Cardinals’ financial onion peeled back

In a Wednesday article, creatively entitled “Cards payroll is going down”, the Post-Dispatch’s Joe Strauss describes a discussion with St. Louis Cardinals chairman Bill DeWitt Jr. and provides additional supporting detail on the status of the team’s finances apparently not directly sourced from DeWitt himself.

This is an area of increasing interest to fans, especially given an off-season of reduced spending on players.

As if they were DeWitt’s talking points, I have extracted the key bullets from the article without editorial comment in the areas of 2008 and 2009 payroll, roster implications, expense/revenue last year with this year’s forecast along with ticket sales information.

2008 payroll

  • The 2008 season-opening player payroll total was $101.8 million, but included $26 million paid to players that didn’t contribute materially last season.
  • (As another reference point, USA Today ranked the Cardinals at number 11 in MLB at the start of 2008 with an opening player budget of $99.6 million.)
  • The club reasserts all 2008 in-season trades considered were not made were due to prospects demanded, not because of money limitations.
  • The 2008 end-of-season payroll was over $110 million.

2009 payroll

  • The team has committed an estimated $93.2 million to the 2009 opening-day roster. (link to P-D‘s player-by-player figures behind the total)
  • Ownership forecasts the Cardinals will rank among the top 10 or 11 payrolls in MLB.
  • DeWitt reiterated his commitment “to have a payroll commensurate with revenue”.

2009 roster

  • The two-year/$18 million offer spurned by closer Brian Fuentes was heavily backloaded. The expense assumed would probably have driven a salary dump trade of either Ryan Ludwick or Rick Ankiel.
  • Despite the uncertainty at second base, after eating the $4 million contract of Adam Kennedy, the club could not pursue free agent Orlando Hudson for financial reasons.
  • Yet the recent signing of reliever Dennys Reyes is cited as an example of the club’s financial flexibility.

2008 expense/revenue

  • Overall revenue in 2008 exceeded $200 million.
  • Expenses exceeded $150 million.
  • Operating profit was $23 to $25 million prior to servicing $17 million of stadium debt.
  • DeWitt states that any “excess” money the past few years has been re-invested in the operation.

2009 expense/revenue

  • The club is not assured of a 2009 operating profit beyond its ongoing debt service on the stadium.
  • The Cardinals are “very sensitive” to attendance due to broadcast contracts that are much smaller than large-market clubs.

Ticket sales

  • 2.7 million tickets have already been sold for the 2009 season.
  • The club will not sell 3 million tickets prior to opening day for the first time in the four years since moving into the new ballpark.
  • The worst-case scenario in which attendance only reaches 2.8 million in 2009 will be exceeded.
  • Sales are down for all-inclusive and premium-seating areas typically bought by corporations and community groups.
  • The club is projecting 3 million in attendance (which would be down 14% from the 3.43 million achieved in 2008).

All-Star Game impact

  • The Cardinals will receive no direct revenue from the All-Star week activities.
  • The 90 percent renewal rate among season-ticket holders to date is expected to grow to 92-93% based on fan interest in All-Star Game tickets.

OK, folks. There you have it. The Cliff’s Notes version of the Post-Dispatch article.

I am going to withhold my comments as I am interested in what you think. Does it make sense? Does the story hold together or is it just a shell game?

Does it matter what the team makes or spends as long as they are competitive? Should the owners have to disclose their finances in an attempt to maintain/restore the confidence of their fan base? How much profit is fair?

What do you think?