The Rangers half-decade of profitability
by Adam J. Morris on Nov 30, 2009 11:00 AM CST
112 comments
Something to keep in mind, as we talk about the Rangers, the ownership situation, and what payroll should be, versus what it is and has been...
Coming into the 2009 season, the Rangers had a sustained run of significant positive results in terms of operating income*.
* Defined as EBITDA by Forbes.
Looking at Maury Brown's excellent website, he has charts summarizing the Forbes data on each franchise from 2002-2009.
The numbers come out in April, so each year is dealing with the operating income from the prior year. April, 2005, has income for 2004. So, understanding that...
For 2004, the Rangers had an operating income of $2.9 million.
For 2005, the Rangers had an operating income of $24.7 million -- 6th highest in the majors.
For 2006, the Rangers had an operating income of $11.2 million.
For 2007, the Rangers had an operating income of $17.2 million.
For 2008, the Rangers had an operating income of $17.4 million.
This is with a team that, throughout that period, wasn't competitive, wasn't drawing well, and had crappy ratings.
No wonder Tom Hicks is so desperate to find a way to buy the team from Hicks Sports Group...if he can uncouple it from the disastrous leveraging he did within the HSG entity, particularly in connection with the Liverpool purchase, the team can be financially successful. Hicks probably figures that if he can get the team away from HSG, he can adopt the Florida model of maintaining low payrolls and not really trying that hard to compete, while maintaining profitability through mediocre attendance and MLB's other revenue streams.
Fortunately for Rangers fans, it sounds like Hicks isn't going to be given the chance to continue to oversee the Rangers. It sounds like there's going to be a new ownership group coming in, one that hoping is going to be committed to winning, rather than continuing to tread mediocre water while feeding at the MLB general revenue trough.
Regardless, though, there's no reason why this team, in 2010, shouldn't be able to support at least an $80 million payroll. The fact that this front office is being handcuffed this offseason because of the financial ineptitude of Tom Hicks is one last kick in the nuts to those of us who have stayed loyal this past decade as he heads out the door.
But that being said, there's also no excuse, given the team's situation and the window of opportunity that is opening, for the Rangers not to have a payroll that is back in the upper half in the next couple of years. This is a team that looks like it can do something really special in the coming years, and it deserves an ownership that is willing to commit financially to help add the pieces necessary to turn the potentiality of something special into reality.
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Just make its spent wisely.
High payroll <> good team. See Chan Ho Park contract.
Do you have any evidence for this?
Hicks probably figures that if he can get the team away from HSG, he can adopt the Florida model of maintaining low payrolls and not really trying that hard to compete, while maintaining profitability through mediocre attendance and MLB’s other revenue streams.
This seems awfully inflammatory for no real reason. As you point out, the overall HSG corporation was in bad financial shape, thus sucking the profits up. There is zero evidence that Hicks would want to do the same thing
Go Rice Owls!
and to be clear
I’m not advocating Hicks keep the team. I too would prefer someone else. But to say that he sits around dreaming of being Loria is nonsense
Go Rice Owls!
I hate Jeff Loria
He’s an embarrassment to his team. That cheap bastard. And I want Tom Hicks out, too. But to say that Tom Hicks is hoping to become the next Loria… sounds a bit overboard.
Couldn't you just argue
That he is so stinking spread with his assets, that it doesn’t even matter whether the Rangers are profitable or not?
So long as the team breaks even, as suggested below, he’ll be fine. If he wasn’t getting any utility out of the Rangers, team would have been sold a while ago. Clearly, he enjoys owning them, running them into the ground, and borrowing against them to service his empire.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 2:06 PM CST up reply actions 1 recs
Well, he may not sit around dreaming of being Loria...
But then he also doesn’t sit around dreaming of being Cuban either, does he?
Operating income is not the same as net (bottom line) profit.
Operating income is gross profit and does not include interest expense (of which the Rangers have plenty), depreciation, amortized expenses or taxes. Pointing to operating income without knowing what the other financial factors are is pretty much a useless exercise.
All you have to ask yourself is
why is Hicks so desperate to keep the team?
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
by Josey Wales on Nov 30, 2009 11:23 AM CST up reply actions
doesnt he have a personal net worth
of several billion?
and im sure if he wanted to, he could find other equally lucrative investments. in fact, id guess that the illiquidity of a sports franchise and the complexities of putting together bids and not to mention trying to basically buy a team from yourself makes for an awkward investment. id reckon that he’d do just as well to stick his money in some hedge funds or buy low in real estate or any number of other things, which says to me that pride is clearly a strong motive.
by Smoakin in the Boys Room on Nov 30, 2009 11:46 AM CST up reply actions
I think Hicks is worth a few hundred million
and is no longer a billionaire.
