An article released this morning by Dan Alexander of Forbes.com claims that the 2013 Astros are on pace to become the most profitable team in MLB history. Although the Astros have not made their financials public, Alexander’s calculations have already come under fire.
The article mentions the fact that CSN Houston, which the Astros have a 45% stake in, lost a reported $63 million last year. Alexander’s initial figures don’t take that loss into account. He goes on to say that inclusion of that $23 million loss would still put the Astros $71 million in the black.
Astros team president Reid Ryan went on record with The Houston Chronicle to dispute the Forbes article. Ryan said:
We’re going to have expenses that are higher than our revenues, and that doesn’t make (the team) profitable. There is no doubt that the numbers are wrong in the Forbes article.
So, who is a fan to believe?
CSN Houston launched in October. Did they lose $63 million in the final three months of the year? If so, then the numbers for 2013 are likely to be comparable. We don’t know exactly what period that reported loss actually covers. We do know that Cable TV and Satellite providers have refused to pay CSN Houston’s asking price and that the network is in trouble financially. I would also imagine that advertising revenue has been lower than expected — since the network is only available to 40% of Houstonians.
So, I would have to agree with Ryan that Forbes’ figures are off. But “expenses higher than our revenues”? That doesn’t seem quite right either. I guess it is possible. But I would have to think that the team’s actual gross profit falls somewhere in between that $71 million and a negative number.
The Astros turned a profit last year. I am basing that statement on the fact that Seattle was the only team awarded a competitive balance draft pick due to a net loss. So why wouldn’t Jim Crane’s team be turning a profit this year? Is the CSN debacle that huge?
Obviously attendance is way down. But the new dynamic pricing system resulting in higher ticket prices means that isn’t such a big deal.
The gutting of the payroll has been over-discussed. Obviously some money has been saved there.
One would also think that the new uniforms and color scheme has resulted in increased revenue from the sales of souvenirs and apparel. Then again, re-branding comes with expenses as well.
The Astros are also spending more on front office personnel and scouting than they have in the past.
We may never know exactly how much of a profit Jim Crane is going to turn this year, but I think it would be safe to say that it won’t be the most in MLB history. We do know that Crane and Co. took out a couple of huge loans in order to buy the team — and paying down those loans is certainly in the team’s best interest for the long term.
So let’s not throw the owner under the bus just yet. He’s not making the kind of money that some want us to believe he is.
But you definitely still have the right to be pissed about the fact that you can’t see the team play on TV.