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

[dagger]

[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.

Certainly stock market analysts react a lot more to the state of advertising and cable revenues than they do to the Jays. Those are supposed to be sustainable growth areas, and when there is a flattening of ad revenues or churn in the subscriber base, or the CRTC denies Rogers/Bell/Telus some ability to gang bang the public for a few more dollars, the analysts react immediately, sometimes with a downgrade. The Jays' profitability, whatever it is, isn't necessarily sustainable, or at least wasn't until the advent of a luxury tax made even the profligate spenders in New York think twice, so the Rogers beancounters would likely prefer to see the profits attributable to baseball be reflected more in the ad/cable side than the Jays side. If the Jays suck, and attendance is down, no stock market analyst even notes that fact. This may change with Rogers charging mobile users for watching games on their iphones and ipads, but right now, the better they make Rogers look - at the expense of paper profitability for the Jays - the better for the corporates in the big house on Mount Pleasant.

That being said, we know that Beeston is not beyond using a rigged loss to justify a cap on spending. So even if this team generates an additional $100 million this season in ticket and merchandise sales and most importantly, ad revenue and app fees for the parent, we could see a paper loss or insufficient profit used to justify not giving a guy like Josh Johnson a pricey new deal next winter.

[gei]

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're absolutely delusional if you think this is just a matter of getting a fair "return" on their investment. And there have been many statistics showing that they are light years beyond "upper-middle" for "mid-market" teams in terms of viewership. In fact I think the have one of the largest TV audiences in all of baseball.

[The_Hater]

Creative Accounting at it's finest.

[flatjacket1]

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're absolutely delusional if you think this is just a matter of getting a fair "return" on their investment. And there have been many statistics showing that they are light years beyond "upper-middle" for "mid-market" teams in terms of viewership. In fact I think the have one of the largest TV audiences in all of baseball.

Under the new revenue sharing system, they are marked as a "big market team", along with the Astros, Mets, Cubs, White Sox's among others. What does this mean? It means that they pay into a revenue sharing fund which they do not receive money from, thus rendering us a payee. This may not seem like a lot, but it is. 34% of profits are pooled into revenue sharing, we are talking tons of money.

Why did Selig do this? Simple, he wanted big market teams like the Jays to have an incentive to spend, which correlates to winning. Before this year, it didn't make business sense for the team to spend money. Teams could previously just sit back and rake in millions of Yankee dollars while trying their best to break even and pocket the revenue sharing dollars. This is a mind set of the past, because now if we don't finish in the top 15 teams, we don't get a very large chunk of revenue sharing dollars.

I don't know any numbers of how much a team actually makes, but one rule hints of how MASSIVE it is. The Jays announced 250M in renovations to Rogers Center within the next decade. That breaks down to 25M a year. Why does this matter? Another new rule states we have to spend every penny of revenue sharing dollars on baseball operations, so no more pocketing revenue sharing. Between the increase in payroll and the renovations to Rogers Center, I would wager we are talking tens of millions.

Now us operating at a loss helps a lot, but you should be happy. It helps the fans too. If we operate at a loss, we don't have to chip in revenue sharing dollars, as our net profit was a loss. Sure they might include increase in net worth (as the team is worth more), and that might somehow count but either way it is less.

I also REALLY remember reading somewhere that the team gets evaluated by a 3rd party agency to determine how much they pay themselves for TV rights.

[tosi]

They made a killing buying the stadium for nothing. 5 million is nothing