What those charts show is that the Ranger player expenses have remained static or gone down from where they were in ’99 while the revenues have increased by $ 50 million.
There’s no pride involved whatsoever with Hicks and the Loria comp is valid.
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
by Josey Wales on Nov 30, 2009 11:51 AM CST up reply actions
forbes has him at 1 billion in late september
the data may suggest hicks is a cheap-ass. i think a lot of us have felt that way to varying degrees for a while. but that doesnt mean there isnt a significant deal of pride associated with his effort to save an ownership stake in the rangers. for you to say there is no pride involved whatsoever is laughable.
by Smoakin in the Boys Room on Nov 30, 2009 12:02 PM CST up reply actions
Repeat after me
The first rule of big business is—-
Never spend your own money.
The second rule of big business is—-
NEVER spend your own money.
The third rule of big business is——
NEVER SPEND YOUR OWN MONEY
or never talk about big business.
"Sometimes you just want to sit back and watch somebody throw 100." - Jeff Passan on Neftali Feliz
If this team had shown success,
I might buy some aspects of pride being a factor but this franchise has been one of the biggest jokes in MLB for the last 10 years.
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
by Josey Wales on Nov 30, 2009 12:09 PM CST up reply actions
10 years?
Learn your history dude. this franchise has been a joke since the 60’s. It was a bad joke in Washington, and a worse joke when they came to texas. Ever hear of Eddy Stanky? David Clyde? Doc Ellis? Gary Ward? Teddy ballgame as manager?
Damn kids. get off my lawn.
I'm very well aware of my Ranger history
and suspect my knowledge goes much deeper than yours (and just about anybody else in here) but I was referencing the ownership of the team over the last 10 years.
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
by Josey Wales on Nov 30, 2009 12:16 PM CST up reply actions
Ahahaha...
I’m very well aware of my Ranger history and suspect my knowledge goes much deeper than yours (and just about anybody else in here)
Modesty.
"The only good is knowledge and the only evil is ignorance."-Socrates
by slc ranger on Nov 30, 2009 12:23 PM CST up reply actions 1 recs
Yes, but do you have a background in nuclear physics?
I thinks not.
Neftali Feliz says sit your 5 dollar ass down before he makes change...
Hi, Keith. Is this the year Edinson Volquez finally wins RoY?
by Brian Thomas on Nov 30, 2009 7:04 PM CST up reply actions
LOLOL
Score one for Brian Carter Thomas.
Ha ha ha.
Win.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Dec 1, 2009 10:51 AM CST up reply actions
Man I've missed you.
"Sometimes you just want to sit back and watch somebody throw 100." - Jeff Passan on Neftali Feliz
its not merely the pride of putting together a winning
club. its the pride associated with failing publicly at the one thing you are really really good at and wanting an opportunity to rectify that.
by Smoakin in the Boys Room on Nov 30, 2009 12:17 PM CST up reply actions
So you believe Tom Hicks
was demonstrating a lot of pride when he dragged this team around with a shotgun in it’s mouth the off-season he was trying to peddle off A-Rod?
Think he had a lot of pride after 2004 when he slashed player expenses yet raised the prices of both tickets & parking?
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
by Josey Wales on Nov 30, 2009 12:24 PM CST up reply actions
thats not the question
the question is whether or not his current bid to salvage a stake in team ownership is motivated by pride.
by Smoakin in the Boys Room on Nov 30, 2009 12:29 PM CST up reply actions
I suspect that Tom Hicks is able to pay himself
and his spare sons fairly nice salaries with this little arrangement while The Thing has also been able to appreciate by $ 150 million plus in the last 12 years so why the hell would he want to give that up unless he had to?
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
by Josey Wales on Nov 30, 2009 12:33 PM CST up reply actions
in 12 years you can double your initial investment at a very conservative 6%
it doesnt make sense that the ball club is such an overwhelmingly profitable enterprise that he’d eschew all alternatives to pursue it purely for monetary reasons.
by Smoakin in the Boys Room on Nov 30, 2009 12:43 PM CST up reply actions
I actually agree with Josey on this thread...
