Although I both think we agree it's a shell game, it doesn't operate like a street shell game. One cannot just move money from one entity to the other without declaring a cost or income on the others business sheet. That is why the entities are separated, and that is why the monies being transferred are defined... i.e. $68 million per for TV rights. Someone will correct me if I am wrong.
Originally Posted by Mongoose
It just happens in this case that the people who own shares of the club and the TV network are the same people.
I believe the wrote that his business model was that half of revenue would go to payroll. No matter, it seems a reasonable business model considering his costs.
The Rockies owner said half of his revenue goes to payroll.
Until books are opened, we can only speculate what happens behind closed doors.
Of course he gave his revenue as around $30 million below the Forbes estimate of net ballpark revenue. He also didn't include $20 million a year in local TV money or $50 million from MLB's network contract. That would make a total of $270 million a year for the Rockies.
By Monfort's standards he should be spending about $135 million a year in payroll. Rockies fans don't like him, and with good reason.
If I were going to use the Rockies Business Model to operate the Mets, that would imply that I should be committing half of Mets Revenue to player payroll.
As for what Fred should be spending, you're doing all kinds of funny counting on his behalf. Just because Fred plays a shell game with TV money doesn't mean we shouldn't notice the $200 million of gross TV revenue the Mets don't receive.
And if Payroll should be half of revenue, why are you subtracting $88.4 million presumed expenses from revenue before you tabulate half of revenue?
From SNY, I get $68 million per.
From MLB, I get $50 million per.
From CitiField Operations, I get $232 million per.
That means that the Mets generate $350 million in revenue. However, what I have not deducted are expenses incurred by the club...
The table I pulled out of the Rockies article reads that they spend $88.4 million on non-player salaries and operations. Lets try to see how the Colorado numbers would compare to the Mets numbers...
Payroll of corporate staff, travel, pension/health insurance of all employees: $40 million (50-60% higher)
Draft bonuses, international signings: $12 million
Stadium operations: $24 million
Minor*league player development: $15 million
Major*league operations: $15 million
Ticket/marketing: $15 million
Scouting: $4.3 million
Umpires: $1.5 million
Spring training: $1 million
Community spending: $1 million
Debt Service on CitiField: $84 million (from link below)
That sums up to: $212.8 million
That would leave them $137 million to spend, which is less than 50% of all revenue, but more than 50% of ballpark revenue. And I still wouldn't be comfortable with all these numbers, because outside of what I see in articles posted, I just don't know what holes they are trying to fill.
The CitiField debt service was taken from thess articles:
These articles imply that once Picard looked at the books, he realized there wasn't anything to left in the cupboard to raid. And reading these articles implies the Wilpons are not as off financially that many think they appear to be.
They can't raid the SNY pantry w/o buying out ComCast and TWC, and I don't see those cable companies selling out anytime soon. And if the debt payments the Wilpons / Mets need to make as described in this article are true, then they will be leveraging their Mets / SNY income for years to get back where they thought they would be. If they were to sell, they'd walk away penniless, and I don't think they'd ever do it.
We can only hope.
I guess seeing is believing.
If the Mets played to a packed house every night, their ballpark generated $400 million in revenue, and the Wilpons put the money in their pockets, would be be complaining? I think that a packed house every night implies they are winning a lot, so my guess would be no. But the Wilpons have separated everything, and its probably makes sense not to put all your eggs in one basket, so in that case, you need to look at each entity separately, and then how the controlling interest operates each. As I wrote earlier, even though all the shoe boxes are in one man's house, it doesn't mean that it's easy to move the stuff from one to the other without creating income / tax liabilities that themselves may not be favorable to business.
You can't look at any part of Wilpon operations in Willets Point in a vacuum because, to borrow Doug's analogy, all the shoe boxes are in Fred's possession; in fact they all flow into his wallet.
When you separate entities, it becomes easy to run one business into the ground to benefit the other. I always think of the scene in Goodfellas where Paulie takes a piece of the Bamboo Lounge, only to run up bills on the joint's credit, and sell the inventory out the back door at a loss, eventually declare bankruptcy, and walk away.... I don't believe that it is their intention to burn down the house, but I believe they have tried to leverage everything they have in order to further their empire. Madoff and the market turn changes their plans, and not for the best..
I actually think they're broke -- not ho-bo in the gutter broke, but liquid poor, and all their potential is tied up in the Mets and the network, and they won't realize any liquidity until their debts are significantly reduced. And I also think they're gun-shy in terms of overpaying... But the reality is we know they'll need to overpay to get someone here... So it's a catch-22..
I don't know what I would do if I were them and had similar financial liabilities.. But I am certain I would want to maintain control of my livelihood, and not sell out and walk away penniless.
20-Game "A" Plan, Prom Box 423.