How Loria Took Money For Personal Use

The Miami Herald on Sunday, in an article by Charles Rabin and Adam Beasley, did a good job of summarizing the issues surrounding the web site Deadspin's release of the financial statements for various MLB teams. In addition, they got the Florida Marlins team president David Samson to admit the following:

• "Some" of the money [5.4 million over 2 years] reported as a 'Management Fee - Related Party' to the company Double Play, covered expenses for architects and engineers. This also then means that "some" of the monies represented actual management fees paid to Loria. This is in direct contrast to Samson's assertion earlier in the week - see Jeff Passan's column - 'that not $1 had gone into Loria's pocket.' What are the odds that if the portion of the $5.4 million which had gone to expenses represented all or most of the $5.4 million, that Samson would have failed to note that?
• That Loria collected $16 million from the team in the past 2 years in repayment of loans [interest was not noted, but probably should have been]. My own attempt to quantify the monies which Loria had collected from the Marlins through Double Play came to $14.2 million -- see my earlier blog post.
• Samson refined his 'not $1 in Loria's pocket' defense to "Loria has never taken money from the team for personal use."

Given Samson's track record, it would not be unreasonable to try and analyze that assertion. Other than having enough money to donate $20 million to Yale in March 2007, not much is know of Loria's wealth as far as I can tell.

Why Management Fees = Taking Money For Personal Use

We don't need any special insight to know that any monies paid to a company Loria controls, like Double Play, should be considered funds that are at his disposal, net of any expenses. As such, almost by definition, whatever amount "some" of the $5.4 million in management fees paid to Double Play which were not being used to cover expenses [architects and engineers] amounted to, those funds would end up at Loria's disposal, or for his personal use.

Left unexplored is why any necessary stadium related expenditures would be handled through an owner controlled company instead of the Florida Marlins themselves. Lack of transparency is not some unfortunate by-product here, it is likely the main purpose of involving Double Play.

Here is how the Marlins will respond. When Samson said "taken" he did not mean to include Loria's management fees [payments to an owner], which likely is most of the $5.4 million. Neither did he mean to include the $16 million of loan repayments and interest earned on those loans. He only meant the net earnings [or surplus in the case of a partnership] from the Marlins themselves.

Then let Samson and the Marlins say that -- with all the caveats which that entails -- rather than making cynical statements which imply that their owner has not benefited [income and cash flow well into eight figures] personally from the team's finances during the two years exposed. The truth is that one of the purposes of a company like Double Play is that it allows owners to take monies from the main business, without appearing to be taking the money directly.

More left unexplored is how many owners of franchises preparing to build stadiums can use that time to pull monies out of their team instead of having to invest in a project which will substantially increase the value of their investment. Loria's behavior is especially egregious when you factor in that the franchise increased in value by about $70 million during the two years covered, as per Forbes valuations, which have an excellent track record. No wonder respected MLB writer Buster Olney has called for a government investigation of the Marlins.

One of Miami's best know journalists remains neutral on this issue. Elsewhere in the Sunday Miami Herald, it took Dan LeBatard about 1,300 words to conclude that this issue is really complicated. As evidence, he noted that he received unsolicited input from CPA's which defended Samson. One was quoted as writing:

Few people understood then, and understand now, how poorly capitalized Loria is.

Unless that CPA was privy to Loria's personal financial statements and or those of his company Double Play, the released Florida Marlins financials would not tell you how well or poorly capitalized Loria was or is. They tell us how leveraged the Florida Marlins were, not Jeffrey Loria, an important distinction. The fact that Double Play lends the Florida Marlins money, is evidence that Loria keeps his money elsewhere. The one concrete observation about Jeffrey Loria's personal finances which can be made after reading the Florida Marlins financials [and the Rabin and Beasley article], is that his cash flow increased by at least $16 million [plus "some" management fees] during the two exposed years. Maybe it's time for some solicited opinions?