"Support the Dutch Oven"
by RangerFloppy on Nov 30, 2009 12:48 PM CST up reply actions
My head just exploded
"What ... 92 miles per hour?" Feldman scoffed. "That's not gas. Feliz throws gas."
by NorCalRangersFan on Nov 30, 2009 3:25 PM CST up reply actions
I'd bet he wants to take credit for the team's pending success
and that he’d rather not completely give it over to somebody else who can take that credit
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Nov 30, 2009 1:10 PM CST up reply actions
Talking about the finances of the team
gives me severe tired head but I think you boil it down very simply.
This team (and MLB on the whole) pulls in much more revenue than it did 10 years ago but player expenses have fallen and Tom Hicks is very, very desperate to keep the team.
If you do the math it has nothing whatsoever to do with the pride of Tom Hicks.
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
X
Should say “you can boil it down very simply.”
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
In reality
these numbers presented in the post tell very little. With the shape HSG is in, I would be willing to bet that the team (a business unit of HSG) is very close to break even.
Also, raising ticket prices is an exercise in elasticity. If you’re not constantly trying to find the pricing sweet spot, you’re not maximizing your businesses potential. Based on how the team has played with prices over the past five years, I believe they are trying (albeit unsuccessfully based on how much they’ve tinkered) to find that sweet spot. It seems Cuban has done a tremendous job of this.
by robert_d_wilfong on Nov 30, 2009 1:50 PM CST up reply actions
Especially when
you haven’t brought a dime of your own money to the table and have borrowed more than the original purchase price of the team.
"I don't condone steroids or any other type of growth hormones or anything else, but I could care less, and, for the most part, I don't think the fans give a (bleep). The people that care about it are the people that probably don't like baseball," - Jim Leyland
how long until we find out who was the leading bidder?
Tom Hicks sucks!
A baseball game is simply a nervous breakdown divided into nine innings.
by NothinG on Nov 30, 2009 11:52 AM CST reply actions 1 recs
The fans deserve this commitment as well...
“This is a team that looks like it can do something really special in the coming years, and it deserves an ownership that is willing to commit financially to help add the pieces necessary to turn the potentiality of something special into reality”
I reject your reality and substitute my own.
by GhostofSteveFoucault on Nov 30, 2009 11:54 AM CST reply actions
This is how I'm thinking it will go down
Huge attendance for the Rangers successful playoff-run next year.
Payroll goes up and we sign FAs: Mauer, Crawford, and Beckett or Webb.
You know someone would complain
that he’d have to move to first or DH at some point and because of that we overpaid and a fern could have done better or somesuch
Look at the comments under Jeff Wilson's blog post on dallasnews.com. What a bunch of rocket scientists.- Keith Law
Can you troll your own blog?
“Hicks probably figures that if he can get the team away from HSG, he can adopt the Florida model of maintaining low payrolls and not really trying that hard to compete, while maintaining profitability through mediocre attendance and MLB’s other revenue streams.”
"Back on the scene, with a gangsta lean" RW
"When you have a weapon on your shoulder like he has, you can be cool." RW on Perez
And the little bastard threw it for a swinging strike three in a 3-2 count. He’s blessed. And ballsy.
by Rodney on Nov 30, 2009 12:09 PM CST reply actions 1 recs
I'm a big fan of this blog
but this may be Adam’s worst post ever. And that includes that nipple post last night.
Go Rice Owls!
How so?
The nipple thing fell through, but what’s wrong with his thinking here?
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 1:59 PM CST up reply actions
There is quite simply zero evidence that Tom Hicks would do anything of the sort
Adam hates Tom Hicks, which is fine. Under his ownership the team got put into a bad financial situation and has been rendered impotent by it. I agree with him that any owner who cannot keep that from happening is not an owner that we want in charge of the club.
That said, the hatred for Hicks expressed in this post and in past ones almost suggest that he is convinced Hicks is just working on some nefarious scheme to pocket as much spending money from revenue sharing while running the team into the ground. This post is just Galloway level analysis shrouded in meaningless numbers to attempt to give it some legitimacy. There is no more evidence that Hicks wants to do that than there is for any of the other ownership groups. In fact, there is more contrary evidence, considering the amount of money Hicks has spent in the past. Spent unwisely, sure. But he has spent.
