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The financial situation and how it is going to be resolved


Dominik
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We all know about the debt situation. Reportedly the new group inherited 400m of debts.

 

Why didn't mlb force either loria or the new owner to pay up for the debt? Loria sold it for 1.2B so he could have paid for it or find a buyer who pays for it. Mlb could for example have threatened contraction to push loria to do that.

 

But now it is what it is and seemingly the 9th lowest payroll in mlb is not low enough. 

 

You need to accept that but how and when will that resolve? With that method of saving it would take more then a decade to get back to zero.

 

Increased revenue will be a possibility but were will that come from with a crap product? Gate will be even lower and a new tv deal can happen but they are not super attractive for that either with being that bad.

 

I don't mind a couple bad years but I would like to see a clear plan both considering finances and baseball ops (definitely prefer a total rebuild and tanking).

 

Worst thing would be if finances never get better and new group hides behind it forever. We should accept tear down and a low payroll but there needs to be a long term plan.

 

 

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I've recently read various things online about recent rebuilds, some saying how well the Astros Cubs and others did it and some saying how well the Braves White Sox and Phillies have done so far even though they're not through yet... why is that different than the Marlins who are hated for trying the same thing? It's biased and beyond stupid. 

 

 

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I've recently read various things online about recent rebuilds, some saying how well the Astros Cubs and others did it and some saying how well the Braves White Sox and Phillies have done so far even though they're not through yet... why is that different than the Marlins who are hated for trying the same thing? It's biased and beyond stupid. 

 

One thing that is different is that we led off with our more highly paid contracts as opposed to the white sox leading off their rebuild with their most valuable assets.  Also, the Astros and Cubs had almost nothing to trade to begin with and did most of their farm system building threw shrewd drafting and good low key trades.  Also, it's just the fact that it's the marlins and any time they trade a good player it will be considered a "fire sale."  I think we are like 2 weeks from when the rebuild started, and I think we have a solid base to build on with our farm system and then either we keep yelich or Realmuto or use them to further rebuild the system.  that's why i think we are about to be really terrible for 2 years, but we also have a leg up on where we are starting the rebuild from as compared to the Astros and Cubs.  Go look at their farm system and major league roster when they started their rebuild.  It all depends on just how much we invest in the draft and IFA, and if we dont do that this will all be pointless anyways, but i think we do have a leg up on other recent teams who have begun to rebuild.

 

 

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I've recently read various things online about recent rebuilds, some saying how well the Astros Cubs and others did it and some saying how well the Braves White Sox and Phillies have done so far even though they're not through yet... why is that different than the Marlins who are hated for trying the same thing? It's biased and beyond stupid. 

 

Ohe no, the Astros and cubs got a lot of hate for that. Phillies took 6 plus years of sucking and while they got better they are still projected sub 500 this year.

 

But it is right marlins got more flak then other teams, likely due their shady past the last decade thanks to Loria and also for prioritizing not eating salary over getting real top prospects. 

 

But it is correct that people now should get over it and accept that the Marlins tear down and suck for the next 3-4  years at least, so people should get over that.

 

Still it is important to know whether they can have a competitive payroll in 5 years or whether the consolidation takes a decade plus.

 

so what is actually the plan? Revenue won't exactly go up the next years and even a new TV deal won't be great if the team is coming of several losing seasons and with no stars.

 

 

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Ohe no, the Astros and cubs got a lot of hate for that. Phillies took 6 plus years of sucking and while they got better they are still projected sub 500 this year.

 

But it is right marlins got more flak then other teams, likely due their shady past the last decade thanks to Loria and also for prioritizing not eating salary over getting real top prospects. 

 

But it is correct that people now should get over it and accept that the Marlins tear down and suck for the next 3-4  years at least, so people should get over that.

 

Still it is important to know whether they can have a competitive payroll in 5 years or whether the consolidation takes a decade plus.

 

so what is actually the plan? Revenue won't exactly go up the next years and even a new TV deal won't be great if the team is coming of several losing seasons and with no stars.

 

The biggest thing is if they continue to invest in the minor league system so we can have cheap talent available all the time, or if they truly are Loria-like and are just using the savings for personal gain.  I think they deserve a few months here until the next draft and IFA period to show their true colors.  

 

 

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Why do people keep asking what's the Marlins plan? Did the Astros Cubs Phillies White Sox Braves and Brewers issue out an outline, an itinerary, and a checklist with every detailed step of their plans beforehand? They've said enough times what their plan is. Why do people expect more than what they've said? 

 

(Wasn't just picking on you Dominik, you said it too but I've seen this said elsewhere)

 

 

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Why do people keep asking what's the Marlins plan? Did the Astros Cubs Phillies White Sox Braves and Brewers issue out an outline, an itinerary, and a checklist with every detailed step of their plans beforehand? They've said enough times what their plan is. Why do people expect more than what they've said? 

 

(Wasn't just picking on you Dominik, you said it too but I've seen this said elsewhere)

 

Epstein actually openly laid out a plan when he started in Chicago. You don't have to do that but if you had an owner like Loria and people are suspicious anyway it might have helped.

 

 

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Will Manso‏Verified account @WillManso 7s7 seconds ago

 

More

 

Jeter says it’s easy to say, “just get more pitching to win.” Says that’s just chasing it but not addressing problem of having sustainable franchise. It won’t guarantee winning. Says the focus has to be rebuilding minor league system. He says that’s proven way.

 

Another good answer.  The "just add pitching" theory is beyond stupid.

 

 

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These are fine answers although canned and prepared. 