Even more left unexplored. How does a team with operating income of $134 million [according to Forbes - hey, we're done with the whole Forbes just makes it up spin no?] since Loria purchased the team in 2002, end up in debt with a partners' deficit? Just think of it this way, if 2008 and 2009 resulted in a total of $52 million in operating income, what would make 2006 and 2007 any different in terms of profitability? What makes 2010 that much different [in terms of baseball operations]? Same bottom of the league payroll and same revenue sharing agreements in place since 2006. Where did all the operating income go? The amount of management fees paid to Loria during that time is probably a good place to start. At least we know the profits are not in the bullpen.

This whole issue reminds me of Malcom Gladwell's observation on the need for journalists to be smarter [about accounting and statistics]. I would add that a willingness to go outside comfort zones could easily compensate for any industry specific or technical issues.

The Rabin and Beasley article referenced is copied in full at end of post.

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Marlins saved millions in revenue-sharing deal
BY CHARLES RABIN AND ADAM H. BEASLEY
crabin@MiamiHerald.com

The Florida Marlins reaped more from Major League Baseball's revenue sharing than the team paid for player salaries the last two years -- a disparity fueling the $52 million in operating income the franchise pocketed in that time, previously secret financial records show.

The team secured its profit -- which exceeded that of five other franchises whose books have also been leaked -- as it won hundreds of millions of dollars in public money for its new stadium, the records show.

Critics chide the team for lobbying for $487 million in public money for its $642 million stadium as its own financial health was robust. The Marlins tell a different story: That the bottom line represents sound financial footing allowing the team to contribute $155 million to the structure rising in Little Havana.

Either way, there's no disputing the bottom line:

``The Marlins are running a shoestring budget so they can turn a profit,'' said Neil deMause, a Brooklyn-based journalist who co-authored the 1999 book Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit.

The previously confidential information came to light last week when the sports website Deadspin.com released the private financial statements of the Marlins and five other teams: the Tampa Bay Rays, Pittsburgh Pirates, Seattle Mariners, Los Angeles Angels of Anaheim and the Texas Rangers.

The documents covered the 2007 and 2008 seasons for the Pirates, Rays and Mariners, and 2008 and 2009 for the Marlins, Rangers and Angels.

While that makes it impossible for an apples to apples comparison, the records provide the first comprehensive look at MLB's financial doings.

And, they show how the Marlins separated from the pack in the amount of money it collected from revenue sharing and income it earned:

• The Marlins reported the largest operating income over a two-year period, at $52 million. Next came the Pirates at $38 million, the Rays at $36 million, the Angels at $23 million and Mariners at $6 million. The Rangers were the only team to record a net operating loss, of $8 million.

• The Marlins also collected the most net income, at $33 million, followed by the Pirates at $29 million, Angels at $18 million, Rays at $15 million and Mariners at $13 million. The Rangers, meanwhile, were $23 million in the red.

• The team secured its largest financial advantage in revenue sharing, in which big-market teams share their wealth with smaller franchises.

In the two years, the Marlins received $92 million in revenue sharing, enough to cover the team payroll in that time with close to $20 million left over to go toward ballpark construction or other costs. Earlier this year, MLB called into question the team's payroll practices.

The Rays collected $75 million from revenue sharing, the Pirates $69 million, and the Rangers $29 million. The other two franchises paid more than they pocketed, with the Mariners reporting a loss of $24 million and Angels $31 million.

The numbers also show the Marlins were last in concession sales and next to the bottom in television and radio revenue, ahead of Tampa.

On the flip side, the Marlins -- who have remained competitive on the field despite being at or near the bottom of payroll in baseball -- devoted the largest share for player development, at $60 million, according to the sports business website BizOfBaseball.com. The Pirates were next closest at $44 million.

Ultimately, the records reveal a franchise turning a healthy profit.

``It should come as no surprise -- and, in fact, a great comfort -- that the team's balance sheet reflects the wherewithal to honor its commitments,'' County Manager George Burgess wrote Friday.

Of the Marlins' share of stadium costs, $120 million will be a direct contribution and $35 million a loan the team will repay the county through yearly rent. Bond deals are bankrolling the public end of financing, and interest costs could ultimately send the tab above $2 billion.

