Forbes: Jays lost money last year ($4.8m)

[dagger]

Call me overly cynical but there is no way the Jays lost money last season unless the left hand - Rogers Sportsnet - gave the right hand - the Jays - less than current market value for the media rights.

With TV rights' fees skyrocketing even for mid-market teams, there is no earthly way the Jays only had $203m in revenues even with an additional 300,000 tickets sold and last year's picayune payroll.

But by short-changing the team, Rogers does get to hide the baseball profitability deep inside the corporation and tell fans they have to ante more to go to the games.

There is a scam going on here, it's legal, but it's meant to deceive.

http://www.forbes.com/sites/mikeozanian ... 3-billion/

[Santoki]

Even if they theoretically lost $4.8 million, that's a drop in the advertising bucket for Rogers.

[Mattd97]

yeah the estimated worth or whatever they use is full of crap. the whole dynamic there allows them to cook it however they want

[Randle McMurphy]

The Jays didn't lose money for Rogers last year. They charge themselves for the TV rights way less than they're worth and make a ton that way.

[dagger]

And under the old revenue sharing formula which continued last season, they would have gotten some $$$ from the league.

[Chevy Chase]

I'm guessing that most top level execs at Rogers get bonuses based on earnings of the Parent Company. Every reason to keep returns at Rogers Inc. high and the Blue Jays low.

Same thing works in relation to how much stock each exec has in their portfolio. The BJs making money, won't move the stock price, but every dollar extra earned at head office help them beat the street.

[SharoneWright]

I'd figure the merch sales last year with new/old uniforms would really have put them into the black.

(kinda the icing on the top, considering the magnitude of the tv revenue...)

[rarefind]

It is all relative, Blue Jays profit margin doesn't mean a whole much when Rogers owns the team, stadium and broadcast (advertisement) rights. Due to this ownership structure they can associate whatever value they want with revenue. Jays owned by Rogers charges Rogers X to broadcast games, it is basically becomes a wash at that point. When the papertrail is transparent as it clearly is, you can expect lower reported direct ties to profit tied specifically to the Jays. Rogers themselves are making a killing, (and with a packed bulding this year will do the same) don't fool yourselves.

[torontoaces04]

*snip

[gei]

Like everyone else, I think this is of course complete BS - but I wonder exactly how they work the numbers. For example they could say Sportsnet paid them only $1.99 per game broadcast... or they could say the Rogers Centre charged them $1 billion per game to use the stadium, etc, etc.

I'm sure it's much more complicated than that of course - but what I'm really wondering is how much money the Jays really made Rogers - I would guess the profit is quite massive considering we have some of the best TV viewership in all of baseball.

[torontoaces04]

Like everyone else, I think this is of course complete BS - but I wonder exactly how they work the numbers. For example they could say Sportsnet paid them only $1.99 per game broadcast... or they could say the Rogers Centre charged them $1 billion per game to use the stadium, etc, etc.

I'm sure it's much more complicated than that of course - but what I'm really wondering is how much money the Jays really made Rogers - I would guess the profit is quite massive considering we have some of the best TV viewership in all of baseball.

Rogers probably tries it's best to show the Blue Jays running at a loss. This way they can use the team as a tax write-off for the company in general.

[Mohanad]

Definately BS, there is no way in hell Rogers isn't making a ton of money from the Jays. http://m.espn.go.com/mlb/story?storyId= ... rc=desktop.

In its report, Forbes, which has been tracking the league's finances since 1998, revealed that the money that all teams made from the $450 million sale of the Montreal Expos in 2006 was invested in hedge funds that are now worth more than $1 billion.
"The value of a team used to be about a team itself," Forbes executive editor Michael Ozanian said in a phone interview with ESPN.com. "Then it shifted to the stadium value and then to the television deals, and now it's more about what's not on the field at all."

Each team also owns an equal share in MLB Advanced Media, which, among other things, has generated massive revenue from its game-day video and audio app MLB At Bat, the highest grossing sports app in the Apple store on the iPhone and iPad for four consecutive years.

MLB Advanced Media generates more than $600 million in revenue, and Forbes conservatively values the subsidiary at $6 billion.

Combine those investments with the $12.4 billion in national television revenue the clubs will receive thanks to new deals with Fox, Turner and ESPN that run through the 2021 season, and it's easy to see why it's a great time to be a Major League Baseball owner.

[RapsFanInVA]

Dang, I feel really bad for Rogers. Let's start a fundraiser to help them recoup their losses. Bake sale to raise $4.8 million?

[distracted]

[Rogers probably tries it's best to show the Blue Jays running at a loss. This way they can use the team as a tax write-off for the company in general.

Are you actually considering the implications of this, or just pulling a Kramer?

As far as I know, Rogers wholly (or majority) owns the Jays as an independent subsidiary from a corporate structure perspective. I can't see any short term or long term reason why Rogers would prefer the Jays to show a loss from a tax perspective.

I believe their short term tax burden between parent and sub would be increased by having Rogers make $5m more while the Jays lose $5m, as the parent (who it is reasonable to believe are making a profit) would be taxed on the additional profits while the jays wouldn't get a tax rebate for the loss.

I can think of numerous other reasons why Rogers would prefer the Jays lose money, but tax efficiency is not one of them. Unless we're talking about a year when the parent company is going to show a loss for tax purposes, but I doubt that's going to come any time soon.

