Owners' Chicken Little Talk

Owners' Chicken Little Talk

Post by Doug Johns » Sat, 04 Sep 1999 04:00:00


Paul Beeston, then president of the Toronto Blue Jays, upon being
congratulated by the press on turning a profit of almost $2 million in
their innaugural year, said:

"The $2 million profit doesn't mean a thing.  By using any other
leagally accepted accounting method I could turn that $2 million
profit into a $2 million loss."

(Note:  The above is not an exact quote, it is a paraphrasation of the
statement made in "Baseball And Billions" by Andrew Zimbalist)

-----

In 1994, Bud Selig claimed the Brewers had lost $1.9 million the
previous season.  What he failed to reveal was that he had given
himself a $1.9 million raise...

-----

The purpose of the owners' "we're losing money" lie is to:

 1.  intimidate the players into accepting lower salaries, and

 2.  convince cities with MLB teams that they must purchase new
stadiums for each team in the league, and

3.  pay less federal and state taxes than would be otherwise due if
the team had turned a profit instead of turning a loss.

-----

The Padres will not turn a profit until the city of San Diego builds
them a new, baseball only stadium.

The Mariners will not turn a profit until they can convince the city
of Seattle to pay the cost overruns on their new stadium.

-----

If the teams want to convince me that they are really losing money,
they will make the entire contents of their books public and will
recalculate the P & L's using every possible legal accounting method,
with each calculation showing a loss.

That ain't gonna happen because they ain't losing money.

The only thing that's being lost is the truth.  The media is in on the
lie because they have a lot to gain from the Big Lie (viewers/ratings)
and because significant portions of the media have financial interests
in some of the clubs (Fox owns the Dodgers, Tribune Company owns the
Cubs, Turner Broadcasting owns the Braves, etc.)

 
 
 

Owners' Chicken Little Talk

Post by David Grabine » Sat, 04 Sep 1999 04:00:00


> The purpose of the owners' "we're losing money" lie is to:

>  1.  intimidate the players into accepting lower salaries, and

>  2.  convince cities with MLB teams that they must purchase new
> stadiums for each team in the league, and

> 3.  pay less federal and state taxes than would be otherwise due if
> the team had turned a profit instead of turning a loss.

This isn't usually an issue, because the profits have to go somewhere,
and wherever they go, taxes must be paid.  When Selig paid himself a
high salary, he paid personal income tax on that salary, reduced by the
Brewers' losses.  When Turner paid very low rights fees to the Braves
from TBS, TBS made a large profit and the Braces took a loss.

(This technique is often used by multinational corporations, who will
have a branch in a high-tax country pay artificially high prices to a
branch in a low-tax country, shifting taxable income to a place with a
lower rate.)

Depreciation is one xcpetion; owners are claiming depreciation as
allowed by tax rules only because the tax rules allow it.  Properly
audited books would calculate depreciation by accounting rules, which
(unlike tax rules) are intended to reflect the proper value of a
product.  (For example, a car purchased for $20,000 is depreciated at
$4000 a year for tax purposes; after five years, the car will probably
still be running, but as far as the IRS is concerned, it is scrap.)

--

http://www-math.bgsu.edu/~grabine
Shop at the Mobius Strip Mall: Always on the same side of the street!
Klein Glassworks, Torus Coffee and Donuts, Projective Airlines, etc.

 
 
 

Owners' Chicken Little Talk

Post by Ian Montbru » Sat, 04 Sep 1999 04:00:00


Quote:


>> The purpose of the owners' "we're losing money" lie is
to:

>>  1.  intimidate the players into accepting lower
salaries, and

>>  2.  convince cities with MLB teams that they must
purchase new
>> stadiums for each team in the league, and

>> 3.  pay less federal and state taxes than would be
otherwise due if
>> the team had turned a profit instead of turning a loss.

