Forbes Magazine is a publication that discusses business news. Business usually ain't none of my business, save for the one time a year when they publish MLB's team values (H/T to Baseball Nation for bringing it to my attention). They list the teams by total franchise value, revenue, operating income, and all that stuff. I'm really only interested in the Reds, and it didn't surprise me to see that they are the 24th most-valuable franchise in the league. This is the information cited when anyone makes the argument that they are a "small-market" team. And yeah, that makes sense. They are bunched together on the list with similar small-market teams like Milwaukee and Cleveland. Nothing too ground-breaking here.
And then I sorted the tables by operating income. Again, I don't know much about business, but when you float your cursor over this column it defines it as the team's "earnings before interest, taxes, depreciation, and amortization". So now that that's all cleared up for us (/blinks, shakes head), the Reds ranked 14th in the league in income. Not too bad, right? Right in the middle of the pack. They made $17.1 million last year, which I bet is a number that ownership is okay with.
But look. This all kinda stuck in my craw a bit. I mean, again, I don't know much about business and profits and operating income and flange paradigms and invested market capitalization curms, but it looks to me like the Reds are doing all right. At least, they look to be doing all right enough to not be totally justified in crying poor, specifically when it comes to being able to afford a contract extension for Joey Votto.
But here's the clincher, for me anyway. According to wikipedia, that august institution, Banana Bob bought the Reds in '05 for $270 million. Forbes now estimates the team's value at $424 mil. That's a tremendous return on investment, and in only a few short years. It pretty much doesn't matter what the Reds do over the next few years, Bob is gonna be far, far richer than when he started. And good for him, you know? This franchise is much, much better off now than it was six years ago. A good bit of credit is due the big guy.
But this money thing is bothering me. I mean, how can the team pull in profits like this and then turn around and say they can't afford to extend Votto? I understand that a goodly part of the reason why ownership is seeing these kinds of profits is because they are managing operational budgets so well. But even then, an extra $5 mil or so added to player payroll could be the difference. And the Reds with Votto are much more likely to generate wins and profits than the Reds without him, right?
I dunno. Again, I don't know much from finance. And we are still a good 20 months away from when the Votto Window is scheduled to close. So it's quite possible that I'm the idiot shouting at the shadows here. But maybe I'm not.