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August 15, 2002 12:00 am

The Zumsteg Plan

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Derek Zumsteg

According to Mike Jones' market-size research, Kansas City is the smallest market with a major-league team. Jones pegs it as the 39th-largest market in the country, based largely on information from Nielsen. Using the latest data from the Census Bureau (which operates one of the most data-intensive sites you'll ever find at www.census.gov), there were about 1,756,000 people in the Kansas City Metropolitan Statistical Area in 1999, as compared to New York's 20,197,000.

K.C. has one team. New York has two. Forbes estimates that the two New York teams took in $384 million in revenue last year. Kansas City? $85MM. If the total revenue pool of a city is divided evenly by the teams in it (This may not be the case. I've seen it argued that instead of splitting a market, adding a second team only causes the first team's revenues to drop by .8, which is attributed to increased interest in baseball, rivalries, and so forth), a third team in New York would make $125MM. That's a cool $40MM more every year.

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I'm the new owner of the Angels.

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As noted in my last column, operating losses account for only $232 million of the $519 million Major League Baseball claims to have lost in 2001. Another $112,491,000 represents net interest expenses. Here's how the interest was distributed.

Part One
Part Two
Part Three
Part Four
Part Five
Part Six

As noted in my last column, operating losses account for only $232 million of the $519 million Major League Baseball claims to have lost in 2001. Another $112,491,000 represents net interest expenses. Here's how the interest was distributed:

Team Interest Chicago Cubs $4,665,000 Chicago White Sox $2,263,000 New York Mets $2,152,000 Kansas City Royals $1,611,000 Atlanta Braves $1,139,000 Toronto Blue Jays $593,000 Boston Red Sox $51,000 Philadelphia Phillies ($239,000) Seattle Mariners ($682,000) St. Louis Cardinals ($962,000) Florida Marlins ($1,640,000) Colorado Rockies ($2,078,000) Cincinnati Reds ($2,633,000) San Diego Padres ($2,815,000) Montreal Expos ($2,835,000) Cleveland Indians ($2,869,000) Houston Astros ($3,056,000) Oakland Athletics ($3,939,000) Minnesota Twins ($4,327,000) Pittsburgh Pirates ($4,677,000) Anaheim Angels ($4,978,000) New York Yankees ($6,089,000) Texas Rangers ($6,815,000) Milwaukee Brewers ($7,128,000) Tampa Bay Devil Rays ($7,421,000) Arizona Diamondbacks ($7,774,000) Baltimore Orioles ($8,385,000) San Francisco Giants ($12,831,000) Los Angeles Dodgers ($14,437,000) Detroit Tigers ($16,354,000) TOTAL: ($112,491,000)

The positive figures are no surprise. Every club--well, every one but the Expos--starts the season with an eight-figure bank balance, thanks to advance sales of luxury boxes, season tickets, and single-game seats. By the time the players start to collect their salaries, this money has been earning interest for months.

Thus, to estimate the interest actually paid by the other clubs, their reported interest expenses must be adjusted to reflect the offsetting interest income. This presupposes, of course, that interest earned on season tickets and luxury boxes is actually reported on the team's balance sheet... which doesn't appear to be the case for the Boston Red Sox. It's hard to imagine how the Red Sox, a club with no long-term debt, could have netted just $51,000 interest on local revenues of more than $150 million.

Since the two Chicago teams reported the most interest income, I'll use the average of their effective interest rates to estimate the total interest received by all 30 clubs. The Cubs earned 3.59% interest ($4,665,000 on total operating revenues of $129,774,000); the White Sox 2.03% ($2,263,000 on $111,682,000), for an average of 2.81%. Multiplying this rate by MLB's gross revenues of $3,547,876,000 yields an estimate of almost exactly $100 million in interest revenue--$99,695,000, to be precise. Since MLB reported net interest expense of $112,491,000, the 30 clubs paid more than $210 million in interest during 2001.






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February 4, 2002 12:00 am

The Numbers (Part Six)

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Doug Pappas

Part One
Part Two
Part Three
Part Four
Part Five

At last we've reached the bottom line. The table below ranks the 30 major league clubs from most to least profitable, net of revenue sharing.





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December 20, 2001 12:00 am

The Numbers (Part Three)

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Doug Pappas

Part One
Part Two

MLB's financial disclosures break down team revenues into five categories. Two, regular-season game receipts and local media money, were discussed in the first two installments of this series. The third column, postseason revenue, contains a few surprises:


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(Peter Schoenke, President of RotoNewsDirect.com, provides a guest column this week that serves as a rebuttal to Keith Law's two recent articles on revenue sharing.)

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