 

probably canned and prepared, but for those who want a full rebuild and a team who wants to do it the right way and build a consistent winner, it's what you want to hear.  

 

Also, Fwiw, he says the rich waltz decision is a fox sports decision.

 

 

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Btw I never questioned the rebuild. Stars and scrubs teams don't work anymore, you need depth in these days. I actually thought they should have started the rebuild when jose was still alive and trade everyone then. I'm a fan of doing the tear down a little bit earlier. 

 

But still the financial situation is bad and I feel they could have eaten 60-70m to get a better prospect for stanton and still get to like a 70M payroll or so. Maybe I'm wrong there but being worried about the financial situation is not the same as rejecting the rebuild.

 

 

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There definitely was no alternative to tearing it down.  The Marlins will suck the next 3 years at least no matter what. That is why yelich and realmuto need to be traded too but for the right return.

 

I also think it is good if they lose 100 next year. If you are bad at least get that first overall pick.

 

 

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The more I hear people react to Marlins current events, the more I feel like the “finances” issue is completely misunderstood.  It isn’t just message board folks.  Its coming from media types like Le Betard too.

 

I’ve thought a lot about this since the Stanton trade and I cannot accept the idea that Major League Baseball would conspire to approve the sale of a franchise to a financially unfit ownership group just because Derek Jeter had his name attached to it.  MLB owners are notorious for being very picky about whom they allow in their inner circle, both in terms of character and financial stability.  Due to the revenue sharing that goes on in the league, sitting ownership groups are not going to be interested in admitting a new group that they will have to support.  Oakland and Tampa Bay have unresolved stadium issues in their community which would seem to only affect those clubs, but the Commissioner and the other 28 owners are deeply interested in having those situations resolved because those teams receives revenue sharing checks from clubs that earn.  Furthermore, in the wake of situations like Frank McCourt I would think ownership would be sensitive to putting ownership in place with solvency issues.

 

Then there is the matter of the supposed $400 M in debt.  Is there debt on the balance sheet?  There should be.  Show me a balance sheet of a successful business that has assets completely financed with equity.  You can’t.  Apple has $375 billion in assets.  The other side of their balance sheet is $241 billion in liabilities and $134 billion in equity.  64/36 debt/equity split.  If the Marlins only had $400 million in debt on a balance sheet with $1.2 bllion in assets that ratio is actually flipped 33.33/66.66 debt/equity.  If anything maybe it is an underleveraged balance sheet.  David Samson (yet I know!!) was on Le Betard trying to say that the $400 million in debt wasn’t there when Loria owned the team.  That is a flat out lie.  Now what we don’t know is the character of the $400 million or if that is the only debt that exists on the balance sheet.  There are too many unknowns.  And guess what folks….we will never know unless there is another leak like ten years ago when Deadspin published all those teams financials and people freaked out.

 

Reading between the lines in all of this I think we can draw a few safe conclusions:

 

1. The Marlins probably have more than $400 million in debt on their balance sheet, post acquisition.  Post acquisition balance sheets are typically more highly leveraged, especially in situations like this where you have an outgoing ownership group that spent so little of their own money to acquire their company.  Is this bad?  Not necessarily.   Samson may actually be correct.  It very well could be that there is a new $400 million liability on the balance sheet as a result of the acquisition in addition to whatever was there before.  This is probably what happened.  If that is the case, then selling off future contractual obligations like Stanton’s contract would certainly help in servicing that debt.  That is sad, but it wouldn’t be incorrect to suggest that.  We saw something similar to this play out with the Glazers sports empire.  About ten years ago when they acquired a controlling interest in Manchester United they did so with a highly leveraged buyout which was highly publicized.  Their locals were angry because of the debt which they did not understand.  The club sold Ronaldo.  The Glazers themselves scaled back spending on the Buccanners tremendously. 

 

2. It seems pretty clear from what we know about attendance and the local television deal which expires soon that the Marlins don’t do particularly well with their Operating Income.  That is, income from day to day operations.  When current and prior owners say they are “losing money”, what they are probably implying is that revenues from these things do not exceed their operating expenses.  That likely excludes major revenue sources like revenue sharing from MLB, MLB Media revenue, etc. It also ignores asset appreciation obviously.  But it is completely believable that their stand alone day to day operations aren’t profitable.  I’m sure the Marlins, like any club would like that to change but I honestly have no idea what a good operating income number for an MLB club is supposed to look like.

 

3. Personally I believe everything Jeter is saying.  You can’t keep throwing money at a losing team.  It really does make sense to sell off a massive future contractual obligation like Stanton to pay down debt which arose from an acquisition.  It kills two birds with one stone.  You’re also going to earn more goodwill over the long term if you build a structure that can win in a sustainable fashion.  People obviously thought we’d do something like the Dodgers did when they were taking on all these terrible contracts just to get a handful of players.  That’s ridiculous.

 

There was a terrific exchange in the town hall last night as described by Barry Jackson.  Someone asked Jeter if Steinbrenner would have traded Mickey Mantle, and a few other famous Yankees.  Jeter said: “Yes if they weren’t winning”.  I think that is absolutely true and it is a strong position for ownership to take.  Heck, Steinbrenner was TOO HARD on guys that were actually really good: Billy Martin, Dave Winfield to name a couple.  This collection of players wasn’t a winning group.   There’s this perception that the Marlins are weak and cant afford them.  Well maybe they need to change that narrative to “these guys weren’t winning so we are moving on from them to put together guys that will win”. 

 

Having said all that I’m still worried about Jeter’s lack of experience and Mike Hill still existing.  But I’m not worried about the Marlins Balance Sheet.

 

 

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