Mains: Can a baseball team succeed without making money?

From SABR member Rob Mains at Baseball Prospectus on February 22, 2018:

I’ll admit, it seems silly to suggest that a business can succeed if it loses money every year. I’m going to defend that view by quoting a couple comments that I received from my last article on the topic. In it, I took issue with owner Bob Nutting claiming that the Pirates will be stuck in a “develop, then sell when it gets too costly” rut with its players unless there’s “a fundamental redesign of the economics of baseball.”

My contentions are that a) baseball teams aren’t like other businesses, in that the rise in their value means that teams can lose money and still make a nice profit, b) baseball teams are vanity purchases, in which part of the return to the owner is the prestige of owning a ball club as opposed to, say, a large portfolio of stocks and bonds, and c) the various revenue-sharing mechanisms in baseball reduce the disparities between large and small markets.

The heart of my argument that it’s OK for teams to lose money is that sports teams are not like most other businesses.

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Originally published: February 22, 2018. Last Updated: February 22, 2018.