The Rockies’ Finances, As Told By The Owner, Bloomberg & Forbes

Colorado Rockies owner Dick Monfort recently told Troy Renck of the Denver Post that the Rockies’ earned $170 million revenue in 2013. Monfort shared the information as part of a larger discussion with Renck about the Rockies’ finances as the team looks to upgrade for the 2014 season. As Renck reports, Rockies fans were in an uproar in October after learning that the team was building a party deck in the upper right-field seats. After two consecutive last-place finishes, fans were clamoring for more money to be spent on the product on the field, not the fan experience off of it.

Perhaps in response to the fans’ negative reaction, Monfort told Renck that the Rockies have a conservative business plan that aims to get the team into the postseason two times every five years. Specifically, Monfort said about the 2013 season:

• The Rockies earned $170 million in revenue;
• The Rockies spent $84 million on player salaries, including in-season call ups;
• The payroll accounted for 49.4% of revenues, in line with the 50/50 rule of thumb; and
• The Rockies local TV rights deal is worth $200 million over ten years and expires in 2020.

Renck asked about the additional revenue all MLB teams will receive in 2014 from the new national TV deals. As I explained in this post a few weeks ago, ESPN, Fox and TBS will pay MLB $1.5 billion per season from 2014 through 2021, nearly double what the networks paid the league under the prior deal. That works out to approximately $25 million in additional revenue per team, if the TV money passes entirely from MLB’s Central Fund to the 30 teams. Monfort believes that MLB will only pay out $19 million per team, to account for Central Fund money the league planned to hold back in 2013 but paid forward after teams complained.

For the Rockies, Monfort expects to spend $5 million or so of the additional $19 million on player salaries and $5.5 million on loan payments to MLB. Another $3.5 million will make up for an expected decrease in ticket revenue compared to 2013 when the Rockies hosted the Yankees and Red Sox at Coors Field. That leaves another $5 million. For what, it isn’t clear. Under the 50/50 rule of thumb, you’d expect the Rockies to spend $9.5 million of the $19 million on players’ salaries.

At season’s end, Cot’s Contracts listed the Rockies’ 2014 obligations at just under $52 million. So far, the Rockies have picked up Jorge de la Rosa’s $11 million option, signed LaTroy Hawkins for one year at $2.25 million, signed Justin Morneau for two years/$13 million (or an AAV of $6.5 million), and traded Dexter Fowler and his $7.85 million salary to the Astros for low cost outfielder Brandon Barnes and pitcher Jordan Lyles. If you use Matt Swartz’s arbitration estimates for Wilton Lopez, Juan Nicasio, Josh Outman and Jonathan Herrera, that’s another $6.5 million (Mitchell Boggs was non-tendered).  Add in another $5 million or so for first and second-year players, and the Rockies are looking at $75 million in salary commitments for 2014.

Monfort’s disclosures are interesting in several respects. For one, it’s unusual for team owners to share that kind of information with the public, and because of that, we have to be suspicious of Monfort’s motivation and the veracity of the numbers. Maybe Monfort felt the need to respond to the uproar over the party deck. Maybe he was sending a message (of what, we don’t know) to the league office or other MLB owners. Maybe he just felt like opening up. Nah, that couldn’t be it.

If Monfort’s $170 million revenue figure for 2013 is accurate, then we have to question the revenue numbers and team valuations published yearly by Forbes and, for the first time by Bloomberg Business. Last month, I took a deep dive through those two sets of valuations, both of which relied on financial information from the 2012 season. Forbes reported the Rockies’ revenue for 2012 as $199 million; Bloomberg had it at $195 million. Bloomberg’s figures explicitly included $13 million in revenue sharing. We don’t know if Forbes included revenue sharing or not. Same for Monfort’s revenue figure.

Bloomberg reported $71 million in “media rights” revenue. Unless that includes national TV money and the Rockies have a lucrative radio deal, that number is way off Monfort’s figures. He told Renck that the Rockies’ 10-year/$200 million deal expires in 2020. Most of those deals have escalators, meaning the team is paid less in the first year of the deal and the most in the final year. On average, that’s $20 million a year, way below Bloomberg’s $71 million. Forbes doesn’t provide a line item for media-related revenue.

Is there that big a difference between the Forbes/Bloomberg roughly $200 million revenue estimates and Monfort’s $170 million? Well, $30 million is $30 million. And if the Rockies do, indeed, follow the 50/50 rule of thumb, that’s a difference of $15 million the Rockies either do or don’t have to spend on player salaries. For a payroll in the $75 million to $85 million range, $15 million could make a huge difference.

All of which leads us . . .  nowhere in particular. We’ve always known we had to read the Forbes and Bloomberg team valuations with a critical eye. We must do the same with Renck’s account of Monfort’s disclosures. Until we see the financial statements the teams send to the Commissioner’s Office, we won’t know the real story. And absent leaked financials like the ones Deadspin received a few years ago, we’re very unlikely to ever see the real numbers.