>This isn't usually an issue, because the profits have to go
somewhere,
>and wherever they go, taxes must be paid.  When Selig paid
himself a
>high salary, he paid personal income tax on that salary,
reduced by the
>Brewers' losses.  When Turner paid very low rights fees to
the Braves
>from TBS, TBS made a large profit and the Braces took a
loss.

>(This technique is often used by multinational

corporations, who will

- Show quoted text -

Quote:
>have a branch in a high-tax country pay artificially high
prices to a
>branch in a low-tax country, shifting taxable income to a
place with a
>lower rate.)

>Depreciation is one xcpetion; owners are claiming
depreciation as
>allowed by tax rules only because the tax rules allow it.  
Properly
>audited books would calculate depreciation by accounting
rules, which
>(unlike tax rules) are intended to reflect the proper value
of a
>product.  (For example, a car purchased for $20,000 is
depreciated at
>$4000 a year for tax purposes; after five years, the car
will probably
>still be running, but as far as the IRS is concerned, it is
scrap.)

>--


math has problems)

Close, but not quite right.  When dealing with large
corporations and holding companies revenue and expenses can
be shifted around use a variety of accounting moves.  This
enables a company to effectively hide any profit that might
be realized and thus not be taxed at all and in fact earn a
tax credit for the following year.

As for Budster giving himself a larger salary, it's smart on  
his part.  He has a lower tax rate than the corporation
(starting around 35%, roughly) and he probably has other
assets (rental property, etc.) spinning off depreciation
that he can write off.  Since an individual cannot "roll"
his depreciation, he needs this income to cover it.  

Items 1 and 2 are bonuses for the MLB clubs.  Major
corporations like Bank of America do this all the time.  It
tells cities that they're not generating the income they
should and will move to another city if they don't get tax
cuts, zoning exemptions, etc.  

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Owners' Chicken Little Talk

Post by Ron Johns » Sat, 04 Sep 1999 04:00:00


Quote:

>Paul Beeston, then president of the Toronto Blue Jays, upon being
>congratulated by the press on turning a profit of almost $2 million in
>their innaugural year, said:

>"The $2 million profit doesn't mean a thing.  By using any other
>leagally accepted accounting method I could turn that $2 million
>profit into a $2 million loss."

>(Note:  The above is not an exact quote, it is a paraphrasation of the
>statement made in "Baseball And Billions" by Andrew Zimbalist)

What's more I saw the followup interviews. Beeston was embarrassed
by all of the attention the statement drew but to his credit he
never claimed he was misquoted or that what he said was taken out
of context.

What he did say was something to the effect that maybe I should
think before making wisecracks on the public record.

At another point in one of the followup interviews he said (almost
a direct quote) of course we make money. We're drawing around 4,000,000
and if we can't make money then I should be fired.

--
RNJ

 
 
 

Owners' Chicken Little Talk

Post by Jeff Jose » Tue, 07 Sep 1999 04:00:00


Quote:



>>Paul Beeston, then president of the Toronto Blue Jays, upon being
>>congratulated by the press on turning a profit of almost $2 million in
>>their innaugural year, said:

>>"The $2 million profit doesn't mean a thing.  By using any other
>>leagally accepted accounting method I could turn that $2 million
>>profit into a $2 million loss."

>>(Note:  The above is not an exact quote, it is a paraphrasation of the
>>statement made in "Baseball And Billions" by Andrew Zimbalist)

>What's more I saw the followup interviews. Beeston was embarrassed
>by all of the attention the statement drew but to his credit he
>never claimed he was misquoted or that what he said was taken out
>of context.

I'd like to think not. After all, he *is* a licensed Chartered
Accountant. Anybody in that field knows that you can follow GAAP to the
letter and still produces different results.

----------*------------*-------------*------------*-------------*-----
Jeff Joseph. Stonecutter #59.                            

"Putting a man on a padded [toilet] seat is like putting Evil Knievel
on a moped" - Adam Carrolla, "The Man Show"              
----------*------------*-------------*------------*-------------*-----

 
 
 

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