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Redsland
01-28-2004, 11:03 AM
A few days ago Krusty asked about GAB revenues. Itís a subject we all discuss from time to time, and one that I know is dear to REDREAD, myself, and others. Unfortunately, these discussion usually suffer from lack of hard data.

So, I decided to try to make a definitive list of all of the Redsí sources of revenue. Then I attempted to find out exactly how much revenue was derived from each source. With some effort, I was able to find good numbers for all but two of the sources, which I have good estimates for.

Then I did the same for expenses. Iíve linked to all of my references, when possible, and explained my system when this was not possible.

So here, then, is my attempt to settle the question of how much the Reds made in 2003.


2003 LOCAL REVENUE SOURCES
Ticket Sales $17.53 (www.teammarketing.com/fci.cfm?page=fci_mlb2003.cfm) x 2,355,259 (www.baseball-reference.com/teams/CIN/attend.shtml) =$41,287,690
Parking $8 x 576 (reds.enquirer.com/2003/03/20/parking.html) x 81 =$373,248
Concessions* =$16,486,813*
Local Cable =$5,000,000 (reds.enquirer.com/2002/10/08/red_fsn_reds_working_to.html)
Local Radio =$5,400,000 (www.google.com/search?q=wlw+700+reds+radio+contract&btnG=Google+Search&hl=en&lr=&ie=UTF-8&oe=UTF-8)
Stadium Naming =$2,500,000 (reds.enquirer.com/2000/07/01/red_great_american_to.html)
Founders Suites 8 x $120,000 (www.cincinnati.com/reds/gabp/gabpsuites.html) =$960,000
Zone 2 Suites 26 x $85,000 (www.cincinnati.com/reds/gabp/gabpsuites.html) =$2,210,000
Zone 3 Suites 23 x $50,000 (www.cincinnati.com/reds/gabp/gabpsuites.html) =$1,150,000
Riverfront Club Memberships** 500 x $500 =$250,000**
Scorecards $1 (cincinnati.reds.mlb.com/NASApp/mlb/cin/ballpark/cin_ballpark_gabp_azguide.jsp) x 10% of attendance =$235,526
Scoreboard Messages 30 x $35 (cincinnati.reds.mlb.com/NASApp/mlb/cin/ballpark/cin_ballpark_gabp_azguide.jsp) x81 =$85,050
In-Stadium Advertising*** =$8,000,000***
Spring Training Income =$1,000,000 (www.jsonline.com/sports/brew/apr00/ball28042700.asp)

2003 NATIONAL REVENUE SOURCES
National TV =$13,333,333 (www.bsu.edu/news/article/0,1370,-1019-6703,00.html)
Revenue Sharing =$15,800,000 (espn.go.com/mlb/news/2002/0906/1428242.html)
MLB Properties Sharing =$4,600,000 (www.jsonline.com/sports/brew/apr00/ball28042700.asp)

2003 GROSS REVENUE
$118,671,660

2003 EXPENSES
Administration, Operations, Player Development# =$13,000,000#
Ballpark Maintenance =$9,000,000 (www.citybeat.com/2002-09-05/sports.shtml)
Ballpark Rent =$2,500,000 (www.citybeat.com/2002-09-05/sports.shtml)
Marketing =$3,000,000 (www.jsonline.com/sports/brew/apr00/ball28042700.asp)
Merchandise Costs =$3,000,000 (www.jsonline.com/sports/brew/apr00/ball28042700.asp)
Player Payroll =$63,062,016 (www.redsinsite.com/playerinfo/salary_chart.php?year=2003)

2003 EXPENSES
$93,562,016

2003 REVENUE MINUS EXPENSES
25,109,644

* Neither the Reds nor their concessionaire, Sportservice, reveals concession figures. However, under their old lease, the team was required to pay the county 10% of the gross from concession sales. The 1998 (reds.enquirer.com/1999/05/23/red_reds_drooling_over.html) payment indicated concession sales of $11,000,000. This works out to $6.13 in concession sales for each of the 1,793,649 (www.baseball-reference.com/teams/CIN/attend.shtml) men, women, and children through the gate that year. Inflation adjustments take that $6.13 to $7.00 per person for 2003. I have ignored other factors, like the greater availability of expensive liquors, wines, and foods in GAB, and the expensive catering options available, making this estimate a lowball one.

** Iím sure GAC said his connection paid $500 for a membership to the Riverfront Club, but I canít find that post in our archives.

*** For obvious reasons, it is very difficult to find information about in-stadium advertising revenue. However, we do know that the team sold out ( reds.enquirer.com/2003/09/28/wwwred2a.html) all of its advertising space. And we also know from a suit against the Mets that they underreported (www.comptroller.nyc.gov/press/2003_releases/pr03-07-069.shtm) their advertising revenue by $13.5 million, which suggests that this figure, combined with whatever amount was reported, would give the Mets something like $15-20 million here. Finally, the Cleveland Indians made $8.8 million (www.ssc.uwo.ca/economics/faculty/jpalmer/Eco182/marlins.html) on signs and ads in 1997. Since the Metsí number doesnít tell us much, and since Cleveland is a Midwestern city with a new park (sort of), I used their number, but depressed it somewhat. Yes, their number is six years old, but Cleveland is a bigger market, their team was more successful at the time, and the economy was booming. By contrast, John Allen says he may have underpriced GAB advertising. Hence my conservative number of $8 million.

