This morning, Deadspin released financial documents from several teams. Among the documents are four pages from the Tampa Bay Rays covering the teams finances from 2007 and 2008.

We are still in the process of breaking down the numbers, but the first thing to jump out at us is confirmation of the amount the Rays receive in revenue sharing. There have been rumors, but never anything concrete. On page 3 (at right), income from revenue sharing is listed as $35.3 million for 2008 and $39.4 million in 2007.

We also see that the Rays took in $17.7 million from their post-season appearance in 2008. The cost of hosting the playoffs was $6.2 million, meaning an $11.5 million windfall from their World Series run. And of course, those numbers don’t include any revenue generated from the millions of dollars in free advertising the team received from wall-to-wall national coverage in October, 2008.

At the end of page 3, we see that the Rays “comprehensive income” was $218K for 2008 and $9.6 million in 2007. Certainly not enormous figures, but…

[Update] According to The Biz of Baseball, the important figure is “Operating Income” also known as “Operating Profit.” This is the figure that indicates how much money the team made or lost in one fiscal year. According to these figures, the Rays made $14.2 million in 2008 and $21.7 million in 2007.

Pair those values with the increased value of the franchise in recent years according to Forbes, this appears to prove that the Rays are not losing money as Stuart Sternberg has stated recently. The Rays also claimed to lose between $20-30 million in 2006 and 2007.

We don’t think very many people actually believed the Rays were losing money, but these documents go a long way towards suggesting that the Rays have been less than truthful when it comes to their finances. It is a big blow to their efforts to move the team to Tampa as this shows the team can be profitable in St. Pete.



  1. Chris says:

    “Can be profitable”

    Sure, they can be profitable in St. Pete, but they can be a hell of a lot more profitable in Tampa.

    • Blake says:


    • Cork Gaines says:

      Completely agree. But that is not the argument the Rays are presenting. They have long claimed they are losing money. If that is not true, it kills their credibility.

      • Michael says:

        Don’t you have to think the numbers from 2009 would be pretty bleak for the Rays? No $11 million from the playoffs, more money spent on increased payroll, and pretty much the same or less from attendance. Who knows if they lost enough last year to wipe out the $10 million profit from 2007, but it can’t be good.

        Those numbers from 2008 show how little margin for error the Rays really have. A dud signing like Pat Burrell really, really does kill them.

        • Andy says:

          They raised ticket prices by roughly 5%, and saw substantial jumps in attendance in 2009 over 2008 (due mostly to people who bought season ticket packages for playoff tix.), and enjoyed a sellout for every spring training game the played in their new home. I’m sure they were fine.

    • Cork Gaines says:

      Check out the update. “Operating Income” is the year-to-year operations of the team. According to that figure the Rays made nearly $15M in 2008. The number I stated earlier included investment expenses that are not related to the operation of the team.

      • pendulously says:

        I think what Maury is arguing is that Op Income is the best way to compare team to team. Which I agree with. But in trying to figure out the health of the Tampa franchise, the things below the Op Income line are relevant. And it is not as if the owners are just paying themselves $10 million or so. The biggest expense by far is interest payments on the debt taken out to buy the team. That is a necessary expense, as I don’t guess SunTrust or whatever bank owns the note is going to invest in payroll either if we didn’t pay the interest and go into default.

        To me the conclusion is still the same: I want my team to be a healthy enterprise that can sustain success. And these numbers don’t make me really optimistic about the future if the status quo is maintained.

      • pendulously says:

        BTW I would love to know what the loss on a derivative instrument was. Is Stewey trying to hedge against poor attendance or something?

        • Tracy says:

          I posted about the derivative loss below, but I will reproduce that part of my post here – I’m an accountant by the way:

          As for the derivative loss, I guarantee that to lower the interest rate slightly, Sternberg & Co accepted a variable rate note (loan) when they bought the team. Then they hedged interest rates increasing through an interest rate swap. When interest rates collapsed during the recession, they took a huge loss on the swap. There is probably some sort of cash expense that relates to the derivative loss but without knowing the transaction details, it is impossible to know how much cash it is costing the team. However, this situation also means they are paying less in interest.

    • Gus says:

      Thanks for sharing this Cork. I try to make two conssitent points on this website. (1) BJ Upton shouldn’t lead off ever, and (2) Sternberg is making a healthy profit given his low payroll, low operating costs (favorable lease), low purchase price and revenue sharing + decent attendance.

