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Settlement Details

OAFC BBS - All Topics: Archive: Settlement Details
Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Friday, August 30, 2002 - 02:42 pm:

http://sports.yahoo.com/mlb/news/ap/20020830/ap-settlement-details.html


Here's the part of the settlement that is of interest to the A's in building a new stadium:

---
A team may not have more debt than 10 times EBIDTA (earnings before interest, depreciation, taxes and amortization), except that a team that has moved into a newly constructed ballpark within the past 10 years may not have more debt than 15 times EBIDTA. There will be a three-year grace period, during which the commissioner has the right to retain the debt service rule, fully implemented. If he so elects, the commissioner must revoke the 60-40 assets-to-debt ratio rule. If he doesn't want to revoke the 60-40 rule, the debt-service rule becomes fully implemented.
---

The agreement, in effect, places a legal limit on how much the A's can contribute towards the building of a new stadium.

What that limit is, I have no idea. I guess we'd have to go figure out what the A's EBITDA earnings are.

But at least the agreement makes some provisions for extra debt for stadium building.

I can't help but wonder if waiting for this agreement is why the A's have been reluctant to say what they'd be willing to contribute to a new stadium.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Friday, August 30, 2002 - 02:44 pm:

Sorry, the link got screwed up. Try again:

http://sports.yahoo.com/mlb/news/ap/20020830/ap-settlement-details.html

Top of pagePrevious messageNext messageBottom of pageLink to this message   By camperhead on Friday, August 30, 2002 - 03:11 pm:

"Draft-pick compensation for losing Type A and Type B free agents is eliminated."

Given recent precedent, I'm not fond of this provision. Hopefully, the others terms make it a moot point. We shall see.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Friday, August 30, 2002 - 03:31 pm:

That draft pick compensation loss is very bad for teams who build through the system. I was under the impression they had not addressed that and it had not been part of the final agreement.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By ronc on Friday, August 30, 2002 - 03:47 pm:

"Draft-pick compensation for losing Type A and Type B free agents is eliminated."

That's going to make a significant change to the A's modus operandi

Top of pagePrevious messageNext messageBottom of pageLink to this message   By bleacherdave on Saturday, August 31, 2002 - 08:40 am:

You can look up the A's EBIT in the financials they released last year. Check Doug Pappas work at baseball prospectus for a link. That debt threshold for stadiums is easily avoided. The Giants provide an example - the TEAM does NOT own the stadium, nor is it liable for its debt. They created the "SF ballpark corporation" to own the stadium. It's an off-balance sheet transaction for the SF Giants Baseball company. No debt for the team.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By bleacherdave on Saturday, August 31, 2002 - 08:46 am:

Wow, I always thought payroll tax funds would be redistributed to teams. No such luck for the A's.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Saturday, August 31, 2002 - 09:27 am:

http://espn.go.com/mlb/columns/stark_jayson/1425248.html

Q: So if a team isn't required to use its revenue-sharing money on players, why wouldn't it just stuff the money in its checking account?

A: Because now fans will know it isn't the system's fault and demand better behavior.


By the end of this agreement, the wealthy clubs will have given the middle and small-revenue teams close to $1 billion in revenue sharing along. That doesn't even count any money those clubs will get from the luxury-tax pot.


So let's take a look at how that money would start to add up. Take a team like the Royals. Let's estimate they'll get $20 million a year in revenue sharing in this deal. Add another $25 million in national TV, radio and licensing money. That's $45 million in their money market fund before they sell a ticket.


Then suppose they draw 1.7 million fans. That ought to generate another $50-55 million. We're now looking at a team with close to $100 million in revenue all of a sudden. If a team with that kind of income cuts payroll to the low $40 millions, how can it then turn around and blame it on the system?

How, in fact, can any small-market or mid-market team blame the system four years from now after taking in $1 billion in big-market welfare checks?