``The deal is so one-sided, it's really sad to see this community obligated for 30 years,'' said art collector Marty Margulies, who campaigned against the use of public money for a stadium set to open in 2012. ``At the end of the day, the people who voted for this . . . are to blame.''

In March 2009 the Marlins won a decades-long battle to secure financing for the stadium now reaching skyward and visible miles away.

Team owner Jeffrey Loria landed the deal through commission votes in Miami and Miami-Dade, beating back a lawsuit from billionaire auto magnate Norman Braman and a legal effort to show the public its books.

Loria and Marlins President David Samson said the information was proprietary, convincing a judge local government didn't need to see the records to award the money.

Though the team never released its financial records, Samson said it allowed elected leaders to speak with the Marlins' bankers.

Some county and city commissioners are trying to reopen negotiations over the stadium and parking contracts, citing the franchise's bottom line.

``Now, Mr. Samson on the record says that at the time, city officials in Miami knew everything about their finances -- and yet on the record before the city commission they refused to disclose their records,'' said Miami Mayor Tomás Regalado, who voted against the stadium as a commissioner and is trying to get the parking deal restructured.

Whether that will happen is yet to be seen, but Samson said city and county leaders were aware of the team's financial shape. ``You may disagree on how we run the team. But I didn't lie. The documents are right there,'' he said.

The president also said Loria has never taken money from the team for personal use.

That may be so, but in 2008 and 2009, the Marlins paid $5.4 million to Double Play Company, whose partners are Loria and Samson. Samson said some of that money covered expenses like the hiring of architects and engineers.

Also, the documents show Loria collected $16 million from the team the past two years. Samson said that represented repayment of a loan Loria provided the team to help with stadium costs.

``The team needed money,'' Samson said. ``Jeffrey lent the team money and the team has to pay him back.''

Samson said the ballclub used revenue sharing to shore up its bottom line so lenders would feel more comfortable that the franchise could cover its end of the stadium cost.

When the revenue-sharing system was adopted in 1996, broad language was written into the collective bargaining agreement between the union and baseball owners that allowed a team to use the proceeds ``to improve its performance on the field.''

The Marlins received a public slap on the wrist earlier this year from Major League Baseball and the players' union. Though the league never said why, it's been reported the team wasn't spending enough on payroll. The team later signed All-Star pitcher Josh Johnson to a multi-year contract.

Still, the position of MLB Commissioner Bud Selig is that, over time, the franchise has been in compliance with the use of revenue-sharing.

``It is always possible to take a club's financial statements in a given year and make an argument that they spent less on payroll than they could have,'' said MLB executive vice president for labor relations Rob Manfred.

``But with a lower-revenue club, you have to look at it over a number of years.

``When you think about the revenue sharing system, you have to focus on the system as a whole, and it has been very successful in improving the level of competitive balance.''

The Marlins have won two World Series, most recently in 2003 when the club toppled the big budget Yankees -- ironically, a team contributing a share of Miami's payroll.

Since then, the ballclub has jettisoned accomplished players, including Miguel Cabrera, Dontrelle Willis and, this year,Jorge Cantu and Cody Ross.

Opening the 37,000-seat, retractable-roof stadium will strengthen the Marlins' long-term financial health, said MLB's Manfred. The roof is sure to draw fans wary of rain or scorching heat.

And, the Marlins will reap more from concessions as the contracts stipulate the team collects almost all the revenue from a new ballpark.

Read more: http://www.miamiherald.com/2010/08/28/v-print/1797179/marlins-saved-millions-in-revenue.html#ixzz0y1J5HAsl
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Marching For Freedom In Cuba On SW 8th Street

Update Mar 27: Click to see the fair Washington Post article about the march.

Practically every person of Cuban descent fortunate enough to be living in the United States hopes and fears the following about the latest turmoil in Cuba: God, please let this be the spark which leads to the end of the dictatorship. Soon after though, our own Screwtape's are whispering, ... 'and just how many times have you thought that before. Don't get your hopes up [it was 'kid' when I first started hoping] viejo.'

