One of the best ways to increase corporate profits is to layoff people. The cutting of salary increases profits by lowering expenses and is usually met with praise from investors who see such moves as a sign the company is streamlining and becoming more efficient. On the other hand, if you are one of the people that got laid off, it's a strategy that is downright awful.
In the case of the 2013 Astros, they didn't exactly layoff employees. They did however slash their payroll to the bare bones. As a result, Forbes is reporting the Astros made record profits this year. And by record, we don't just mean for the team, we mean for the entire history of professional baseball to the tune of $99 million. To put that in perspective, that's almost as much as Drayton McLane paid Carlos Lee. Almost.
According to the report, which does not factor in the estimated $23 million the team lost on CSN Houston -- still only available to 40 percent of viewers in the Houston area thanks to a lack of carriage agreements with U-Verse, DishNetwork and DirecTV -- even if those losses were counted, the Astros would STILL be the most profitable team in MLB history.
The Astros are on pace to rake in an estimated $99 million in operating income this season. That is nearly as much as the estimated operating income of the previous six World Series championship teams -- combined.
First, it's pretty surprising the Yankees don't make higher profits. But, secondly, it demonstrates the value of a crappy team. Fans still go. Advertisers still buy sponsorships. And it isn't as if we're talking about a one-time loser. This is a team in the midst of three of the worst years in baseball history and they are still profitable thanks to a payroll where the highest paid player makes $1.5 million on a one-year contract.
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An argument can be made that replenishing the minor league system has real value and, eventually, the team will be good and spending money. The presumption here is that Jim Crane is, to quote Billy Joel, is "saving his pennies for someday" and those pennies will be used on big time talent when the team is contending again.
But, until that time, the money spent is almost literally pennies and the bargain basement roster is embarrassing.
Some of this might be mitigated were they on television, particularly to see some of the very few young talented players on the roster (Not George Springer, who needs the valuable experience of the minor league playoffs, apparently), but even that is a bust.
As fans, you'd like to believe there was real pain in this for Crane and the Astros, but with $99 million in profits, it's hard to imagine they are gung ho to start spending money
again for the first time.