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New Stadium To Have No Effect On Profits


pierremvp1
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As we wait for the season to begin, and as we wait with hope for a stadium deal....I'd like to clarify the situation that the franchise will find itself in revenue and cost wise...in a new stadium. We'll have to make some educated guesses here, but I call on all to add their thoughts, especially those with a firmer grip on the money aspect of the game.

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To make a long story short, I see a new stadium as being revenue neutral for the Marlins. I do not see it equating to a surge in profits. .

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Some rough numbers:

 

2007 in Joe Robbie ............. 2011 in New Stadium

 

Skybox and Club Seat 0 .......... $8,000,000

Other Season Tickets $4,000,000 ......... 25,000,000

Non-season Tickets 4,000,000 ......... 8,000,000

Parking 0 .......... 0 Concessions 1,000,000 ........ 6,000,000

Advertising 0 ......... 15,000,000

Media Money from MLB 30,000,000 ........ 30,000,000

Merchandise Sales 5,000,000 ........ 5,000,000

Revenue Sharing 30,000,000 ........ 0

 

Total 74,000,000 ......... 97,000,000

 

Cost of Lease(Rent) (1,000,000).......... (10,000,000)

 

Gross Profit 73,000,000 .......... 87,000,000

 

Not a great difference. Almost revenue neutral. But I imagine that I'm missing something, understating other things, overstating others. Please add your thoughts.

I am making the following leap of faith assumptions:

200 skyboxes or 3200 seats will be close to a sell out.

There will be 15,000 season tickets sold in addition to the skyboxes.

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To break even the Marlins have to generate about 90M-100M in revenue (without MLB welfare), assuming a payroll of about 60M. Right now they probably generate about 80M. The new stadium will produce about 30-40M in new revenue. Which means that without MLB welfare they will generate 110M-120M in revenue. Add in some MLB welfare and we're talking about 120-130M in revenues. Which means they have a payroll of about 80-90M. About what the Phillies can afford.

 

I'd love to see what Beinfest can do with 80-90M to play with.

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I've argued something to this extent in the past.

 

That if you believe we're spending all we can afford, to expect the new stadium to help us field a payroll north of $50 million (and even that's pushing it) is expecting unprecedented and unrealistic revenue streams.

 

Now, of course, if Prin's right and we're generating $80-$90 million, then Loria's a disgusting pig and he's pocketing $30 to $40 million and still crying poor.

 

I doubt we will move up to the point where we recieve no revenue sharing...

 

As the following list shows, the highest amount a team in a new ballpark (that is, opened in the last 3 years) received from revenue sharing was the $5.8 million received by the Phillies.

http://www.hardballtimes.com/main/article/...evenue-sharing/

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I've argued something to this extent in the past.

 

That if you believe we're spending all we can afford, to expect the new stadium to help us field a payroll north of $50 million (and even that's pushing it) is expecting unprecedented and unrealistic revenue streams.

 

Now, of course, if Prin's right and we're generating $80-$90 million, then Loria's a disgusting pig and he's pocketing $30 to $40 million and still crying poor.

 

I doubt we will move up to the point where we recieve no revenue sharing...

 

As the following list shows, the highest amount a team in a new ballpark (that is, opened in the last 3 years) received from revenue sharing was the $5.8 million received by the Phillies.

http://www.hardballtimes.com/main/article/...evenue-sharing/

 

I think the Marlins are generating 80-90 million right now. They use normal accounting methods to show they are losing money or breaking even. Every single businessman I know claims to lose money every year, but it's only because they are allowed to write off basically everything. People in my family that own their own business have shown me their books show deep losses yet they take home a ton of money. So, in essence, they could have positive cash flow of 20M-30M right now, but the books show losses.

 

But this is how most intelligent businesses do their accounting. GAAP (the accounting guidelines) and the tax code encourage this.

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I've argued something to this extent in the past.

