Originally Posted on the Previous Iteration of Baseball.FYI by Daniel R. Epstein, @depstein1983
Here’s a philosophical question: can a billionaire be a good person? There shouldn’t be any inherent correlation between money and decency. However, to achieve ten-figure wealth, one must put profit ahead of all else- including morals. Sure, billionaires could pay employees more or lower costs for consumers, but if they do that any more than necessary, the bottom line might shrink a bit. Even their “philanthropy” makes them money! Maximizing net gain by all means, regardless of the consequences for society, is the most tried and true path to billions.
At the very least, billionaires shouldn’t receive the benefit of the doubt, regardless of your opinion on their capacity for goodness. Unless they can prove what they claim with facts, we should question their ulterior motives. So, when Tom Ricketts, whose family owns the Cubs and is worth $5.3 billion, makes these claims…
Tom Ricketts told season ticket holders that 70 percent of the Cubs revenue comes from game day operations / ticket sales/ fans in the stands. He went on to say with half the season gone 15 percent of gross revenues would be the take with no fans.— Bruce Levine (@MLBBruceLevine) May 15, 2020
…We should take them with a mountain of salt. The simple fact that MLB clubs have never opened their books- either to the MLB Players Association or the public- is an indication that they’re lying about finances. Otherwise, they would have nothing to hide! Ricketts’ claims, in particular, have an especially Pinocchio vibe.
Let’s start with the idea that 70% of revenue comes from game day receipts. The average Wrigley Field ticket price was $59.49 in 2019. This would have increased in 2020, so let’s round that to an even $60 per ticket. The average attendance was 38,208 fans per game last year. That number has dropped by a few hundred per season since 2016, so we’ll assume 38,000 per game for 2020. The final piece is parking and concessions, which is harder to estimate. Let’s generously assume $20 per fan. Add this all up, and the Cubs rake in about $3,040,000 per game, which is $246,240,000 over the course of 81 home games ($124,640,000 for this year’s supposed 41-home game season).
If Tom Ricketts is telling the truth, and $246,240,000 is 70% of his revenue, the Cubs would bring in $351,771,429 in a normal 2020. According to Statista, their actual revenue in 2019 was $471 million. Assuming an annual revenue increase of 4%, they should have generated $490 million in 2020. $246 million from game day receipts is just over 50% of the estimated total revenue, which isn’t even close to 70%. Maybe this estimation is off- after all, their books are closed- but there’s a $148 million discrepancy. It seems more likely that Ricketts is simply lying.
How about the second claim: 15% of gross revenue would be the take with no fans? Using the $490 million estimated revenue for a full season, this doesn’t hold water either. Deducting the $246 million and change from game day receipts leaves the Cubs with just under $244 million. Cutting that in half for the missed games brings 2020 revenue to roughly $122 million. This would be 25% of expected revenue, not 15%.
It’s not fair to simply cut all their revenue in half, though. Merchandise, as an example, is sold all year long regardless of whether or not they play games. They might sell less than usual, but some of that cash is still incoming. The same goes for other revenue streams as well. Their actual revenue is going to be several million dollars more than $122 million, and it’s impossible to tell how much. Besides, their expenses are less without fans as well. If this was a conversation about net instead of gross, we’d have to talk about how much they’re not paying to open up Wrigley Field.
In fact, the full-season estimate of $490 million leaves out a lot of important windfalls. MLB Advanced Media generates nearly $1 billion dollars per year, some percentage of which is divided among the 30 teams. It’s not 100% because MLB sold most of BAMTECH to Disney in December 2017, generating $50 million for each team- including the Cubs. There’s also money generated from other agreements, such as the one with MGM, that likely isn’t factored into gross income. Add all of this together, and there are untold millions more in revenue that Ricketts conveniently forgot to count.
Clearly, Ricketts is lying, but why? MLB reached an agreement regarding the shortened season with the Players Association back in March. Now, they’re trying to strongarm them into taking even less money when they resume play. MLB didn’t share revenue with the players when they sold BAMTECH or found other unexpected money, but when they lose revenue due to the pandemic, they expect the players to subsidize them. As Craig Goldstein wrote, they want to privatize the profits and socialize the losses.
Ricketts is crying poor. He’s lying. It’s part of a devious ploy to convince fans that players should endanger themselves for less than their contracts stipulate. This isn’t just billionaires being billionaires; it’s a slap in the face to all the people actually suffering right now. So many of us are suddenly food or housing insecure, with little idea of how to provide for ourselves and our families. Meanwhile, Ricketts and the other MLB owners use the pandemic as a vehicle for greed. They think that, by lying to you, they can justify withholding millions of dollars from employees. Don’t believe them.