# I heard this number a few months ago and etched it in my brain. Having previously never heard how much the team spends on the FO, minors, etc. I found this piece of data interesting. But now I canít find a cite. The Brewers claim to spend about $30 million here, FWIW.

TeamDunn
01-28-2004, 11:11 AM
Are souvenirs and the Reds gift shop included in this?

The actual Shop in the Westin, is that *owned* by the Reds?

Awesome set up!! WTG on finding/figuring the dollar amounts! :thumbup:

Redsland
01-28-2004, 11:22 AM
Originally posted by TeamDunn
Are souvenirs and the Reds gift shop included in this?

The actual Shop in the Westin, is that *owned* by the Reds?
Yes. All MLB merchandise sales go into a pool that is shared equally by all teams. According the Brewers' disclosures, they got $4.6MM for 2003, which means that's what all the teams got. Assuming you believe the Brewers on matters of income. ;)

TeamDunn
01-28-2004, 11:27 AM
Ahhhhhhhhh

Gotcha! :thumbup:

Thanks!

You really did an excellent job on this!

Redsland
01-28-2004, 11:30 AM
Thanks! :thumbup:

And now the links even work! :)

red-in-la
01-28-2004, 11:32 AM
Where does the salaries of non-players come in? Who pays Marty and Joe? They manager and coaches take in some coin as well as our illustrious President and GM and their staffs.

Then there are travel costs and equipment as well as some rather large doctor bills.

DeadRedinCT
01-28-2004, 11:36 AM
This is awesome. It's nice to debate using facts (cold, hard ones in most cases).

I think you need to fix your links -- when I clicked on them, it put an extra "http://" in front of your links giving me an error message. After I deleted the extra "http" in the browser, it sent me to appropriate webpage.

JaxRed
01-28-2004, 11:37 AM
The player payroll number will be low for 2 reasons. I don't have a link handy but all teams have to pay about a 6 million dollar charge for something as part of payroll.

And you have no allowance there for benefits, etc. For example the Reds pay Social Security on all these guys.

And yes, I think you'll find your 13 million figure will be WAY low.

DeadRedinCT
01-28-2004, 11:37 AM
You fixed the links as I was typing my previous reply. Thanks!:beerme:

Redsland
01-28-2004, 11:38 AM
Originally posted by red-in-la
Where does the salaries of non-players come in? Who pays Marty and Joe? They manager and coaches take in some coin as well as our illustrious President and GM and their staffs.

Then there are travel costs and equipment as well as some rather large doctor bills.
Marty and Joe are paid by WLW.

Non-player salaries are paid out of the baseball operations, administrative, and player development budgets as appropriate. Healthcare, travel, catering, lodging, uniforms, equipment, the drafts, minor league operations, front office staff, RedsFest, spring training, etc. all come out of this pool.

I'd break it all down as thoroughly as I have the revenues, but there's very little data out there to go by.

4256 Hits
01-28-2004, 11:38 AM
Originally posted by red-in-la
[B]Who pays Marty and Joe? /B]

I believe that WLW pays them but they are hired w/ the approval of the Reds.

Redmachine2003
01-28-2004, 11:45 AM
The Player payroll of 55,509,745 this doesn't reflect the salary dump at the end of the year or the cash receive in the trades does it?

Redsland
01-28-2004, 11:49 AM
Originally posted by Redmachine2003
The Player payroll of 55,509,745 this doesn't reflect the salary dump at the end of the year or the cash receive in the trades does it?
This is the amount actually paid by the team for 2003, according to Jax's shiny new site.

UKFlounder
01-28-2004, 12:13 PM
Never mind - I see your source now. Sorry for my confusion.

JaxRed
01-28-2004, 01:11 PM
You gave all the concession revenue to Reds. Only place I saw that had figures

http://cincinnati.bizjournals.com/cincinnati/stories/1998/11/16/story7.html

showed that Reds got 30% of concession revenue which would be $4,946,043.90

so subtract 11 million from revenue.

backbencher
01-28-2004, 01:14 PM
Excellent work.

My comments:

On the revenue side, I don't see the cash the Reds got in trades.

On the expenses side, I think you need the player payroll charge common to all teams and the benefits calculations mentioned by Jax.

I also think that the "administative" expense must be off by a factor of at least two and perhaps way more. You are talking about salaries for the entire front office and scouting staffs, the Reds' share of the entire minor league organization, transportation, medical expenses, lawyers, lobbyists and probably a dozen more things I cannot think of at the moment.

cincinnati chili
01-28-2004, 01:22 PM
I just want to say that while I second some of the critiques (esp. the player development number), this must have taken a lot of work, and I appreciate it.

Boss-Hog
01-28-2004, 01:23 PM
Same here. Nice work, Redsland.


Originally posted by cincinnati chili
I just want to say that while I second some of the critiques (esp. the player development number), this must have taken a lot of work, and I appreciate it.

JaxRed
01-28-2004, 01:24 PM
The prior figure used showed we paid 35 (second lowest in baseball on those) that included stadium rental.

