2K21 - Houston Astros

[Judge Jude]

As I noted earlier, the whole Forbes sports biz blog-o-sphere is this way, I think. left hand, meet right hand.

The Brown piece is very good, and I too wonder if the owner will truly ramp up spending once the team improves. But we can't assume a negative before it happens, either.

[TranaGreg]

This is all fairly bizarre - original forbes writer Dan Alexander doesn't seem to check with a co-worker who has written about the owner of the Astros before (Forbes can't have that many writers, can they?). Alexander proven wrong on a bunch of facts. Alexander doesn't write a retraction, but instead, a co-worker writes another piece refuting his piece, and, while his co-worker Maury Brown is clearly right, it doesn't look like Brown interviewed Alexander for his article!

An interesting technique for increasing readership perhaps ...

[Kevin Seitzer]

This is all fairly bizarre - original forbes writer Dan Alexander doesn't seem to check with a co-worker who has written about the owner of the Astros before (Forbes can't have that many writers, can they?). Alexander proven wrong on a bunch of facts. Alexander doesn't write a retraction, but instead, a co-worker writes another piece refuting his piece, and, while his co-worker Maury Brown is clearly right, it doesn't look like Brown interviewed Alexander for his article!

The writer of the original article, Dan Alexander, is an intern at Forbes. However that may play into the dynamics of the situation, I don't know. Maury Brown is not a full-time employee of Forbes, either. As far as I know, he is an occasional columnist there on the business of baseball. He runs his own website covering the business of baseball.

[Judge Jude]

Brown is a contributor, yes.

[dslaw]

"Grossly inaccurate". I guess they don't have any fact checking at all, just write something and then print it. Sorry Seitzer but I guess you won't be getting that big raise.

[Kevin Seitzer]

Now Dan Alexander writes a response and talks about some of the variables involved.

http://www.forbes.com/sites/danalexander/2013/08/29/can-houston-astros-really-be-losing-money-despite-rock-bottom-payroll/

[Judge Jude]

Ozanian from Forbes also is backing the kid in the comments section at bottom

[Judge Jude]

if you want a peek behind the curtain of how the Forbes blog works...

http://www.poynter.org/latest-news/regret-the-error/222642/why-news-orgs-need-to-make-it-easier-for-readers-to-distinguish-between-staffers-contributors/#.UiJdtF7LyTs.twitter

[RSF]

As suggested a couple pages ago, this really comes down to operating vs net income--as Ozanian makes clear in the comments. There's quibbles about the variables (and appears Alexander did make some mistakes on some of them, as does Brown and others) but ultimately Alexander's story stands up as to operating income being huge; Brown misses some of the income categorization issues but effectively just says "I would analyze as net income" which is fine, but not what the original article sought to do.

Brown's article really attacks the suggestion that the Astros are cheap---which, to me, is not a strong part of Alexander's piece either. That's different than the fundamental economics, which Brown actually substantially agrees with Alexander about in spite of the wording. Given that he doesn't seem to really understand the difference between those accounting concepts Brown's article is kind of rich.

[Kevin Seitzer]

As suggested a couple pages ago, this really comes down to operating vs net income--as Ozanian makes clear in the comments. There's quibbles about the variables (and appears Alexander did make some mistakes on some of them, as does Brown and others) but ultimately Alexander's story stands up as to operating income being huge; Brown misses some of the income categorization issues but effectively just says "I would analyze as net income" which is fine, but not what the original article sought to do.

Given that the truth has now come out that the Astros haven't gotten any TV rights payments for the last three months, and in fact have been kicking in cash to keep the RSN out of bankruptcy, Alexander's estimate that the Astros are raking in $80 million from the RSN this year is exposed as completely and absolutely ridiculous.

[RSF]

Given that the truth has now come out that the Astros haven't gotten any TV rights payments for the last three months, and in fact have been kicking in cash to keep the RSN out of bankruptcy, Alexander's estimate that the Astros are raking in $80 million from the RSN this year is exposed as completely and absolutely ridiculous.

When you say it is 'ridiculous' I can only conclude that either you haven't read what's been posted in this very thread and the links within it, or you don't understand it Either way, Alexander is not really the problem (even though I have some relatively minor quibbles with his approach).

First, operating income for the baseball operation only (which is what Alexander has always said he is reporting and basing his comments on) is different than you seem to think it is. If you don't have your arms around those differences, you are not going to understand what he wrote and why.

The Astros, by all descriptions, are owed an average of $80 mil in rights payments by the RSN. That is what is reported in the approach Alexander took. As I noted previously, and he notes in his supplemental article, there's an accounting question about whether the better approach is to use average over the whole deal or a true year-one payment. But that's a relatively small part of the total and gets us nowhere near 'ridiculous' (and the only reason we don't have more specificity on this is the team hasn't shared it). This is a CBA matter and it's not really open to the kind of interpretation you and Maury Brown suggest.

One distinction I think you are missing is the team as a standalone entity is not the same as the ownership that controls multiple entities, including the baseball team and the RSN. As Alexander notes in his supplement, the team may be losing money as an owner of the RSN (not as a baseball operation). Or it may not be; there's ambiguous reporting there. However more importantly, the ownership losing money on their RSN invesmtnet has nothing to do with projecting the baseball team's operating income, because the baseball team is entitled to the $80 mil payment (or whatever the true year one number is) either way. To put it bluntly, if the owners made made a crappy investment decision in a separate entity (the RSN---which appears to be the case) that impacts the owner's cash flow, but doesn't change what the baseball team itself should have available. That's not the only way to analyze the economics, but it's one approach that people take, and it is the one Alexander said very clearly in the initial article he was using.

As Alexander notes, the team could be realizing less than the reported $80 mil (or the year-one payment under the deal) if there's actually a default by the RSN. That may or may not have happened; it's a different question than whether an undercapitalized entity is making a cash call on its owners anyway and it's not relevant to the operating income assessment. It is, of course, highly relevant to the cashflow and thus (as I noted before) I don't like Alexander's insinuation about the team being 'cheap'.

I encourage you to read Ozanian's comments to Alexander's second article; I think he does a nice job of explaining the difference between what Alexander reported and what you and Maury Brown seem to think he reported (incorrectly, I am afraid).

[chancellor]

When you say it is 'ridiculous' I can only conclude that either you haven't read what's been posted in this very thread and the links within it, or you don't understand it.

LOLOLOL. Holy &*(%, that was funny. KS, gosh, I guess you just don't understand the 'Stros organization.

[Bob Kohm]

RSF, there are days when it pays to be a long time regular here. For you, this would have been one of them. Suffice it to say that from time to time on the Internet you never know who may be behind a screen name.

[RSF]

As I noted on the prior page, I know who he is and where he works. And in which part of the organization (which is not the finance group).

Being around a long time is nice---knowing what one is talking about is usually better, though.

[YourPalChrisMal]

RSF, there are days when it pays to be a long time regular here. For you, this would have been one of them. Suffice it to say that from time to time on the Internet you never know who may be behind a screen name.

Wait...I thought he was really Kevin Seitzer?! LOL.