2:50 p.m. update. Deadspin just released what they claim are the Rays financials from 2007 and 2008 and it shows the Rays operating well-into the black.
Biz of Baseball also has a nice summary.
AP broke news today that the Pirates have been a profitable company throughout their incredible string of suckitude.
I am not really certain why AP has decided this information is either newsworthy or, for that matter, surprising. But if they anyone that worked for Vince Naimoli’s Devil Rays could have told you that there is real money to be made in losing baseball games.
All professional teams are business entities created to make profit for their owners. Any sports economist will tell you that, in an era of profit-sharing, luxury taxes, and television deals, revenue is only loosely connected to on-field success. In fact, there is some room to argue that teams that spend the money necessary to win may actually be risking short-term profits (see Rays, Tampa Bay) for long-term gains (see Yankees, New York).
Most bad teams (and by bad, I mean historically sucky teams like the Pirates or — for that matter — the Devil Rays) are bad because they don’t spend a lot on personnel. That means they have lower bottom-line costs than their competitors while receiving the same piece of the overall profit-sharing pie. My business 101 book tells me that lower costs + same revenue=more profit.
Maybe we should go back and re-write Major League. Instead Rachel Phelps tanking games so she could move to Miami, maybe she should just want to build profitability.
For more analysis, here is Rob Neyer’s take on the Pirates roster moves during this period of profitability and here is some more analysis from the Pittsburgh Lumber Company blog. Pirates moves during time still make sense.