From a tax perspective, it's likely most efficient for the Jays to make a profit, up to the point that making a profit would cause Rogers to incur a loss on their total business.

[flatjacket1]

The Jays didn't lose money for Rogers last year. They charge themselves for the TV rights way less than they're worth and make a ton that way.

IIRC they are determined by a 3rd party.

[Schad]

[Rogers probably tries it's best to show the Blue Jays running at a loss. This way they can use the team as a tax write-off for the company in general.

Are you actually considering the implications of this, or just pulling a Kramer?

As far as I know, Rogers wholly (or majority) owns the Jays as an independent subsidiary from a corporate structure perspective. I can't see any short term or long term reason why Rogers would prefer the Jays to show a loss from a tax perspective.

I believe their short term tax burden between parent and sub would be increased by having Rogers make $5m more while the Jays lose $5m, as the parent (who it is reasonable to believe are making a profit) would be taxed on the additional profits while the jays wouldn't get a tax rebate for the loss.

I can think of numerous other reasons why Rogers would prefer the Jays lose money, but tax efficiency is not one of them. Unless we're talking about a year when the parent company is going to show a loss for tax purposes, but I doubt that's going to come any time soon.

From a tax perspective, it's likely most efficient for the Jays to make a profit, up to the point that making a profit would cause Rogers to incur a loss on their total business.

Comes down to Rogers' toplines, I'm guessing. They freaked and cut a bunch of staff last year when profits dropped to keep share prices high, and while a couple mil per quarter isn't determinative there, neither does it hurt.

[satyr9]

Well, distracted is my favourite poster for the week between this and the Wells link, which is in no way meant to link him to the mess that is about to follow.

I do wish people would stop talking about tv revenues as if Rogers is stealing from the fans. There was an fg article this offseason that showed they were upper-middle as far as mid-market teams go. Do they make more money because they also own the tv station so they get the ad revenues? Of course, but they also have a lot of dough invested in said tv station and want return on it.

You can argue they are big market all you like, they are not getting a super raw deal on tv, just not a good one either. There are teams out there who aren't the in the Jays position who signed long-term tv deals that leave them much worse off. I can't remember the actual amounts, but the Braves are screwed for a very long time. That being said, the landscape is changing very quickly, see TEX, SD, LA deals and Rogers will pay more for tv, because they'll have to pay close to market rates. The downside is the Jays will never make a killing, but the upside is they'll never get jobbed either 'cause they're constantly short-term (I thought I read that they do 3 year deals, but I could be making that up). Throw in doubling the guaranteed national tv money in 2014 and they can lose a bit of money last year, see more coming in as guaranteed and pay out a bit in advance to try and spark the growth curve.

I will say I think it's in Rogers interest to always have the team operating as close to zero profit as possible, from a PR perspective (it's not that I don't know anything about taxes, but I don't know nearly enough to talk about corporations the size of Rogers). It's easier to go in any direction and spin it acceptably if you're making or losing small amounts. And whatever the tax savings are one way or the other, I don't think they outweigh the enormous visibility of getting PR with their sports teams right.

So while I don't disagree that Rogers has a large amount of control on the Jays bottom line just from accounting practices and can make the Jays profitable or not depending on how they structure intra-company deals, they don't just make up nonsensically low deals to pad the rest of the book. If for no other reason than if they went too far, the rest of MLB would complain as it relates to revenue sharing (there's likely whatever Canadian anti-trust type problems they might incur if they went wild with it, but that's just me rambling). IMO, They do creative bookkeeping largely to the extent that every other professional sports franchise does (those deadspin leaks of Nets financials were freaking hilarious as an example) and do not leave Jays fans worse off than other teams.

And for the record, I **** hate Rogers the company. While I still have to make them some money 'cause the pipes are theirs, I don't have a single Rogers account for anything anymore.

[Randle McMurphy]

I do wish people would stop talking about tv revenues as if Rogers is stealing from the fans.

They're not stealing anything from the fans. They're just charging themselves far less than the rights are actually worth, which means the Jays organization take in much less money than they would otherwise.

There was an fg article this offseason that showed they were upper-middle as far as mid-market teams go.

And the FanGraphs article you're referring to was incorrect to label them as such (which was pointed out several times in the comments, IIRC). There's nothing upper-middle about the Toronto television market.

[distracted]

Comes down to Rogers' toplines, I'm guessing. They freaked and cut a bunch of staff last year when profits dropped to keep share prices high, and while a couple mil per quarter isn't determinative there, neither does it hurt.

Given that the television deals are short term, manipulating the profit or loss by changing them or other 'vertical integration' type items should have very little impact on the price they would be able to garner on the open market if they were to sell, and thus should impact their balance sheet very little.

While I'm no corporate controller, I believe the Jays would only impact Rogers' profit and loss statement in so far as they need to infuse cash or are paid a dividend, and both of those would be 'below the line' items, not operating profit. While the sharper analysts makes adjustments for all these things, the laymen only see 'Rogers posts profit of X in Q4' and these maneuvers should help pump up X without affecting their balance sheet position.

Improving that number should also help executive compensation, which I'm sure wasn't just a throw-away consideration in all of this.

[Sifu]

I thought the Jays had one of the highest (if not highest) tv ratings in baseball. If that is the case, then the Jays are in no way a mid market television team.

Does anyone have the viewership ratings for each team?