      I mayy need to add a 3rd point. The they will “make more money in Tampa” is not quite so easy an analysis.

      This is where lots of people miss the boat. If you believe the Rays that they will contribute $150M towards the new stadium as described in the Al Lang plan and would be expected I think in any new plan (and they would contribute that in the form of “rent” on the new stadium), then you are looking at servicing $150M over 30 years. Depending on interest rates, you are looking at about $10M to $12M a year to service that debt. They basically pay zero rent (I think less than $1M) at the Trop now (rent depends on attendance, and has been one of the reasons the Rays don’t deeply discount tickets, because after 2.0M, the rent goes up), and presumably would get a better deal to stay in a paid off dome (post-2016).

      So you’d have to do better than $10M-$12M more in a new stadium just to break even at a new stadium (no matter its location). While I think most people assume a more centrally located stadium will help attendance, will it help attendance by 500k (what you would need at $20 a head to get to $10M)? Im not sure about that, especially if the stadium is not air conditioned (and retractable roof will drive costs higher than $10-$12M a year).

      The Rays are like the well-run restaurant in the dated location whose owners dream of a brand-new facility in a “better” part of town where they charge more $ for the same food. We’ve all seen those restaurants make those moves and fail (think of the Pirates, and maybe the Marlins). Lots of risks in such a move, and I don’t think post-financial crisis, that Sternberg’s group has the pockets to withstand such a move.

      They have the best team in baseball. Don’t kill it with debt like the Glazers.

  2. I didn’t break down and do a comprehensive analysis (accounting just isn’t my thing), however it’s about what I expected when it came to the profit/loss statement. The Rays make a tiny profit, unless they make a post-season run. That’s why they pulled back on the frills last year around this timee.

  3. pendulously says:

    So the good news is assuming the Rays can go to the World Series every year they can squeak out a $200,000 profit? Call me naive, but I almost think that is an argument in favor of management’s contention that the current set up is not sustainable.

    • Michael says:

      Exactly. They made a measly $218,000 on the heels of that fantastic playoff run two years ago — when the payroll was some $20 million less than it is now.

      Attendance is the same or lower this year so far, although with ticket price increases, the $2 walkup surcharge, increased concession prices, etc. they probably take in marginally more than 2008 from home games. We’ve gone over how increased viewership for TV broadcast unfortunately doesn’t benefit the team’s bottom line much since the deal with FSN is locked in. I don’t see the numbers going up much at all on the revenue side, not to mention the fact that I’m sure Stu’s fellow owners aren’t big fans of subsidizing a team that’s kicking all their asses.

      Another way to look at it is that the 2007 team, which was terrible, made $10 million in profit mostly because they spent $20 million less on payroll. The Rays increased payroll thinking that revenues would increase accordingly thanks to higher attendance etc, but even with the extra $11 million from the playoffs they barely turned a profit. Imagine if they had fallen a game short of qualifying for the postseason, they would have lost a boatload. I bet the numbers for 2009 look pretty dismal. I have to think most owners would look at numbers like this and think “I can make a tidy profit with a bare bones payroll, or I can put a bunch of money into players and barely squeak by if everything goes right.” It’s pretty easy to see which way a Vince Naimoli-type would go.

      I have to agree that these numbers are further proof that the Rays cannot remain competitive long-term in the Trop, not evidence that everything is just fine.

  4. Mike says:

    Summary – the Rays can make money if they keep payroll under $55 million and put a successful team on the field. If only it was possible to do this regularly. If they make 5% more this year than they did in 2008, the Rays will lose money.

  5. Beth says:

    I agree with many of the comments above — clearly the Rays have been making money, but their profitability is tenuous. We don’t want to have a team whose owner can only profit by keeping payroll very low.

    But….I firmly believe that if the Rays want taxpayer subsidies for a new stadium they need make their financial position public. I can’t apply for public assistance or student aid without showing the state my tax returns. If a private company wants public aid they should be prepared to meet the same level of scrutiny.

    If they don’t want to make a public accounting of their profits that’s fine, but then they should fund their own stadium.

  6. Kevin says:

    I am a financial guy so I might be able to provide some insight into the numbers. First, comprehensive income is typically not used to judge performance in any industry i’ve been involved in. The majority of the comprehensive loss is an increase to pension obligations which is not a current period expense…it’s a future liability (think balance sheet not P&L). And the company likely has pension assets to pay these future liabilities.

