Mike Ilitch gone now Chris Ilitch possibly selling the Tigers?

[kalinecountry]

http://www.crainsdetroit.com/articl...es-might-sell-the-detroit-tigers-and-why-they
Analysis: Why Mike Ilitch or his family might sell the Tigers ? and why they might not.
Crains Detroit

Interesting read. Taxes, Debt and Expenditures, Delaying tactics, possible New Owners, Sales Price.

 

[Mitchrapp]

Good find. That was a good read.

 

[tomdalton22]

"Martha Ford, owner of the Detroit Lions since inheriting them last year, is out because the NFL prohibits cross-ownership with other sports leagues."

THANK GOD!!

 

[Mitchrapp]

"Martha Ford, owner of the Detroit Lions since inheriting them last year, is out because the NFL prohibits cross-ownership with other sports leagues."

THANK GOD!!

In fairness she's not to be blamed for the Lions problems. Plus even if cross-ownership in the NFL was allowed at 90 I think she'd be out.

 

[swami45]

If they did sell, two of the most likely names would be Dan Gilbert and Mark Cuban. Which wouldn't be a bad thing

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[tomdalton22]

If they did sell, two of the most likely names would be Dan Gilbert and Mark Cuban. Which wouldn't be a bad thing

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Gilbert out because he owns 5 casinos.

 

[kingofdetroit57]

I don't think they are selling any time soon. They are doubling down on the area around the stadiums and casino, which should help to increase the value of all their holdings in that area. I'm expecting that they'll go the trust route with Chris Ilitch taking over once Mr. I is gone. The team has done nothing but appreciate and make them boatloads of cash, and should continue to do so for years and years. They aren't hurting for money, so there is no compelling reason to divest now.

 

[Mitchrapp]

I don't think they are selling any time soon. They are doubling down on the area around the stadiums and casino, which should help to increase the value of all their holdings in that area. I'm expecting that they'll go the trust route with Chris Ilitch taking over once Mr. I is gone. The team has done nothing but appreciate and make them boatloads of cash, and should continue to do so for years and years. They aren't hurting for money, so there is no compelling reason to divest now.

Mr. I wants that WS title, not sure his son has the same desire. I could easily see them selling down the road. I don't have any numbers but I doubt the Tigers are making boat loads of cash.

In 2013: Forbes: Tigers value up 35%, but still losing money.

 

[kingofdetroit57]

Mr. I wants that WS title, not sure his son has the same desire. I could easily see them selling down the road. I don't have any numbers but I doubt the Tigers are making boat loads of cash.

In 2013: Forbes: Tigers value up 35%, but still losing money.

They may occasionally "lose money" in a given season (which I still doubt when all factors are included) on paper, but the value of the franchise continues to appreciate at a high rate. He bought the team for $82mil in 1992 and it is worth more than 13x that amount now according to Forbes.

 

[tomdalton22]

They may occasionally "lose money" in a given season (which I still doubt when all factors are included) on paper, but the value of the franchise continues to appreciate at a high rate. He bought the team for $82mil in 1992 and it is worth more than 13x that amount now according to Forbes.

losing money yearly takes it's toll on the franchise...not in the worth of the franchise but putting money back into the minor league system. Rebiv has made some really good points on this topic many times.

 

[Mitchrapp]

They may occasionally "lose money" in a given season (which I still doubt when all factors are included) on paper, but the value of the franchise continues to appreciate at a high rate. He bought the team for $82mil in 1992 and it is worth more than 13x that amount now according to Forbes.

The franchise going up in value, while still losing money each year is the reason why someone would sell. And it's not occasionally.

 

[kingofdetroit57]

losing money yearly takes it's toll on the franchise...not in the worth of the franchise but putting money back into the minor league system. Rebiv has made some really good points on this topic many times.

They don't lose money yearly, and quite honestly I don't believe that they ever lose money when you bring in TV and radio deals, league profit sharing, merchandising and licensing deals, etc. As for a lot of this investment, don't forget that some of it has been taxpayer funded and some has been financed. The financed part goes into operating expenses where you can show a loss on paper.

Related to this... Mr. I paid $9mil for the Red Wings in 1982 and they are worth over $570mil according to Forbes. So, between the Tigers and Red Wings, his initial investment of $91mil is now worth almost $1.7B. Not a bad rate of return.

 

[Mitchrapp]

They don't lose money yearly, and quite honestly I don't believe that they ever lose money when you bring in TV and radio deals, league profit sharing, merchandising and licensing deals, etc. As for a lot of this investment, don't forget that some of it has been taxpayer funded and some has been financed. The financed part goes into operating expenses where you can show a loss on paper.

Related to this... Mr. I paid $9mil for the Red Wings in 1982 and they are worth over $570mil according to Forbes. So, between the Tigers and Red Wings, his initial investment of $91mil is now worth almost $1.7B. Not a bad rate of return.

