Normally when people judge whether or not a sports team is having successful season they will look at the team's record or, if they make it that far, they will factor in how a team performs in the playoffs. Usually that success on the field will lead to financial success for the ownership; more people will come to the games, at those games they will consume more concessions and they will buy more memorabilia.
So when Forbes magazine said that the 2013 Houston Astros, a team in dead last place, is set to become the most financially successful teams in history it caused people to drop their jaws in shock.
With the combination of a dirt cheap payroll, $26 million on opening day but multiple players with high salaries were dumped by the trade deadline, and a massive television deal the owner of the Astros, Jim Crane, is going to make an estimated $99 million this season. To put that amount of profit into perspective it is greater than combined profits of the last six World Champions, according to Forbes.
While the opening day payroll of the Astros was ridiculously low, Yankees pariah Alex Rodriguez makes more, the team now has a payroll of roughly $13 million. Ryan Dempster, the number four starter for the Red Sox who recently was suspended for intentionally throwing at the aforementioned Rodriguez, makes approximately the same amount as the Astros, according to the Houston Chronicle.
The low payroll has led to one of the worst seasons in MLB history. The Astros are currently 43-86 which means that they manage to win one third of their games. They have both the worst batting average and the worst ERA in the American League. Their opponents have scored 178 more runs than they have. Yet, the team is making money. A lot of money.
Crane has insisted that he isn't planning on putting a horrific team on the field every year, telling ESPN The Magazine that once the minor league system is fixed the team will start to spend on payroll. Focusing on rebuilding the team while not worrying about the product on the field in the present may be part of the reason for the miniscule payroll although the enormous amount of debt Crane took on when buying the team might play a larger role, according to Forbes.
Crane took on a reported $275 million of debt along with the team, it is thought that the bulk of the profits will be spent on paying that off, according to Forbes.
The Astros scored a mega-when Comcast SportsNet Houston was created and the baseball team was given a 45 percent share of the venture, the Rockets owns 33 percent and NBC Universal owns the rest. The network is paying $80 million a year to allow viewers to watch all 162 games played by the historically horrible team, according to Forbes.
Derek Baine, a sports media analyst for SNL Kagan, told Forbes that making massive money off of TV deals is the main way teams will make their money instead of expecting to make it from ticket sales.
"Sports rights are escalating astronomically, so ideally, on a team you want to be benefiting from anybody who is in there trying to take a piece of margin out of it," Baine said. "It's a way you can generate big fees while still capturing some of the upside if they ever get sold. Because when they get sold, they go for pretty big valuation also."
In an interesting twist CSN Houston has had trouble convincing cable providers in the area that they want to spend the extra money to receive the channel, causing the network to lose $63 million last year. The lack of interest could stem from customers not wanting to spend any extra money to watch a team that would struggle in AAA. Although, with Dwight Howard joining the Houston Rockets, it's likely that interest in the network will spike once the NBA season begins, according to Forbes.
* All stats were taken from Baseball-Reference.com.
