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The 2009 Forbes "Business of Baseball" Rankings

Is there a better time to talk about baseball finances than when the Yankees come to town?

Forbes Magazine just released their annual list on the value of all 30 Major League Baseball clubs. But what I find more interesting than total value is the numbers they give on revenue and operating income. Yesterday, Joe Posnanski put up an article about the Forbes list, talking about baseball revenue and its relation to payroll. It's a great read, as always.

So how much money did the A's take in last year? Forbes gives a figure of $155MM, which would place us 28th out of 30 teams (beating only Pittsburgh and Florida). Note that these figures include revenue sharing money, which is a payment rich teams like the Yankees and the Red Sox make to less fortunate clubs like Oakland and Florida. Forbes puts our operating income at $22.1MM, which is the profit the Athletics franchise made in 2009, before interest and taxes. We can work backwards from there and calculate how much money out of their revenue the A's spent on baseball: $132.9MM, or a little over 85% of our total revenue, ranking us 25th out of 30 in percentage. For reference, the average and median for baseball expenditures comes out to roughly 90%.

Furthermore, using 2009 payroll figures, we can calculate how much of Oakland's baseball expenditures come from player salaries. We spend 47% of baseball expenditures on player salaries (the average and median are at 50%), leaving $71MM for non-payroll expenses, like staff salaries, funds for the various departments like scouting and medical, and normal operating expenses.

There's really not much about the A's in the Forbes report that's surprising. Until a new park happens, Oakland, San Jose, Fremont, or elsewhere, our financial situation isn't going to change, and that mythical nine-figure Justin Upton contract will never happen.

Weather allowing, the Yankees will take the mound in Oakland at 7:05 PM. Ex-ex-Yankee Javier Vazquez (0-2, 9.82 ERA) will battle Gio Gonzalez (1-0, 3.38 ERA).

Odds and Ends

  • I've made my calculations for all 30 clubs available here, as a Google Docs spreadsheet. The column headers are, in order, team, revenue (for 2009), operating income (profit before interest and taxes), baseball expenditures (operating income subtracted from revenue), percentage of baseball expenditures (amount of total revenue that goes into baseball), payroll (from Cot's), non-payroll expenses (payroll subtracted from baseball expenditures), percentage of payroll (amount of baseball expenditures that go into player salaries), and percentage of non-payroll (amount of baseball expenditures that aren't included in player salaries).
  • If it's not immediately obvious, I have next to no expertise with finance and accounting. If someone more enlightened wants to clarify or correct my explanations and mistakes, please do.
  • The Yankees? Their revenue stream is close to three times that of Oakland's, and that's after their revenue sharing and MLB luxury tax payments. Owning your own TV network has got to be nice.
  • As Joe Posnanski notes, the Yankees spend a relatively average amount of their revenue on baseball. It's just that their revenue is so high.
  • The Detroit Tigers actually ran a loss for the year, spening $30MM more than they took in.
  • Ah, Florida. They were easily the most profitable club, with an operating income of $46MM. Yes, their profit (before interest and taxes) was $10MM more than what they spent on their players.
  • Completely and entirely off-topic: In Jane Lee's Inbox column that was published yesterday, Jane said that Ben Sheets "firmly believes" he can score on Warriors guard Monta Ellis. I would pay to see this.