February 11, 2013
Are the Astros Really Losing Money?
Depending on what you read, clubs in Major League Baseball are either making a massive profit, breaking even, or, if you listen to the owners, often running in the red. Since baseball is a private industry, trying to determine the truth is a matter of educated guessing, wild hyperbole, or a case of “no comment” coming from the league and clubs.
So when an owner talks about the financial status of the club he runs, it prompts a fair amount of discussion. As we’ve seen with the leaked financial documents from the likes of the Marlins and others, the truth typically is on the side of ownership not only making a profit, but a handsome one at that.
The next chapter in this ongoing conversation comes via the Houston Astros and their owner, Jim Crane. Brian T. Smith of the Houston Chronicle tweeted on Saturday that Crane said, “As a franchise, [the] Houston Astros have lost money the last five seasons.”
There are some very important semantics that need to be taken into account regarding that statement. The key word to latch onto is “franchise.” If you look at only the revenues and costs that the Astros themselves must cover, I can see very easily how Crane’s statement can be accurate. This includes only revenue streams attributed strictly to the club, such as gate receipts (attendance), television revenues (local/regional reached by the club), concessions, parking, suites, and other sources of that nature. In looking at player payroll and attendance in the final years of the Drayton McLane era and in the first year of Crane’s ownership, you’ll find that Crane has a good case. As he said upon purchasing the club, “The way we’ll approach it moving forward, and they’ve already started that, is get the payroll lined up with the revenue that’s coming in and continue to build our farm system. With the trades that have been made, we’ve got some very good prospects. I think you’ll see some more of that.”
So, Crane was speaking about club-controlled revenues. In order for his statement to hold true in the aggregate, the Astros’ own losses would have to also exceed their revenues from national broadcast deals, MLB Advanced Media, and other league-wide sources, not to mention the revenue-sharing checks that the organization has recently collected. Once you account for all of that, you’ll notice that the Astros are actually pulling in a hefty sum: