Tuesday morning was a flurry of fan shock as readers took in the Forbes.com story entitled "2013 Houston Astros: Baseball's Worst Team is The Most Profitable In History." Rebuttals came quickly from Reid Ryan, president of baseball operations for the club, as well as from owner, Jim Crane.
Here at Crawfish Boxes, our own economist, clack, gave us a nice overview of the flaws in that story and why he would be hesitant to believe the picture painted by Dan Alexander of Forbes.com. In addition, the public outcry about the team making money while the fans suffered through multiple 100+ loss seasons was loud.
It looks like much of what clack shared with us was right on point. This morning, Maury Brown, who covers the business of baseball on his own site as well as contributing for Forbes.com, published a story ripping the original piece to shreds and pointing out all the erroneous assumptions that were originally made.
In his story, Brown explains that the revenue numbers from CSN Houston did not take many expenses into account and that the regional sports network is running at loss. That's a far cry from the $80 million in revenue claimed in the original article.
With start-up fees to get the regional sports network off the ground, the fledgling RSN is running at a loss. Not only do my sources in the broadcast industry say that cash calls for CSN Houston have already taken place, other reports speak to how difficult gaining carriage is, and will likely, continue to be. SNL Kagan, which Alexander quoted for the "most profitable, ever" story has said separately, "CSN Houston ‘has been a bust.’"
Brown, who has been rather critical of Jim Crane in the past, then defended the stripped payroll in Houston, speaking of the rebuild as if it was the best thing since sliced bread (which, of course, it is).
The premise by which Crane and General Manager Jeff Luhnow are operating works like this: the minor league system was rated one of the worst when Crane purchased the Astros, and player contracts at the Major League level were inefficient in terms of gaining wins for the salary being spent. In a case of "pulling the Band-Aid off quickly", MLB player payroll has been stripped to the axels and emphasis has been placed on building up the minor league system. The Astros organization now has playoff teams at all four levels of the full-season minors (Oklahoma City, Corpus Christi, Lancaster, Quad Cities).
The reconstruction of a team is a slow, painful and expensive undertaking, despite the low payroll numbers.
All of this reinforces everything that was published in response to the original story by Crawfish Boxes as well as a host of other traditional and blog media outlets. The claims in the original article were way off base and had absolutely no merit.