Author Topic: Lerners are Cheap - 2017  (Read 19111 times)

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Offline NJ Ave

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Re: Lerners are Cheap - 2017
« Reply #100: February 07, 2017, 10:11:14 AM »
How much are they pulling from the team each year?

You see, I've always had problems with this. Team owners routinely don't count debt service as profit, despite the fact they are paying debt on a very quickly appreciating asset.

Let's put it simply - let's say the Lerners took out $600 million in debt to buy the team at 0% interest, payable in 10 annual installments of $60 million. My understanding is that those payments are taken out of operating profits for MLB purposes. So the Lerners could spend $60 million less in payroll without "taking any profits out of the team" according to MLB numbers.

Of course, after ten years they not only have the team owned debt-free, but the value of an MLB franchise likely doubles (conservatively) over ten years, so now they have a $1.2 billion asset without any debt on it, without having "taken any profits". Of course they'll be happy to take the profits when they sell the team :(