We must ignore the demons in our heads, even as the Orlando Zapata's and Yoani Sanchez's of Cuba ignore the demons in their faces. This may not be 'it,' but when it happens, it will likely evolve as this has evolved. A few brave women and men taking a stand against a corrupt oppressor. As the struggle expands, more become aware and join in. We await the Tipping Point. The outer band of the struggle hits Miami on Thursday.

Leading the march is Gloria and Emilio Estefan - this from the Miami Herald article:

Dressed in white at a news conference, the Cuba-born singer and songwriter passionately urged Cuban exiles and others to join her in the march as an expression of solidarity with the Cuban women who last week were violently harassed during a street march to mark the anniversary of the 2003 jailing of 75 dissidents. The Miami march is being held on Calle Ocho, beginning at 6 p.m. Thursday.

"The moment has arrived for us, the Cubans who live in freedom, and all those who wish to join, to offer absolute support and encouragement to the ladies and the people of Cuba," said Estefan, standing at a lectern in the main dining room of Bongos Cuban Cafe at the American Airlines Arena in downtown Miami.

The announcement comes just a week after members of Ladies in White were confronted violently by Cuban security forces and pro-government civilians in Havana. Members said they were punched, pinched, scratched and had their hair pulled by security agents and civilians, who made rude gestures and swore at them. Agents also dragged them away in buses.

On Tuesday, Estefan asked those who plan to take part in Thursday's march to wear white, the color worn by the Cuban women's group. She also encouraged non-Cubans to join her and Cuban exiles: "Our Anglo brothers, our African-American brothers, our Haitian brothers . . . people from all nationalities . . . anybody that loves freedom, anybody that wants to join our cause, of course is invited and welcome."

Thanks to Rolando Pulido for the graphic above and as usual, to Babalu and Robert Molleda for keeping the rest of us aware of those out there helping in whatever way they can.

The Miami Herald article about the upcoming march is copied in full at end of post.

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Gloria Estefan calls for march to support Cuba's 'Ladies in White'

Posted on Wed, Mar. 24, 2010

BY ALFONSO CHARDY
achardy@ElNuevoHerald.com

Cuban music star Gloria Estefan, speaks during a press conference with a group of artists to call for a march along SW 8 ST next Thursday to support Las Damas de Blanco- Ladies in White marching on Havana Streets for the last seven years asking for their relative freedom. The event took place at Bongo's Cafe in Miami.

Cuban music star Gloria Estefan, speaks during a press conference with a group of artists to call for a march along SW 8 ST next Thursday to support Las Damas de Blanco- Ladies in White marching on Havana Streets for the last seven years asking for their relative freedom. The event took place at Bongo's Cafe in Miami.
In a rare personal move, Miami musical icon Gloria Estefan stepped into the international political spotlight Tuesday to say she was organizing a Little Havana march in support of Las Damas de Blanco (Ladies in White), the wives and mothers of imprisoned Cuban opponents of the Raúl Castro regime.

Dressed in white at a news conference, the Cuba-born singer and songwriter passionately urged Cuban exiles and others to join her in the march as an expression of solidarity with the Cuban women who last week were violently harassed during a street march to mark the anniversary of the 2003 jailing of 75 dissidents. The Miami march is being held on Calle Ocho, beginning at 6 p.m. Thursday.

``The moment has arrived for us, the Cubans who live in freedom, and all those who wish to join, to offer absolute support and encouragement to the ladies and the people of Cuba,'' said Estefan, standing at a lectern in the main dining room of Bongos Cuban Cafe at the AmericanAirlines Arena in downtown Miami.

The announcement comes just a week after members of Ladies in White were confronted violently by Cuban security forces and pro-government civilians in Havana. Members said they were punched, pinched, scratched and had their hair pulled by security agents and civilians, who made rude gestures and swore at them. Agents also dragged them away in buses.