"I hope they don't," DuPuy said. "I hope what ends up happening is that no team has an inherent advantage in developing better players or running their team better ... and that every club comes to spring training knowing that if things go right, they have a shot to get to the playoffs and the World Series. That's the objective of this deal."


In the end, though, it was all laid out there between the lines of the agreement, not in them. And that's a potential danger zone we should all keep our eyes on verrrry carefully.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By ronc on Saturday, August 31, 2002 - 12:21 pm:

"Some critics also question the effectiveness of a plan that doesn't require owners to use the extra revenue for player salaries.
"You don't have to worry about us," A's owner Steve Schott said. "Any extra money we get will be for payroll."
http://www.bayarea.com/mld/cctimes/sports/baseball/3977636.htm

""Any extra money we get will be for payroll," Schott said"
http://www.bayarea.com/mld/cctimes/sports/baseball/3977639.htm

Top of pagePrevious messageNext messageBottom of pageLink to this message   By debbiet on Saturday, August 31, 2002 - 12:30 pm:

Schott has a similar comment in the Chronicle:

"The A's are receiving $12 million this year. In the new agreement, they could receive $16 million to $17 million, plus much more in luxury taxes. That makes for a $26 million to $27 million revenue-sharing differential between the Bay Area teams next year.

"We're going to use it on payroll. You don't have to worry about that," Schott said."

Also in this article, he says the A's will lose money this year.


http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/08/31/MN165089.DTL

Top of pagePrevious messageNext messageBottom of pageLink to this message   By sactodavey on Saturday, August 31, 2002 - 02:45 pm:

The A's are going to lose money this year but schotts consession business is making 20-25 mill in profit go figure? work those books baby workem!

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Saturday, August 31, 2002 - 02:58 pm:

...but don't forget he had to settle a lawsuit with his ex team president, Mr. Ed Alvarez who must have cost him a pretty penny in lawyers and settlement...that's probably part of his lost revenue

Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Saturday, August 31, 2002 - 02:59 pm:

Where'd you get that 20-25 mill figure from?

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Saturday, August 31, 2002 - 03:23 pm:

I'm sure glad the A's spent money in signing their draft picks. With the news of the CBA on draft picks, this may be turn out to be very important for the A's.

This news about the elimination of the free agent compensation draft is very bad news for a team like the A's who builds from their farm.

And they will be punished in the draft order because of their successful season as well.

This is really a throwing cold water in Beane's operation...and they want to bring competitive balance to MLB huh?

It seems to me this draft news actually gives more leverage to the free agent and softens the market. There will be more incentive to trade players by the July deadline due to the loss of compensation
if the player walks at the end of his free agency
year.

I haven't read anything on how the trading of draft picks will work and how this could help Beane continue to build the farm system.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By sactodavey on Saturday, August 31, 2002 - 04:15 pm:

well let me see 2 million, average person spends $8.00 conservative 16 million gross then there is parking how many for 2 mill attendance 1/4 ?? lets say 350k cars x$10.00 =3-4 mill so 20 mill give or take.
don't let the crooks tell you different.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By sactodavey on Saturday, August 31, 2002 - 04:53 pm:

another reason to hate Giambi this in the ny post:The players understand the impact the new CBA is likely to have on the Yankees' way of doing business, that George Steinbrenner probably will have to dig significantly deeper. Jason Giambi spoke last week of the possibility of "going on strike to support Mr. Steinbrenner's right to do business his way."

kinda like screw my old team and their fans i just want to win even if we gota whore the whole league.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By eyleenn on Saturday, August 31, 2002 - 10:59 pm:

Burger Boy makes a good lap dog.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Saturday, August 31, 2002 - 11:14 pm:

If we're gonna call these guys liars and crooks, we can't do it by making up numbers out of thin air. That's fighting liars with liars. Then we're no better than they are.

The reported revenue on concessions, parking, luxury boxes, stadium advertising, etc. for the A's last year was $13.9 million. That's not out of line with other similar teams. So even if the concessions business is structured separately, it's reported together.