Even if we assume that we paid Rent in Riverfront and so we subtract 9 million from the 35, that would place the Admin costs at 24 million knocking another 11 million off profits.


And I think this will serve as a tremendous resource!!

traderumor
01-28-2004, 01:34 PM
I'm not sure that I agree with counting the cash received in trades as revenue. This is an operating statement, not a cash flow statement. Assuming that the Reds do not employ any kind of cutting edge capitalizing of their players as assets, I would make the credit to the partners' captial accounts. I suppose if you really wanted it in revenues, it could be loosely considered a gain on sale of assets.

I also didn't follow where the national tv revenue number was in that article.

It is also appropriate to make an annual amortization charge for deferred money, like Griffey's contract. Any kind of backloaded contract such as Jr.'s would be a candidate since the contract is designed to take advantage of NPV for cash flow purposes. These should be amortized an equal prorata portion per year over the term of the contract. Likewise, investment income should be recorded since the Reds are hopefully investing to help match the NPV of the deferred contracts when they come due.

I also agree that $13M is low for all front office, minor league, etc expenses. Considering the draft budget, signing bonuses, the minor league system, spring training, and the entire scouting and admin staff probably exceeds that total alone

JaxRed
01-28-2004, 01:42 PM
Actually I think Redsland would like to view this as a cash flow statement, and exclude the kind of things you are mentioning.

Redsland
01-28-2004, 01:50 PM
Originally posted by JaxRed
You gave all the concession revenue to Reds. Only place I saw that had figures

http://cincinnati.bizjournals.com/cincinnati/stories/1998/11/16/story7.html

showed that Reds got 30% of concession revenue which would be $4,946,043.90

so subtract 11 million from revenue.
Per my cite (reds.enquirer.com/1999/05/23/red_reds_drooling_over.html) in the concessions footnote:
"Concessions: At Cinergy Field, the Reds pay 10 percent of the gross to Hamilton County. The 1998 payment indicates the Reds had concession sales of about $11 million. Under the new lease, the Reds keep it all, and sales will almost definitely increase in the new stadium, with higher attendance and more offerings, particularly in catering to the fans in luxury boxes and club seats. ďWe'll be restructuring our entire con cessions deal, so there should be an increase,Ē Mr. Allen said. "

JaxRed
01-28-2004, 01:56 PM
I think you'll find in the end that's a poorly written paragraph. Obviously the Reds won't get all the revenue. Why would SportsService agree to be the vendor if they get no money?

I think what that meant is the county won't get a cut. Maybe I can find a better reference.

Redsland
01-28-2004, 01:56 PM
Originally posted by traderumor
I also didn't follow where the national tv revenue number was in that article.
It's the first entry under "National Revenue Sources," $16,666,667.

(I split up national and local revenues because only local revenues go into the revenue sharing pool.)

Redsland
01-28-2004, 02:00 PM
Originally posted by JaxRed
I think you'll find in the end that's a poorly written paragraph. Obviously the Reds won't get all the revenue. Why would SportsService agree to be the vendor if they get no money?

I think what that meant is the county won't get a cut. Maybe I can find a better reference.
You may be right. Community organizations still work the concession stands, presumably for a cut of the action.

It may be possible that Sportservice works for a flat fee that comes out of the baseball operations budget. But probably not.

traderumor
01-28-2004, 02:00 PM
Sorry Redsland, I found the numbers for the National TV contract, but if I read it right, it looks like a 5 year contract for $2 billion, which would be $400M/year, or $13.3M for the Reds.

I do not agree that cash-basis accounting is the best way to look at these numbers. Doing so will severely overstate the Reds' bottom line, which benefits no one. All that will do is provide fodder for those who claim that the Reds are lying about their financial situation. Amortization of backloaded contracts is a critical number in the Reds' business and should be included in any income statement. It is known, measureable, and certain to be paid. It should be included in the interest of fairness.

Redsland
01-28-2004, 02:05 PM
Thanks for the feedback everyone, and keep it coming.

I'll add in the approx. $6MM payroll fee or whatever it is once someone provides me with a cite. Also, if anyone can help me determine how much to "charge" for Social Security, etc., let me know.

Cash from the trades? I suspect these show up as "savings" on Jax's player payroll page, but I could be wrong.

As for front office expenses, personally I think $13MM sounds like a lot of money, but if you're skeptical about this number, I will gladly change it if you can point me toward a cite.

:thumbup:

JaxRed
01-28-2004, 02:09 PM
I'll get you some more numbers (probably tonight). I do NOT include the cash we get back from trades. I could probably do that.

Redsland
01-28-2004, 02:11 PM
Originally posted by traderumor
Sorry Redsland, I found the numbers for the National TV contract, but if I read it right, it looks like a 5 year contract for $2 billion, which would be $400M/year, or $13.3M for the Reds.
**Smacks head** Oops. I misread my own source. It says "this year and the next four." I only saw the "four."

Thanks, I'll fix it.

traderumor
01-28-2004, 02:24 PM
One thing I'm a little confused on is how the Reds end up with $15.8M in revenue sharing when the City Beat article agrees with the Reds' position that they likely would be paying out instead of taking in. I realize that attendance was lower than expected, but that should not result in a postive share to the tune of $16M.