On Tuesday, Estefan asked those who plan to take part in Thursday's march to wear white, the color worn by the Cuban women's group. She also encouraged non-Cubans to join her and Cuban exiles: ``Our Anglo brothers, our African-American brothers, our Haitian brothers . . . people from all nationalities . . . anybody that loves freedom, anybody that wants to join our cause, of course is invited and welcome.''

She also personally relayed news of the Miami march to Laura Pollán, spokeswoman for the Ladies in White, reached by phone in Havana during the news conference.

Pollán expressed gratitude. ``It's an honor,'' Pollán said, during a shaky phone connection in which every other word was audible.

Estefan and exile community leaders hope the singer's leadership and name recognition will draw international media attention to the plight of dissidents in Cuba, particularly the Ladies in White, and independent journalist Guillermo Fariñas, who has been on a hunger strike since Feb. 24.

Estefan's aides said that while she has not shied away from broaching opposition to the Cuban regime during her public career, this represents the first time the beloved artist has taken up the issue on a ``grand scale.''

So it was on Tuesday when a very different Estefan stepped up to the podium -- emerging as a leader with a very political message to deliver.

At the event were several prominent Cuban exile leaders, including Jorge Más Santos of the Cuban American National Foundation, and Ninoska Pérez-Castellón, of the Cuban Liberty Council. Also joining her: singer Willy Chirino, Mayor Tómas Regalado of Miami and several former Cuban political prisoners.

Estefan was dressed in white and, before the announcement, sat among a group of women also dressed in white. She stood at a lectern flanked by photos of the Ladies in White being dragged away by security agents.

Behind Estefan: a photo of Orlando Zapata Tamayo, a dissident who died Feb. 23 after an 83-day hunger strike, in the middle of a Cuban flag.

Regalado said Miami police planned to close Calle Ocho beginning at 2 p.m. Thursday and that Estefan planned to cover expenses incurred by city police in providing security.

In addition to wearing white, Estefan asked that everyone carry gladiolas and march in silence from 27th to 22nd Avenues, beginning at 6 p.m.

The Ladies in White was formed in 2003 after the Black Spring government crackdown against dissidents in which husbands and sons were picked up and became political prisoners. The women wear white and march periodically, flowers in hand -- mostly gladiolas. Last week, the group marched for seven consecutive days to mark the seventh anniversary of the crackdown.

Read more: http://www.miamiherald.com/2010/03/23/v-print/1544287/estefan-calls-for-march-to-support.html#ixzz0j6zHYyVD
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Pirate(s) Finances - Gladwell's Law #0001

Malcolm Gladwell's Law - Journalists need to have a better grasp of financial figures in order to truly understand some of their subjects.

A good place to analyze how a better understanding of finances could impact a journalist's work is an article by Rob Biertempfel of the Pittsburgh Tribune-Review back in April 2008. As someone who was been scouring the web for clues about MLB finances for the past two years, I can tell you that this article represented a real opening in the secretive world of MLB finances. I wrote this post shortly afterwards. Mr. Biertempfel got the Pittsburgh Pirates President Frank Coonnelly to disclose the following items which few teams ever publicly admit or even discuss:

• Amount expected to be received in Revenue Sharing for 2008 - $35 million.
• Team had debts which exceeded $100 million and the interest payments were between $5 and $7 million yearly.
• That the CBA language as to the use of revenue sharing monies -- "to be used to improve on field performance" -- would not preclude the Pirates from using those monies to pay down team debt.
• Although Coonnelly states that the "Forbes numbers are never right," Coonnelly does not take issue with Forbes estimate of the Pirates operating profits for 2006 [$25 million], given that he agrees that it was the "highest [operating] profit recent season" for the Pirates and that he "didn't expect to be seeing $25 million in operating profits [in the future]."

How a financial background could have affected the questions or focus of this article.

