Boston Club Finances in the Early Professional Era

The finances of the Boston Club in the 1870s are uniquely well documented. Their annual financial statements were reported in the press, and some internal financial records survive in the Frederick Long papers in the Hall of Fame. Together they present a picture of baseball finances in the early professional era.

The Boston Base Ball Association was incorporated in 1871 as a joint stock company, offering 150 shares with a par value of $100 each.1 The joint stock company was a relatively new model for baseball clubs. The early clubs had been fraternal social clubs with dues-paying members who elected officers and a board of directors. The financial demands of forming a new professional club required more startup funding. A new club needed to rent a playing ground, make improvements to the ground, and recruit players, often paying advances on their salaries. These were substantial expenses that needed to be paid before the opening of the season brought in any revenue, hence the need to raise money through the sale of stock.

The Association leased the Union Base Ball Grounds, which came to be known as the South End Grounds and would be the club’s home field through 1887. The Union Grounds were first enclosed and used for baseball in 1869, and were so named because this was the result of a collective effort by several clubs. The new Boston Club took sole control of the grounds and improved the seating and added a roof.2

The Boston BBA’s capitalization of $15,000 was generous. In part this reflected that they were doing the preliminaries right: paying for the best players and first-class amenities. But even so, the entire $15,000 was not needed up front. They therefore did not collect payment on all 150 shares. This was a common practice in this era. The par value of the shares constituted a pledge by the shareholder to pay the full amount, but this was only called upon in case of need. The problem was that this need implied that the club was in poor financial condition, which did not inspire enthusiasm. The shareholders often regarded fulfilling this commitment to be throwing good money after bad. Only 78 of the 150 shares were paid. The remaining 72 shares reflected an asset of $7,200, but this was highly theoretical. This discrepancy would result in a peculiar, unique hybrid structure.3

The problem was that no one actually knew what the finances of a professional baseball club would be like. The business was too new. They could project their expenses, but not their revenue. How many spectators would pass through the gate? Their model was the Cincinnati Base Ball Club of 1869-1870. This turned out to be a poor model. The Cincinnati Club with its unbroken string of victories into June 1870 drew large crowds. A more routine effort—even by a very good club such as the Bostons—wasn’t the same. It is like looking at attendance in the late stages of a player’s extended batting streak, and assuming that this is normal.

The results were not good. Detailed numbers are not available until 1873, but it is known that the Boston Base Ball Association finished the 1872 season about $4,000 in debt. The holders of unpaid shares showed little interest in making good, and the holders of the active shares showed little interest in contributing further. There was serious discussion of shutting down the organization. This is especially remarkable in light of their having just won the pennant. They averted this fate by putting out a call for “all friends of the club and all persons interested in base ball” to attend the annual shareholders’ meeting. After the meeting was completed, an open meeting was held at which a committee was appointed “to report at a future meeting a plan or plans for assisting in paying off the debt of the Boston Base Ball Association for 1872, and also for raising a guaranty for carrying on the club next season.”4

The solution they arrived at was remarkable. A new organization was formed, the Boston Base Ball Club. It took over the Association’s debt, as well as ownership of the 72 unpaid shares of stock—not quite a majority, but a controlling interest unless the individual shareholders voted as a nearly unanimous bloc. The membership of the Club was open to anyone for a $15 initiation fee and $10 annual dues.5

Over a hundred people joined. (Accounts disagree on whether the exact number was 108 or 110.)6 What did they get for their membership fees? First was a season ticket. Season tickets typically cost about $15, so at $25 for the first year’s membership, they were paying a premium, but in subsequent years they were getting a discount. Membership also carried with it access to the club rooms, apparently provided by the Association. The amenities of the earlier rooms are not clear, but in 1875 new rooms were opened just above the cigar store and billiard room run by star shortstop George Wright. These comprised a “card-room, and parlor, all handsomely fitted up and admirably lighted and ventilated.”7 The Club in essence was a replication of the fraternal baseball club as it had existed in the early professional era. The members were not playing for personal recreation and exercise, as they had in the original amateur clubs. Rather, they were sponsors of a professional club, with personal access both on and off the field. One of the first club activities was the receipt of the championship pennant for the previous season.8 It is not too far wrong to regard it as a booster club for the Boston team.

What the Association got was both an immediate infusion of cash and a steady annual income. The Club’s annual membership dues went straight into the Association’s treasury. After the 1873 season this amounted to $2,730.9 This was about 10 percent of total annual revenue, and came during the offseason, when the Association’s cash flow was the tightest. In light of the reality that this was in exchange for nearly worthless stock, this wasn’t a bad deal. Potentially more important was the voting power the Club’s bloc of shares represented, but the Association’s officers largely remained in place. They won the pennant six years out of the seven-year span of 1872-1878. The Club was happy, and wisely left well enough alone.