Man, this stuff is like auditing a car dealer--now you see it, now you don't.

Redsland
01-28-2004, 02:34 PM
Originally posted by traderumor
[B]One thing I'm a little confused on is how the Reds end up with $15.8M in revenue sharing when the City Beat article agrees with the Reds' position that they likely would be paying out instead of taking in. I realize that attendance was lower than expected, but that should not result in a postive share to the tune of $16M.
The 2003 revenue sharing payment is based on results from previous years.

As a point of comparison, Pittsburgh got a $10MM revenue sharing check during its first year in PNC Park. The next year the team only got something over $1MM, which suggests the Reds could get $0-6MM in 2004.

JaxRed
01-28-2004, 02:34 PM
It depends....... I bet the Reds get revenue sharing for 2003 based on 2002 numbers. So in 2003 they got money, but in 2004 they won't. Again, would be nice to nail down.

Spring~Fields
01-28-2004, 02:34 PM
Nice work, something that many of us can read in accounting form.

What about the tax consequences from a net income of 32,661,915 ?

Are they exempt from
Employers Social Security
State Workmans Comp
Federal Unemployment

Are their insurance expenses lumped into Admin expenses?


You have done a great job considering how difficult it is to get data let alone accurate data on the Reds revenues and operating cost.

REDREAD
01-28-2004, 02:36 PM
The player payroll number will be low for 2 reasons. I don't have a link handy but all teams have to pay about a 6 million dollar charge for something as part of payroll.

And you have no allowance there for benefits, etc. For example the Reds pay Social Security on all these guys.

And yes, I think you'll find your 13 million figure will be WAY low.



Social security is neglegible. There is a threshhold, at approximately 70-80k annually when
no more social security is collected. Medicare taxes are still withheld, but that comes
out of the employee's check.

There was a ballpark estimate for annual benefit, insurance, etc. that I think WOY had. I'm not sure if that
is included in the 13 million figure or not.




You gave all the concession revenue to Reds. Only place I saw that had figures

http://cincinnati.bizjournals.com/c.../16/story7.html

showed that Reds got 30% of concession revenue which would be $4,946,043.90



The above article is not relevant. That article said the 1998 CINERGY take of the concessions.
Like most new parks, the Reds got a much more favorable split in concessions, parking, etc
income.



(Redsland wrote) You may be right. Community organizations still work the concession stands, presumably for a cut of the action.


And while its nice that they let community organizations do these things, the fact
is that it's kind of a ripoff. I've participated in several of these at different parks.
The "volunteers" earn much less than minimum wage for the time spent, particularly if
you factor in setup and clean up time.. It's a clever way to run concession stands for
a very cut rate cost.

traderumor
01-28-2004, 02:45 PM
After reading the Peterson article, and figuring that the Reds accrued the 2003 revenue sharing payment in 2002 operations(which is why JA warned us that we could really take a hit in the revenue sharing source of revenue in 2003) since it is based on 2002 results, I think the income that should be recorded for revenue sharing should reflect Jax's 0-6M estimate. So even if we go the conservative route and give them $6M, there goes almost another $10M to reduce the bottom line.

Redsland
01-28-2004, 02:53 PM
Originally posted by JaxRed
It depends....... I bet the Reds get revenue sharing for 2003 based on 2002 numbers. So in 2003 they got money, but in 2004 they won't. Again, would be nice to nail down.
Here's Doug Pappas's summary. No mention of lag, so presumably everything is based on the previous year.

http://roadsidephotos.com/baseball/02-3CBA.htm
"Local Revenue Sharing: Rises from 20% under the 1996-2001 CBA to 34%, net of ballpark expenses. Revenue sharing money divided equally among all teams. Following the recommendation in their Blue Ribbon Economic Panel report, the owners had originally proposed sharing 50% of local revenues."

This means that 34% of the Reds' local net goes into a pool with the other 29 teams' local net. Each of the 30 teams then shares equally out of this pool.

"Central Fund Revenue Sharing: $72.2 million (based on 2001 revenue figures) taken from clubs which are net payers in the base revenue sharing plan and given to those who are net receivers. This amount will fluctuate in conjunction with the base plan, and is phased in: 60% in 2003, 80% in 2004, 100% in 2005-06. Money is paid and disbursed in proportion to a club's distance from the average. Fluctuations intended to assure that the projected amount of revenue is transferred each season from the combination of local and central fund revenue sharing."

The rich teams give welfare to the poor ones ona sliding scale.

traderumor
01-28-2004, 03:00 PM
Jax,

It looks like your figures take the LTC and straight line per year based on the total contract amount. Is that correct? If it is, then that makes my point about amortizing deferred contracts moot since your calculation is already expensing a flat amount over the term of the contract.

As an overall comment, it is somewhat disturbing to come down to the final numbers and, after making some proposed adjustments such as backing $10M off revenue sharing, the amount on the National TV money, upping overall Admin to $20M, you still have a $15M profit. That is a 14% net profit margin, which is not bad in any industry, but this is an organization who claims to be struggling to make a dollar in profit. That's another $15M that could be poured into player development and improving the ML team in higher salary levels.

Yet, I don't want to jump the gun, because we do have some soft numbers like revenue sharing and Admin expenses. Are we missing a major expense? Is the Admin number too small?

