Even Cash-Inhibited Athletics Disprove DeWitt Saying MLB is a Money Loser
One of the storylines that slipped a bit under the radar this week was the assertion by St. Louis Cardinals’ owner Bill DeWitt that owning a Major League Baseball was effectively a one-way ticket to the poorhouse.
It’s one thing to spin the truth a little in the middle of contract negotiations, but DeWitt asserted on a St. Louis-area radio show that “The industry isn’t very profitable, to be quite honest.”
What audience was he trying to reach? Who did he imagine would believe that baseball franchise ownership is a fool’s errand?
DeWitt may not actually believe it himself. He shouldn’t. He and his group bought the Cardinals in 1995 for $150 million. According to Forbes, the current value of the franchise is $2.1 billion. In a quarter of a century, his investment has enjoyed an average increase in value of $78 million per year each year for 25 years.
Wonder if he’s applied for food stamps.
Umm, probably not. He and his management group were able to scrape together enough of the coins under the couch cushions to build a Ballpark Village outside of Busch Stadium, then dropped $260 million on a Phase 2 expansion that includes luxury apartments, a 29-story high-rise and a Live! By Loews Hotel.
DeWitt and his fellow owners came back at the players with a new offer Friday, and it seems that there are a few dollars available. The new offer is worth an estimated $70 million more that the last offer, potentially more than that if a full postseason is completed.
And that’s good. But it’s tough to get around the thought that DeWitt isn’t an outlier, that he is a voice for at least some of baseball’s ownership. As documented above, the Cardinals are proof that, this current blip perhaps being the exception, baseball ownership is a moneymaking machine.
We only have to look out our own Bay Area back yard at the Oakland A’s, my any account one of the poorest franchises in the game. The A’s annually are on most lists of the most frugal teams in baseball.
Still, that’s not the same thing as not being a money-making undertaking.
When Lew Wolff and John Fisher got together to buy the Oakland A’s from Steve Schott and Ken Hofmann in 1995, they paid $180 million. Forbes says the A’s – Wolff sold all but a fraction of his shares to Fisher a while back – are valued at $1.1 billion. Over that same quarter century, the A’s have gone up in value a little less than $37 million per year for $25 years.
Making money the A’s way
Buyer Year bought Purchase price
Arnold Johnson 1954 $3.5 million
Charlie Finley 1960 $1.92 million (*52%)
Walter A Haas Jr. 1980 $12.7 million
Schott/Hofmann 1995 $72 million
Fisher/Wolff 2005 $180 million
Current Value (Forbes) $1.1 billion
(Note: Finley bought the club after Johnson died of a heart attack at 53. Finley bought 52 percent of the team’s shares in 1960; a few months later he bought out the minority owners).
DeWitt might be the first to suggest that cash-in-hand profit isn’t realized until the asset is sold, and he’d be right. Technically.
Counterbalancing that, however, are facts. One, the owners of a franchise worth multiple billions of dollars don’t have to go to pay-day lenders to get a loan.
And revenue money keeps flowing in. Fox’s deal to televise Major League Baseball was due to run out in 2021, but it’s been extended for $5.1 billion through 2028. Deals with ESPN, Turner Sports and Facebook are pending, but when finalized, the total will more than double the national TV take for the 30 big league clubs.
Oh, did we mention that Major League Baseball earned $10.7 billion last year?
If owners like DeWitt are approaching the current negotiations with the players’ association trying to get the players to believe the well is dry, they’ve got a ways to go.
Just ask A’s reliever Jake Diekman, who took to Twitter to demand that the owner open their financial statements and prove their claims of poverty. That hasn’t happened. And it won’t.
But with that attitude on the part of at least some of the ownership group, it’s not surprising a deal has yet to be struck.
Follow Athletics insider John Hickey on Twitter: @JHickey3
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