Pittsburgh Pirates principal owner Bob Nutting went on record yesterday in refuting Forbes MLB valuations—especially as it pertained to operating income, or profit in 2006 for the Pirates. As reported by Dejan Kovacevic of the Pittsburgh Post-Gazette:
"The information reported in Forbes is simply inaccurate," principal owner Bob Nutting said yesterday.
Neither Nutting nor CEO Kevin McClatchy has divulged how much profit the team made while spending $43.4 million on player payroll last season -- third lowest in Major League Baseball -- but they have said it was not excessive.
"We are operating the Pirates responsibly from a solid business and baseball foundation in order to consistently compete on the field and maintain the long-term viability of the franchise," Nutting said.
"Compete on the field" and "viability of the franchise" is certainly debatable given the fact that the Pirates have 14 consecutive losing seasons and there's nothing to say that they won't have another losing season again in '07. The Pirates 2007 Opening Day payroll came in at $38,604,500, the third lowest in MLB, and down from a 2006 season-end payroll of $43.4 million.
This is while Forbes reports that the club pulled in $25.3 million in profits—third highest. Nutting and McClatchy have both tried to spin the matter as keeping in line with what the A's and Twins have done by using a modest player payroll base and working to field competitive teams. The problem with that notion is that the A's and Twins aren't brazenly pulling in profits. The two clubs rank 19 and 20 respectively in terms of operating income. They also know how to procure player talent.
So, is it pure profit-taking by the Nuttings and McClatchey?
It may not be that ownership is pocketing revenue sharing dollars directly, but they are making a profit from it.
One questions if the Pirates are making money (and they admit as much two years running), where does it go? If not player payroll and not into their pockets, where then? The answer seems to be in paying down debt, which was approx. $120 million in 2005. Paying down debt is, in many senses, paying yourself as the value of the franchise increases as the debt is paid down.
Mark the Pirates down as example #1 for those fans that clamor for an MLB player payroll floor.
Maury Brown is the founder and president of The Business of Sports Network, of which The Biz of Baseball is a member. He is a contributor to Baseball Prospectus, and can be contacted here.