Still, Redsland, great work. Fire up the email campaign boys, I think the Reds FO has some splaining to do. And anyone who hangs out here knows that I am an overall supporter of management, but when you poor mouth and it ain't so, you've crossed a line.

Redsland
01-28-2004, 03:36 PM
Originally posted by traderumor
I think the Reds FO has some splaining to do.
That's quite a statement coming from you, tr. Glad to have you on the dark side. :evilgrin:

JaxRed
01-28-2004, 03:39 PM
We'll never know for sure. We simply don't have access to all the numbers. But I bet you when we do get the best numbers we can put together, the "profit" is fairly small or non-existent.

Last time they did this (2002 I think) MLB showed Reds with 2 million profit, and Forbes with 4 million. Pre-tax. And that was in a year where we had received a one time "bump" of about 4 or 5 mill.

You better wait till your numbers look good before you fire off those letters.

traderumor
01-28-2004, 03:51 PM
Originally posted by Redsland
That's quite a statement coming from you, tr. Glad to have you on the dark side. :evilgrin:

I agree with Jax on the point of tieing some more numbers down, but one thing that I don't like about the last numbers is that they were arrived at in conjunction with Bud's appearance before Congress, IIRC, so I'm not sure that makes those numbers reliable since everyone deflated their numbers for that purpose. Of course, the Forbes $ being in the same range makes that a shaky argument to make.

Redsland,

I am in a business that I deal with management and owners of companies, so it is common for the employees or general public to be easily convinced that management is making money hand over fist, when they are usually pouring in their own money just to keep things going. That is one reason that I am more apt to believe the FO when they claim to be struggling to break even. But from this CPA's point of view, you have done very good work and have good support for many of your figures. Thus, I am now more skeptical of the Reds FO poor mouthing claims. Rather, it could very well be that the comparisons they are making are with profit margins when they say money is tight. However, they represent that they are breaking even at best. For 2003, that does not appear to be the case. That ought to make them very pleased for 2004, as they will have a difficult time even breaking even the way things stand today.

15fan
01-28-2004, 04:10 PM
Originally posted by JaxRed
The player payroll number will be low for 2 reasons. I don't have a link handy but all teams have to pay about a 6 million dollar charge for something as part of payroll.

And you have no allowance there for benefits, etc. For example the Reds pay Social Security on all these guys.

And yes, I think you'll find your 13 million figure will be WAY low.

Not just Social Security. Factor in things like medical, dental, life and disability insurance. Furthermore, any smart organization is going to have costs such as workers' comp insurance, tort claims liability insurance, fidelity bonding, etc.

And to answer the specific question about rates and limits for Social Security withholdings, I'd refer everyone to page 15 of IRS Circular E, Publication 15:

http://www.irs.gov/pub/irs-pdf/p15.pdf

Employers pay 6.2% and employees pay an additional 6.2% for Social Security in 2003. The income cap was $87,000.

The Medicare rate is employers 1.45% and employees pay another 1.45%. Note that there is NO INCOME CAP on Medicare. Therefore, if you go with the calculations / estimate that the player payroll was $55,000,000, then the Reds paid almost $800,000 in Medicare payments alone in 2003 on the player payroll portion of the expense ledger.

Fringes are a huge cost to an employer.

If you want to know why jobs are moving to other nations, it's not just the hourly wages that must be paid - it's also the taxes & benefit costs associated with employing someone in the US of A...

westofyou
01-28-2004, 04:12 PM
Factor in things like medical, dental, life and disability insurance. Furthermore, any smart organization is going to have costs such as workers' comp insurance, tort claims liability insurance, fidelity bonding, etc.

Payrolls are for 40-man rosters and include averages of multiyear contracts plus $7,552,271 to cover health and pension benefits; clubs medical costs; insurance; workman's compensation, payroll, unemployment and Social Security taxes; spring training allowances; meal and tip money; All-Star game expenses; travel and moving expenses; postseason pay; and college scholarships.


http://espn.go.com/mlb/news/2003/0721/1583823.html

REDREAD
01-28-2004, 04:22 PM
Originally posted by 15fan
The Medicare rate is employers 1.45% and employees pay another 1.45%. .

Ok, I stand corrected on this. I didn't realize that employers matched Medicare.
I knew they matched Social Security and medicare had no limit.

The 87k figure seems a bit high as a ceiling though, unless it was just raised this
year. I had looked up the number as recently as last year, but again, my memory
could be failing me this year.. In any event, there's not a huge disparity here between
your ceiling and my estimate.

Redsland
01-28-2004, 04:23 PM
Thank you woy!

You found the exact "payroll fee," gave me a web page to cite for it, and eliminated a LOT of math, all in one post!

You get a gold star. :thumbup:

I will add the $7MM to the payroll figure I took from Jax's site instead of using ESPN's July payroll figures, because JAX's info is more accurate.

backbencher
01-28-2004, 04:36 PM
Here is a different source for administrative expenses. It is characterized differently, however, so it may include either more or less than the $13,000,000 intended:

from MLB's disclosure to Congress (http://www.baseballprospectus.com/news/20020124pappas.html)

JaxRed
01-28-2004, 04:46 PM
This is absolutely the best reference for the operations number. The biggest question here is did the 36 mill include Riverfront rent?

