Will leaked docs showing Rays’ profit affect the team’s fight for a new stadium?
Leaked financial documents show that the Tampa Rays Rays turned a profit during their last-place campaign in 2007 and their unlikely run to the World Series in 2008 — revelations that come at a problematic time for the team. The Rays have entered into a political fight with the City of St. Petersburg after announcing in June that the team’s ballpark, Tropicana Field, is not financially viable and that the team must move.
Rays owner Stuart Sternberg rubbed salt in the city’s wounds by saying the team’s search for a new stadium site would include the entire Tampa Bay area, including outside St. Petersburg, which contradicts the lease the club signed with the city pledging to play in Tropicana Field through 2027.
The Rays will not confirm or deny that the documents released this month by the sports blog Deadspin are for real, but other teams such as the Pittsburgh Pirates and Florida Marlins have decried the leak, calling it a crime. Major League Baseball is also conducting an investigation to find the source of the leak, giving credence to the documents’ veracity.
Rays officials are not only silent on the documents (which you can read or download in full below), but also will not comment on their stadium fight till after the season, which has the Rays again competing with the New York Yankees and Boston Red Sox for a playoff spot while continuing to battle low fan attendance.
“We are not commenting on those documents,” says Rays spokesman Rick Vaughn. “For certain, we will not have any comment on anything until after the season.”
The documents show that the Rays earned $11 million in profit in 2007 and $4 million in 2008 — numbers that will certainly be a sticking point as the stadium debate plays out in the off-season.
“It’s really no surprise they made a profit, that it’s not been too horrible for them,” says St. Petersburg City Council Member Jeff Danner. “Eventually these numbers will have to have an effect on our discussions.”
Danner admits he has not yet taken a close look at the leaked documents, saying the stadium fight will be “discussed for years to come.” Some say, however, that a close look at the numbers shows the Rays’ financial concerns are very real.
Leaked documents show that the Pirates and Marlins – two teams with minimal player payrolls and low attendance – both turned substantial profits in 2008 and 2009, mostly by taking advantage of MLB’s revenue-sharing agreement, according to sports economist David Berri.
The Rays documents outline data from a different time frame, but show the team also benefited greatly from revenue-sharing — a system through which large-market teams turn over revenue to small-market teams in an effort to promote competitive balance in the league, according to Berri, president of the North American Association of Sport Economists.
Berri says revenue-sharing allowed the Pirates and Marlins to sock away profits from other areas in 2008 and 2009. With a bigger payroll, the Rays did not make the same gains, even though revenue-sharing and other financial assistance from MLB covered their entire player development program and payroll, which are a baseball team’s biggest expenses, according to Berri.
The Rays received $74 million in revenue-sharing in 2007 and 2008, while spending $91 million on payroll, he says.
“With revenue-sharing alone they nearly covered their payroll, so I just don’t see how they are only clearing $15 million profit. This team is basically paid for by Major League Baseball,” Berri says.
If the numbers are a true reflection of the Rays’ profit margin, it amounts to financial trouble for the team, Berri says. With a stadium fight brewing, he believes it will come down to taxpayers helping pay for a new facility or the team leaving.
“Either the cost data is inaccurate, or it’s not going to work for this team,” Berri says.
Of course, voters’ perception can often trump reality, so the leak of documents showing a Rays profit could not have come at a worse time. “I would say the ownership is not happy this got out as they are asking for a new stadium,” Berri says.
Several years ago rumblings began that Tropicana Field could not sustain the Rays, and then-St. Petersburg Mayor Rick Baker tasked a group dubbed the ABC Coalition to conduct a study on the viability of baseball in the region.
The coalition, made up mostly of business representatives from local companies, also came to the conclusion that Tropicana Field had to go. The coalition recommended a search include sites outside St. Petersburg, including in Tampa and Hillsborough counties.
After those findings were released, the St. Petersburg City Council refused to even publicly hear the final results of the coalition’s research. Coalition member Craig Sher says it is still obvious those findings are correct, and he doesn’t believe the leaked documents will have much of an effect on the stadium fight.
“They are just a snapshot in time. I don’t think they will make much difference,” Sher says. “I believe everyone involved knows that Tropicana Field is not working. The argument becomes who pays for what of a new stadium.”
The leaked documents, via Deadspin: