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Estimating the Tigers financial situation

The Detroit Tigers are certainly one of the more interesting teams heading into the winter meetings. They are a team with a top 5 payroll in a region that is struggling economically. The Tigers also have holes to fill in the bullpen and at shortstop and limited means to address those issues  with free agency and a farm system that can’t afford to surrender too many prospects. Dave Dombrowski has made some key players such as Edwin Jackson and Curtis Granderson available on the trade market leading to much speculation about a fire sale. But what really is the Tigers financial situation?

We will never really know the Tigers true financial situation but there is enough information available (thanks in part to the Scott Boras/Rob Manfred argument about revenue sharing) that we can make some educated guesses. We know that every MLB team receives $30 million from the central fund. We know that the Tigers have an annual $40 million television contract (h/t Kurt @ Mack Avenue Tigers) and that only 2 years into a 10 year contract that money isn’t going away anytime soon. The Tigers also probably get at least a couple million in radio rights as well meaning that they take in $75 million before they sell a ticket.

As for those tickets? The Tigers sold 2.5 million of them last year which if we estimate the value of a ticket to be $20 that is another $50 million meaning that the Tigers nearly covered their payroll with what we can reasonably ascertain in terms of their revenue.

But there is more money that the Tigers need to spend beyond payroll. Not even counting stadium debt, the Tigers need to pay for the front office personnel, stadium operations, player development, marketing, etc. I’ve seen that expense estimated at $30 million for big league teams meaning that for the Tigers to not lose money they’d need to take in $160-175 million.

Forbes estimated the Tigers 2008 revenues to be $186 million. The same report said that the Tigers lost $26 million. The $186 million puts the Tigers in the middle of the pack in terms of revenues which likely puts them close to the border for revenue sharing for last season.

Things are rougher for the Tigers this year than last though. They probably lost $13 million or so in gate revenue and additional revenue in terms of in-stadium sponsorship. The overall revenue drop will likely put them in position to receive revenue sharing money, which may mitigate things.

It’s not that bad

The Tigers likely lost money, or at least they didn’t make much money in 2009. Things will probably be tough in 2010 as well. Even with a competitive product I’d be surprised if the Tigers drew more than 2.3-2.4 million based on the empty seats we’re seeing at Red Wings and Pistons games.

But Mike Ilitch is interested in winning. Gutting the team and trading off top talents for prospects doesn’t help the team win and it would further decimate the attendance figures as the season ticket base would continue to dwindle.

Continuing a theme here, I just don’t see the Tigers going fire sale and the speculation is entirely overblown. The talk of a fire sale was a game of telephone that went awry (excellent piece by Tigstown). Things will be difficult and the Tigers may have to part with a player they don’t want to to fill multiple holes. But to go into a sell mode when a great deal of the payroll difficulties will resolve themselves in 12 months doesn’t make a lot of sense.

Posted by on December 6, 2009.

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Categories: Winter Meetings

7 Responses

  1. The Tigers might have fewer holes to fill than we did last Winter. Last Winter, we had no catcher, SS, 4th, or 5th starter, closer, and set-up man. We picked up Jackson, Laird, Everett, Lyon, and brought up Porcello to fill those holes. Rodney won the closer job in ST also.

    This year, we just need a SS and some bull-pen help like we did before. I think we’re set at 2ndbase with Sizemore and Santiago. We won’t spend much on a SS. Even if we wanted to spend we couldn’t because all the FA Shortstop’s are brutal. Perhaps Santiago can be our SS, and Don Kelly can be our utility guy. Maybe Bonderman can be the new closer? We can fill those holes in house if needed. Nothing wrong with having question marks going into spring training. I like it when players are fighting for jobs.

    by Keith (Mr. X) on Dec 6, 2009 at 5:25 pm

  2. There have been various journalists that have noted the absurdity of trading Ejax and Granderson if the goal is reducing payroll, especially since there was absolutely no evidence the Tigers were trying to package any of their bad contracts into either of those potential deals.
    I’m grateful to Paul Wezner for writing his article, because the situation is truly out of hand. But I’m not sure that he gets everything right. He says that a Detroit beat writer’s suggestion of trading Granderson was what started the firestorm of speculation. While that did come first, there wasn’t much reaction to that when it happened (I see Lynn Henning originally mentioning it July 23). I think the real trigger was Joel Sherman’s article in the NY Post on November 11th. The very first words of the article I think is what got minds racing. He says, “In a cost-cutting frame of mind, the Tigers have let teams now that Curtis Granderson could be had for the right package, an NL executive told The Post.”
    “In a cost-cutting frame of mind” immediately makes everyone think that he can be had for lower, or much lower, than market value. But was that part of what the exec told him (how would the exec know?) or was that his embellishment?
    And of course then it was easy for writers to simply remind everyone that the city has hit hard times and voila, our best players are on the block and can be had for a song. It escalated from there, to the point that JP Morosi included a suggestion he heard from exec that the Tigers should throw in $5 million a year to open up the possibilities for smaller market teams. Ridiculous.

    by Birdy on Dec 7, 2009 at 8:21 am

  3. Well done article. What about the revenue from concessions and merchandise? It probably matches ticket sales. I believe that brings 2010, like 2009, to somewhere in the break-even land.

    So you can see, if the Tigers make the playoffs, everybody’s happy…

    by Frank on Dec 7, 2009 at 5:16 pm

  4. [...] maybe the financial situation is much more dire than I project it to be? That is certainly a possibility, but the difference between Jackson and Granderson on the payroll [...]

    by It doesn’t add up on Dec 12, 2009 at 11:52 am

  5. [...] maybe the financial situation is much more dire than I project it to be? That is certainly a possibility, but the difference between Jackson and Granderson on the payroll [...]

    by It doesn’t add up on Dec 12, 2009 at 1:24 pm

  6. [...] maybe the financial situation is much more dire than I project it to be? That is certainly a possibility, but the difference between Jackson and Granderson on the payroll [...]

    by It doesn’t add up on Dec 12, 2009 at 1:24 pm

  7. [...] what you might have heard earlier this off-season, the Tigers are not broke. That notion was refuted back in December, as was the idea that the the team would hold a fire sale. Yes, they traded both [...]

    by Tigers Pay a Dollar Today to Save Tomorrow | FanGraphs Baseball on Feb 24, 2010 at 1:05 pm

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About the Site Detroit Tigers Weblog was launched in July, 2001. At the time it was the only Tigers blog and it resided as a blogspot page. There were multiple authors and it mostly consisted of links to the rare times the Tigers were mentioned in the national media. We only had a few dozen […]more →

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