Now, do I think Adam really thinks that? No. He knows better. Hicks isn’t John Henry or George Steinbrenner or Arte Moreno, but Hicks obviously isn’t Loria or Huizienga or among any of the other actually bad-intentioned owners in the game. What his point is with these types of posts, I don’t know. I think he just hates Hicks and the mere prospect of him staying the owner horrifies him into this “fear-mongering” as wilfong says.
Go Rice Owls!
Nothing you said convinced me otherwise.
Please see my post above. I actually think Adam hit the nail on the head here, but used the wrong metric, or wrong combination of metrics to satisfy our more financially literate.
Somehow I think you are giving Hicks too much credit. We know what his motives are and we have knowledge of his purpose for owning the team (8 years of evidence). You cite A-Rod, Ho as spending, but there is nothing to suggest that Hicks would ever raise payroll again. He did it as a formality to swindle the fans.
He was supposed to raise payroll after 2004 when the team was expected to contend after a solid season. We weren’t in a recession at that time. Where the hell was the money.
The reason Hicks won’t retain ownership is because all the other owners are pissed off that he is ciphering from revenue sharing to support a fucking soccer team in Europe. Meanwhile, there’s probably a line of people ready to take on a burgeoning asset that could do big things with a little backing.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 2:55 PM CST up reply actions
err: Siphoning* from revenue sharing
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:01 PM CST up reply actions
"Where the hell was the money"?
Well coming off that whopping 2.9 million dollar operating profit (which as has been explained doesn’t mean actual profit) we were also only a year removed from operating losses of 28.5 million as referenced below. The 4 years prior to the 05 season we had a gross operating loss of 56.7 million dollars.
So any “money” he would have dumped into payroll would have been debt anyway and most likely this organization would be in serious serious financial trouble right now.
Think about it if we had signed two guys to 5 year deals back then they would be in the last year of those deals right now making the most money of the deal. Had we shed their salary a year or two ago we probably only get pennies back on the dollar in terms of prospects and who knows if we get the Teixeira deal done.
Bryan Smith (12:17:17 PM PT): Justin Smoak and Josh Hamilton. The AL West might just have found their Bash Brothers, v. 2.0.
No, no.
The team’s finances on an annual revenue basis are irrelevant.
You have to understand that Hicks has moved on to bigger and better things. This is just the fallout.
He’s probably pissed that he hired JD, somebody who put him in this position of looking foolish. Hart was just a stooge.
I guarantee your ass that he sees the benefits of spending now, what with the pipeline and everything. He knows the Rangers are a sleeping giant. He knows the area is a sleeping giant with Jerry’s World. Now is the time he is willing to open up the check book, supposedly, but it’s too damn late.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:10 PM CST up reply actions
This is a completely irrational post
The team’s finances on an annual revenue basis are irrelevant.
I think when arguing that a guy has the goal of pocketing all the profit from an organization, the team’s finances do actually matter.
You have to understand that Hicks has moved on to bigger and better things. This is just the fallout.
He’s probably pissed that he hired JD, somebody who put him in this position of looking foolish. Hart was just a stooge.
I don’t think Josey has ever said anything quite as unfounded.
Go Rice Owls!
Hmm??
You need to read more closely.
He doesn’t care about pocketing profits from the Rangers. Are you kidding?
Why do you think he has been so satisfied with essentially breaking even, or less?
Liverpool spits off cash, not This Thing. Not yet anyway.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:19 PM CST up reply actions
Reason hes been so satisfied is because while the year to year revenue isn't there the club has risen in value
He bought the Rangers for 250 million 10 years ago and now the selling price is going to be 450+. Thats 200 million in profit in 10 years. Id be pretty satisfied with that.
Bryan Smith (12:17:17 PM PT): Justin Smoak and Josh Hamilton. The AL West might just have found their Bash Brothers, v. 2.0.
And it'd be a damn shame
to let it go to waste on payroll. Now wouldn’t it?
Look where he’s reinvesting the money. Guy hasn’t poured shit into this team in years.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:25 PM CST up reply actions
Im not saying its what I want as a fan
I could care less if Hicks or any owner goes broke if the team wins. But when I take my fan glasses off and look at it from a business standpoint it makes sense.
Sure right now the Rangers are a sleeping giant. The last few years Hicks has been a pretty damn good owner IMO. Im sure after committing to a complete overhaul and rebuild he doesn’t want to sell the team and see them right away turn successful. We have a good core of young talent both pitching and hitting unlike 2004 where we had plenty of offense but shit for pitching (Ryan Drese and Ricardo Rodriguez…..need I say more). It wouldn’t take an owner coming in here and spending 100 million dollars to turn things around right away. Its very plausible that whoever the owner is comes in and only has to spend 10-15 million of their own money right away to bump us into the playoffs.
