Bill DeWitt, MLB, and the lies we tell ourselves

In 1995, a young businessman named Bill DeWitt, Jr. purchased the St. Louis Cardinals for $150 million. That’s the equivalent of $252 million in 2020 dollars. Today, the Cardinals are worth over $2 billion. To put it a different way, the Cardinals have increased in value by almost eight hundred percent over the past quarter-century. This isn’t merely an on-paper valuation, either; the Cardinals made $356 million in revenue in 2018, and $319 million in 2017, showing that a baseball team is a pretty great way to earn a couple hundred million dollars annually. According to Forbes, the team has generated at least $40 million in profit every year since 2014, and hasn’t made a profit of less than $19 million since Forbes started keeping records. In just the last decade, the Cardinals have increased in value by over $1.4 billion.

In light of those numbers, it raised a few eyebrows when DeWitt went on Frank Cusumano’s radio show on St. Louis’ 590 AM and said this:

“The industry isn’t very profitable to be quite honest. And I think they (the players) understand that,” DeWitt said. “But they think the owners are hiding profits and this and that and there’s been a little bit of a distrust there.”

“They have audited financial statements for each of the teams, so I don’t know what they mean by opening the books? They point to things, I mean I’ve heard rhetoric like, ‘Well maybe the teams don’t make that much money or lose a little money but what about things like Ballpark Village or other entities like that?’ And that in my view is a real reach. Ballpark Village we don’t view as a great profit opportunity. We think it’s great long-term for the franchise and downtown St. Louis. And what’s good for St. Louis is good for the Cardinals. There’s been talk by one of the agents that teams build new stadiums so they can generate more revenue that will help them when they sell the team. The fact is that it generates more revenue, but the more revenue the more the players get, too,” DeWitt said.

Bill DeWitt clearly thinks that we’re fools.

DeWitt becomes the second owner in as many weeks to claim that MLB is financially cash-strapped, following Cubs owner Tom Ricketts’ claim last week. It’s a bit concerning that Bill DeWitt doesn’t consider an 800% return on his investment to be profitable, because you really can’t get that kind of return much of anywhere else. But I’d like to focus also on his claim that Ballpark Village won’t be profitable.

In particular, BallPark Village is a $260 million project that includes “One Cardinal Way” among several luxury apartment buildings. The prices of those apartments at One Cardinal Way, a 29-floor, 297-unit tower, range from $1,500 per month for a one-bedroom apartment to $3,500 per month for a two-bedroom apartment. To put it a different way, if 250 of those units are occupied at an average rental rate of $2000 per month, this one tower will generate $6 million in revenue annually. That’s before we get to the PwC Pennant Office Building, which includes 500 parking spaces at $25 per day and thus could generate as much as $4.5 million in parking revenue alone. The 120,000 square feet of office space are leased out at a rate of $28.50 per square foot per year, which comes out to $3.4 million in rent per year. So from one office building and one apartment complex, Ballpark Village stands to generate almost $14 million in revenue annually - and that’s assuming partial occupancy.

So the idea that Ballpark Village won’t profitable is, frankly, poppycock; twenty years after completion, two buildings in the Village will have justified the cost of the entire project and be producing pure profit, and that’s not a best case scenario. That’s before we get to the movie theater, or the “three-story retail pavilion,” or the twelve high-end restaurants, or the fitness centers; or the 75,000 square feet of other businesses, or the 216-room hotel.

Then there’s DeWitt’s claim that teams have seen audited financial statements for each team. But what reports we do have indicate that this claim isn’t true either. As of May 13, Brendan Kuty reported that teams had still not disclosed their financial statements to the union. Two weeks later, Sports Illustrated reported that the union was still waiting to receive those documents. So if there are audited financial statements showing that baseball is not a profitable enterprise, it doesn’t look like the teams really have turned them over.

But even if DeWitt was telling the truth, there’s one last point we should make here. Dallas Mavericks owner Mark Cuban recently said in an interview that he didn’t buy that basketball team to make money.

“Never crossed my mind as an investment. I did it because I love basketball,” Cuban, 60, tells CNBC Make It on Friday.

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“I love the Mavericks,” he says in a 2000 interview. “I am just a huge Mavericks fan. And I have just been blessed and put in a position where I can contribute.”

He was all in: “This is a business, but it is a business that I am willing to commit as much money as it takes. Whatever energy, funding, to make this team successful,” a 41-year-old Cuban says in the clip.

Can you imagine any MLB owner - any owner at all - saying something like this today? “I love baseball, I am just a huge baseball fan, and I am willing to contribute as much money as it takes.” Cuban isn’t really an outlier, either, among NBA owners. Wyc Grousbeck openly rooted for his Boston Celtics to face LeBron James. Joseph Tsai bought the Nets because he loved watching them on television. Are there any MLB owners who actually, well, love baseball? Maybe the Royals’ John Sherman, who notably is the only MLB owner fully paying all of his minor leaguers for the entire season. But there is undeniably an enthusiasm gap between the owners of MLB teams and owners of other sports franchises.

That’s really sad, to be honest. Because Bill DeWitt, Jr. isn’t someone who loves baseball. He’s someone who loves money, and believes that two billion dollars isn’t enough of it. Right now, DeWitt is openly lying about the finances of his team and of the league in general in order to justify not having baseball games. If that’s how owners intend to proceed, we should be worried for the future of baseball, not just in the near-term but in the long-term as well.