If it did, you need to subtract rent of 9 million from that figure. If we weren't paying rent at Riverfront, than this 36 million figure needs to replace the 13 million.

Redsland
01-28-2004, 04:48 PM
Originally posted by backbencher
Here is a different source for administrative expenses. It is characterized differently, however, so it may include either more or less than the $13,000,000 intended:

from MLB's disclosure to Congress (http://www.baseballprospectus.com/news/20020124pappas.html)
I read Pappas's articles, but in the end, I didn't use any of them. I, like Congress, simply don't trust MLB's numbers.

That said, MLB told Congress that the Reds' non-player expenses for 2001 were $36,533,000. Add up all of the non-player expenses in my table, and you have $30,500,000.

Redsland
01-28-2004, 04:50 PM
Originally posted by JaxRed
The biggest question here is did the 36 mill include Riverfront rent?
Probably. From the site:

"The black hole of MLB's financial disclosures is titled "National and Other Local Expenses." This category includes all operating expenses other than those associated with players on the 40-man roster. Legitimate expenses in this category include salaries for managers, coaches, and scouts; signing bonuses for draftees and foreign free agents; the farm system; stadium expenses; front-office payrolls; and the cost of operating Major League Baseball's central office in New York."

JaxRed
01-28-2004, 04:53 PM
I bet you it did not !!! That article says all clubs have essentially all the same costs except for stadiums. And we were second lowest, therefore our costs probably did not include rent.

I'll look it up. I bet you Riverfront was rent-free.

Redsland
01-28-2004, 04:54 PM
IIRC, Riverfront was not rent-free, but the Reds did not pay the rent they owed.

backbencher
01-28-2004, 05:01 PM
Originally posted by Redsland
I read Pappas's articles, but in the end, I didn't use any of them. I, like Congress, simply don't trust MLB's numbers.

That said, MLB told Congress that the Reds' non-player expenses for 2001 were $36,533,000. Add up all of the non-player expenses in my table, and you have $30,500,000.

You can do what you like, and you certainly have researched and authenticated your figures. It seems pretty clear, though, that even Pappas trusts the Reds number ("The Expos' layout of $35 million is probably close to the minimum any club can reasonably spend") and suggests that new parks add to expenses as well as revenues ("The Pirates' high costs are also presumably inflated by expenses related to the opening of their new park"). I also would add that the MLB figures are from two years ago, and expenses likely have not diminished in the interim.

On the subject of GAB, I also wonder about the Reds' final payments toward its construction. (The rent/maintenance article suggests that the Reds owe another $10 million.)

Some other line items that may or may not be included in the $13 million include interest and the cost of insurance on player contracts, Griffey's LTC in particular.

westofyou
01-28-2004, 05:09 PM
On the subject of GAB, I also wonder about the Reds' final payments toward its construction. (The rent/maintenance article suggests that the Reds owe another $10 million.)


What about these costs?

Are they counted" as of yet?

A new $12.3 million building along Main Street that will house a Reds merchandise store and a Hall of Fame. The shop will be two stories and 5,500 square feet. It's expected to open by June 1.

Monday morning, demolition of concession stands on the first-base concourse begins. Two 30-foot breezeways will be cut through, connecting the concourse to a new plaza on the west side, and a new "mega-concession stand" will be built. The first-base concourse will be about eight feet wider, eliminating a frustrating bottleneck.

Just south of the Hall of Fame will be the Rose Garden. Delano said architects viewed video of Pete Rose's historic hit No. 4,192 from a variety of angles to estimate where it landed. He thinks they've nailed the location within five feet. Roses will grow from planters.

ē In the southwest corner of the ballpark, close to the river, will be a plaza of more than an acre. The area will contain picnic tables, a bandstand and lots of things to do, mostly for children. Much of this will be ready Opening Day.

Construction is expected to end in June 2004, after some 46 months.


http://reds.enquirer.com/2003/09/28/wwwred2and.html

Redsland
01-28-2004, 05:10 PM
backbencher,

The point I meant to make at the end of my last post was that my number and MLB's number are reasonably close. And since I think MLB's number is inflated, whereas some think my number is low, I suspect the true number is right in this neighborhood. (Sorry, I should have been clearer.)

All GAB payments have been made, so there's nothing to worry about there.

Insurance is already covered in Pappas's "Non-Player Expenses" category, of which my own "Admin/Ops/Devel" grab bag is a subset. So, like Ragu, it's in there. ;)

Redsland
01-28-2004, 05:18 PM
WOY,

The county is responsible for that.

http://famulus.msnbc.com/famuluscom/bizjournal01-24-010115.asp?bizj=CIN

"We're concerned, but we're not panicked," said Hamilton County Administrator David Krings.

Krings said the county is working on ways to beef up riverfront parking revenue and is keeping tight controls on final construction costs for the Hall of Fame at the Reds' Great American Ball Park."

"The county's stadium financing model is expected to break even through the end of construction of the Reds' facility this year. The county is completing work on the Reds Hall of Fame and some infrastructure around the ballpark, said Assistant County Administrator Eric Stuckey, Krings' top budget official."