MLB says the A's made a $3 million net profit last year. Forbes, when it looked over MLB's books, says it was really closer to $6 million.

So if Schott is hiding profits in the concession business, it's probably closer to about $3 million, not $20-25 million.

Let's fight lies with truth, deception with facts, and not stoop to their level by making stuff up to suit our devious purposes.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By bleacherdave on Saturday, August 31, 2002 - 11:24 pm:

Good stuff, Ken. Just the facts, mac!

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Sunday, September 01, 2002 - 08:20 am:

I totally agree nobody should make up numbers or take wild guesses.

We certainly don't want to lose credibility by
disseminating wrong information.

The reality however, based on reports by Forbes and other sources, their numbers are still mere estimates. Nobody really knows the reality since nobody can look at their books.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By voxhoo on Sunday, September 01, 2002 - 09:30 am:

The Forbes numbers are believable. Schott was going to jump at the chance to sell the team for $170 mil. This is an industry which doubles in revenue every 8 years, that's a 9% growth rate. A reasonble valuation for any business that grows at that rate is around 18 times EBITDA. The $170 mil offer is probably over the fair market value of the team, which is why Schott jumped at the chance to sell.

1. The Forbes numbers were estimated by someone who has been studying baseball financials for more than a decade.

2. They also seem completely in line with a $170 mil. franchise + concessions price tag.

So, believe what you want but the $6.8 mil Forbes estimate is probably within a mil or two.

If you want to believe the A's pull in $20 mil a year then there's no way that Schott would sell the team for $170 mil.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By eyleenn on Sunday, September 01, 2002 - 09:45 am:

I read in one of the papers yesterday that Schott claims the A's will lose money this year. Why do I find it hard to believe anything he says?

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Sunday, September 01, 2002 - 10:42 am:

I don't believe nor disbelieve any numbers of how much Schott makes or doesn't make. Or how much the franchise if worth or not worth...

First, these numbers are just what they are...numbers given out to a reporter. The $170 million was just a number given to a newspaper from a bidder who never came through with a deposit... it was a Selig's Trojan Horse by Schott's information, perhaps just to artifially set an asking price for the A's. Does the $170 million include Schott's concessionaire business?
I had read in one of studies that the A's were valued at $150 million and not $170 million.

Secondly, as far as I know the team does not own the concessionaires, Schott does.
When he bought the team for $78 million and then got $16 million as compensation and settlement from the City, that brings the price of the A's to about $56 million to him correct?

So how can anybody know if the profits the team is making includes or not the concessionaire profit which belongs to Schott and not the team.

And yet we have read in the papers that he purchased the A's for $85 million. Without the concessionaire business which he created after he bought the team.

Does anybody here have any proof of what numbers are correct? I don't think so.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By sactodavey on Sunday, September 01, 2002 - 01:12 pm:

First of all mr K. it is reasonable to conclude that an average dog-beer,soda go for around $8.00 not everyone buys one at a game but some buy 3-4 beers 2 dogs etc per person so it is very reasonable to conclude the average at $8.00 per games x2millon $16 mill gross parking $3-4 million.

If revenue is made in 3 areas:

1.local-national tv revenue, merchandise
2. gate reciepts,staduim advertising
3. consession ,parking

each generats around 33.3% (if a team draws 2 million) of total gross reciepts

then tell me if the average club only generates 11-14 mill on the #3 food parking etc... why would the owners be willing to pay the average superstar player now around 11-16 mill season wiping out 1 whole year of food parking $$$ on 1 player this does not make sense in any business terms and i cannot believe the owners nomatter how much they want to win would sucumm to such stupid madness!!

if the A's owners are losing $$$ or only making little money for thier time and effort why is schott not acitivley seeking a real buyer for the A's or a partner with big $$$$? this guy is a business man if he is struggling like you say he would be very vocal in trying to unload the team or get a partner etc... and this is a team drawing 2 mill with only a 40 mill payroll, not to many klike the A's in baseball as sucessfull like this.

