Forbes 2012 MLB valuations out

[USSoccer]

Wait, was it Linguo that blew up?

 

I think I'm thinking of Linguo blowing up at something Homer said... and then I combined that with some helper robot Peter Griffin had, maybe...

 

Sentence fragment is a sentence fragment.

[Guest]

Wait, was it Linguo that blew up?

 

I think I'm thinking of Linguo blowing up at something Homer said... and then I combined that with some helper robot Peter Griffin had, maybe...

 

Sentence fragment is a sentence fragment.

 

Yes, exactly this.

[Geech]

Does this include the 25% of CSN Chicago? That is pouring into the bottom line for Ricketts. They got a lot more there than I bet they expected.

 

Also, "stadium improvements" is capex and has nothing to do with operating income. Its not a P&L item.

capex has something to do with OI. The impact is just spread across multiple years.

 

Well, if this is EBITDA, then it actually won't include capital expenditures. Major facility improvements -- like the Dominican, and spring training facilities and probably even elements of the information infrastructure -- would not be included in this number at all.

 

From the wikipedia entry on EBITDA:

 

A positive EBITDA, on the other hand, does not necessarily mean that the business generates cash. This is because EBITDA ignores changes in Working Capital (usually needed when growing a business), capital expenditures (needed to replace assets that have broken down), taxes, and interest.

[Geech]

You can see the cognitive dissonance eating at Brett. He wants so badly to believe in Ricketts, but he knows the numbers don't add up.

 

I'm not sure you know what you're talking about. EBITDA is not and is not intended to be a measure of actual profitability or of available cash resources. The idea behind it is to demonstrate the intrinsic profitability of the core business on a level that makes business to business comparisons more appropriate. What this really means is that Cubs are a fundamentally profitable institution, which we pretty much already knew. But when a lot of capital investment is necessary -- for example, building a new spring training facility, a new facility in the Dominican, building a modern information infrastructure and renovating a 100 year old stadium -- EBITDA is not going to be a very meaningful metric because there's so much spending going on that isn't included.

[Hairyducked Idiot]

You can see the cognitive dissonance eating at Brett. He wants so badly to believe in Ricketts, but he knows the numbers don't add up.

 

I'm not sure you know what you're talking about. EBITDA is not and is not intended to be a measure of actual profitability or of available cash resources. The idea behind it is to demonstrate the intrinsic profitability of the core business on a level that makes business to business comparisons more appropriate. What this really means is that Cubs are a fundamentally profitable institution, which we pretty much already knew. But when a lot of capital investment is necessary -- for example, building a new spring training facility, a new facility in the Dominican, building a modern information infrastructure and renovating a 100 year old stadium -- EBITDA is not going to be a very meaningful metric because there's so much spending going on that isn't included.

 

I'm not sure you know what I'm talking about either. I wasn't talking about the operating profit. Simply the fact that we have extremely high revenues but payroll keeps shrinking. Player expenditures (including amateurs) went down by $25 million.

 

The spring facility is being paid for by a land sale by the city of Mesa, the Dominican facility cost $8m, the information infrastructure is a drop in the bucket for an operation of this size, and we haven't paid for any renovations yet.

[Geech]

I'm not sure you know what I'm talking about either. I wasn't talking about the operating profit. Simply the fact that we have extremely high revenues but payroll keeps shrinking. Player expenditures (including amateurs) went down by $25 million.

 

What conclusion can we draw from that?

[Guest]

I'm not sure you know what I'm talking about either. I wasn't talking about the operating profit. Simply the fact that we have extremely high revenues but payroll keeps shrinking. Player expenditures (including amateurs) went down by $25 million.

 

What conclusion can we draw from that?

You got your ass handed to you.

 

They very well could be banking money to pay for future construction.

[davell]

We're highly leveraged and appear to be using profits to eventually fund our renovations, which cuts into the payroll, made easier due to what we were left with, post-Hendry. Making it much easier to claim a rebuild was needed. And now its basically running neck and neck with our new TV deal. Stars aligning at the absolute "perfect" time just doesn't seem to be a coincidence to me. My thought is Ricketts is a version of a more responsible Frank McCourt. A guy that bought a team and saw future help financially on the way, just had to ride it out til it came. Ricketts will make it to that point, when McCourt obviously couldn't.

[Hairyducked Idiot]

I'm not sure you know what I'm talking about either. I wasn't talking about the operating profit. Simply the fact that we have extremely high revenues but payroll keeps shrinking. Player expenditures (including amateurs) went down by $25 million.

 

What conclusion can we draw from that?

 

Take your pick. Either Ricketts was lying when he said the baseball operations budget was the same from 2011 to 2012, or they simply passed on spending a lot of money they could have spent.

[Guest]

I'm not sure you know what I'm talking about either. I wasn't talking about the operating profit. Simply the fact that we have extremely high revenues but payroll keeps shrinking. Player expenditures (including amateurs) went down by $25 million.

 

What conclusion can we draw from that?

You got your ass handed to you.

 

They very well could be banking money to pay for future construction.

 

How did he get his ass handed to him?

 

That's exactly what he suggested was going on.