Bryan Smith (12:17:17 PM PT): Justin Smoak and Josh Hamilton. The AL West might just have found their Bash Brothers, v. 2.0.
Ok, so you're agreeing with me now, or not?
It’s fine if we have to agree to disagree. We probably won’t change each other’s minds anyway.
If money was in place after ‘04, bats (1 of the young infield) could have been traded for a frontline pitcher. I forget the timeline on Blalock – Beckett, but I think that was after 2003. Then, use the money to replace the bat because it’s cheaper than paying for a pitcher.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:56 PM CST up reply actions
Im agreeing that i wish it was an ideal world and we could be like the Yankees and spend all the money we want
But in reality theres a reason there is only one NY Yankees and only a handful of teams that spend alot of money. Not all teams generate the revenue that those teams do. While we all sit here and think they spend that money purely to win im sure their owners are looking at the books and aren’t seeing huge red numbers.
Its easy to spend other peoples money. And right now I do think we should be able to go out and spend some money but if anyone thinks we should have a payroll near 100 million next year they are crazy. Its simply not feasible with our current roster construction and wouldn’t be a good business decision
Bryan Smith (12:17:17 PM PT): Justin Smoak and Josh Hamilton. The AL West might just have found their Bash Brothers, v. 2.0.
6%
annual rate of return gets you to roughly $450m. He could have done much better elsewhere.
by robert_d_wilfong on Nov 30, 2009 3:43 PM CST up reply actions
Heh
10 years ago the S&P 500 was 1416.62. Now it is a nice 1095.63. I think I’d be happy with 6% return over the past decade…
Go Rice Owls!
Best I can tell
you’re not Tom Hicks and you don’t have a quarter mil to invest.
But if you do, your personal banker down at the corner Compass Bank can probably get you a pretty good rate on a $250m 10-year CD.
by robert_d_wilfong on Dec 1, 2009 7:41 PM CST up reply actions
Hes also a self proclaimed sports fan, baseball specifically
I imagine hes just fine with only a 6% return owning a team in a sport he supposedly loves
Bryan Smith (12:17:17 PM PT): Justin Smoak and Josh Hamilton. The AL West might just have found their Bash Brothers, v. 2.0.
I'm sure he loves soccer, too!
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 4:05 PM CST up reply actions
Thank you.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:57 PM CST up reply actions
The teams annual revenues are relevant
if you keep spending more than you make eventually its all gonna come crumbling down. After the 2004 season Hicks was still at least 50 million in the hole over a 4 year span. The more accurate figure is probably close to double that. And we weren’t as close as you make us out to be. We had a nice young offensive nucleus but we didn’t have pitching. And since the CHP debacle was still ongoing and he was feeling the effects of being stung by a high priced pitcher I doubt he was too keen on the idea of going out and signing a FA pitcher.
Bryan Smith (12:17:17 PM PT): Justin Smoak and Josh Hamilton. The AL West might just have found their Bash Brothers, v. 2.0.
Yawn.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:23 PM CST up reply actions
it's OK if you hate Hicks and choose to paint him in a negative light
but either rant without an argument or if using an argument, at least choose one that’s rational without claiming to know “what his motives are” and is a little more financially astute than to float the belief that the team’s finances don’t carry forward from one year to the next. Only the W-L record resets each year, the finances don’t.
I've brought more than your bag to this discussion.
It’s not about me or my hate. It’s about the team and the quagmire it is in.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 3:51 PM CST up reply actions
Thank you for your well-formed and intelligent response.
Your insights have greatly illuminated the situation. Back to you.
If you say something worth reading, I'll play nice.
"Nothing we do here has a point" - Czar Morris
by inactive lsb user on Nov 30, 2009 4:08 PM CST up reply actions
I'd be interested to see MLB's data
On the Rangers debt/equity ratio. Operating income alone doesn’t portray the net picture (as pointed out above). However, that disclaimer does not exempt Hicks from the Bernie Ebbers trick of stashing cash elsewhere in the HSG venture accounts, some of which could conceivably be more personal than organizational.
"He uses statistics as a drunken man uses lamp-posts... for support rather than illumination." - Andrew Lang (1844-1912) also -
"Telephone, n. An invention of the devil which abrogates some of the advantages of making a disagreeable person keep his distance."