If what you say is true baseball itself is in much bigger danger than any new CBA can undue, I DO NOT BELIEVE THE OWNERS ARE MAKING ONLY 6 MILL PROFIT PERIOD!. the players have said the books are cooked their is no doubt they are any resaonable men would never pay 1 guy 33% of gross reciepts never yet this is becoming the average for a team star player no way! schott is realling the $$$ in easy just he's doing it by subverting the $$$ in other directions on the ledger.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Monday, September 02, 2002 - 08:47 am:

Wow, what a rant!

You have every reason to believe the owners numbers are lies. You have every reason to be angry about it. I'm just saying that your numbers, if you're making them up, are a kind of lie, too. Don't stoop to their level and do the same thing they do. Be better than them.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Monday, September 02, 2002 - 09:10 am:

I agree with you ken...we can't perpetuate with guesses or with more lies. At least make sure we have a good source to back the arguments or we will lose credibility just as they did...

The owners have lost credibility because they have been caught lying too many times already. To Congress and players and to the fans, they have lied. But this is why they keep their doings not only hidden, but also legal....so far...

Top of pagePrevious messageNext messageBottom of pageLink to this message   By bubba69 on Monday, September 02, 2002 - 10:26 am:

It's called a "p e r i o d"

Top of pagePrevious messageNext messageBottom of pageLink to this message   By vinnieangelo on Monday, September 02, 2002 - 01:14 pm:

hahahahahahahhahahahahaahahahahahahahahahahah!!!!!

Breathe Keith!

Top of pagePrevious messageNext messageBottom of pageLink to this message   By voxhoo on Tuesday, September 03, 2002 - 10:43 am:

I'm reversing the thread back to where it started on the draft settlement. Draft pick compensation has been eliminated for type A and B free agents. But, type C free agents still result in a sandwich pick between the 2nd and 3rd rounds.

So, if Tejada were to leave the A's would get no compensation picks. If Terrence Long (Not sure Long qualifies as a Type C free agent, they have a formula based mostly on batting average, rbis, and HRs for determining the type and a score between the 40th and 50th percentile is a type C free agent. In 2002, Marty Cordova was the only type C free agent, and Long's stats are comparable) were to leave the A's would get a 2nd-3rd round pick as compensation for the loss. Isn't that bizarre?

Top of pagePrevious messageNext messageBottom of pageLink to this message   By sactodavey on Tuesday, September 03, 2002 - 12:34 pm:

also on the sporting news web site a voice interview with ken r. said George steiny is working out ways to defer his payroll to go under the YES network and rework to get his payroll to look under 100 million and now the top owners will just rework the books to get away with spending anayway and baseball better come down now on some hard fast rules or the accountants will play with the books untill the teams they work for will give no money up.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By jenmed on Wednesday, September 04, 2002 - 04:01 pm:

Rob Neyer chimes in on how the changes to free agent compensation through draft picks will affect Billy Beane's ability to do his "magic."

http://espn.go.com/mlb/columns/neyer_rob/1427057.html

Top of pagePrevious messageNext messageBottom of pageLink to this message   By jenmed on Wednesday, September 04, 2002 - 04:02 pm:

Question - is anyone clear as to WHOM wanted the draft pick compensation eliminated? Was this a bone for big market owners? Did the players want this? Just curious, because it stinks for the A's.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By voxhoo on Wednesday, September 04, 2002 - 04:14 pm:

Eliminating draft pick compensation came from the owners side although it's great for the players, too.

My guess, is it originated from the voting block of mid-revenue teams. This is the largest and most powerful group of owners. It allows them to go after mediocre free agents without paying the penalty of lost draft picks. The big revenue teams don't really mind losing a low 1st round pick if they sign a superstar. The mid-revenue teams hate losing a mid-1st round pick for signing Derek Bell.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Thursday, September 05, 2002 - 12:04 am:

If I understand correctly, the reason for owners wanting to eliminate the draft pick compensation is to make the draft no longer subject to collection bargaining with the union.

