The Pirates do not, as a rule, divulge their finances. Not even when a third-string shortstop signs a contract.
But one dollar figure always is available to the public through other means, and that is, perhaps, the most relevant one for a team in jeopardy of a 13th consecutive losing season:
The player payroll of $33.6 million is second-lowest in Major League Baseball.
This is no radical departure, of course. The Pirates have been at or near the bottom of that scale most of the past decade.
The difference now is that only three teams — the Pirates, Kansas City Royals ($36.9 million) and Tampa Bay Devil Rays ($29.7 million) — are below $40 million this season. Only five others are below $55 million. The Pirates’ payroll is less than half the average of $73 million.
Where once the Pirates could point to a wide array of have-nots and primarily blame economics for their annual failures, they are increasingly stark in their isolation.
And that raises three fresh questions this year:
Why did the Pirates’ payroll increase by only $1.4 million from 2004 while two teams in similar markets, Milwaukee and Cincinnati, increased theirs by more than 30 percent?
Why has the dramatic upswing in national revenues being distributed by MLB to the Pirates made little visible impact?
What is the Pirates’ ownership doing with the profit it made last year and the profit it anticipates this year if it is not spending it on the players?
A Post-Gazette analysis of the team’s finances — compiled over the past two months with the help of sources familiar with the finances of the Pirates and other teams, sports economists and trade publications — projects that the Pirates will make a $12.8 million profit in 2005. That is before debt payments, interest and taxes, and it is assuming no additional money spent on players.
The average team last season made a profit of $4.4 million, according to Forbes magazine’s annual survey.
Kevin McClatchy, the Pirates’ managing general partner, is adamant that the ownership group is following a prudent business course and that it is not pocketing profits.
He said the team has chosen to apply most of that profit toward a debt that is estimated by knowledgeable sources at $110 million. The rest, he added, is being used for capital projects such as the $2 million scoreboard the Pirates bought for PNC Park this year.
“Revenue sharing has enabled teams to put more money into player payroll. But the fact is, a lot of them are not doing that,” said Andrew Zimbalist, noted author and professor of economics at Smith College in Northampton, Mass. “You could be paying off debt. You could be paying front-office people. You could be expanding your facilities. Or you could be taking profits. That’s what’s happening in some places, and I wouldn’t be surprised if McClatchy was doing it.”
Allen Sanderson, economist at the University of Chicago who studies baseball’s inner workings, said low-spending teams now can find a way to profit from being losers, thanks to revenue sharing.
“You have owners who are doing the right thing and making their teams better, and you have owners at the other end,” he said. “You could have an owner who says, ‘Hey, I can go to the bar and put nine drunks out on the field and maximize my profit.’ Even a bad baseball team wins 40 percent of its games. Why should he spend an extra $50 million to win that extra game or two each week?”
Sanderson made clear he was pointing to the Pirates.
“It’s conceivable that somebody could just market the ballpark as having nice views of Downtown, great food and giveaways. At that point, if you can sell that, the quality of the team might not matter at all. It might not be what the fans or taxpayers of Pittsburgh want, but it’s lovely from the ownership standpoint.”
In December, the Post-Gazette asked McClatchy if the Pirates had spent all of their 2004 revenue-sharing money in the minor-league system. Clearly, it was not used to boost the major-league payroll, which had decreased.
“No, we didn’t pour all of it into the system,” he replied. “We have spent more there than we had. Much more. But we’re also trying to get the team back afloat, to balance the ship with our debt.”
Paying debt is not one of the permissible uses of revenue-sharing money. McClatchy has since denied using that money to address debt.
“We are in full compliance with all regulations,” he said.