 

That if you believe we're spending all we can afford, to expect the new stadium to help us field a payroll north of $50 million (and even that's pushing it) is expecting unprecedented and unrealistic revenue streams.

 

Now, of course, if Prin's right and we're generating $80-$90 million, then Loria's a disgusting pig and he's pocketing $30 to $40 million and still crying poor.

 

I doubt we will move up to the point where we recieve no revenue sharing...

 

As the following list shows, the highest amount a team in a new ballpark (that is, opened in the last 3 years) received from revenue sharing was the $5.8 million received by the Phillies.

http://www.hardballtimes.com/main/article/...evenue-sharing/

 

I think the Marlins are generating 80-90 million right now. They use normal accounting methods to show they are losing money or breaking even. Every single businessman I know claims to lose money every year, but it's only because they are allowed to write off basically everything. People in my family that own their own business have shown me their books show deep losses yet they take home a ton of money. So, in essence, they could have positive cash flow of 20M-30M right now, but the books show losses.

 

But this is how most intelligent businesses do their accounting. GAAP (the accounting guidelines) and the tax code encourage this.

 

Oh of course I agree to a degree.

 

However, I still say that my point is basically that whatever we make is far different from what we claim to make, and as fans, the only number that is relevant (at least as a Marlin fan) is the number we claim to make.

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Yeah, I think your lease numbers are way off. They are putting like 212M for the stadium, 30M of which is upfront. The lease is for thirty years. Thus, (212-30)/30=6M.

 

I've argued something to this extent in the past.

 

That if you believe we're spending all we can afford, to expect the new stadium to help us field a payroll north of $50 million (and even that's pushing it) is expecting unprecedented and unrealistic revenue streams.

 

Now, of course, if Prin's right and we're generating $80-$90 million, then Loria's a disgusting pig and he's pocketing $30 to $40 million and still crying poor.

 

I doubt we will move up to the point where we recieve no revenue sharing...

 

As the following list shows, the highest amount a team in a new ballpark (that is, opened in the last 3 years) received from revenue sharing was the $5.8 million received by the Phillies.

http://www.hardballtimes.com/main/article/...evenue-sharing/

 

I think the Marlins are generating 80-90 million right now. They use normal accounting methods to show they are losing money or breaking even. Every single businessman I know claims to lose money every year, but it's only because they are allowed to write off basically everything. People in my family that own their own business have shown me their books show deep losses yet they take home a ton of money. So, in essence, they could have positive cash flow of 20M-30M right now, but the books show losses.

 

But this is how most intelligent businesses do their accounting. GAAP (the accounting guidelines) and the tax code encourage this.

 

Oh of course I agree to a degree.

 

However, I still say that my point is basically that whatever we make is far different from what we claim to make, and as fans, the only number that is relevant (at least as a Marlin fan) is the number we claim to make.

 

Oh, no doubt. This man is making some dough right now but is claiming poverty.

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Yeah, I think your lease numbers are way off. They are putting like 212M for the stadium, 30M of which is upfront. The lease is for thirty years. Thus, (212-30)/30=6M.

 

I was figuring some interest on the roughly 200 million. Someone would have to pay the debt service on the bonds the county would issue. Unless that's also covered by the bed tax money.

.

.

I'm sure I'm off on all my figures. They're all guesstimates except for the revenue sharing money.

The lease number is just 3-4 milion here or there. There's got to be something bigger that I'm off on or missing alltogether.

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Once they get a new stadium it will be very difficult for loria to say he is losing money. I am not expecting a 100 million dollar pay roll, I am just expecting that they wont have to trade off all their players as soon as they are finished with arbritration. What kind of payroll do the marlins have this season, 18-20 million?

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I've argued something to this extent in the past.

 

That if you believe we're spending all we can afford, to expect the new stadium to help us field a payroll north of $50 million (and even that's pushing it) is expecting unprecedented and unrealistic revenue streams.

 

Now, of course, if Prin's right and we're generating $80-$90 million, then Loria's a disgusting pig and he's pocketing $30 to $40 million and still crying poor.