Chip R
01-28-2004, 05:40 PM
Here's an article I found about back rent on Cinergy and the rent on GAB

http://reds.enquirer.com/2000/01/13/red_cost_for_reds_park.html

backbencher
01-28-2004, 05:58 PM
Redsland, you were clear. Also, I understand that one part of this exercise is to either substsantiate or disprove the Reds' bottom line -- meaning that any numbers provided directly from the Reds or MLB should be treated with skepticism.

All that said, it's fairly clear that even MLB's foremost economic skeptic has no quibble with the Reds bottom line figure from 2001 -- which, in turn, is certain to be less than the bottom line figure for 2003 (with or without the new stadium).

I also understand that every nonenumerated expense is "in" your $13 million figure, insurance and interest included. On that score, frankly, I just don't buy it. Not even close. As one example, the Milwaukee paper you linked showed the Brewers paying $10 million in minor league expenses alone in FY 1999, and $25 million for administrative expenses, player development and interest combined. I just don't see how that squares with an estimated $13 million 2003 burden for the Reds. (Note: is it possible that the number you "heard" was $30 million, not $13? And how do you know that includes everything?)

On the Reds payments for the GAB, your City Beat article says this: "the Reds will owe the final $10 million of their $30 million upfront contribution for the stadium when it's completed, they might not write that check until next year." Since that artucle was written at the end of the 2002 season, I would wager on the final $10 million coming as a 2003 expense.

Please don't get me wrong here; I think you have done a fantastic job. I just think some of the numbers warrant greater scrutiny.

JaxRed
01-28-2004, 05:59 PM
I'm afraid we're just about to lose Redsland as an honest broker in this discussion. The numbers are starting to look bad. The Reds must have paid rent at Riverfront. I'll see if I can find out how much.

Redsland
01-28-2004, 06:08 PM
Originally posted by JaxRed
I'm afraid we're just about to lose Redsland as an honest broker in this discussion.
Fear not. I want to get the numbers as accurate as possible, regardless of what they show. I've already adjusted my table at the beginning of this thread three or four times today, thanks to confirmed numbers provided by helpful Zoners.

backbencher
01-28-2004, 06:09 PM
Originally posted by JaxRed
I'm afraid we're just about to lose Redsland as an honest broker in this discussion. The numbers are starting to look bad. The Reds must have paid rent at Riverfront. I'll see if I can find out how much.
Jax, I think that is unnecessaily critical. Redsland did a bang-up job with the original numbers and has responded to all queries. Plus, Chip's article suggests that the Reds skated on $6 million-plus in backrent.

Redsland
01-28-2004, 06:17 PM
Originally posted by backbencher
I also understand that every nonenumerated expense is "in" your $13 million figure, insurance and interest included. On that score, frankly, I just don't buy it.
Fair enough. I'd love to have complete breakdowns for the expenses, too.

I would wager on the final $10 million coming as a 2003 expense.
You'd win that wager:

http://www.enquirer.com/editions/2003/04/02/biz_peale02.html
Check's in the mail

After the feel-good opening of Great American Ball Park on Monday, the Reds and Hamilton County will turn their attention to one item of unfinished business: the third $10 million payment required of the team for ballpark construction.

Except for one thing: It won't be $10 million.

The Reds already have pulled several items out of the contract and bought them themselves. Those include the video board, replay system, playing surface and other items.

With these items costing millions of dollars, the actual payment will be substantially less than $10 million, said Reds chief operating officer John Allen.

Eric Stuckey, the county's assistant administrator for administrative services, said the team and county would talk in coming weeks about how much cash the team will pay. The payment is due on the "completion date," which most had estimated would fall about April 1.

"We're going to work with each other on that issue," Stuckey said.

Okay, so we have a one-time payment of unknown amount and some costs associated with infrastructure. I'm not sure how to proceed with this info, but I'll give it some thought.


I just think some of the numbers warrant greater scrutiny.
Me too. That's why I'm happy to have the input.

:thumbup:

JaxRed
01-28-2004, 06:21 PM
If the Reds bought these systems costing millions of dollars, and therfore reduced the final 10 million dollar payment, it would be logical to assume that the toal cost of these items and the payment are still going to equal about 10 million isn't it?

Krusty
01-28-2004, 06:25 PM
After reading this thread, I got to thinking that maybe the reason why the Reds are cutting the payroll 10-12 million next season is because they are directing that money to the scouting and player development departments. The Reds added the likes of Terry Reynolds, Bill Wood, Ron Oester, Dean Taylor and seven new scouts. Other than Al Goldis, did anyone else leave the Reds organization since Bowden was fired? If not, you have to pay the salaries and benefits for these individuals, and one way could be is cutting the major league payroll and directing it to the farm system.

backbencher
01-28-2004, 06:33 PM
Originally posted by JaxRed
If the Reds bought these systems costing millions of dollars, and therfore reduced the final 10 million dollar payment, it would be logical to assume that the toal cost of these items and the payment are still going to equal about 10 million isn't it?
I would agree. I think the question would be whether that any of that $10 million was already counted in the $9 million of stadium maintenance (I would doubt it, as the $9 million comes from a 2002 article, but you never know).