We have financial statements for 1873 through 1875.10 The statement for 1873 is rudimentary, showing revenues of approximately $28,000 and expenses just $27,200. This seems to include both the funds from the Club and the retirement of the debt from the prior season. The Association went into 1874 with no debt and $767.93 in the bank.

The statement for 1874 is more detailed. It shows total assets of $31, 699.10 (including the $767.93 from the previous season) and expenses of $30,865.97, giving the bottom line number of $833.73 in the bank: a profit of $65.77 for the year.11 This year is given added interest by the trip the Boston team made with the Athletics of Philadelphia to England and Ireland in the hope of spreading the game, or at least earning a few dollars.

The 1874 revenue breaks down this way: home games 50 percent, away games 40 percent, the Europe trip 5 percent, and season tickets (i.e., Club dues) 5 percent. On the other side, the largest expense by far was player salaries, accounting for 58 percent of total expenses. Travel expenses were next, accounting for 22 percent (including both domestic and foreign travel). The Europe trip was a loss, costing $2,318.13 and bringing in but $1,660.69: a disappointment, but one they could absorb.

Revenues were up in 1875, to $37,767.06. Player salaries were modestly higher, at $20,685.00. In all, this was the club’s most financially successful year, with about $2,500 in profit.

Looking over the Bostons’ National Association years, their finances started out rocky. They nearly went under after the 1872 season and had to be bailed out. After that the numbers steadily improved. The club never produced massive profits—there was never any question of paying a dividend—but by the end of the NA period the treasury was slowly building up. The trends were in the right direction.

This didn’t last. The post-Civil War economic boom burst with the failure in September 1873 of the banking firm of Jay Cooke & Company. This resulted in the Depression of 1873-1879. The baseball economy was a lagging indicator, but by 1875 was showing stress. The formation of the National League in 1876 can be regarded as a reaction to this. The Bostons held up well through 1875, as their continued pennant victories sustained enthusiasm. The hard times finally caught up with them in 1876. Revenue dropped by 17 percent. They were able to cut expenses and end the season with money in the bank, but revenues continued to fall.12 This trend continued through the next several years, both for Boston and the rest of the League. This explains the rapid turnover in League franchises in these years, as well as the institution of the reserve system. The Bostons broke even in 1881 only with the help of $758 in donations. Not until 1882 did the club return to profitability.13

The booster Boston Base Ball Club dissolved after the 1876 season. The reason is not stated, but the team had just lost the pennant for the first time since 1871. A reasonable explanation is that a booster club is a lot more fun when it is supporting a winning team.14 Its shares were returned to the Association, which dissolved them. Ownership of the Association was thereafter divided among the remaining 78 shares. Why were they not sold instead? The likely explanation is that they had essentially zero value. The club was not paying dividends, and had no immediate prospect of doing so. Indeed, it was an open question whether shareholders could be held liable for the organization’s debt, giving shares a potentially negative value. At the same time, selling the shares would impose a liability on the Association, since shareholders at that time were entitled to season tickets. Better to sell the season tickets each year than to sell the share for a one-time payment. The next account listing voting shares comes from 1881. 77 of the 78 shares voted. The 72 Club shares were long gone and would never reappear.15

The Bostons have an air of inevitability to them. They were the best-run baseball club of the 1870s, both on the field and in the front office. They are the oldest baseball organization to field a team every year since 1871 to this day. They seem to be the Rock of Gibraltar of the early professional era. Yet they almost went under after the 1872 season, and only stumbled through the end of the decade. They could easily be remembered today by specialists in early baseball history as yet another of the innumerable clubs with but a fleeting existence.

Postscript

Baseball entered a boom phase in the 1880s. Albert Spalding, the Bostons’ star pitcher from 1871 to 1875, maintained ties with some of the Boston organization as he established himself in Chicago, first as a player and then the president of the club and as a sporting-goods manufacturer. In 1884 he engaged in a protracted correspondence with Frederick Long, the treasurer of the Boston Association, to discreetly buy up shares. This would be a clear conflict of interest today, but would not raise an eyebrow at that time. Shares for sale were hard to find, but by April Long had scrounged 12, at par value. Spalding’s reason for wanting this was straightforward: “I judge the Boston Club is making money, and a dividend might be paid one of these days.”16

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Red Stockings finances—a minor observation

It now being over 140 years since the Boston Red Stockings played ball, and with it not having been public information to begin with, it’s not the easiest thing to determine the finances of the ballclub. Wondering about player salaries in these days long gone by, we reached out to Michael Haupert, co-chair of SABR’s Business of Baseball Committee and our leading researcher in this area.