~Ambrose Bierce
by Ed Coffin on Nov 30, 2009 12:11 PM CST reply actions
I noticed you left off
2003 -28.5
2002 -24.5
2001 -6.5
59.5 M in losses is pretty staggering. Combine that with 73.4 M in profits EBIT and you get a net 13.9M.
There is no way 13.9M over the last 8 years has covered the interest payments, deprecation or amortization.
I don’t like Hicks, but don’t tell me that this club has been a regular cash hound for return on investment. I am not even sure if he has made a single cent off the Rangers over that 8 year span.
What he does gain is the steady appreciation that a MLB ball club nets. It has nothing to do with the team making him tons of money on a yearly basis. He wants to keep the Rangers and for that matter the Stars because how fast they appreciate vs other assets.
Don’t let the owners fool you. Unless you own one of the privilege few, the real value is not in the annual revenue but the amazing piece of leverage assets it provides you.
JD’s like, "you want some fucking pitching? Here’s all the pitching you can stand. Now choke on it, bitches!"- RCCook
Well not exactly
EBITDA is more a measure of cash flow than it is profitability. As others have pointed out, it is earnings before certain expenses (interest, taxes, and depreciation and amortization).
I am sure that the combined entity (orginization) looses money on a net income basis every year. So he is likely cash positive but doesn’t owe any income taxes. That net loss also has an economic value as you can carry those forward to offset against future earnings for tax purposes.
Bad analysis
As a couple of people have said, EBITDA is not operating income and analysis that suggests they are the same time is immediately flawed.
That said, using those EBITDA numbers, and making an unrealistic assumption that no capital expenditures would need to be made on an annual basis, applying a risk-weighted cost of capital of 10% to 2007 and 2008 EBITDA numbers would indicate that the Rangers’ cash flows would support an enterprise value of about $175 million, which is well less than what Hicks purchased the team for.
To argue that Hicks should retain the team solely off this level of positive EBITDA is simply incorrect.
by Darrell McKown on Nov 30, 2009 12:53 PM CST reply actions
Sorta
EBITDA can and is used to compare large businesses within a particular industry. AJM’s link doesn’t work for me (for whatever reason) but the question is how do the Rangers compare to other teams? That’s what would be telling.
Baseball teams and the owners of those teams make money one way or another. This is a rule not an exception. Hicks is a businessman and should know more about the Rangers finances than anyone else. Hicks isn’t trying to buy the team out of altruism.
It breaks your heart. It is designed to break your heart. The game begins in the spring, when everything else begins again, and it blossoms in the summer, filling the afternoons and evenings, and then as soon as the chill rains come, it stops and leaves you to face the fall alone. You count on it, rely on it to buffer the passage of time, to keep the memory of sunshine and high skies alive, and then just when the days are all twilight, when you need it most, it stops.
A comparison to other teams
would only have value if all the other teams carried a similar debt load. Comparing race horses is best done when their respective jockey’s are of equal weight.
I'm guessing the difference would be found in length of same ownership
Initially, the debt load would likely be similar percentage-wise. No one’s reaching into their pocket to write a check when they buy a team. What you don’t want to compare is a team that’s been owned for 20 years to one that was recently purchased.
It breaks your heart. It is designed to break your heart. The game begins in the spring, when everything else begins again, and it blossoms in the summer, filling the afternoons and evenings, and then as soon as the chill rains come, it stops and leaves you to face the fall alone. You count on it, rely on it to buffer the passage of time, to keep the memory of sunshine and high skies alive, and then just when the days are all twilight, when you need it most, it stops.
Depends on how much debt was assumed with the purchase
but my point was that no two teams are identical in the way their finances are structured.
What about this season?
Even with new ownership in place by say February 1st, the longer this drags on, the less maneuverability the club is going to have in free agency and the trade market. While other clubs are busy making moves to fill needs, the Rangers are in limbo. How bad is this going to affect 2010? That’s my real concern.
The silver lining
to all of this is that the team doesn’t need much but if they do nothing, it’s easy to see where we go back to 75-80 wins.
Gotta get an OBP monster who kills LH pitching, an arm for the bully and then hope like hell Holland and Davis get their shit together.
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
I don't see how we NEED a bullpen arm
I think we’ve got enough to work with there…but a couple of low risk NRI’s isn’t a bad idea
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Nov 30, 2009 1:33 PM CST up reply actions
CJ is going to be given a shot at starting
and he was probably our most valuable relief pitcher so his appearances need to be replace and who knows what is going to happen with Feliz.