1. Coonelly states: "Team is paying down debt and reinvesting in the club, not spinning off money to ownership." It matters greatly the source of the debt being paid down. If the debt being paid down was incurred as part of the purchase of the franchise, then paying down debt is an indirect way of enriching ownership.
2. What does Mr. Coonnelly mean by 'spinning off?' Selling off interest in the franchise or the owners salary? What is the owners salary? Is it tied to performance [a little sarcastic in the case of the Pirates, but still a legitimate question]?
3. Coonelly states: "When interest, taxes, depreciation and amortization are thrown into the mix, said the Pirates rank 27th in revenue." Those non-operating expense items [interest, depreciation and amortization] would affect net income, but not revenues or even the operating profits. Forbes does not disclose net income.
4. Given that Forbes employs the same methodology yearly, how likely is it for Forbes to have materially erred on determining operating profits in 2007, given that 2006 was accurate?
5. The article glossed over the fact that the team purchased for $92 million in 1996 was now estimated to be worth $292 in 2008. The fact that their investment in the team had tripled in value -- largely due to the fact that a new stadium was built for them with a minimal investment by the franchise [net of $14 million] -- means that the team literally has been handed house [or PNC] money to play with.
6. How reliable are Forbes estimates? The less complicated the finances of a franchise, the more accurate Forbes can be. Franchises who don't own their RSN's [like the Pirates and Marlins] are easier to calculate. Forbes estimate of the Marlins worth was 97% accurate when compared to the value ascribed to the franchise in the team's stadium agreement deal with local governments in early 2009.

OK, this is the fun part. $100 million in debt? From where?

Keep the following in mind:

• Team purchased in 1996 for $92 million.
• Team assumed debt from the URA totaling $29 million initially and an additional debt of $11.5 million in 2000. However, that is a debt which does not have to be repaid unless the team moves. The URA writes off roughly $2 million of that debt yearly.
• Technically, the Pirates still have to disclose that debt on financial statements until it is actually written off, however it is clearly misleading to include that amount when disclosing debt, while ignoring the fact that the debt does not have to be repaid.
• $100 million in debt and interest payments between $5 and $7 million would indicate that the team pays between 5 & 7% in interest rates, which is reasonable.
• But if they are including the URA debt in the $100 million figure, then the reported $5 to $7 million in interest payments makes no sense, since the URA debt does not require interest payments. The interest is added to the principal and will be written off as well.
• The Pirates operating profits since 1998 total $98 million. Only one year in that period showed an operating loss.
• The Pirates net contribution towards the stadium was a net of $14 million, since naming rights were used to offset scheduled team contributions.

Bottom Line: The Pittsburgh Pirates use of revenue sharing monies to pay down team debt is very likely an indirect method of enriching ownership, when a part [or a majority] of the $100 million in debt could only have originated from the team's purchase.

Pretend that a generous neighbor on your block gave you $10,000 yearly to "improve the look" of your home. Imagine further that you turned around and paid down the principal on your mortgage instead of fixing up your property. Could you convince that neighbor that his monies didn't go into your pocket? If you could, you are ready to be a MLB executive.

Click on the spreadsheet to enlarge or print


The Biertempfel article referenced is copied in full at end of post.

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Profitable Pirates to pay down huge debt
By Rob Biertempfel
TRIBUNE-REVIEW
Friday, April 18, 2008

The Pittsburgh Pirates turned a profit in 2007 -- the franchise's fourth consecutive year in the black -- and will do so again this year, regardless of how many games they win or lose.

Team President Frank Coonelly said the profit will be used to pay down the franchise's debt, which will help field a better team in the future. The Pirates have endured 15 consecutive losing seasons.

According to Forbes Magazine's annual team valuations, the Pirates' 2007 operating income was $17.6 million. That ranks 18th among the 30 major league clubs. Forbes estimated the team's value at $292 million, putting it at No. 28 among the 30 major league clubs.

"Their numbers are never right," Coonelly said Thursday. "But, we are profitable."

Coonelly said the Pirates' actual profit is much lower, taking into account annual interest payments of "over $5 million, maybe approaching $7 million" on the franchise's $100 million-plus in debts.

When interest, taxes, depreciation and amortization are thrown into the mix, Coonelly said the Pirates rank 27th in revenue.

The Pirates expect to receive about $35 million this year through Major League Baseball's revenue-sharing system, Coonelly said, adding that it's incorrect to believe that money must be used only to increase player payroll.

