On The Brewers' Finances And Going "Deep In The Red"

As the Brewers pare back (or slash) payroll this winter, we've all been told on multiple occasions that it's a response to going "deep in the red" financially in 2012. If the team lost money last season despite drawing over 2.8 million fans, then certainly it wouldn't be feasible to maintain a $100 million payroll in the Milwaukee market.

The problem, though, is that the only evidence we have to support these financial losses is what they've told us. We don't know if "deep in the red" means the team lost $50,000, $500,000 or $50 million in 2012, or even if the claim of financial losses is true at all. Major League Baseball teams go way out of their way to prevent anyone from seeing their actual financial numbers, routinely decry attempts to estimate their value and generally do their best to downplay the economic benefits of a business that consistently finds franchise buyers willing to pay hundreds of millions or billions of dollars.

That's why it caught my eye this morning when I spotted a Newsday report outlining the Mets' ballpark revenue from 2012. The Mets are required by New York City to make this information available as part of the agreement regarding the bond payments for Citi Field. To the best of my knowledge, this is the most reliable insight we've ever received on the topic.

For the Mets the news isn't very good. Their ballpark revenues have declined significantly each year since they opened Citi Field in 2009. They still made $118.6 million at the park in 2012, though, despite drawing just 2.24 million fans. Those numbers include ticket sales, parking and concessions. Based on those numbers we can say that the average fan who bought a ticket to a 2012 Mets game was worth $53.91 to the team. I've previously estimated the value of an additional fan in the ballpark at around $50, so this passes the sniff test for me.

Obviously the numbers won't match up perfectly, but we can use that value to come up with a rough projection of the Brewers' 2012 ballpark revenue. The Brewers drew 2,831,385 fans to Miller Park in 2012, and if each one was worth $53.91 to the team then that would represent about $152.6 million.

It's worth noting that ballpark revenue represents a significant portion but not all of a team's income. Over the past year the Brewers have also received revenue sharing money, payments on their TV and radio contracts and other payments shared across MLB teams.

It's also worth noting, of course, that the team's on-field payroll isn't their only expenditure. On top of major league payroll they also employ a very large staff of team employees, minor league players and coaches and more.

With all of that said, I wouldn't believe the Brewers went "deep in the red" in 2012 unless the team was willing to open up the books to prove it.