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View Full Version : Do the White Sox lose money every year?


theoakwoody
07-14-2010, 11:10 PM
I know I always hear on the radio about how Reinsdorf is a shrewd business man and that he always gives Kenny a budget to work with but I'm having a hard time figuring out how the Sox don't lose money each year. Their attendance has really dropped off from '06 and their revenue from Comcast Sportsnet, US Cellular, and other TV rights can't be that much can it? Can anyone hear even begin to estimate what the sox income is based on tickets sales, advertising, etc?

BadBobbyJenks
07-14-2010, 11:13 PM
In before the **** storm.

Sam Spade
07-14-2010, 11:16 PM
It depends what you mean by lose money. If they take a loss, but the value of the franchise goes up do they lose money?

Personally, I don't really care.

theoakwoody
07-14-2010, 11:33 PM
I don't care either way i'm just curious because it is implied that Reinsdorf keeps a balanced budget. With a payroll of over $ 100 million it seems like the Sox are his charity work for us fans with an average attendance of 25,000 a game. I know they have other revenue streams but its not like the YES network.

kingpin_rcs
07-14-2010, 11:51 PM
If the Sox average 25k per game (I think it might actually be a little higher) then 25,000 fans x 81 games - 2,025,000

$100,000,000 player payroll / 2,025,000 = about $49 per person.

Sox get revenue from:

Tickets
Parking
Concessions
Souvenirs
advertising revenue (there is a lot here, tv, stadium ads, and all the little things that are "brought to you by" etc.)
Salary luxury tax from the Yankees (and others?)
MLB revenue sharing
Probably a lot of other stuff I can't think of

Sox spend on:

Player payroll
Staff payroll (probably higher than you think)
Rent on US cellular field (if attendance is > 1M)
Concessions and concessions contractors
Probably a lot of other stuff I can't think of

I am not trying to prove a point with this post just adding to the discussion:smile:

voodoochile
07-14-2010, 11:52 PM
My general feeling is they break even including the BOD salaries (which some would call profit).

They get a huge amount of money from the national contract, have excellent radio revenue because Chicago is huge, own their own TV station and even if they only draw 2M fans that's probably pretty close to $70M in revenue or more especially if you factor in parking (which is not on the Sox books as revenue I don't believe).

Try Googling info from Forbes which is the best guess anyone can give considering no one has ever actually seen MLB's books...

g0g0
07-15-2010, 08:56 AM
It depends what you mean by lose money. If they take a loss, but the value of the franchise goes up do they lose money?

Personally, I don't really care.

The value of the franchise could be billions but it won't pay today's bills. You'll only get that money if you sell it. So I would say "yes" to your last statement.

On a related note, it was said how Lebron helped the Cavs franchise more than double in value over his seven years. So now that he's gone, has the franchise lost that value?

SephClone89
07-15-2010, 09:03 AM
The value of the franchise could be billions but it won't pay today's bills.

Ladies and gentlemen, Manchester United.

doublem23
07-15-2010, 09:05 AM
I don't think any owners of any sport have really ever opened their books to be investigated, BUT whenever a team is up for sale, millionaires line up around the block to try and squeeze their way in. You think they're all just itching to lose their money to a bunch of 20-year-old meatheads?

Domeshot17
07-15-2010, 09:09 AM
Lets be honest, there is no way Jerry is losing money consistently. He is a smart business man. I am sure they are just fine

TheOldRoman
07-15-2010, 09:16 AM
They have maintained that they will spend if the fans came out. Maybe it was a little backwards, but they lived up to their word, upping payroll by (I think) $17 mil from 04-05 and another $25 mil after winning the World Series. Our payroll has been at or above $100 million for the past four seasons, even as attendance has steadily declined. Obviously, we have no idea how much they are taking in, but people get into team ownership for enjoyment or to brag to their friends about it. They don't do it to make money.

I will say this, the Sox catching fire has, IMO, saved this franchise for a few years. Offseason ticket sales were down, and horrible April weather combined with awful play to start the year had ticket sales down considerably from last year. If the Sox ended up losing 90 games, they would have lost a lot of money, as we would have lots of 22k attendance nights in August and on weekends. I think that would have resulted in them selling everything that wasn't bolted down in the offseason, which would have further pissed off the fans.

