Archive for April 7th, 2010

Billion Dollar Bombers

Forbes has released its annual estimate of major league baseball franchise financials, and the Yankees once again sit atop the list. Thanks to the opening of the new Yankee Stadium, the Yankees franchise value jumped 7% to $1.6bn, or nearly twice the value of the next highest team and a shade below the value of the Mets and Red Sox combined. The Yankees also saw revenue increase over 18% to $441mn and stopped a string of six consecutive years of operating losses. In fact, the Yankees 2009 operating income of $24.9mn was the team’s highest since Forbes started conducting the study. The Yankees economic surge has come at a price though. In order to facilitate the building of the new stadium, the team now sits with a debt/value ratio of 89%.

New York Yankees Financial Data, 2000-2009 (Source: Forbes)


Interestingly, the value of the Mets declined by 6% to $858mn, despite the fact that the team also opened a new stadium. According to Forbes, the dip in value reflects a lower than expected revenue increase from 2009 (only 2.6%) as well as an expected drop in 2010 revenue resulting from the team’s decision to slash  ticket prices after a disappointing season. In spite of the dampened results, the Mets still turned an operating profit of $26mn, a $2mn increase over 2008. The next time someone argues that the Yankees success is solely predicated by their market, be sure to point to the Mets.

The Mets’ misfortunes allowed the Red Sox to reclaim the second slot on the list. The Red Sox franchise value increased by 4% to $873mn, despite a small drop in revenue. In spite of the slight reduction in revenue, Boston surged to an operating profit of $40mn. Still, with revenue almost constrained, one can see why John Henry has become the latest proponent of cost control by means of a salary cap? I wonder how Red Sox Nation will feel knowing that the team could match the Yankees payroll if only Henry was willing to break even?

The only team to earn a larger operating profit than the Red Sox was the Marlins, who retained their customary position as baseball’s most profitable franchise by taking in over $46mn (the team’s second straight year above the $40mn threshold). Now we know why MLBPA had to scold the Marlins for not spending their revenue sharing money. Baseball can be a lucrative business when you refuse to spend on players.

Speaking of the Marlins, they also experienced the greatest rise in franchise value. Miami’s decision to help fund the Marlins new ballpark, which is scheduled to open in 2012, fueled a 15% increase in value to $317mn. Another team with a new publicly financed stadium, the Twins, experienced the second largest jump in franchise value. Thanks to the anticipated opening of Target Field, the value of the Twins climbed 14% to $405mn.


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Curtis Granderson earns his pinstripes with a game winning HR off of Jonathan Papelbon.

  • Did Curtis Granderson officially become a Yankee? An extra inning home run off of Jonathan Papelbon at Fenway Park seems to meet all the criteria for such a moment.
  • While Granderson will get most of the accolades, the three inning performance by Chan Ho Park deserves its fair share. I wasn’t very excited about Park after his Opening Day implosion, but you have to give Girardi credit for sticking with someone in whom he apparently believes. If, and it’s still an if, Park can become an Aceves v.2, then the Yankees bullpen will be strong in deed.
  • Big Papi got off the snide with an RBI base hit in the third inning, but then struck out in his final two ABs. The sharks in the Boston media will undoubtedly be circling around Big Papi in the coming weeks.
  • Andy Pettitte recovered from an early game stumble, literally, to pitch six strong innings of one-run ball. On the first play of the game, Andy Pettitte collided with Jacoby Ellsbury while covering the bag on a groundball hit wide of first. Pettitte’s momentum caused him to hit the ground hard, but he continued in the game without any hindrance.
  • In the bottom of the 5th, Pettitte hit Kevin Youkilis with a pitch that grazed off his helmet. Then, in the top of the 6th, John Lackey plunked Derek Jeter. Considering the history between Youkilis and the Yankees (i.e., Joba), things could have escalated, but both teams seemed to realize that neither pitch was intentional. The umpires did hand out warnings, but there was no further provocation. In fact, Jeter gave Youkilis a playful shove when he reached first base.
  • Robinson Cano continues to hit the ball hard. Even though he had only one hit in the game, the Red Sox seemed impressed enough to pitch to Arod in the 10th inning despite there being an open base. One of the concerns entering the season was whether Cano would provide enough protection for Arod. In tonight’s game, at least, that question was answered resoundingly.
  • The Yankees bullpen backed up its 4 shutout innings on Tuesday with another 4 innings of no run relief.
  • Mark Teixeira, a notorious slow starter, remains hitless on the season. Nick Johnson has also failed to record a hit, but he has walked six times.