"The revenue-sharing plan says you have to use those proceeds to improve your performance on the field," Coonelly said. "That's written extraordinarily broadly, and we did that on purpose. Paying down debt can help you improve on the field. You can't get any better while you're taking a (huge) interest hit on all the debt you have. You can't be building an academy in the Dominican Republic. You can't be improving Pirate City. You can't be spending on major league payroll."

This year, the Pirates broke ground on a $5 million baseball academy in the Dominican. The club contributed $2 million of the $30 million necessary to renovate its spring training complex in Bradenton, Fla.

Coonelly denied that principal owner Bob Nutting is pocketing the Pirates' profits.

"We're paying down debt and reinvesting in the club, not spinning off money to ownership," Coonelly said. "If the Nutting family wanted to get into a business that would just spin off money, baseball would not be that business."

The sport is not necessarily a loser for owners, though. According to Forbes, Major League Baseball's profits increased 7.7 percent last year to $5.5 billion. The magazine estimates the average team is worth $472 million, a one-year hike of 9.5 percent.

The Forbes estimate means former owner Kevin McClatchy's purchase price of $92 million in 1996 was $200 million below its current value.

Where is all that money going? Not necessarily to the players. According to Forbes, player costs in Major League Baseball (salaries, bonuses and benefits) have fallen over the past five years from 66 percent of revenue to 56 percent.

In 2003, 16 teams lost money. Last year, only Toronto, Boston and the New York Yankees posted operating losses. But, Boston and New York recouped their losses with the dividends from their cable television deals.

Last year, Forbes reported the Pirates made $25.3 million profit in 2006, the year PNC Park hosted the All-Star Game.

"It was the highest-profit season in the recent past for the Pirates," Coonelly said. "I don't expect us to be seeing $25 million operating profits. I expect (growth), although I don't want to promise it."

Rob Biertempfel can be reached at rbiertempfel@tribweb.com
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Introduction To Malcolm Gladwell's Law

Malcolm Gladwell's Law - Journalists need to have a better grasp of financial figures in order to truly understand some of their subjects.

In an obvious desperate attempt to push my Google Analytics Direct Traffic into the triple digit stratosphere [the 2nd generation Kardashian Zone], best-selling writer Malcolm Gladwell has recommended that young journalists be more like your humble 2 Think Good blogger. I exaggerate, but not as much as you would think. Here is the portion of the interview which addresses young journalists:

Time magazine / Alex Altman: If you had a single piece of advice to offer young journalists, what would it be?

Malcolm Gladwell: The issue is not writing. It's what you write about. One of my favorite columnists is Jonathan Weil, who writes for Bloomberg. He broke the Enron story, and he broke it because he's one of the very few mainstream journalists in America who really knows how to read a balance sheet. That means Jonathan Weil will always have a job, and will always be read, and will always have something interesting to say. He's unique. Most accountants don't write articles, and most journalists don't know anything about accounting. Aspiring journalists should stop going to journalism programs and go to some other kind of grad school. If I was studying today, I would go get a master's in statistics, and maybe do a bunch of accounting courses and then write from that perspective. I think that's the way to survive. The role of the generalist is diminishing. Journalism has to get smarter.

I intend to illustrate Mr Gladwell's point whenever possible. The complete Gladwell interview is copied in full at end of post.

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Author Interview: Malcolm Gladwell By Alex Altman
Tuesday, Oct. 20, 2009

With three best sellers to his credit, Malcolm Gladwell is one of the brightest stars in the media firmament. A British-born, Ontario-raised New Yorker staff writer and 2005 TIME 100 honoree, Gladwell's clear prose and knack for upending conventional wisdom across the social sciences have made The Tipping Point, Blink and Outliers, as well as his lengthy magazine features on topics ranging from cool-hunting to ketchup, into must reads. His new collection of New Yorker stories, titled What the Dog Saw, hit stores Oct. 20. Gladwell talked to TIME about experimenting with public education, the flaws in corporate hiring processes and the future of journalism.