[Hairyducked Idiot]

Even if that's what they were doing, slashing payroll to pay for a bunch of infrastructure improvements is a bush-league way to run a sports team. Your team is worth $300 million more than it was when you bought it three years ago, take out a damn loan for the capital investments.

[SouthSideRyan]

I was told the increase in value of the cubs doesn't count because ricketts would never sell

[Guest]

Even if that's what they were doing, slashing payroll to pay for a bunch of infrastructure improvements is a bush-league way to run a sports team. Your team is worth $300 million more than it was when you bought it three years ago, take out a damn loan for the capital investments.

 

I thought you just said it was $100M like a page ago?

[Tracer Bullet]

What conclusion can we draw from that?

You got your ass handed to you.

 

Lol what

[mookie]

Kyle is going mongo. It's funny (read: a person going mongo) when people keep retorting on a topic they clearly don't know squat about.

[Hairyducked Idiot]

Even if that's what they were doing, slashing payroll to pay for a bunch of infrastructure improvements is a bush-league way to run a sports team. Your team is worth $300 million more than it was when you bought it three years ago, take out a damn loan for the capital investments.

 

I thought you just said it was $100M like a page ago?

 

I was thinking he paid $900m off the top of my head, but the link says $700m.

[Hairyducked Idiot]

What conclusion can we draw from that?

You got your ass handed to you.

 

Lol what

 

"Here's a bunch of things the Cubs spent money on that you didn't think about!"

 

"Yes, I did, and I know more about them than you apparently do."

 

Handed.

[Guest]

Even if that's what they were doing, slashing payroll to pay for a bunch of infrastructure improvements is a bush-league way to run a sports team. Your team is worth $300 million more than it was when you bought it three years ago, take out a damn loan for the capital investments.

 

I thought you just said it was $100M like a page ago?

 

I was thinking he paid $900m off the top of my head, but the link says $700m.

 

http://sports.espn.go.com/chicago/news/story?id=4414860

 

CHICAGO -- Media conglomerate Tribune Co. announced a definitive agreement Friday to sell all but a 5 percent stake in the Chicago Cubs and Wrigley Field to the billionaire Ricketts family, capping a tortuous process that began nearly 2½ years ago.

 

Tribune valued the transaction at about $845 million.

 

"Our family is thrilled to have reached an agreement to acquire a controlling interest in the Chicago Cubs, one of the most storied franchises in sports," said Joe Ricketts, who founded the Omaha, Neb.-based online brokerage TD Ameritrade Holding Corp. "The Cubs have the greatest fans in the world, and we count our family among them."

 

Tribune had announced on Opening Day in 2007 that the marquee baseball franchise and historic ballpark would be sold at the end of that season. But the process was slowed by CEO Sam Zell's efforts to maximize sale profits, the collapse of the credit markets and Tribune's 2008 bankruptcy filing.

 

The Ricketts family, tentatively selected as the winning bidder last January, had agreed to pay about $900 million for the team, Wrigley and a 25 percent stake in Comcast SportsNet Chicago, which broadcasts many Cubs games.

[Hairyducked Idiot]

OK, so it is about $100m (they only own 95%, so their share would be worth $950m by Forbes' estimate).

[jersey cubs fan]

I was told the increase in value of the cubs doesn't count because ricketts would never sell

 

For the interest of this discussion the theoretical increase in value really doesn't matter.

[Hairyducked Idiot]

I was told the increase in value of the cubs doesn't count because ricketts would never sell

 

For the interest of this discussion the theoretical increase in value really doesn't matter.

 

It is kind of a tangent.

 

Slashing MLB payroll to pay for capital improvements is a bush-league move, regardless of the valuation of the franchise. And it's far from clear that capital improvements make up for all the money that's gone missing from baseball spending.

[Guest]

I was told the increase in value of the cubs doesn't count because ricketts would never sell

 

For the interest of this discussion the theoretical increase in value really doesn't matter.

 

It is kind of a tangent.

 

Slashing MLB payroll to pay for capital improvements is a bush-league move, regardless of the valuation of the franchise. And it's far from clear that capital improvements make up for all the money that's gone missing from baseball spending.

 

They've also said that any money not spent now would be spent in the future (which, like, I hate because wtf is one year's $20M payroll savings going to bring you in future payrolls?), so that makes it hard to even call them on that.

[Hairyducked Idiot]

They've also said that any money not spent now would be spent in the future (which, like, I hate because wtf is one year's $20M payroll savings going to bring you in future payrolls?), so that makes it hard to even call them on that.

 

I'm willing to accept that as a possibility, but I'm not exactly counting on that money ever showing up in our payroll in the future. Ricketts says a lot of things that don't turn out to happen.

 

As recently as September, 2011:

 

One thing we've seen in baseball over the last few years is that turnarounds can happen pretty quickly. So I don't think it's fair to describe a year as a rebuilding year or reloading year. That fact is you get the right players on the team and they stay healthy and they play hard, a team can go from 70 wins to 90 wins. It can happen pretty quickly. Look at the Diamondbacks and even the Cubs a few years ago. So that's how we look at it.

[SouthSideRyan]

What I'm saying is we COULD tear down the burlesque house, but instead OMG Baseball Mogul

[Sammy Sofa]

I'll bet they're writing it off.