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John Lackey makes his Red Sox debut, while Andy Pettitte begins his 12th season with Yankees. The last time the Yankees saw Lackey, he angrily left the mound in Anaheim after being lifted for a reliever in the 7th inning of Game 5 of the ALCS. The Angels would wind up winning that game, but Pettitte would slam the door on the Angels in Game 6.

vs. John Lackey PA BA OBP SLG HR RBI
Derek Jeter SS 54 0.341 0.442 0.545 1 5
Nick Johnson DH 7 0.333 0.429 0.500 0 0
Mark Teixeira 1B 56 0.388 0.464 0.551 2 11
Alex Rodriguez 3B 61 0.176 0.295 0.471 4 6
Robinson Cano 2B 27 0.231 0.259 0.346 0 1
Jorge Posada C 32 0.414 0.469 0.586 1 3
Curtis GrandersonCF 14 0.167 0.286 0.583 1 1
Nick Swisher RF 51 0.116 0.255 0.209 1 4
Brett Gardner LF 4 0.250 0.250 0.250 0 0
Total 306 0.269 0.337 0.458 10 31
vs. Andy Pettitte PA BA OBP SLG HR RBI
Jacoby Ellsbury LF 20 0.412 0.474 0.471 0 6
Dustin Pedroia 2B 38 0.211 0.211 0.289 0 6
Victor Martinez C 18 0.200 0.278 0.200 0 1
Kevin Youkilis 1B 38 0.345 0.500 0.552 1 3
David Ortiz DH 58 0.367 0.431 0.551 1 10
Adrian Beltre 3B 9 0.375 0.444 0.500 0 1
J.D. Drew RF 37 0.361 0.378 0.694 3 4
Mike Cameron CF 58 0.222 0.259 0.389 1 9
Marco Scutaro SS 26 0.190 0.346 0.429 1 3
Total 302 0.292 0.354 0.464 7 43
  • Each team has a trio of hitters who own the opposing pitcher. Mark Teixeira, Derek Jeter and Jorge Posada all have an .OBP of .400-plus and .SLG of .500-plus against Lackey, while Kevin Youkilis, J.D. Drew and David Oritz have all hammered Pettitte.
  • Big Papi exploded at reporters after yesterday’s game. When asked about his 0-7 start to the season, Ortiz responded, “You guys wait ’til [expletive] happens, then you can talk [expletive]. Two [expletive] games, and already you [expletives] are going crazy.”
  • Mark Teixeira continues to battle his usual April struggles. In 664 April plate appearances, Teixeira has a sub par line of .245/.345/.426.
  • The Yankees claimed 1B/OF Chad Huffman off waivers from the Padres. Huffman, who was ranked as the Padres #21 prospect by Baseball America, will be optioned to AAA.
  • Alex Rodriguez will move into sole possession of 8th place on the All-Time HR list with his next long ball. Arod is currently tied with Mark McGwire at 583.

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According to AP, the MLBPA is investigating the possibility that baseball’s owners colluded to keep salaries down over the off season.

”We have concerns about the operation of the post-2009 free agent market,” new union head Michael Weiner said Tuesday in a telephone interview with The Associated Press. ”We have been investigating that market. Our investigation is far along but not yet complete.”

The MLBPA and baseball owners have butted heads over collusion in the past. Could we be headed toward another skirmish?

Is it possible that major league owners would make the same catastrophic mistakes that they made in the 1980s?  For those unfamiliar with the history, MLB owners were found guilty by an arbiter of having colluded on three separate occasions during the 1980s. As a result of the rulings, on November 4, 1990, MLB owners agreed to pay the MLBPA a sum of $280 million plus interest and distribution costs. The total cost, which took 14 years to be paid in full, amounted to over $430 million. It should also be noted that on October 24, 2006, MLB was once again forced to settle $12 million in collusion damages as part of the CBA ratification process.

Earlier in the day, I had a running dialogue with Tom Tango (of Tangotiger fame) over at his very informative www.insidethebook.com. Tango couldn’t get past the idea that the market reacted efficiently according to his projections. Unfortunately, not every MLB owner and GM thinks as rationally and scientifically as Tango. To suggest that a majority of the 30 teams similarly evaluate both past and future performance, and then similarly translate that performance into dollar values, seems a bit farfetched to me.

It remains to be seen whether the MLBPA will actually file a grievance, but if they do, it would be foolish to assume that they do not have a strong case. After all, the grievances of the 1980s were all centered on circumstantial evidence, so it’s not like a smoking gun is needed. If the MLBPA can uncover any evidence of conspiracy, or make a strong circumstantial case involving a pattern of signings, then MLB owners could find themselves considerably lighter in their pockets.

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