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Leaked financial documents may aid Tampa Bay Rays' cause in stadium debate

ST. PETERSBURG — The commissioner has got to be furious.

The guy in charge of the Florida Marlins has got to be embarrassed. The folks in the banks and insurance companies that do business with Major League Baseball and are suspected of leaking information have got to be nervous.

And Rays owner Stuart Sternberg?

Oh, he's got to be tickled.

This unprecedented disclosure of sensitive financial documents of five Major League Baseball teams this week may have infuriated a lot of baseball officials, but it could turn out to be a boon for the Rays' stadium arguments.

For, once you get beyond the concept of the Rays turning a profit a couple of years ago, these statements actually paint a portrait of a ballclub in need of serious financial assistance. Among the items that jump out at you from those 2007-08 financial statements:

• The Rays got more than $39 million in '07 and more than $35 million in '08 from revenue sharing, i.e. baseball's welfare system. That's a ton of money in the team's pockets, but it's also an indication that revenues in Tampa Bay are among the lowest in baseball.

• For the two years listed, the Rays got an average of about $13 million in local TV and radio fees. That was the lowest of the five teams disclosed and, presumably, the lowest in baseball. The Mariners averaged $62 million. Even the woebegone Pirates averaged $39.5 million.

• The Rays had a net operating profit of $11 million in '07 and $4 million in '08. So how does that help Tampa Bay's cause? Because the payroll was a fraction of what it is today, lending credence to the team's claim that higher payrolls mean big losses.

Of course, the question at this point is whether we should trust this data that was leaked to Deadspin.com.

And I'd say not completely.

The Pirates and Marlins have all but confirmed the numbers are accurate, but that doesn't mean a team's accounting figures are always a true reflection of their cash registers. The Dodgers, for instance, charge themselves an obscene amount of rent for land they own in Chavez Ravine. And the Yankees can cook their TV revenues any way they like since they run the YES network.

You also have to consider Tampa Bay's value has risen considerably since Sternberg purchased the team, and that is a form of profit, too.

But if you accept that some numbers — i.e. revenue sharing, central fund payouts and payroll — are distributed throughout baseball and cannot be fudged, then these documents go a long way toward validating what Sternberg has been saying.

Take, for instance, the $11 million profit in 2007:

At the time, the Rays had one of the lowest payrolls and one of the worst teams in baseball. And a low payroll with lots of revenue sharing means a team can make money.

But when the payroll took a large leap the next season, the Rays actually stood to lose $7 million. Fortunately, for the bottom line, Tampa Bay reached the World Series, and that infusion of postseason cash translated into a $4 million profit in 2008.

However, since the payroll went up again in 2009 with virtually the same attendance and no postseason, you could use the same numbers to extrapolate losses in the $20 million range.

In essence, what we have is a market that does not generate a lot of money, and an economic system that rewards teams for keeping their payrolls low. The Pirates and Marlins are in similar situations and, as the statements show, have made a nice living with cheap rosters.

So, it's true, the Rays can survive in Tampa Bay. They can even turn a profit at Tropicana Field. They can also be a World Series contender. The trick is trying to do it all simultaneously.

Realistically, the Rays need to keep their payroll in the $45 million range to approach the break-even mark without a postseason appearance. And it's not easy being a postseason contender in the American League East when you're spending $45 million while the Yankees are at $200 million and the Red Sox check in around $160 million.

When you factor in bonuses, buyouts, deferred payments and other benefits, this year's payroll will be well over $70 million. Even if the Rays reach the World Series — and they are certainly good enough — the projected revenues will not cover the payroll. Not with attendance well below the league average.

So you have to ask yourself why an owner would have a $70 million payroll if it does not significantly goose attendance or revenues, and if it almost certainly leads to financial losses. The answer, of course, is most owners wouldn't.

Which is why Sternberg has made it clear the payroll is going to be cut this winter.

Even if the Rays wanted to keep the status quo — paring the payroll to $30 million in rebuilding seasons and boosting it to $60 million when the stars align — there is no guarantee MLB officials would be agreeable.

Sternberg told me on opening day that other owners would not allow the Rays to continue with their current revenue streams. Why? Because the Rays are sucking more than $30 million a year out of the pockets of more wealthy teams through revenue sharing.

Does that make this a legitimate argument for a new stadium in Tampa Bay?

As always, that depends on your point of view. If you think major-league baseball has a significant impact on the bay area's economy and quality of life, then these financial figures bolster the Rays' argument for a stadium. If you do not believe baseball adds much to the market, then there is no reason to invest public money in a new stadium.

What these documents appear to show is the Rays have reason to be concerned about the viability of Tropicana Field as a stadium and Tampa Bay as a major-league market.

John Romano can be reached at romano@sptimes.com.

Leaked financial documents may aid Tampa Bay Rays' cause in stadium debate 08/24/10 [Last modified: Wednesday, August 25, 2010 8:55am]
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