The Detroit Tigers Have Money Issues

What do we really know about the Detroit Tigers’ finances?

A Monday morning tweet by Detroit News scribe Chris McCosky led to a minor uproar among Detroit Tigers fans on Twitter.

While a few fans agreed with this take, most cried foul and immediately pointed to the wealth of Detroit Tigers owner Chris Ilitch. McCosky was accused of being a mouthpiece for the team, and his metaphor was given the full Krusty Burglar treatment.

I’m as prone to emotional outbursts as any other sports fan, but it’s always best to try to stick with facts when we can. So let’s take a look at what we do and don’t know about the Detroit Tigers, their finances, and baseball revenues in general.

First, here are some things we DON’T know:

• How much money the Detroit Tigers lost or made in 2020.
• What the team’s budget looks like for 2021.
• What Detroit’s off-season operating expenses are.
• How many games teams will play in 2021.
• How many fans will be willing/allowed to attend games in 2021.
• What baseball will look like in 2022 and beyond.

With the Covid-19 pandemic truncating the 2020 season, and contentious collective bargaining agreement negotiations looming after 2021, it’s understandable if teams are a bit uncertain about the future of their profits. It would definitely help fans and players to know exact financial numbers, but most teams are privately owned, and it’s in those owners’ best interests to keep that data private.

Now, let’s look at a few things we KIND OF know:

Reports about national and local television deals in sports almost always mention approximations. We never really get the exact details, so we can’t be sure about all the figures, but we get some pretty strong estimates. For example, we know national TV networks pay Major League Baseball about $1.5 billion a year.

In 2012 ESPN agreed to pay MLB $5.6 billion over eight years, or $700 million per year through the 2021 season. The official press release doesn’t mention money.

This article from 2018 tells us FOX agreed to extend their deal with MLB, paying $5.1 billion over seven years from 2022 to 2028. They currently pay MLB about $500 million a year, but that will jump to $728 million in 2022. The official story on MLB.com does not mention the dollar amounts.

Then this summer, right around the time some owners complained about losing “biblical” amounts of money, reports surfaced about MLB reaching a new deal with Turner Sports. In September the New York Post pinpointed the figures at $3.745 billion, or $535 million a year, beginning in 2022. That’s a substantial increase from their current $325 million deal.

That $1.5 billion per year breaks down to about $50 million annually per MLB team, but when those new deals kick in — and we haven’t seen what ESPN might do — MLB is looking at about $1.9 billion a year in national TV revenue, or $65 million per team, annually.

That doesn’t even touch on local TV revenue. FanGraphs updated their estimates of local TV money last April, and they projected the Detroit Tigers to make $64 million from local TV in 2020.

It’s likely some of this TV money was affected by the pandemic as well. National TV may have been able to make up for it with more weekly broadcasts and the expanded playoffs, but local TV almost certainly took a hit. If we prorate that $64 million for the shortened season we get about $23 million.

So, it looks as if the Detroit Tigers would have made as much as $114 million in 2020 from TV contracts alone in a regular season, but it could be more like $80 million.

Craig Edwards at FanGraphs also did an excellent piece on the Atlanta Braves, the only franchise that releases financial data. Edwards found that the Braves, who have local TV revenue of about $86 million (prorated to $32 million) and paid about $58 million in prorated salaries, still made about $6 million during the third quarter, which coincides with the baseball season.

Again, that doesn’t account for off-season expenses, and Edwards estimates the Braves lost about $65 million for the year, before any tax-related gymnastics. But he also makes a strong point about financial gains in the previous year:

Some teams might have lost more than the Braves and some teams might have lost less, but that doesn’t mean we should ignore prior gains. From the beginning of 2019 to the end of 2020, the Braves are down a total of just $11 million. Since the start of 2018, with the same fourth quarter assumption, they are up by a total of $83 million. If the Braves are like the rest of baseball, then MLB has generated around $2.5 billion in adjusted operating income over the last three years despite the pandemic and a shortened season.

Finally, let’s look at the things we DO know about the Detroit Tigers:

• Al Avila took over as General Manager in August 2015.
• In his first winter as GM, under owner Mike Ilitch, Avila signed free agents to deals totaling about $272 million.
• Detroit’s 2016 Opening Day payroll was roughly $198.5 million.
• Chris Ilitch assumed control of the Tigers in February 2017.

Below you’ll see Detroit’s Opening Day payrolls since:

A quick note here. In 2018, Crain’s Detroit projected the Detroit Tigers payroll would be completely covered before a single ticket was sold, thanks to local TV money, revenue sharing, and a one-time $50 million share of the profits from the sale of BAMTech to Disney.

• Since 2017 the Tigers have spent roughly $46 million total on MLB free agents…about $11.5 million per offseason.
• From 2016-2020 the Tigers produced a .403 winning percentage.
• Baseball America ranked the Tigers farm system 26th in 2016.
• They rank the farm system 6th now.
• In July 2019 Al Avila was signed to a multi-year extension.
• The Tigers received $0 in ticket revenue in 2020.
• Ilitch Holdings reportedly paid employees through September, but then announced a series of layoffs and furloughs.

Those are the facts we have. There are some non-trivial financial aspects we didn’t cover, including revenue sharing, staffing costs, stadium maintenance, and draft bonuses, but TV revenue and player salaries seem like the most important points to discuss.

It’s enough information to make an awful lot of assumptions about Chris Ilitch, Al Avila, and the future of the Detroit Tigers, but we have to refer back to the first bullet points in this piece. We just don’t know enough about the team’s finances.

McCosky’s tweet, while certainly overwrought, probably holds some truth to it. The Detroit Tigers are used to making money, but they almost certainly lost money in 2020. Chris Ilitch owns the team, and it’s his right to be concerned about money in 2021, and have those concerns reflected in the team’s spending this offseason. And as fans, you have every right to hate that.