Fishy Finances

A close inspection of the Marlins' accounts shows Wayne Huizenga trashed the team and made a bundle

Adding the $2.1 million in lost cable revenues to the $38 million in lost stadium revenues brings the total earned by -- but not credited to -- the Marlins in 1997 to $40.1 million. But that's not the end of it. Smiley's prospectus suggests "other" revenues of $10 million. No details are provided. In 1997 the Marlins beat the Indians in the seventh game of the World Series. The Indians reported net postseason ticket revenues of $6.8 million. Presumably this is part of the "other" $10 million for the Marlins.

Then there is roughly $2 million that comes from Major League Baseball Properties as licensing and sponsorship income. This leaves only $1.2 million for all "other" sources of revenue: roughly fifteen preseason games at the Marlins' publicly financed spring-training ballpark; special functions; net income from the team store in Fort Lauderdale (since closed) and so on. Finally, in the "Private Placement Memorandum" Smiley reports that he intends to lower general and administrative expenses by $3 million per year, suggesting there is that much padding in the current budget.

In short, if the Marlins' financial statement is adjusted for related-party transactions and bloated costs, what appears to be a $29.3 million operating loss in 1997 becomes an operating profit of $13.8 million (adding $40.1 million in additional revenues and $3 million of bloated costs). Why else would Don Smiley, who as team president knows its financial predicament as well as anyone, have wanted to buy the team?

Why does Huizenga want to sell a profitable team? Perhaps the same reason he sold Blockbuster to Viacom: He can get a good price for it with a nice capital gain and he can control the terms of the deal to benefit his other holdings, including Sportschannel and the Pro Player Stadium corporation. Further, Huizenga has owned the Marlins since 1993 and has by now used up his player amortization allowance (a tax benefit that allows an owner to set aside up to 50 percent of franchise value and then depreciate this sum, usually over five years). Thus the substantial tax-shelter value of the club is exhausted.

Meanwhile the team finished the 1998 season with a payroll of $13 million. Seven million of this was from the insured contract of pitcher Alex Fernandez, who was on the disabled list all season. As such, the insurance company was responsible for at least 70 percent of the $7 million, so the actual payroll disbursements for the 1998 Marlins were probably less than $10 million.

With average attendance at Pro Player down from 29,555 in 1997 to 22,157 in 1998, ticket revenue fell by around $6 million. Auxiliary stadium income also took a proportional hit, but the player payroll was down by more than $40 million -- more than offsetting lower stadium income. Huizenga's Marlins were more profitable losing in 1998 than they were winning in 1997.

Andrew Zimbalist is an economics professor at Smith College. This article first appeared in the New York Times Magazine.

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