Franchise value has no barring on loss of revenue. And it is every year btw. Mid market club who spends large market money. And every year we always seem to be paying for someone no longer on team.

 

[Mitchrapp]

I think we still owe Sheffield money for 4 more years.

 

[Rebbiv]

They don't lose money yearly, and quite honestly I don't believe that they ever lose money when you bring in TV and radio deals, league profit sharing, merchandising and licensing deals, etc. As for a lot of this investment, don't forget that some of it has been taxpayer funded and some has been financed. The financed part goes into operating expenses where you can show a loss on paper.

Related to this... Mr. I paid $9mil for the Red Wings in 1982 and they are worth over $570mil according to Forbes. So, between the Tigers and Red Wings, his initial investment of $91mil is now worth almost $1.7B. Not a bad rate of return.

You are so misguided. Their losses over the years include ALL revenue and all liabilities, not just player salaries. Financials are reportable to the IRS and are now public record.

Franchise value is the equivalent to home value. Because someone bought a house in 1982 for $9,000 and it is now worth $570,000 is hardly any indication. What is the median of all homes in the area? Does that home need a new roof, furnace, etc, etc any time soon? Winning adds to the value. Expect the Tigers franchise value to take a hit this year.

 

[swami45]

If they did sell, two of the most likely names would be Dan Gilbert and Mark Cuban. Which wouldn't be a bad thing

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Don't see how he could be out when he cam just transfer the casinos over in his wife's name.

How different is that than Motor City Casino being in Marian Illitch's name?

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[kingofdetroit57]

You are so misguided. Their losses over the years include ALL revenue and all liabilities, not just player salaries. Financials are reportable to the IRS and are now public record.

Franchise value is the equivalent to home value. Because someone bought a house in 1982 for $9,000 and it is now worth $570,000 is hardly any indication. What is the median of all homes in the area? Does that home need a new roof, furnace, etc, etc any time soon? Winning adds to the value. Expect the Tigers franchise value to take a hit this year.

The articles claiming the Tigers are losing money only cite a negative operating income, which is an approximated EBITDA number from those who aren't inside the organization. If you know what EBITDA is and how it is used in M&A to put rough values on businesses, you should understand that it is far from telling you the whole story. It is easy to have a negative operating income in a given year (or a couple years) if you are investing in the business. In this case, that can be facilities, player salaries, etc. However, that investment in the business also increases the value of the business, which isn't something that shows up on the single year snapshot of finances. In the case of the Tigers, the value of the franchise grew from $643mil to $1.125B between 2013 and 2015. So, please explain to me again why one or two -$20mil operating loss years that they may or may not have really had was bad, particularly for a multi-billionaire who doesn't need to pull money out of the business to live.

 

[Thumb]

I don't think they are selling any time soon. They are doubling down on the area around the stadiums and casino, which should help to increase the value of all their holdings in that area. I'm expecting that they'll go the trust route with Chris Ilitch taking over once Mr. I is gone. The team has done nothing but appreciate and make them boatloads of cash, and should continue to do so for years and years. They aren't hurting for money, so there is no compelling reason to divest now.

When I read this thread yesterday I knew a post like this would come.

That someone would argue that money is not an issue, or that Mr. I will spend whatever it takes, team makes tons of money, etc.

Even when most of it has been proven wrong.

 

[Rebbiv]

The articles claiming the Tigers are losing money only cite a negative operating income, which is an approximated EBITDA number from those who aren't inside the organization. If you know what EBITDA is and how it is used in M&A to put rough values on businesses, you should understand that it is far from telling you the whole story. It is easy to have a negative operating income in a given year (or a couple years) if you are investing in the business. In this case, that can be facilities, player salaries, etc. However, that investment in the business also increases the value of the business, which isn't something that shows up on the single year snapshot of finances. In the case of the Tigers, the value of the franchise grew from $643mil to $1.125B between 2013 and 2015. So, please explain to me again why one or two -$20mil operating loss years that they may or may not have really had was bad, particularly for a multi-billionaire who doesn't need to pull money out of the business to live.

First, Forbes magazine is a very reputable source. I will believe their conclusions long before some wannabe financial hack on a message board.

And Operating Income is equivalent to EBIT, and just that. Few use EBITDA, unless they are trying to make the point you are trying to make. And based on your reasoning, and all that infusion of money into infrastructure, the Tigers now have a better farm system and facilities will not need upgrading anytime soon, right?

Listen, of all 30 MLB Teams, DET has the worst operating income over the last 7 years with -$90.1 Mil. The next worst is PHI, at -$31.1 Mil and they are still trying to recover from their lopsided payroll. The average operating income is $108.5 Mil, with 17 teams above $100 Mil. Only 3 MLB teams had a negative operating income over the last 7 years and DET leads the list. Why is that, because they did not spend more money than any other team on infrastructure or the farm system. I will reiterate, DET is $198 Mil below average over the last 7 years. That is $28.2 Mil below average, per year for operating income.

