You'll recall the recent Forbes story in which the 2013 Astros -- a ludicrously bad team, for the uninitiated -- were purported to be the most profitable club in MLB history. That's an eye-grabbing claim, to say the least. While Forbes' valuations of sports franchises, a practice out of which they've made a cottage industry, are based on guesswork, it's typically educated guesswork. In this instance, though, Forbes appears to have soiled their business-casual pleated slacks with the cell-phone belt clip.
How do I know this? Forbes says so. In the initial piece, Forbes contributor Dan Alexander posited that the Astros were raking in operating income at historic levels. Now, though, Forbes contributor Maury Brown is here to challenge that notion. And he does so quite effectively.
Much of Alexander's argument rested on assumptions about the Astros' local-television revenues. As Brown writes, though, those assumptions are thoroughly off-base:
At this point in time, Comcast SportsNet Houston has no major carriage agreements with anyone outside of their own partner, Comcast. 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.'" Indeed, the Astros have pulled back from trying to make any carriage deals this year, and will try to make something happen ... in 2014.
Brown goes on to state that while the 2013 Astros are indeed profitable, they're not anywhere close to being MLB's most profitable team ever. It goes beyond the cable-television revenues, and Brown also addresses the philosophical point that owner Jim Crane is somehow derelict in his duties by making money during the deep-rebuild phase that's ongoing. Please do read the entire piece.
If nothing else, though, let's rethink the supposed massive profitability of your 2013 Astros.