TheOldRoman
07-15-2010, 09:19 AM
I don't think any owners of any sport have really ever opened their books to be investigated, BUT whenever a team is up for sale, millionaires line up around the block to try and squeeze their way in. You think they're all just itching to lose their money to a bunch of 20-year-old meatheads?Obviously they aren't getting into it planning on losing money, but they also don't think being owner is going to give them an income of $20 million a year. Owning a team is like owning a yacht. It costs a lot but you don't get much use out of it. It is a status symbol more than anything.

russ99
07-15-2010, 09:28 AM
The Sox were likely operating at a loss or break even (again, after BOD salaries, which everyone does for tax purposes) prior to 2000.

But with the overall higher attendance the since 2002, and MLB Advanced Media/online shop sales which has pushed each team into the black, I'm convinced they make money.

But I have to give Jerry & the other partners credit, since he's spent much of that (obviously actual numbers aren't available) on improving the park, charitible causes and on club operations, instead of pocketing it.

rdivaldi
07-15-2010, 09:44 AM
Not to mention, even if the White Sox do lose a certain amount of money each year, it's not like one person foots the bill. The ownership group is quite large.

cws05champ
07-15-2010, 09:45 AM
This is just an estimate because no one has seen the actual books but the Sox consistently seem to turn a profit.

http://www.forbes.com/lists/2010/33/baseball-valuations-10_The-Business-Of-Baseball_Income.html

The Immigrant
07-15-2010, 09:53 AM
I don't think any owners of any sport have really ever opened their books to be investigated, BUT whenever a team is up for sale, millionaires line up around the block to try and squeeze their way in. You think they're all just itching to lose their money to a bunch of 20-year-old meatheads?

The Rangers just went full kimono with their books as part of the bankruptcy process. Their total revenues for 2009 were more than $169 million, compared to $147 million in 2008.

ewokpelts
07-15-2010, 01:33 PM
the sox operate as a break even enterprise. this is from jerry's mouth.

that said, it's been said the sox have made a profit every year since 2005. btw, they havnt drawn less than 2.1 million fans since 2004.

areilly
07-15-2010, 02:32 PM
I've heard it directly from someone in a position to know that Reinsdorf doesn't care about not making any money, but he absolutely hates losing money - which is pretty consistent with what I know about smart business people and wealthy people alike. So I'm inclined to believe that while there may have been seasons where the franchise was operating in the red, it usually at least breaks even year-over-year.

downstairs
07-15-2010, 02:52 PM
I've heard it directly from someone in a position to know that Reinsdorf doesn't care about not making any money, but he absolutely hates losing money - which is pretty consistent with what I know about smart business people and wealthy people alike. So I'm inclined to believe that while there may have been seasons where the franchise was operating in the red, it usually at least breaks even year-over-year.

Makes sense. Himself and everyone involved get a healthy salary. There's no need for "profit" after everything is paid. Plus, profit means less was put into the team, meaning the franchise all around is less valuable. He wants the value of the franchise to rise- whenever he sells, or his family does, that's their big cashout.

soxfanatlanta
07-15-2010, 02:57 PM
Lets be honest, there is no way Jerry is losing money consistently. He is a smart business man. I am sure they are just fine

This

Lip Man 1
07-15-2010, 03:32 PM
I have been told by two individuals, one a former Sox broadcaster and two a former Sox player with ties to members of the Board of Directors that the Sox haven't lost money in "a long time..."

Take it for what that may be worth.

Lip

TheOldRoman
07-15-2010, 04:30 PM
I have been told by two individuals, one a former Sox broadcaster and two a former Sox player with ties to members of the Board of Directors that the Sox haven't lost money in "a long time..."

Take it for what that may be worth.

LipThat may be true, but it doesn't necessarily support your theory that they could have a $200 million payroll, either. They may not have lost money during those awful 98 and 99 seasons, but I doubt they made any.

voodoochile
07-15-2010, 05:28 PM
That may be true, but it doesn't necessarily support your theory that they could have a $200 million payroll, either. They may not have lost money during those awful 98 and 99 seasons, but I doubt they made any.