 

I doubt we will move up to the point where we recieve no revenue sharing...

 

As the following list shows, the highest amount a team in a new ballpark (that is, opened in the last 3 years) received from revenue sharing was the $5.8 million received by the Phillies.

http://www.hardballtimes.com/main/article/...evenue-sharing/

 

I think the Marlins are generating 80-90 million right now. They use normal accounting methods to show they are losing money or breaking even. Every single businessman I know claims to lose money every year, but it's only because they are allowed to write off basically everything. People in my family that own their own business have shown me their books show deep losses yet they take home a ton of money. So, in essence, they could have positive cash flow of 20M-30M right now, but the books show losses.

 

But this is how most intelligent businesses do their accounting. GAAP (the accounting guidelines) and the tax code encourage this.

 

I don't doubt Loria is making money. Also, accounting for sports franchises has certain rules for depreciating players, which I am not up on. Nonetheless, most businesses and businessman cannot write off basically everything-unless they are crooks. Now, I know most people will stretch business expenses, write off entertainment when not fully business related etc-but unless their accountants are also crooks, their accountants will not have their license jeopardized for anyone-unless you are using unlicensed accountants. So, Loria is making money utilizing various accounting standards-which differs from many tax regulations-but not because he is writing off Samsons triatholon training.

Sorry, for putting everyone to sleep.

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Yeah, I think your lease numbers are way off. They are putting like 212M for the stadium, 30M of which is upfront. The lease is for thirty years. Thus, (212-30)/30=6M.

 

I was figuring some interest on the roughly 200 million. Someone would have to pay the debt service on the bonds the county would issue. Unless that's also covered by the bed tax money.

.

.

I'm sure I'm off on all my figures. They're all guesstimates except for the revenue sharing money.

The lease number is just 3-4 milion here or there. There's got to be something bigger that I'm off on or missing alltogether.

 

In fact its actually the opposite. Rent is a fixed expense, as inflation drives the prices of everything up the lease becomes less and burdensome. In fact in 2041 dollars it will be an absolute steal.

 

There's a lot wrong with the numbers but I have a cold and I've been down this road seven gazillion times already with these mixed up economic theories and I'm not going to do it ago. You just have to ask yourself why would they go through all they have gone through if there wasn't a pot at the end of the rainbow.

 

Theres and interesting article out there in the last couple of days with Moore from KC, the GM they brought in from the Braves organization, on the business of baseball. Good read,

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Yeah, I think your lease numbers are way off. They are putting like 212M for the stadium, 30M of which is upfront. The lease is for thirty years. Thus, (212-30)/30=6M.

 

I was figuring some interest on the roughly 200 million. Someone would have to pay the debt service on the bonds the county would issue. Unless that's also covered by the bed tax money.

.

.

I'm sure I'm off on all my figures. They're all guesstimates except for the revenue sharing money.

The lease number is just 3-4 milion here or there. There's got to be something bigger that I'm off on or missing alltogether.

 

In fact its actually the opposite. Rent is a fixed expense, as inflation drives the prices of everything up the lease becomes less and burdensome. In fact in 2041 dollars it will be an absolute steal.

 

There's a lot wrong with the numbers but I have a cold and I've been down this road seven gazillion times already with these mixed up economic theories and I'm not going to do it ago. You just have to ask yourself why would they go through all they have gone through if there wasn't a pot at the end of the rainbow.

 

Theres and interesting article out there in the last couple of days with Moore from KC, the GM they brought in from the Braves organization, on the business of baseball. Good read,

 

I think the lease terms are in present value. So the lease will always be about 6 million per year present value 2007.

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As we wait for the season to begin, and as we wait with hope for a stadium deal....I'd like to clarify the situation that the franchise will find itself in revenue and cost wise...in a new stadium. We'll have to make some educated guesses here, but I call on all to add their thoughts, especially those with a firmer grip on the money aspect of the game.

.

.

