FanPost

Pohlad's his own worst enemy

Carl keeps insisting that he loses $15 million per year. The numbers just don't add up.

The Twins have been trying to get a publicly funded or financed stadium for 12 years. And no team in baseball is more deserving or more in need of a facility upgrade than the Twins.

On the surface, a new stadium should be a slam dunk. The Twins have played in a football stadium since 1983, with the promise from the beginning of a baseball-only stadium when the state could afford it. It is without question the worst baseball stadium in the majors and most of the minor leagues. The Twins' agreement with the Metropolitan Sports Facilities Commission (which the team is suing) gives them zero revenue from luxury boxes,  almost nothing from concessions, no parking revenue, limited signage revenue. And when the commission took away 200 seats to make a special luxury box for the Vikings, it wouldn't even let the Twins use it. I hope the Twins get a better deal now, but even a better deal will be the worst in the major leagues by a long shot.

Couple this with the deal on the table, which requires no state money, requires the owner to pay one third of the construction costs, and requires a local tax that is 1 percent of the tax used to fund the Metdrodome, and even voters in Miami would overwhelmingly approve. But the governor refuses to call a special session that would make the slam dunk a reality because it is still too much of a political risk to publicly support a billionaire owner who seems to have no basis in financial reality.

The only thing that stands in the way of proposal after proposal is the owner. And he's at it again. This time, he was quoted in Charlie Walter's column that he continues to lose $15 million per year. This is the figure he cites at the end of every year, despite the fact that team President Dave St. Peter has been repeatedly quoted that the Twins have broken even the last two years, with a slight profit this year.

Which one should we believe? St. Peter. With the exception of marketing and sales, the Twins have not  appreciably changed their operating budget for the last three years, most of which goes to player salaries, player signings, and player development. Since the team last lost around $10 million (according to then President Jerry Bell), in 2001, it has increased revenues in the following ways:

* Attendance has increased the last three years, culminating in 2005--the first 2-million attendance year since 1993. This is an increase of 25 percent over 2001.

*Team sponsorship and signage revenues are up nearly 100 percent since 2001.

  • TV revenue is up the last two years by a factor of four over the previous years. Before the team refused to take the TV monopoly money from FSN and threatened to start Victory Sports instead, it took in $4 million in TV money per year. Under the renegotiated contract, it grosses $16 million per year.
  • The team now receives more than $20 million in revenue sharing and luxury tax revenues from the league. That is up from nothing in 2001.
  • Now in 2001, Terry Ryan's baseball operations budget was less than what it is now. It stood at around $45-50 million, of which $30 million or so went to player salaries; whereas now it's between $75 and $80 million, of which $60 million or so goes to player salaries.

    Most of the budget increase can be attributed to revenue sharing. As required by the recent collective bargaining agreement (CBA), teams must spend their revenue sharing dollars on players. A small portion of the budget increase stems from the TV deal and attendance projections. But by and large, the extra revenue from ticket sales, sponsorships, and TV more than make up for the increased operating expenses and the operating loss the team sustained year after year until 2001. In fact, it operated as a slight profit, perhaps $1 million or so, in 2005.

    Why does Pohlad keep playing the broken record on operating losses? I've heard some theories.

    1. He's senile. He might be, but he sure seems with it when people interview him about the current crop of players, which turns over at a 25 percent rate every year. If he is senile, he's not senile enough to forget that the economics of baseball changed so drastically with the last CBA.
    2. If he makes public statements about operating losses, it might sit better with the IRS when he writes off $15 million every year for "hidden costs" such as liability for flying bats and balls and depreciation. This might be true, but if I wrote these things off, I wouldn't publicize it in the newspaper. That's just daring an audit.
    3.  He really thinks people will empathize with his plight if they believe he's throwing $15 million from his personal check book into the team every year. This is the most likely theory. In Walter's interview he said, "We will do everything in our power short of bankruptcy to win." This team may have a bad deal, but it's not close to bankruptcy, not with a black bottom line this year.
    For some reason, he thinks he's doing his stadium cause a favor by crying poor mouth. But the cry has a tinny ring when your mouth has had nothing but silver spoons in it since you made all your millions by foreclosing on farmers during the depression and selling off the land after the War. And it has a false ring when you make more money from your team than most of the owners in baseball. That's not saying much, but its a far cry from a $15 million loss.

    After 12 years, you think he would finally get it. He should just tell the truth. He's a billionaire. He can afford a few losses. But he won't be around much longer, and the next owner will likely expect a black bottom line. The black bottom line from 2005 won't last long in the Metrodome, not with contracts like the ridiculous $47 million, five-year deal to a closer with 42 career saves.

    The only way to keep the team in Minnesota after Pohlad is gone is by building a stadium that brings in better revenue. Short of that and we're looking at loosing the team within the next 10 years. If everyone just stepped back and admitted it's not about Pohlad it's about the Twins' future, the Hennepin County deal would be done by now. By crying poor mouth, he makes it about himself, which dooms the cause year after year.

    Carl, just tell the truth or be quiet. Lying or stretching the truth never helps.

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