In America, people don't go into business to lose money. Today we woke up to the news that the Pirates' financial statements from the past 3 season had been leaked to the press and the statements showed that the Pirates' made $15 million in 2007, $14.4 million in 2008 and $5.4 million in 2009. For some Pirates' fans and a "sports economist" to be discussed later, this was unacceptable. After all, how could Pirates' ownership allow themselves to make money while simultaneously allowing the major league team to be a complete embarrassment for 18 years? After the jump, I tell you why I don't have any problem with the Pirates making money but I have a serious problem with the Associated Press...
Let's compare how this story was covered in two separate places - the Post Gazette and the Associated Press (via ESPN.com). The PG reported the news the proper way - it started with facts and quotes from the actual people involved in making the news. That's called journalism. The AP, on the other hand, appeared to be writing as if it was outlining discussion points for an afternoon-drive sports-talk radio program. After the AP reveals in the third paragraph that it "wasn't invited" to owner Bob Nutting's press conference discussing the financial statements, it quotes David Berri, a "sports economist," who says:
The numbers indicate why people are suspecting they're taking money from baseball and keeping it -- they don't spend it on the players. Teams have a choice. They can seek to maximize winning, what the Yankees do, or you can be the Pirates and make as much money as you can in your market. The Pirates aren't trying to win.This is an unprofessional presentation of the story. First, what is a "sports economist?" Sounds made up. Second, why is this opinion presented before the actual news? The news, like I said earlier, is the finances and what Nutting and Coonelly had to say about the finances. Maybe the AP feels that because they "weren't invited" to the press conference that they can't quote Nutting, but the entire second half of the article summarizes what Nutting was saying at the press conference. That's amateur hour.
GTOG, the internet's hottest news magazine, could spend hours critiquing the journalistic integrity of the media, but let's focus instead on the Pirates. According to Nutting and Coonelly, the team paid $20.4 million in profits to its ownership group over the past 3 years and this was to pay taxes and pay back the interest on a loan. I'm not a financier, but I don't see anything wrong with this. The Pirates have had to go to their ownership group several times over the past dozen years to ask for more money and these owners often ponied up. At some point, aren't they justified in at least getting some money back to help cover taxes? And think about the last time you owed someone money...were you willing to wait around forever for it to be repaid? Didn't think so.
Some people just want the Pirates to "spend more." I ask, to what end? The Pirates made $15 million in profit in 2007. Let's say that they invested that entire amount into the major league roster in 2008. That's a drop in the bucket. $15 million buys you a journeyman starting pitcher and an average left fielder. If the Pirates had two guys like that, how many more games would they win. 5? 6? Ok, so they win 73 games instead of 68. Big deal. Those 5 wins will not sell a single extra ticket and, even if it would, it isn't going to come close to $15 million more in revenue. So if you own the Pirates, there is no reason to do that.
The other problem I have with the Nutting-bashers is that it is a false comparison to compare the Pirates to the Yankees. They're both in the MLB, but for all intents and purposes they aren't in the same league. Berri, our "sports economist," decries the Pirates because they don't invest in winning "like the Yankees." I'm really tired of this argument. The Yankees can have an unlimited payroll because they play in New York, sell tickets at 10 times the price of PNC park (at minimum), have their own TV network, and have ESPN in their pocket to constantly promote them. The Pirates don't have this. If the Pirates reinvested their $15 million in payroll, they'd still be about $150 million behind the Yankees. Big difference that would make.
The Yankees don't spend money because they are trying to win. They spend money because they can get a return on that investment, not in the form of winning but in, you guessed it, more money. The Pirates don't have this luxury. Unless the team gets an owner who is willing to hemorrhage money for the sake of winning, they can't afford to spend more money. Without a salary cap, the Pirates have no chance to come at all close to what the bigger market teams can pay. And if the Pirates did start spending more, wouldn't that just drive salaries up across the board, thereby giving the advantage right back to the Yankees? (To our Yankees' fans out there - I don't begrudge you for spending money. I'd want my owner to do it. Just know that you are competing in a league with about 10 other teams, while the other 20 serve as your farm system).
Of course this is the point where you could look to the other teams who have been moderately successful with lower-end salaries. Tampa Bay, Minnesota, etc. They have done a great job, but they are also operating with no margin for error. If Tampa signs Javier Vazquez and he stinks, the team suffers for years. If the Yankees do sign Vazquez and he stinks, they trade for someone else and pay Vazquez to go away. I know San Diego and Cincinnati are doing well this season, but wake me up when they win the World Series.
I'm not absolving the Pirates of blame for sucking for 18 years. Quite the opposite. The Pirates have sucked for 18 years and that has meant 18 very high draft picks with nothing to show for them (save for some guys from the past couple of years). The team is horribly managed. They can't draft and develop players. When they spend money, they spend it on Matt Morris (the second worst trade of all time behind the Louisiana Purchase). When they have a good player, they trade him (Aramis Ramirez). So yes, I'm with you, the Pirates are awful.
But awful as they may be they have a right to make money, or at least not lose money. If you don't like it, don't go to the games. Actually, you aren't going anyway.