I’m also less than impressed with Frank Frank and don’t want to go into the season depending on him as our only option to close.
Now that I think about it, we’re going to need at least a couple of bullpen arms.
"Dying ain't hard. It's living that's hard."
"Ranger players, especially veterans, weren’t surprised that Daniels couldn’t find a deal"
"Business as usual." - Tom Hicks on the Ranger off-season 11/19/09
Choose any 7 from the following:
(assuming the rotation is Millwood, Feldman, Hunter, Holland, and either McCarthy or Harrison)
The Likely Pen: Francisco, Wilson, Feliz, O’Day, Nippert, Moscoso, Mathis
Fillers (should CJ start, which I doubt; or should one of the above falter): Strop, Madrigal, Harrison/McCarthy, Hurley, Eyre, Mendoza
The Next Wave to break in: Kiker, Phillips, Kirkman, Poveda, Perez, Beavan, Main, Vaughan, Jones…I could go on
If we add a top notch closer/setup man, I agree. If you’re just looking to add “another bullpen arm” then I disagree.
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Nov 30, 2009 1:49 PM CST up reply actions
Pitching staff
I hope the opening day rotation isn’t Millwood, Feldman, Hunter, Holland, and either McCarthy or Harrison.
Feliz should be in the rotation to begin the season.
Also, I’m not certain that Wilson shouldn’t be as well.
Take those two out of the bullpen, and you probably need at least one more bullpen arm.
by Darrell McKown on Nov 30, 2009 1:58 PM CST up reply actions
I don't see any way
Millwood, Feldman, Hunter and Holland aren’t starting. That only leaves one spot, and as well as Harrison pitched when healthy, and McCarthy did in spurts, I wouldn’t see us looking past those two to fill out the 5th slot. I also think we will keep Feliz in the pen to start the year to keep innings down; and as much as I’d like to see CJ start for us, I really don’t see that happening.
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Nov 30, 2009 2:30 PM CST up reply actions
Harrison
He had a 6.11 ERA and an ERA+ of 76 last year.
by Darrell McKown on Nov 30, 2009 6:23 PM CST up reply actions
was he healthy?
I’m thinking of that May run where he had 2 complete games and a 3.82 ERA. And I’m not saying he’s going to do that all year long, just that he’s capable – and that he has as much of a right to the rotation battle as anybody else for that 5th slot
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Nov 30, 2009 6:30 PM CST up reply actions
Harrison's May run was much better than that
in 4 starts from April 27 through May 14 he was 4-0, 1.80 ERA in 30 innings, allowing 6 runs (all earned) and 22 hits with only 2 walks and 18 strikeouts.
After that he was 0-3, 10.61 ERA. Before that he was 0-2 with a 9.20 ERA.
He also managed 2 quality starts all year, and they were both complete games.
How does the 09 team turn into a 75 win team?
Is losing Guardado going to be that big of a hit?
By 2028, Mark Teixeira will be in the HOF.
"I am one of the biggest Texas Ranger fans out there but I'm also one of the smartest. Deal with it."
-The Outlaw
I guess if the pitching/defense regresses
and the hitting doesn’t improve, it COULD happen…you have to go ahead and figure that one of Young, Kinsler, Hamilton and a starting pitcher and catcher will be injured at some point, so take that into account
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Nov 30, 2009 2:32 PM CST up reply actions
The problem with that line of thinking
is that it ignores the injuries and under-performances the team suffered in 2009. 2009 was far from perfect with 3 important preseason starters (Hamilton, Blalock, and Davis) gave the team little to nothing for most of the year. Each year, teams go through injuries and under-performers. I don’t see why someone would expect the young pitching and defense to regress by about 120 runs (10 runs per win) and I certainly don’t see why we should expect the offense to perform significantly worse than last year (when they were ranked 7th in the AL).
By 2028, Mark Teixeira will be in the HOF.
"I am one of the biggest Texas Ranger fans out there but I'm also one of the smartest. Deal with it."
-The Outlaw
and I don't expect that either
but I’m thinking it could be a possibility
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Nov 30, 2009 6:30 PM CST up reply actions
Just 3?
