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Wait a Minute... the Marlins are making money?

Over at Lookout Landing (covering the Mariners) the other day, I came across an excellent post by Jeff about the annual Forbes team valuations.

Before I even had a chance to read the Forbes article, one particular number jumped out at me from Jeff's table:


Yes, three.  As in three million.  As in three million dollars of operating income for the Marlins last year.

So it seems that despite their onerous lease that the Marlins might not be in as bad of shape as you might have previously believed.  In fact, according to the Forbes numbers, eleven teams had less operating income last year than the Marlins.

Granted, these aren't audited numbers provided to the SEC as you'd normally be able to find for a publicly traded company. The Marlins aren't a public company, so they don't have to share that kind of detail with the world.

And if Forbes' numbers are anywhere close to accurate (this link goes directly to more detailed Marlins information), they surely wouldn't want to be sharing these sorts of numbers. The Marlins have made their case for years now (actually for their entire existence, across multiple owners) that they are not a profitable ballclub. This is a common refrain amongst sports owners and we as fans normally buy off on it because the team is usually (1) a hobby for the rich owner - and one that most of us would likely undertake if we had the disposable income and (2) ownership usually makes up for its operating losses through the appreciation in franchise value (which they benefit from when they sell the team).

The Marlins, however, have taken this one step further. After the 1997 World Championship season, Wayne Huizenga used the huge losses he was claiming ($20 to $30 million) as cause for breaking up the team and ultimately selling it. Even with the current ownership group, Mr. Loria has claimed to have lost tens of millions of dollars per year - even in 2003, when the team won the World Series title again. Much of this was blamed on below average attendance and interest in the team coupled with a very unfavorable lease agreement.

What most folks overlook though is that the "losses" that major league team owners can legitimately claim are derived from tax benefits such as being able to depreciate the value of a player and his contract. While these tax loopholes don't generate out of pocket losses for team owners, they do allow owners to save on taxes.

The Marlins have taken this one step - one significant step - farther and have used their claims of the suffocating lease and the "fact" that they are losing money to drum up interest for a mainly publicly financed stadium (which ultimately doesn't seem to be coming together).

If they're not losing money - especially significant amount of it ($10 - $20 million dollars per year represents a significant portion of Mr. Loria's net worth, at least in comparison to other billionaire owners like George Steinbrenner and Carl Pohlad), then their need for a publicly financed stadium is - at least - a little different.

I'm sure that the Marlins will claim that the Forbes numbers are innacurrate (and that they'll also refuse to provide the actual numbers for inspection). Maybe they are. Forbes surely has to make some assumptions here.

It's not important though whether or not the Marlins actually had $3 million in operating profits last year. What is important though is the significant difference in the order of magnitude between the Marlins' claim of annual losses of $20 million per year versus Forbes estimate of $3 million in operating income in 2004. Granted, we're likely looking at apples and oranges here as the Forbes estimate is based on a definable number (operating income) while the Marlins typically talk about "losses" in a much more vague fashion (leaving them open to interpretation as to what's exactly included in those losses or not).

All things considered, we don't really know how much money the Marlins are making or losing.  Using the data provided by Forbes though, we have a pretty good idea that they're either making money or at least aren't losing as significant amount of money as you might otherwise be led to believe.  The moral of the story is to have an open mind when you hear the Marlins (or any team really) cry poor because you might not be getting the full story.