You Mean to Tell Me a Losing Team is Actually MAKING MONEY?

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Put your green visors on and pull out the adding machine, folks. The Pittsburgh Pirates' financial statements have been leaked to the media, and they ain't pretty. Wait a minute, the miserable, basement-dwelling Pirates are making millions in profits?!? Nix that: the financial statements are quite pretty after all!

So the big revelation in the documents, as analyzed brilliantly by Maury Brown at Biz of Baseball, is that team owner Bob Coonelly Nutting and his fellow shareholders made approximately $15 million in profits in both 2007 and 2008, instead of the $5 million or so that Coonelly Nutting had earlier admitted. Although that is a significant difference in funds, that $10 million is not the difference between an eighteenth consecutive year of losing or an empty 82-80 record and third place finish.

What would critics rather have the Pirates do? Spend that extra $10 million on the team on a crummy pool of free agents like Russell Branyan and Randy Wolf? The Pirates would have struggled to win a handful of extra games! Would Pirates fans sleep better if the team behaved more like the Mets, who mortgage the future, overspend in the present, have their owner's finances tied up in a pyramid scheme, and STILL put out a losing product?

Instead, the Pirates have recently spent over $20 million a year on player development, a higher rate than some wealthier teams. General manager Neal Huntington is building a team from the ground up; he's opted to start from scratch because of what he inherited from his predecessors. And remember, Huntington has yet to celebrate his third anniversary of getting the job, so we can't really evaluate his reign of terror over PNC Park for a couple of years.

Losing sucks, we get it. But MLB owners are rational businesspeople, owning franchises in the single most financially successful sport in the history of humanity. They are running businesses, not gambling on the win-loss record of their team! Sure, winning teams make money in baseball but losing teams make money, too, because the MLB owners got together and decided to share their revenue with one another to preserve the competitive balance in the sport.

Yes, there is competitive balance in the sport. That's what allowed the Rays to win a pennant on a budget payroll and that's what will allow the Pirates to contend for a pennant in the next couple years, thanks to following the Rays model of buying low and selling high. The Pirates didn't spend 18 straight years losing because they didn't pay for players; the team was driven into the dumpsters by some bad luck and some piss-poor management of personnel. Huntington is spending a ton of cash in the amateur draft and on international signings now; it's a gamble to spend so much on prospects but still a helluva lot cheaper and smarter than dropping $37 million on a free agent closer.

Full disclosure: I am not a true lifelong Pirates fan, I'm just getting my ass on board the bandwagon as early as possible. The organization may not win a pennant under its current regime but I guarantee this much: the generation-long Pirates string of losing seasons will end before the Mayan calendar expires in 2012 and the entire world gets sucked into the Sun, mark my words.


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6 Comments

The Yankees also have an expensive player development department, it's called the Cleveland Indians.

Hey, they're putting money back into the product. Gotta respect that. Hell, they're using that extra cash to bring in hot new musical talent for their post-game concerts like... um... Collective Soul and George Thorogood?

I noticed on their balance sheets the assets equal their liabilities and equity. Someone should look into that

Oddest of all: they had an entire line item for amortization of pierogi-related injuries.

hey Rob, how much is money baby holding?
Thanks for the article/link. Can't wait to read.

To be fair, Jerkwheat did buy a LOT of buffalo wings.

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