Well, again, kind of depends on how you define profit. JR as COB gets paid $1M/year. Do the other board members draw salary?

If so, do they really do much to earn that salary or are they just investors being paid salary to prevent double taxation (taxed profit on the corporation and taxed income for the stock holders)?

It would be very easy for the team to hide any actual profits by handing them out as salaries not that I have a problem with that, but it would even make JR's statement "we haven't paid a dividend other than 2005 since he owned the team" technically and legally correct.

And again, I don't have any problem with that. They invested the money they should have the right to make money on that investment. It's more just for the sake of discussion...

Daver
07-15-2010, 05:33 PM
I love the smell of cooked books in the morning.

It smells like victory.

slavko
07-15-2010, 05:40 PM
Well, again, kind of depends on how you define profit. JR as COB gets paid $1M/year. Do the other board members draw salary?

If so, do they really do much to earn that salary or are they just investors being paid salary to prevent double taxation (taxed profit on the corporation and taxed income for the stock holders)?

It would be very easy for the team to hide any actual profits by handing them out as salaries not that I have a problem with that, but it would even make JR's statement "we haven't paid a dividend other than 2005 since he owned the team" technically and legally correct.

And again, I don't have any problem with that. They invested the money they should have the right to make money on that investment. It's more just for the sake of discussion...

Is the team a corporation or a limited partnership? I've heard the owners referred to as partners.

Lip Man 1
07-15-2010, 06:05 PM
Roman:

I never have said at any point in time over eight years here at WSI that the Sox could have a "200 million dollar" payroll. Only one team in baseball can have that and they will continue to have it until MLB places another team in the New York city area.

I have consistently said, that based on what I've been told, they can have a higher one than they usually have and if need be, can go "in the red" for a season or two if they must in order to get better talent. They choose not to.

Lip

voodoochile
07-15-2010, 06:45 PM
Is the team a corporation or a limited partnership? I've heard the owners referred to as partners.

I don't know. I was actually going to ask that question. It still might be better on them to pay salaries instead of dividends for the sake of public perception.

I also meant to mention that the Sox do not include parking revenue in their yearly statements. The parking company is owned by JR (and the other partners?) but is separate from the Sox themselves. Of course that company wouldn't be seeing a dime for running those lots if it weren't for the 81 home games (minimum) every year. Also, a good chunk of the money that flows through those lots is in cash. I have a hard time believing it's all ending up on the books.

ilsox7
07-15-2010, 06:49 PM
I don't know. I was actually going to ask that question. It still might be better on them to pay salaries instead of dividends for the sake of public perception.

I also meant to mention that the Sox do not include parking revenue in their yearly statements. The parking company is owned by JR (and the other partners?) but is separate from the Sox themselves. Of course that company wouldn't be seeing a dime for running those lots if it weren't for the 81 home games (minimum) every year. Also, a good chunk of the money that flows through those lots is in cash. I have a hard time believing it's all ending up on the books.

It would be incredibly stupid for a very public multi-million dollar business run by a tax expert to partake in tax fraud. They have a target on their backs and it would not be that difficult to catch them in an audit. The White Sox (and related entities) are no doubt tax savvy, but I would tread carefully accusing them of criminal activity.

voodoochile
07-15-2010, 07:32 PM
It would be incredibly stupid for a very public multi-million dollar business run by a tax expert to partake in tax fraud. They have a target on their backs and it would not be that difficult to catch them in an audit. The White Sox (and related entities) are no doubt tax savvy, but I would tread carefully accusing them of criminal activity.

Nothing illegal with paying investors for helping to run the team. At least I don't think so. Am I wrong? I had an LLC for my restaurant and we could set it up to pay me a salary for being the GM (IIRC - not that we ever got that far :(: ) but I assume the Sox could do the same thing.

I'm not attempting to accuse the Sox of anything illegal. If I have, then please disregard that part of my post...:redface:

However, if it's legal to pay the BOD salaries then from a public perception they could get away with saying, "no profits here" while hiding some profits by paying them as salaries (again only from the public).

I know JR draws a salary. I was merely saying that if they can pay the other guys salary too then I wouldn't be surprised if they are.

