Pirates President Defends Team's Finances In Rare Inside look

Coonelly Says All Of Pirates' Profit Channeled Back Into Baseball

Pirates President Frank Coonelly last week said that the team has made "less than $11[M] in profit over the past two years, and all of that was channeled back into baseball," according to Dejan Kovacevic of the PITTSBURGH POST-GAZETTE, in part one of a two-part look at the team's finances. Coonelly who "broke from the team's long-standing policy of not discussing finances," said that the Pirates "put all their profit in that span toward $11[M] in baseball-related capital investments and, even then, needed to incur additional debt to cover the rest of the amount." The capital investments included a $5.4M baseball academy in the Dominican Republic, $2M toward the renovation of the Pirate City complex in Bradenton, Florida, and the recent purchase of the Single-A Florida State League team in Sarasota, which will relocate to Bradenton. Coonelly: "The Pirates utilize every dollar we receive in our effort to build a winning club." Kovacevic noted an annual profit of $5.5M would be considered "marginal in professional sports," and it would be "well below the most prominent published estimates, made each year by Forbes." Coonelly "described the Pirates' formula for calculating their profit," saying that the "first figure is operating income." Coonelly "would not divulge that figure for either year but characterized the 2009 figure as 'significantly' lower than" $14M. Next, "any cash paid on debt is subtracted." Coonelly said that for the Pirates, the "cash paid on debt -- roughly $6.5[M] each of the past two years -- has covered nothing more than interest charges on debt of a little more than" $100M. The Pirates "have made no payments on the debt's principle the past two years and, in fact, the debt has increased slightly because of those capital investments." Coonelly added that "no ownership dividends have been paid the past two years, and no money divested to outside ventures."

SETTING THE RECORD STRAIGHT: Kovacevic noted MLB's national monies are distributed annually in two forms, the Central Fund and revenue sharing. The Pirates' Central Fund check for the '09 season was $30M, and the revenue-sharing check was $36M. The $66M total is 12% below the $75M figure reported in an August 16 N.Y. Daily News story, and about 30% below MLB player agent Scott Boras' estimate that small market teams are receiving around $80-90M. The N.Y. Daily News report also indicated that the Pirates "would make a $14[M] profit in 2009," but Coonelly said the figure is "significantly higher than even our operating income before interest is paid and far, far higher than our income after interest." Kovacevic noted the Pirates have "what is considered a good local broadcasting contract for Pittsburgh's size," at roughly $15M, so they have $81M "before any ticket sponsorships or other PNC Park revenues are counted." But "all MLB teams also have expenses above major league payroll, generally in the range" of $50-60M. Coonelly "made clear throughout his interviews that he wished public attention would turn away from the Pirates' finances." Coonelly: "I think it receives far more attention than it deserves, quite frankly. What should be the focus is: Are we making good, sound baseball decisions?" (PITTSBURGH POST-GAZETTE, 12/7).

Pirates Have Spent $18.7M On Past Two Drafts

PROFIT GOING BACK INTO TEAM: Kovacevic in part two today notes Coonelly is "adamant" that the Pirates' profit is not going "in the owners' pockets or in any of controlling owner Bob Nutting's other business ventures." Coonelly: "What is critical for the Pirates' fans to know is that we are investing all available resources from our operations, whether local or national, back into the club in our effort to return a winning baseball team to the city of Pittsburgh." The Pirates "maintain that neither Nutting ... nor anyone in the ownership group has been paid dividends related to the past two years," and "neither has Nutting drawn any salary." But "not all of the minority owners are pleased," as one "described a meeting several months ago in which the minority owners were denied distributions to cover taxes they owed on the team." Some owners "promptly left the room," but Nutting and other Pirates officials "stressed that, despite this incident, there is no disharmony in the ownership group." Meanwhile, Coonelly said that "several baseball operations expenses were boosted in the past two years." The Pirates spent $18.7M on the past two drafts, up from $10.4M the previous two years, and "overall player acquisition costs in the draft and international signings increased" 70% since '07. Kovacevic reports the Pirates' payroll for the '10 season "currently projects" to $34M, which "might represent the new bottom" in MLB (PITTSBURGH POST-GAZETTE, 12/8).

HOLDING THE LINE: The Pirates yesterday announced that they will again freeze prices for season-ticket packages in '10, marking the eighth consecutive season the team has gone without a season-ticket price increase. The franchise will bring back the four Full Season Value Plans and will add a Half Season Plan. Also new this year are an extended payment plan option and kids-priced tickets for fans 14 and under (Pirates). The POST-GAZETTE's Kovacevic notes the eight consecutive seasons without an increase mark the "longest such streak of any MLB team." The Half Season Plan "encompasses opening day, all Friday-Sunday games and the interleague series against" the White Sox (PITTSBURGH POST-GAZETTE, 12/8).