Once you pick a story topic, what's your reporting process like?
It differs. I'm interested in placing things in a larger context and in making lateral connections. A lot of my process is informed by the notion that two mildly good stories put together sometimes equal one really good story. (Read Malcolm Gladwell's TIME 100 bio.)

Have you ever raised an idea in one of your pieces and then later — say, when a new nugget of information emerges — realized it was off the mark?
Yeah. Or, more often, additional evidence starts to pile up and you realize you just positioned the article the wrong way. In The Tipping Point, I would write the chapter about the decline of crime in New York differently, just because we know so much more about crime than we used to.

In your last book, Outliers, you talked about how success comes not just through genetics or hard work but through context — the situations we stumble into fortuitously. Can you talk a little bit about your own lucky breaks?
I've had millions. I was in one of the last generations to sign on with newspapers when newspapers were still hiring lots of young people. To go to the New Yorker and get the editor I got were lucky breaks. I'm also lucky to be an outsider in America. A lot of what Americans take for granted I think of as strange and weird. I still don't feel like I fully understand this country. (See the 100 best novels of all time.)

You've talked before about the deficiencies of the U.S. public-education system. If you were U.S. Secretary of Education Arne Duncan — who has about $5 billion in discretionary funding and a mandate to fix our schools — what would you do?
There's precious little experimentation in education. Instead there seems to be a desire for greater regimentation, which I think is nonsense. I think we need to try 100 different things. If I were Arne Duncan, I'd think of myself as a venture capitalist, fund as many wacky and inventive ideas as I could, and closely monitor them to see how they worked.

I've always been fascinated by the idea that in inner-city schools, the thing they do best is sports. They do really, really well in sports. It's not correct to say these schools are dysfunctional; they're highly functional in certain areas. So I've always wondered about using the principles of sports in the classroom. Go same sex; do everything in teams; have teams compete with each other. I'd like to try that. I don't know whether it will work, but it's certainly worth a shot, and we could learn something really useful.

I'm curious about your take on the statistics revolution in baseball and, increasingly, basketball. You've cautioned against assessing players through measurements like height or arm strength. Some of the ideas in Blink would also seem to support old scouting models, in which you just take the guy who looks like he plays the best.
My take on it is that what you're looking for is a balance between these two things. I remember once having a conversation with a top executive with the Toronto Raptors. I asked her about the stats revolution in basketball and she just kind of shrugged and said, "It's interesting, and we look at those things, but you have to understand that for our purposes, it's all [about] character." The thing that separates players is that some have a work ethic, some don't; some are coachable, some aren't; some party all night, some go to bed early. From her standpoint, it's all those intangibles. (See the top 10 non-fiction books of 2008.)

But as a society, as you've pointed out, we're not very good at making these predictions. We use measurements like IQ or the SAT or the Wonderlic test, and we're unable to determine if a budding lawyer or a budding quarterback is going to be any good. How can we get better at making predictions?
Certain kinds of predictions are impossible. If you want to find out if someone can do the job, you have to let them do the job. We should be experimenting with people too. I feel very strongly about the notion that if you want to find the best teachers, you let everybody into the profession, monitor them for two years, and then pick the 10% that are the best. That's how you do it, and that's completely the opposite of the way we do it now. Right now we're acting out a fiction, which is that we can tell whether someone's good at this enormously complex thing called teaching before they've ever taught.

If you had a single piece of advice to offer young journalists, what would it be?
The issue is not writing. It's what you write about. One of my favorite columnists is Jonathan Weil, who writes for Bloomberg. He broke the Enron story, and he broke it because he's one of the very few mainstream journalists in America who really knows how to read a balance sheet. That means Jonathan Weil will always have a job, and will always be read, and will always have something interesting to say. He's unique. Most accountants don't write articles, and most journalists don't know anything about accounting. Aspiring journalists should stop going to journalism programs and go to some other kind of grad school. If I was studying today, I would go get a master's in statistics, and maybe do a bunch of accounting courses and then write from that perspective. I think that's the way to survive. The role of the generalist is diminishing. Journalism has to get smarter.
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