Chip R
01-28-2004, 06:36 PM
I think a couple of things that we need to take into account is player depreciation and depreciation on anything the team owns. I know people believe these are accounting tricks to increase expenses but it is a legitimate expense and I'm sure the Reds claim it as such. Another expense that is a big unknown is if the Reds pay the owners any salary or if they receive dividends from any profits the Reds make.

JaxRed
01-28-2004, 06:48 PM
I disagree Chip. Yes there is depreciation. Yes we could amortize some items. But unless I miss the point of Redsland and most people, they want to know if the Reds have a positive or a negative cash flow.

JaxRed
01-28-2004, 06:50 PM
Originally posted by backbencher
I would agree. I think the question would be whether that any of that $10 million was already counted in the $9 million of stadium maintenance (I would doubt it, as the $9 million comes from a 2002 article, but you never know).

I think there is almost ZERO chnace of those items being in the 9 mill. But, I have this vague recollection of hearing the Reds bought the new Video screen for 2002 season. If so, that would mean it would not be a 2003 expense.

Chip R
01-28-2004, 07:03 PM
Originally posted by JaxRed
I disagree Chip. Yes there is depreciation. Yes we could amortize some items. But unless I miss the point of Redsland and most people, they want to know if the Reds have a positive or a negative cash flow. That may be Redsland's intention but people are going to see his post and this thread and say that the Reds are taking in more cash than they are paying out. Therefore the Reds are making gobs of money and are a bunch of lying scoundrels that are cheating the fans out of a higher payroll. Don't get me wrong, I think what Redsland is doing is very informative and he went to a lot of hard work to find all those numbers and the numbers seem to be legit. But expenses are expenses whether they be payroll, stadium or depreciation and you can bet your bottom dollar that the Reds count them as such.

JaxRed
01-28-2004, 07:09 PM
They are not going to say that if this thread is done right. I can tell you based on what I'm adding up, is that the numbers displayed here will show the Reds LOST money.

CougarQuest
01-28-2004, 07:25 PM
Originally posted by 4256 Hits
I believe that WLW pays them but they are hired w/ the approval of the Reds.

I think the Reds pay Marty and Joe. If I remember correctly, Marty and Joe were under gag orders from the Reds about mentioning certain things a couple of years ago. And they made it clear that that the order was from the Reds. Marty also has made comments that he will say things about the Reds players if they are playing poorly, regardless of how the Reds feel about it, because they didn't hire him to be the cheerleader. The Reds are looking for Joe's replacement, not WLW. John Allen has said that he has worked out agreements with Joe over this year, not WLW. Aren't they working under something like the Cincinnati Reds Baseball Radio Broadcast?

JaxRed
01-28-2004, 07:32 PM
No the Reds just have "approval authority"

4256 Hits
01-28-2004, 07:43 PM
Very interesting read! I don't think anything will be proved w/ this because there is just to many unknowns but keep going I am enjoying.

One large expense (I would expect they would get one) that is being missed is the owner(s) salary. I would guess both Carl and the limited are talking a salary from the Reds that could be any size.

KronoRed
01-28-2004, 07:45 PM
Great read! Thanks for the hard work :)

JaxRed
01-28-2004, 07:59 PM
Okay here's the revised info.

I figured the 2 million we got for Boone and Williamson into the database. We also got undisclosed cash for White but I assume that was fairly small and i ignored it.

That puts the Reds net payroll at $53,509,745. Before the add-on we discussed.

The expenses of 13 million for baseball operations need to be 36 million minimum. (The MLB/Pappas numbers). As part of their negotiations with the County for the new stadium the Reds had their rent reduced to $1. So the 36 million figure is all "baseball operations".

Since the 6 million listed for cost of materials and marketing would have been included in the umbrella 36 million, they should no longer be included.

That means expenses are:

Operations 36 mill
Rent 2.5 mill
Maintenance 9 mill
The combination of the remainder of last 10 million dollar payment, adding what Reds spent I'm calling 10 mill.
Payroll 61,062,016



That means total expenses are $118, 562, 016

On the revenue side. The old agreement on concessions was a 90/10 split with the county. Now, the Reds could keep all 90% and run their own operations, but they instead gave 60% to Sportservice. Meaning the Reds got 30% of the revenue.

In the new contract, there was no split with the county. The Reds got 100%. But again they decided to give Sportservice a percentage. If they did better as John Allen says, it safe to say they kept 40% this time. That makes Concession revenue $6,594,725, reducing the previous Revenue estimate by $9,892,088.

Total Revenue is now: $108, 779, 572
Total Expenses : $118, 562, 016

Net Loss - $9,892,088

A couple articles mentioned 11 or 12 million in luxury items the Reds are paying. I think these are in addition to these figures, but I can't be positive, so I did not include them

Krusty
01-28-2004, 08:08 PM
Man, you guys are amazing.:thumbup:

RFS62
01-29-2004, 12:56 PM
Boy, what an exceptional thread. Thanks a lot to all who researched and contributed to this.

I hope we can come to some final numbers everyone can agree on and archive this.

lollipopcurve
01-29-2004, 01:11 PM
Best thread in a while -- get ready for media folks to start looting it.
Thanks for the great work.

Ga_Red
01-29-2004, 02:00 PM
2/09/07