    Moving up the P&L net income is a good indicator of performance. However, net income includes the $10M in other expenses which are not considered core activities to running a baseball team. You can think about that however you like but for this team interest expense in pretty fundemental in my opinion.

    Operating income measures the organizations performance around its core activities, running a baseball team.

    In my opinion the interesting information comes by comparing the Rays operating results to other teams. So for me (and I have not done this) I would take the operating income and add in the $8M of interest expense to arrive at “core income” of about $6M which is a little less then 4%. How does that compare with others? Also how does $3M in suite revenue compare with other teams…feels low. Also, and what is the MLB central fund?

    Interesting stuff but I would conclude that the Rays are making money. They made money in 2007 in a bad year and in 2008 in a good year. When being compared to their peer group, however, they are probably not as well positioned due to their inability to generate as much revenues as others. The risk seems to be that you would likely have years which result in a payroll similar to 08 with ticket sales due to the on field results similar to 07…that seems likely and the rays can mitigate some of that risk by not having a payroll similar to 08 which is apparently what we will see them move towards this offseason.

    • pendulously says:

      Good stuff, thanks. The interesting unknown to me is how they are doing now. It does appear they are capable of making money with a $45mm payroll. It is (I think) $70mm something today, with attendance basically flat. I know ticket prices are higher and I think they have a new tv deal, but I am guessing that does not add $25mm in revenue.

      I am not sure the fact that the Rays can be profitable on a $45mm payroll is comforting to me as a fan who wants to see them continue to win ball games.

      • Kevin says:

        I’m curious as to how you cover the $25-$30M in new expenses as well…and that’s assuming the remaining expenses are fairly flat. I noticed a big jump in the concessions/parking line and I would think that would add a few more million as well with parking no longer free and a few more fans at the games.

        If the best/2nd best team in baseball can only do slightly better then break even with a $70m payroll that’s not great. However the value of the franchise has increased so we need to take that into consideration…that will return value to the owner.

        • pendulously says:

          Agreed. Easy for me to say but I am 100% content with Stew & Co. breaking even until a sale and then making money on an increased sale. (Not sure what they would say about that…) But if I was owner the one thing I would not allow is constant annual cash calls. So back to the breakeven discussion.

          Hard to say for sure but again, I can’t say these docs make me feel particularly good about the long-term sustainability of a winner in the current environment.

    • Gus says:

      Kevin: Seems like $10M in interest expense is approaching Glazer territory, if they bought control of the team for $150M (approx.) and the note has no ammortization, $7.5M would cover interest expense at 5% Note for $150M (I have no idea how good their credit is, but I assume Stu could borrow at that rate or lower).

      The point is, they bought they team with something close to no money down, so I’m not sure how the Tampa Bay area, the Trop, the fans, or Pat Burrell is blamed for that particular line item.

      I too am interested in the derivative loss. Again, another business decision by management.

      Finally, sponorships, season tickets, suites are going to be lagging indicators as the franchise finally turned the corner in 2008. You’d have to think they are going to be seeing more revenue there, plus the spring training operation as well.

      • Tracy says:

        I happen to be an accountant. First, ditto on everything that Kevin said.

        Second, interest expense may include debt on the Trop renovations a few years ago. IIRC, that cost about $25m. At 5%, that would add another $1.25m.

        However, 5% would have been a very low interest rate when Sternberg & Co bought the team. With a quick look, Treasury interest rates were much higher back in 2004, about 1% higher at medium to long term rates than they are now. What that means is that even the federal government couldn’t have borrowed that much money, $150m, for 20 years at 5% interest. I hazard that Sternberg & Co probably paid closer to 7%-8%, which means that they probably put down $20m-$30m.

        Also, as for the derivative loss, I guarantee that to lower the interest rate slightly, they accepted a variable rate note. Then they hedged interest rates increasing through an interest rate swap. When interest rates collapsed during the recession, they took a huge loss on the swap.

        As for the rest of operations, it seems that Sternberg is telling the truth. To make a decent margin, they need to keep payroll around the $50m range.

        • Gus says:

          Wouldn’t they have refinanced as rates dropped and the cash flow of the franchise improved? I’m guessing that is why they had to realize the hedge termination payment.

          I believe the improvements to the Trop were touted as $10M, which sounds about right.