Hurley, Harrison, and Benoit were hurt as well, plus we lost Mike Young for 3 weeks, Nelly Cruz for 2 weeks, Kinsler for 2 weeks, Salty was hurt, Padilla “Played” his way into being released, Francisco was hurt, Guardardo was hurt for much of the year, McCarthy was hurt (big news there), Benson played his way off the team, Josh Rupe hurt himself. Even Millwood missed a week or so.
Even those who were healthy had issues. Andruw Jones may have started off well (.344/.523/.781 in April) but the rest of the way, (.197/.293/.418) was stinkeroo.
Kinsler slumped his way through July (.157/.200/.384) and was not much better in May and June.
This was a team in transition. We saw Holland, we saw Feliz, we saw Hunter and we saw a new side of Feldman. We saw Julio Borbon and Taylor Teagarden and Elvis Andrus. Realize that this was the first year that Frank Francisco was a closer. 2010 has alot of optimism even if we don’t “add a big arm” or “add another bat”. A little luck, some better production and health from some guys, The continued exceptional defensive play, and we’ll look back on 2009 and say, “There was the appetizer, this is the main course, with the desert in October”
I like your optimism
and really, I’m hoping Hurdle can do with this offense (with the help of another high OBP bat and some health from his hitters) what Maddux did to our pitching last year: complete transformation. I believe Rudy was a great hitting coach, but we need a change of pace and we need to move on towards run production and utilizing our hitters’ best attributes going forward.
Really, it’s all about health first and foremost. Without health, you don’t even have a chance for production.
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Dec 1, 2009 11:22 AM CST up reply actions
Nope...
but losing Jones and Vizquel obviously will.
"The only good is knowledge and the only evil is ignorance."-Socrates
Vizquel will be missed
quite a bit I think
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Dec 1, 2009 11:23 AM CST up reply actions
Something I have never understood about the HSG loan default.......
I readily admit to being a financial novice – i know just enough to be dangerous.
What I have yet to understand is this: The HSG loan default is on approximately $525 million, correct?
Hicks bought the Stars in 1995 for $82 million
Hicks bought the Rangers in 1998 for $250 million
That is a total of $332 million paid for the 2 teams.
Where did the other $200 million in debt come from?
Other team related purchases I am unaware of? My understanding is Liverpool is not part of HSG, so that team purchase should not be part of the debt. Additional loans to service the existing debt?
I would appreciate any clarity those smarter than me might have…..
Debt
It’s entirely possible that Hicks used the increase in franchise value to lever up the team and withdrew the proceeds to use for other purposes.
Also, the team had pretty significant cash flow losses during the early part of this decade that he may have debt financed as well.
by Darrell McKown on Nov 30, 2009 2:00 PM CST up reply actions
perhaps, but $200 million worth.....
…… of other purposes and cash flow debt from the early ’00’s?
Just seems like an awfully big number that I haven’t heard anyone ask about, or get an explanation for. Not that they owe us one, but it is curious.
it has some other assets...
plus financiing operating losses.
“HSG operates Hicks Sports Marketing Group, an entity formed in 2006 to represent sports branding opportunities and corporate sponsorships for HSG, most notably for the Stars, the Rangers, and real estate projects related to Hicks’ sports venues. HSG has an interest in eight Dr Pepper StarCenter facilities, including the StarCenter in Frisco, Texas, that serves as the practice facility for the Dallas Stars, and owns approximately 40 acres surrounding the Dr. Pepper/7 Up Ballpark in Frisco, which is designated for future mixed-use development. In Arlington, HSG is involved in the development of over 100 acres, as an exciting mixed-use development focused on restaurants and entertainment, planned between the Rangers Ballpark in Arlington and the new Dallas Cowboys Stadium.”
Circling the Bases
Circling the Bases is a baseball website that I stumbled upon a little while ago, and one which I really enjoy. They had a post today about the pending sale of the Rangers, and this blog post by Adam got referenced a few times. The most interesting thing about the post is at the end where Craig Calcaterra (formerly of ShysterBall) says:
Whatever the case, this thing could be over quick. A source tells me that Hicks Sports Group is gearing up to make an announcement of a sale this week.
Nothing more is said of this source, but I have a feeling that this sale is going to drag on and ruin the next few months for us Rangers fans.
by Excel Hearts Choi on Nov 30, 2009 3:51 PM CST reply actions
That's a good site
but I don’t buy that source’s statement one bit.
G G G E-flat_______ F F F D__________....
Preach it.
"Sometimes you just want to sit back and watch somebody throw 100." - Jeff Passan on Neftali Feliz
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