As far as franchise value, the average value is $1.2 Bil. DET, at 13th with $1.125 Bil is pretty much average. There are 15 teams whose value is at or above $1.0 Bil. The correlation to franchise value increase and winning can be made. Any other correlation is speculative without granularity. The average value increase since 2009 in 60%. DET is at 67%. 17 teams are at or over 60%. So again, there is not much difference to the norm. MLB values are increasing across the board. DET isn't doing anything special other than winning the last 5-7 years to increase their value above the norm.

TOP 4
SFG 76.5%
LAD 69.9%
WSN 68.3%
PIT 68.0%

Bottom 4
NYM 32.4%
HOU 44.4%
TBR 48.8%
CLE 51.6%

And the thing about franchise value, it is like a home appraisal. It is what the market says it is worth. You can have a $10 Mil home and try to sell it and get only $5 Mil. And in some cases, two people might like it so much, they outbid each other and pay $15 Mil. You never know. Valuations are only good if you are borrowing against it or for taxation. Businesses and home owners are not looking for ways to overvalue their asset unless it benefits them. Certainly not when it comes to taxes.

 

[kingofdetroit57]

First, Forbes magazine is a very reputable source. I will believe their conclusions long before some wannabe financial hack on a message board.

And Operating Income is equivalent to EBIT, and just that. Few use EBITDA, unless they are trying to make the point you are trying to make. And based on your reasoning, and all that infusion of money into infrastructure, the Tigers now have a better farm system and facilities will not need upgrading anytime soon, right?

Listen, of all 30 MLB Teams, DET has the worst operating income over the last 7 years with -$90.1 Mil. The next worst is PHI, at -$31.1 Mil and they are still trying to recover from their lopsided payroll. The average operating income is $108.5 Mil, with 17 teams above $100 Mil. Only 3 MLB teams had a negative operating income over the last 7 years and DET leads the list. Why is that, because they did not spend more money than any other team on infrastructure or the farm system. I will reiterate, DET is $198 Mil below average over the last 7 years. That is $28.2 Mil below average, per year for operating income.

As far as franchise value, the average value is $1.2 Bil. DET, at 13th with $1.125 Bil is pretty much average. There are 15 teams whose value is at or above $1.0 Bil. The correlation to franchise value increase and winning can be made. Any other correlation is speculative without granularity. The average value increase since 2009 in 60%. DET is at 67%. 17 teams are at or over 60%. So again, there is not much difference to the norm. MLB values are increasing across the board. DET isn't doing anything special other than winning the last 5-7 years to increase their value above the norm.

TOP 4
SFG 76.5%
LAD 69.9%
WSN 68.3%
PIT 68.0%

Bottom 4
NYM 32.4%
HOU 44.4%
TBR 48.8%
CLE 51.6%

And the thing about franchise value, it is like a home appraisal. It is what the market says it is worth. You can have a $10 Mil home and try to sell it and get only $5 Mil. And in some cases, two people might like it so much, they outbid each other and pay $15 Mil. You never know. Valuations are only good if you are borrowing against it or for taxation. Businesses and home owners are not looking for ways to overvalue their asset unless it benefits them. Certainly not when it comes to taxes.

You know nothing about me, my education, or my background, so cool it on the insults.

If you bothered to look at the Forbes data, you'd realize that negative number you are fixated on is exactly what I said it was.

http://www.forbes.com/teams/detroit-tigers/

See footnote 3 at the very bottom of the page where it says that the -$20.7mil operating income is EBITDA. As you typically do though, feel free to keep grandstanding.

As for the "cash infusions", as I already explained, any capital investment back into the business can contribute toward a negative operating income. That could be money into the facilities (e.g., the big shiny new scoreboard in LF or paying ahead on the mortgage), salaries (e.g., signing big name players who sell more jerseys, make the team more competitive/interesting and also put butts in the seats), or any number of other things. At the end of the day, that investment is hopefully a wise one that results in an increased franchise valuation. According to Forbes, it clearly has, as the value of the organization has nearly doubled between 2013 and 2015.

In basic terms, it takes money to make money and sometimes it is beneficial to show a short term operating loss if that's driven by investment into operations. If that's wise or not often depends on the objective and the duration of the investment. If you are in it for the long term, it makes sense to spend money on improving facilities, fielding a competitive and interesting team, paying down/off debts, etc., because it increases interest in the team. That typically means higher ticket sales, concessions, and merchandise, more lucrative media and licensing deals, etc. All stuff that boosts the value of the organization and will soon go toward increasing revenue, and hopefully margins. I believe the Tigers are doing all of these things based on what I see and hear from them, but what do I know? You clearly have it all figured out, so keep on preaching and we'll just sit back and soak up all the wisdom.