          But it looks like baseball relaxed its leverage rules to let get Naimoli out of the general partner chair and thus they have more interest expense than would be typical if they bought the team under non-stressed circumstances.

  7. Jacob says:

    Looking at the other teams, the Rays ticket revenue is about the same as Florida and Pittsburgh, but is no where close to LA(100 mil). The TV/radio lags behind both despite Tampa Bay being a larger media market. So for the Rays to remain competitive and profitable they need a new TV inline with the size of the market, closer to 20 mil.
    A new stadium will not only bring high costs but the team will also be able to charge more for tickets and suits, which could offset the high costs.

  8. Leighroy says:

    4% profit on an investment that large is not what any Wallstreet hedge fund manager would call “successful.” 10 to 12% is much more so the area of the target that people like Sternberg seek out of their investments.

    I think another thing people really need to consider is that the trop is not an attractive asset at all come time for when Sternberg resells. It’s one of the reasons he got the team for its relatively cheap rate. Look at the Glazers. They bought the bucs when they played in the old sombrero for a fraction of the cost that they are presently valued playing in RJS. Why? Because the new stadium has the sustainable characteristics to provide corporate, suite, and additional revenue streams that a facility like the Trop simply just doesn’t come close to providing at a comparable level. And when you factor in the city of st. pete’s stubbornness, you can’t guarantee a new facility that will provide these kinds of means that the Glazers enjoy will exist in the future.

    Also, who’s to say the Rays will have a high resale value anyway? Baseball as a whole is struggling with viewership/fan levels as has been well documented in national media. The reality is the future for baseball as a successful business industry on a national level is very uncertain.

    People simply do not go into business thinking that they can scrape by year to year making minimal if any profit while thinking “hey when I resell my store in X years down the road I’ll make that money back.” I mean that’s just not smart business sense. So you can say sure, nominally the rays make a profit each year, but in the greater scheme of things a profit like this is not guaranteed to compensate for uncertain disparities in resale value.

    Long story short, you or Stu Sternberg cannot (and I guarantee you he does not) assume that the resale value will be guaranteed to generate a profit compared to the price they paid for the team a few years ago. And you especially cannot take such a risk when you are talking about a sum of money as large as the multi-millions we are dealing with here especially with such large debt liabilities involved.

  9. John S says:

    Hahaha I love all the financial experts that have joined this discussion. So let myself another financial professional, expect, I am a financial analyst in IB Merger&Acq.

    First off, everyone one is right the Rays are making money. Second off, you never ever look at an Income Statement for true performance of a business, you look at the Cash Flow. An Income Statement is like a personal W-4, you put so much junk on there and show that to the government to decide how much you owe in taxes. ALWAYS look at the Cash Flow Statement. Now you will notice that the 2008 $4 million will carry over from the Income Statement to CF Statement. The CF Statement will tell you that the Rays annually are making something.

    BUT this is the BIG BUT… The Rays can and are making money but that does not mean the Partners (The investors, yes Steinberg one of them) are making money. And if you need any evidence to see what their investments are worth. Take a look at the Balance Sheet and check out the Partners Equity at the bottom of the statement and check out the negative haymakers that are being throw there. Let me introduce to you the owners and investors in the Limited Partnership (General/Limited Partners) and the value of their investments. Looks pretty bad.

  10. Joe says:

    This is just amazing. Absolutely amazing. We know what the Rays are getting now. Yes, I have management degree and finances are not quite a specialty, but they are something I know of. What keeps on changing and increasing is MLB Network, MLB Properties and the Central Fund. Look at the piece written by Jayson Stark on November 19th that Scott Boras went at with Rob Manfred.

    The payroll level the Rays have even in 2010 is exceeded by what they take in off the Central Fund and revenue sharing. We don’t even talk about ticket sales, that can fluctuate due to a number of mitigating factors.

    The main point here as mentioned by Cork and everyone concedes is the RAYS ARE MAKING MONEY!!! And if they tell one source they lost $20-30 million and then tell the editors they lost between $10-100 million, what purpose does that serve?! Why talk about 2011 payroll on the first day of pitchers and catchers reporting in 2010?! There is no logic and it serves a self-defeating purpose! Stuart Sternberg has played this completely and utterly incorrectly and inappropriately because of the stadium issue. How can anyone say he is credible and believable when this information is in direct contradiction to what he is saying?

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