "cynical" than the local writers, so I tend to want more answers beyond just taking Lincoln and companies word for it.
The first thing that jumps out at you when you read the PFD reports from prior years is how little actual information they contain. Is there a special report posted elsewhere that actually contains real data, because the pdf snapshots they have on the site offer so little detail as to be completely useless. For example, it would be impossible to know the Mariners claimed to make $17.8 million in 2007 by looking at the PFD annual report. As explained in the PI, this number is calculated by a "special" formula. Why then can't the PFD more clearly explain this in the final report? Can't they produce a report that is actually readable and relevent? I guess not.
Just look at the breakdown of the agreed upon profit determiner: (how can you not laugh)
Input A= Number the team claims they made or lost for a given year
Input B= The claimed Depreciation/Amoritization of assets
Input C= Player signing bonuses (!??)
Input D= Capital Expenditures on ballpark (i.e. ballpark expenses)
A + B - C - D= Yearly Total Profit
Just look at how absurd this formula is. The Mariners are telling you for Input A, they lost $4.5 million in 2008. This is what a reader of the PI sees in the morning = "Mariners report losing $4.5 million in '08"
Except this number doesn't include all money they pay to players in 2008! When they sign a player like Ichiro to a new contract, often times a signing bonus is involved. (Same thing for draft picks- Josh Fields would be a perfect example when the team paid $1.75 million to bring him to camp.)
You can already see how to the common person the reported number is getting fishy as shit. The Mariners are telling you they lost $4.5 million last year, yet the simplest glance at the figure reveals even simple, annual expenses like signing draft picks are not even calculated when reaching the number.
What about normal upkeep like refreshed paint, carpet, changing the giant poster of Willie Ballgame out front etc... Most reasonable people would expect the Mariners to incur real, legitimate upkeep expenses for keeping Safeco open. Just like a homeowner who needs to replace a door knob or paint the house, this is a perfectly reasonable expense the Mariners are paying, so surely this is part of the debt that led to $4.5 million in losses, right?
Nope- The Mariners are reporting $4.5 million in losses and this number does NOT count for things like money out of pocket for keeping up Safeco.
This is where the dirty little secret is hiding, you just need to read beyond the headlines. Here is what the team is claiming-
2008 Mariner income: -$4.5 million
2008 Signing bonuses: $14.6 million
2008 Safeco capital expenditures: $2.5 million
That is $21.6 million the Mariners are claiming they lost last year by playing the full season, signing players and draft picks and keeping Safeco clean and beautiful. Yet in the end, they actually end up with a $1.9 million profit for 2008. Not what the head lines read, not what the Mariners want you to believe, but thanks to that little old depreciation calculation the team is actually doing just fine.
Here is a real world example of how the Mariners play games with our money. Say you have a friend who has a great job and makes good money- $100,000/yr
He's single, has no debt and at the end of the year he tells you he is broke and lost money last year. Puzzled by this, given he still has a good income you ask how he became broke.
Simple, he says- I started the year with $4,000 in my bank account, but at the end I only had $3,000. Therefore, I lost $1,000 working last year.
You then ask him if he has a 401k he contributes to every month. Yep.
Didn't he buy a new car with cash? Yep
Didn't he put in a new bathroom that will make the value of his house rise? Yep
Doesn't he declare his mortgage interest on his taxes and expects a big refund this year? Yep
So in this example, our sample friends net worth might have risen by $20,000 during the year. Yet by focusing purely on one number (bank account statement) he can claim he lost money. It's a total bullshit, wouldn't pass muster in any Accounting 101 class, but if it makes him feel better or worse so be it.
The Mariners are doing the same thing to the public. They are not outright lying when they say they lost $4.5 million in 2008. Not in a legal sense. They are creating a very arbitrary view of how they define profit or loss, and it's not until the PFD applies even basic accounting principles that we see the Mariners did, in fact actually make a profit last year.
For 2009, the Mariners are cutting the team budget by $20 million. If attendence stays reasonable close to last year, they will do just fine.
Count on them making money in 2009, but don't count on any remaining papers from truthfully reporting it in 2010, at least from the headlines.
posted by Tom at
9:35 AM