To make a long story short, I see a new stadium as being revenue neutral for the Marlins. I do not see it equating to a surge in profits. .

.

.

Some rough numbers:

 

2007 in Joe Robbie ............. 2011 in New Stadium

 

Skybox and Club Seat 0 .......... $8,000,000

Other Season Tickets $4,000,000 ......... 25,000,000

Non-season Tickets 4,000,000 ......... 8,000,000

Parking 0 .......... 0 Concessions 1,000,000 ........ 6,000,000

Advertising 0 ......... 15,000,000

Media Money from MLB 30,000,000 ........ 30,000,000

Merchandise Sales 5,000,000 ........ 5,000,000

Revenue Sharing 30,000,000 ........ 0

 

Total 74,000,000 ......... 97,000,000

 

Cost of Lease(Rent) (1,000,000).......... (10,000,000)

 

Gross Profit 73,000,000 .......... 87,000,000

 

Not a great difference. Almost revenue neutral. But I imagine that I'm missing something, understating other things, overstating others. Please add your thoughts.

I am making the following leap of faith assumptions:

200 skyboxes or 3200 seats will be close to a sell out.

There will be 15,000 season tickets sold in addition to the skyboxes.

I think you may have understimated some of the increased revenues.

 

My guesstimate would be an additional $37 million Year 1 and each following year the additional revenues would increase because revenues will continue to increase (inflation) but the lease payment will remain constant.

 

(Numbers in $ millions)

 

PPS / New

Ticket Recepits 19.4 / 48.1

Skyboxes 0.0 / 15.8

Concessions 2.4 / 10.9

Stadium Ads 0.0 / 15.0

Parking Revenue 2.0 / 0.0

MLB Media $ 30.0 / 30.0

Revenue Sharing 30.0 / 5.0

Merchandise 5.0 / 10.0

Rent (1.0) / (10.0)

Gross Profit 87.9 / 124.8

 

=======================

Some assumptions:

 

Tickets

PPS - 15k fans per game / $15 average price

New - 27k fans per game / $22 average price

 

Skyboxes

PPS - Nada

New - The Phillies get around $17 million. I'm assuming 70 boxes @ $225k.

 

Concessions

PPS - $2 profit per fan

New - $5 profit per fan

 

Merchandise Sales

Should increase with the higher attendance

 

Rent

PPS - I don't know so I'll go with your number

New- $10 million should cover the debt service

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I think the lease terms are in present value. So the lease will always be about 6 million per year present value 2007.

 

Let me tell you why I "think" you're wrong. The municipal bonds that will be sold, and serviced by the Marlins rent payments, will be fixed rate, let's say 3.5% for their life. There's no inflation-hedging. The reason people buy these is because of their security and their tax-free nature.You're not selling them to some hayseed on a turnip truck in the Texas panhandle (unless it's a really really REALLY big turnip farm and the truck an International RXT), these are some of the saaviest investors around.

 

Since rate won't change the rent probably won't either. Now perhaps the city or county will have some escalator based on some factor but basically the rent stays the same during the term of the lease. It isn't like the rent will go up a million a year or anything remotely like that. All the city or county - I assume it's the county - needs is enough to service the debt.

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If the Marlins say they are going to give 180m in rent payments over 30 years and they count the full 180 as part of the construction costs then it has to be hedged against inflation. For example, giving 180M in rent payments over 30 years (at 6m per year) means that's it's not really worth 180 million present value to pay for the stadium construction. The 3.5% you mention is itself a hedge againsts inflation. However, it may very well be that when the Marlins refer to 180M they are talking about the present value of rent payments that stay the same over the course of 30 years. But that means they have to make payments exceeding 6M per year (probably around 11-12m).

 

Regardless, they're paying 180m present value in rent. If it's not present value then they are being extremely deceptive.

 

On another note, one of my lawyer frirends that does bonds says he and some colleagues got some calls from Miami-Dade to start drafting the bonds. Good sign.

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