Monday, August 26, 2013

Blowback from Forbes report

So the Forbes piece that came out this morning that said the Astros were the most profitable baseball team ever in the history of ever? That's causing some waves - which is of no surprise. Some of you are pissed. Some of you are willing to give it some time.

But while I decided to formulate some thoughts in the form of Photoshop Wizardry, others decided to pass the time actually coming up with something. A roundup, if you will:

Rob Neyer: ...While the Astros are losing even more games and making even more money than I would have guessed, I'm willing to cut their owner some slack for another year or two, in the absence of new information.

Crawfish Boxes: When the Astros' prospects blossom into a winning core, the money should be there to sustain a long term winning team.   I'll wait for that time in the future before I point any anger at the Astros' owners.

And while both of those come with a self-admitted place of incomplete knowledge of the Astros' finances, this one doesn't - Astros President Reid Ryan says that Forbes is totally wrong:
There is no doubt that the numbers are wrong in the Forbes article. If they were right, I’d look like the guy who had done the best job in three months ever (since taking the job in May). The fact is that the numbers are wrong.

Where are they wrong? We’re going to have expenses that are higher than our revenues, and that doesn’t make (the team) profitable.

So there you have it. Yes, Forbes' numbers are wrong. No, the Astros aren't going to release their financial statements. I'll have more thoughts later tonight, and certainly on tomorrow's Morning Drive.

9 comments:

Anonymous said...

Well, I thought that his making money was an example of great stewardship, paying off debt and thus setting up the franchise for financial health. Now, I hear that he can't turn a profit with a miniscule payroll. So, is he a financial badass or what?

Anonymous said...

Gosh, if we had signed Kyle Loshe for 5/90, then we could have been sitting at around 46 wins (optimistically) about now. And, with the free agency just gone, we could have built an AWESOME bullpen (although K-Rod would have been exactly the signing I thought this front office would have made)

Terence said...

Forbes is assuming that the Astros received $80M from CSN this year. I'm going to go ahead and assume that the Astros did not. I'd be surprised if they have received $1 from CSN this year.

Mike Castleman Jr. said...

I'm pretty sure that Reid Ryan is speaking from the perspective of "NET INCOME" and not "OPERATING INCOME"

No way their EBITDA is negative

Mike Castleman Jr. said...

...but at the same time the whole exercise is an excruciating waste of time as the business was a complete "re-do". IMHO...how much money the Astros make is simply immaterial to me.

Anonymous said...

No doubt they are taking apples and oranges, and Ryan is imperfectly reacting to the negative reaction of the Forbes article.

However, instead of throwing out some claim about losing money, Ryan/Crane should just come clean. If they are using money from whatever source to quickly pay down debt, then they should just say so. Let the public know they have a plan. It can't be worse than the publicity they get otherwise.

If they are indeed losing money as Ryan tried to portray, that just makes them look like fools, and many fans will likely conclude that if they are losing with a small payroll, why would the payroll ever get higher.

Just come clean and treat the fans as adults.

Anonymous said...

Ryan doesnt say that tbey lost money. Just that the numbers are wrong. I bet they are somewhere closer to $40-50MM

Anonymous said...

Well, he said:

“We’re going to have expenses that are higher than our revenues, and that doesn’t make (the team) profitable.”

Not being profitable is not very far from losing money.

MoleBoy said...

“We’re going to have expenses that are higher than our revenues, and that doesn’t make (the team) profitable.”

As I pointed out in the other comments section, Forbes isn't really calling it "profit," but "operating income" since the money the team makes right now is being used to pay off the loan.

Ryan is really dealing more with semantics and probably being truthful about the numbers being wrong, though probably not as much as he seems to be implying.