Edit: Oh you meant the parking stuff. Well, it wouldn't be the first time and yeah, it would be real easy to hide revenue - give both halves of the same ticket to two different cars and it "disappears off the books".

TheVulture
07-15-2010, 11:02 PM
How could anyone selling thousands of six dollar beers, five dollar dogs and four dollar sodas every game be losing money?

Noneck
07-15-2010, 11:26 PM
This is not a toy for this ownership. If it wasnt making money it would have changed hands.

bigdommer
07-16-2010, 09:43 AM
How could anyone selling thousands of six dollar beers, five dollar dogs and four dollar sodas every game be losing money?

I don't want to justify the price of a hot dog, but I don't think the Sox reap that benefit too much. You and I could go to Sam's and get a hot dog for about 25 cents each if we buy in bulk. However, the Sox hire a concession manager or managment company. Concession management hires a food broker. The food broker prices out the options, and hires a supplier (Vienna Beef, Esskay, Oscar Meyer, whatever). The supplier brings their product to the stadium, where is prepared by the concession staff. The vendor buys his product from the concession stand, and sells his product to you.

Everybody involved in this transaction takes a nice financial chunk out of each hot dog before it gets to the fan's mouth. Don't get me wrong, the White Sox profit off of each dog, but they give up at least half of that $4.75 (difference between stadium price and Sam's club price).

bigdommer
07-16-2010, 09:45 AM
I have no idea what the numbers are, but I think we underestimate the TV/radio revenue. I know that here in Baltimore the Orioles get a couple of dozen fans a game, but the ballclub is in excellent fiscal shape because Angelos owns his own TV network that has the rights to the O's and Nats and covers multiple states.

The Immigrant
07-16-2010, 10:52 AM
Is the team a corporation or a limited partnership? I've heard the owners referred to as partners.

I believe the operating entities are corporations, the shares of which are held by LLCs. I'm 99% sure the "partners" are actually members of an LLC.

fcl
07-16-2010, 01:24 PM
I'm not an insider in this area but I know one. He tells me:

TV, TV, TV money is what drives sports. Ticket sales aren't as important as owners let on. It's only important because it's a solid indicator of TV ratings. If less dupa's in the seats buying tickets, probably less dupa's in front of their TV watching on the couch.

voodoochile
07-16-2010, 02:00 PM
I'm not an insider in this area but I know one. He tells me:

TV, TV, TV money is what drives sports. Ticket sales aren't as important as owners let on. It's only important because it's a solid indicator of TV ratings. If less dupa's in the seats buying tickets, probably less dupa's in front of their TV watching on the couch.

Maybe in other sports where good attendance is 1 million dupas, but baseball good attendance is triple that and almost every team draws double.

2M dupas in the seats is ~ $80M in revenue in a city like Chicago. That's a nice chunk of change. I'd imagine the flubbies are pulling in well over $100M a year in ballpark revenue and wouldn't be shocked if it was close to $150M.

Edit: In addition, the other sports tend to draw better ratings as I understand. Football that's surely true but that's ALL national money.

Moses_Scurry
07-16-2010, 02:17 PM
dupas?

voodoochile
07-16-2010, 06:24 PM
dupas?

I think it means butts...

FielderJones
07-16-2010, 06:53 PM
dupas?

Polish slang for butts.

tsoxman
07-16-2010, 07:06 PM
There are two things that help this organization imensely...one, by virtue of owning the team for thirty years, the franchise has a very low cost basis. Jerry bought the team for about $21 million in 1980..Contrast that with the Rickets family that paid about $700 million for the Cubs and asa result, has to service about $300 million dollars of debt. Think about this the next time someone tells you that he wishes Reinsdorf would sell the team.

The other thing that helps is a favorable lease agreement with the ISFA. Many team that have built new parks recently have had to pay higher rents as a means to service debt on bonds floated to build the facility.

Dan H
07-17-2010, 08:41 AM
The White Sox have cried poor but they have not been losing money. There were times that they probably were hit hard: after the strike and the White Flag Trade. But the Reinsdorf group would not lose money for 30 years. Just how profitable they are is something we will never know.