If the draft is no longer subject to approval with the union, the league can use their antitrust exemption to set up whatever rules they want for the draft. They can then set up a kind of salary cap on the draft if they want.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Thursday, September 05, 2002 - 12:05 am:

Um, I meant "collective" bargaining. My brain has shut down after being at that game tonight...

Top of pagePrevious messageNext messageBottom of pageLink to this message   By voxhoo on Thursday, September 05, 2002 - 08:47 am:

But the draft is still linked to free agency because type C FA compensation still exists. The owners voted to eliminate Type A and B FA compensation which included the loss of your 1st round pick. When teams sign a type C FA, they don't lose a draft pick, a sandwich pick is created for the team that lost the FA.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By diamond_lil on Thursday, September 05, 2002 - 10:32 am:

One the positives of the draft rules is that a team can 'pass' on a draft pick and save the same
position on the draft for the following year.

I'm not sure of the rules concerning trading draft picks.

Either way I know Beane and his staff will have a field day in mastering the new system.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By sactodavey on Thursday, September 05, 2002 - 04:53 pm:

hey k-man aka kenarneson,

you telling me i am out of line when i say it is rediculous that the A's would only generate 11-14 million on consessions even Jason Stark on th espn web site in analyzing the Royals in the new labor deal says:So let's take a look at how that money would start to add up. Take a team like the Royals. Let's estimate they'll get $20 million a year in revenue sharing in this deal. Add another $25 million in national TV, radio and licensing money. That's $45 million in their money market fund before they sell a ticket.


Then suppose they draw 1.7 million fans. That ought to generate another $50-55 million. We're now looking at a team with close to $100 million in revenue all of a sudden. If a team with that kind of income cuts payroll to the low $40 millions, how can it then turn around and blame it on the system?

so 50 -55 in 1.7 includes tix plus poarking = consessions so consessions = parking = at least 1/2 for only 1.7 mill it is 25-30 mill oh yea the Owners are raking in the money so even stark agrees with my figures on $$$ coming in.

so without the new labor agreement the A's make on 2.2mill at least 80-95 million depending on how far the playoffs go and schott can't afford miggy with the new labor deal giving him an additional 20 25 mill coonmon they are crooks and my numbers are right on man!!!

Top of pagePrevious messageNext messageBottom of pageLink to this message   By kenarneson on Thursday, September 05, 2002 - 09:59 pm:

Hey Sacto,

You may be right for all I know. I was just asking for some supporting evidence to your numbers, that's all. Quoting Jayson Stark from a national publication is good enough for me.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By vinnieangelo on Thursday, September 05, 2002 - 10:04 pm:

Sacto,

You keep bringing up numbers ($). But these are all PRETEND numbers. How can you back these up?

Thats why Ken keeps shooting your ideas down.

Vinnie

Top of pagePrevious messageNext messageBottom of pageLink to this message   By sactodavey on Thursday, September 05, 2002 - 10:45 pm:

mr. vinnie

hey i have 2 service buisneesesd i run with employees believe it or not, just computing in my head what logically would be the $$$ made on food etc... parking it does not take a college wizard to come up with some #### and Mr. stark who has greater insight and knowledge with personal contacts then us backed me up on the 55 mill made on 1.7 mill this would inc, tix food parking so i guess i can be right in some things:)

Just go to a game, some buy 3-4 beers food some nothing so the average would be 1 dog 1 drink per at $4.00 dog $4.00 drinkl = $8.00 x 2 million gross 16 million then comes parking 3-4 mill= 20 mill and according to stark they probabley make more.

I just think the owners are making so much $$$ right now this is why ol schotts is not holloring for a new stadium or a new $$$ partner or to sell the club he's raking it in baby!!


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