IBJNews

Indianapolis Indians take big revenue hit, but team still profitable

Back to TopCommentsE-mailPrintBookmark and Share

A swooning stock market and declines in ticket sales, concession revenue, suite rental and advertising income have caused the Indianapolis Indians’ financial fortunes to plummet this year.

As a result, the baseball franchise is indefinitely discontinuing its years-long stock buy-back offer Dec. 31.

Indians profits declined from $1.23 million in 2008 to $459,603 this year. Despite that, the team’s board voted unanimously to give a $250 dividend for each of 757 outstanding shares. That’s down from $350 last year.

Schumacher

Almost every revenue line saw a small drop, with the biggest decline coming in stadium signboard advertising from $592,850 in 2008 to $332,200 this year.

“All those things just added up,” said Indians Chairman Max Schumacher. “A lot of it has to do with the economy and people having less disposable income.”

The team was also hurt by five rained-out games, including the July 4 game. That game typically sells out the 15,000-capacity Victory Field.

The team held operating expenses in check, increasing only slightly from $7.3 million in 2008 to $7.48 million this year.

In an attempt to bolster revenue, the Indians are increasing ticket prices for the first time in three years by $1 to $14 for box seats, $10 for reserved seats, and $9 for lawn tickets.

The economy had another big impact on the team. Interest and dividend income from the team’s investments plummeted from $354,051 in 2008 to $165,464 in 2009. But that’s not the worst of it.

The minor-league franchise realized a loss of $648,306 on the sale of marketable securities on the team’s most recent ledger. It earned $97,767 on the same line item in 2008.

“I decided the best thing to do was to bite the bullet and sell everything that was a loser,” Schumacher said.

The Indians started divesting those stock-market losers in September 2008.

“We reinvested the funds immediately in other mutual funds,” Schumacher explained. “It looks bad in the short run, but will benefit the corporation greatly on our financial statement in 2010.”

The Indians are not alone in their financial woes.

“Lots of professional sports teams, especially those that have experienced some level of profitability in recent years, had funds in stocks and other properties that took a big hit as the bottom fell out of the economy,” said Andrew Zimbalist, a professor at Smith College in Northampton, Mass., and a noted sports economist. “For a small or midsized franchise, that can be a sizable financial hit.”

The financial hit for the Indians was so sizable that Schumacher and the team’s board decided to suspend the team’s stock buy-back offer. The Indians had been offering $21,328 per share, using a formula based on annual earnings to value the team. That formula was supplied by National City Bank. The shares bought back by the team are retired, giving the remaining stockholders a bigger piece of the ownership pie.

The formula would have lowered the buy-back offer by about $9,000 per share, Schumacher said. A buy-back offer of $12,000 would put a $9.1 million value on the franchise, which is a AAA affiliate of Major League Baseball’s Pittsburgh Pirates. Baseball America magazine and Pink Sheets stock traders making recent offers for the team’s stock have pegged the team’s value at about $20 million.

“We thought the new buy-back price undervalued the franchise, and we felt there would have been virtually no offers generated based on the formula,” Schumacher said. “And we didn’t want to roll out a new formula because we had a bad year.”

Continuing to offer the buy-back at the current formula “would have painted a darker financial picture” than is reality, Schumacher said.

Despite the team’s economic swoon, it has $1.2 million in checking and savings accounts and money market funds – which should be enough to cover any stock buy-backs that happen before the program is suspended at the end of the year.•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

ADVERTISEMENT