Local accountant reviews Pittsburgh Pirates numbers-Kovacevic
Here, again, are those 2007-09 financials, as published by Deadspin yesterday morning.
All the content below is Beerman's ...
Review of the Pirates' audited financial statements for the year ended Oct. 31, 2008 and the year ended Oct. 31, 2007. Also reviewed were the unaudited financial statements for the nine months ended July 31, 2009.
I thought they were saving cash to spend down the road but,
- as of Oct. 31, 2008, they only had $608,000 in cash, so apparently they're running the team purely out of each year's revenues. Not sure how they can ever increase payroll without additional sources of revenue/increased attendance.
The July 31, 2009, financials show $11.7 million in cash, but that's only because
- they have been able to borrow an additional $21 million from a financial institution under a refinancing plan.
In any of the past three years,
- I don't see any paying down of debt,
- only increasing debt.
For the nine months ended July 31, 2009, the Pirates had a net loss of $3.6 million. For the same period in 2008, they had net income of $8 million. This drop in net income is due to a decrease in home gate receipts and an increase in expenses of minor-league operations and marketing expenses.
- They still owe $27 million in deferred salaries for players that are gone,
- primarily Brian Giles.
The $63 million credit facility they have with Major League Baseball is almost tapped out as of July 31, 2009. They have borrowings of $59 million against it.
- Their bank credit facility has a maximum availability of $70 million but can possibly go as high as $100 million if the Pirates meet certain conditions.
- There is $61 million outstanding as of July 31, 2009.
It looks like the Nutting family's loan to the team in 2003 was to fund operations with a stipulation of a 15 percent annual return.
- That loan was not repaid but converted into equity.
- The exact additional ownership percentage converted is not apparent.
The Nutting family received two years of interest payments but the other three years appear to have been written off.
- I’ve also reviewed the financial statements for the Rays, Marlins, and Angels. None of these teams are really making any money and appear to be running their teams based on each year’s revenues. The Marlins have a total of $61 million in losses as of Oct. 31, 2009 under current ownership and the Rays' total of accumulated losses as of Dec. 31, 2008 is $65 million.
But I continue to contend that the owners aren’t concerned about profits as long as their team can cash-flow itself each year and maybe have to borrow a little to fund operations.
- Because of the way the value of sports franchises generally appreciates each year in the marketplace, each owner is in it for the holy grail,
and that is to sell the team eventually when they realize very nice capital gains.""
- "From a local accountant," 8/24 Pittsburgh Post-Gazette, Dejan Kovacevic