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A Discussion on the Pirates’ Revenue and Payroll

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Where do the Pirates get all their revenue from? Photo by Brian Grublis for TPOP

Where do the Pirates get all their revenue from?
Photo by Brian Grublis for TPOP


“Nutting is cheap. The Pirates need to spend more on payroll.”

You’ve probably heard this on talk radio tons of times. You may have overheard someone say it at a Pirate game, at a bar, or at a party. You may have said it yourself.

What follows is a discussion on how the Pirates bring in revenue and how much they should be doling out to the players. As is the case with most economic issues in baseball, there are no dead-on known facts about revenues, due to the “closed shop” nature of Major League Baseball franchises. There are things that we can extrapolate from leaked documents and interpreted public statements from team executives, though.

The basic rule of thumb is that team payroll should be around 50% of a team’s revenue. This falls in line with recent Collective Bargaining Agreements (CBA’s) reached with the other three major sports leagues (NFL, NBA, NHL). The most accepted study of team revenues in MLB is done annually by Forbes magazine. From their March 2014 study, Forbes estimated the team values, revenues, and operating income for each team from the 2013 season. To no one’s surprise, the Yankees had the highest revenue at $461M, while the Pirates clocked in at 20th with $204M. The last column is the most pertinent when discussing the finances of a MLB team — operating income.

Operating income is defined as the earnings before income and taxes. Essentially this is “profit” from revenues minus expenses. For 2013, the Pirates had an operating income of $21.8M. Yes, the Pirates turned a profit. No, this is not Communist China. They are allowed to do so. But here’s something else to keep in mind — the debt-to-value ratio, in which the Pirates have a 16% ratio. Considering that the Pirates were valued at $572M, that means they have a debt of $91.5M to pay down.

So where did the Pirates’ $204M revenue come from in 2013 and how can it be increased so that more money can be rolled into payroll?


There’s no point in owning a team if no one is going to show up. Again, using 2013 numbers, the Pirates drew 2.2M fans in 2013 to PNC Park. The average ticket price at PNC Park was approximately $18.13 in 2013, so for math purposes let’s make that an even $20. The Pirates keep 90% of revenue from ticket sales, so:

90% x 2.2M x $20 = $39.6M from attendance in 2013

Every 100,000 extra fans would result in $1.8M of additional revenue. Considering that the Pirates drew 2.4M fans in 2014, that means that there should be an additional $3.6M of revenue from 2014 for the 2015 payroll.


Now let’s assume that each fan spends $25 on food and merchandise at the game. When I first did a variation on this story in 2011 for another site, a high ranking Pirate official told me that the Pirates get 40% of all food/merch revenue, with most of the rest going to Aramark for the distribution service fees.

You may be thinking, “Wait, there’s no way I spend that much per game!” You may be right. Perhaps you get a bottle of water for $1 outside the park on the Clemente Bridge and bring it in. Maybe you eat before the game. Maybe you’ve never bought a T-shirt there at the Clubhouse store.

Now think about that family sitting next to you with two adults and two kids. The one with the beleaguered dad constantly getting up to get hot dogs, popcorn, cotton candy, and a well-earned beer for himself. And maybe a foam finger or two for the kids. How much do you think they spent? Then think about the people downing three to four beers a night at $8/beer.

40% x 2.2M x $25 = $22M from food/merchandise in 2013

Using the same sensitivity analysis, every 100,000 extra fans would bring in $1M of additional revenue. For the 200,000 extra fans in 2014, that would be an additional $2M of revenue from 2014 for 2015.


When PNC Park was developed, the Sports and Exhibition Authority didn’t want there to be a sea of asphalt between PNC Park and Heinz Field, so there is only limited parking revenue. From their website:

In order to incentivize the teams to develop the Option Area ?s surface parking, unlike what occurred with Three Rivers Stadium, the teams are given only limited parking revenue. Instead, certain parking revenue is placed in a development fund that is accessed only when a parcel is developed. The teams hired Continental Real Estate Companies as developer of this land, which consists of twelve parcels. The Stadium Authority oversees this development according to the terms of the Option Agreement.

Let’s assume that the Pirates get zero dollars from parking for purposes of this discussion. However, they are getting something from the development fees of all the hotels, office buildings, and parking garages on those twelve parcels.


Here’s the big one. The new national TV deals kicked in during the 2014 season. Each team’s national cut went from $23M to $50M, thanks to newly brokered deals with ESPN/FOX/TBS. So from the 2013 Forbes’ analysis, that’s an increase of $27M. However, not all of that is “white meat” for the Pirates. Some of that gets kicked back upstairs to the MLB Central Fund for MLB to keep in reserve or pay down any revolving loans that a team may have taken out with them.

There’s also the local TV deal with ROOT. At one time, I estimated their yearly sum to be $20M, based on metropolitan size and other reported local TV deals. Frank Coonelly refuted that number and said it was higher and that the Pirates were closer to the middle of the pack in local TV deals. Let’s say it’s $30M for purposes of this piece.

If the national plus the local adds up to $80M, let’s assume that the Pirates got $60M of that in 2014. That would be an additional $20M of revenue from 2014 over 2013’s TV money.

Other Revenue Streams

Adding up the 2013 numbers for TV, Attendance, and Food/Merchandise, you get about $102M. Remember, this doesn’t account for the increases due to better attendance and the new national TV deal in 2014. So where did the other half come from? I can’t put a figure on any of these items below, but here are some other streams to pull from:

  • MLB Advanced Media — In 2013, the revenues for the digital service arm of MLB were $650M. Every team owns an equal share of MLBAM
  • League-wide merchandising/licensing — If a video game has the Pirates, if a Cutch jersey is sold in Idaho, the Pirates will get a cut of that
  • MLB’s Investment Portfolio — When the Expos were owned by MLB, then sold to the Lerner family to become the Washington Nationals, the profit from the sale (about $330M profit) was parked into a hedge fund in 2006. Each team is an equal shareholder and, presumably, gets a cut yearly from the Baseball Endowment L.P.
  • General Revenue Sharing — The Pirates are one of the “poor” teams in MLB, so they’re getting a cut from MLB to attempt to level the playing field. This comes from teams like the Yankees and Dodgers going over the $189M payroll threshold and having to pay a tax to MLB. All local TV deals get a small cut sent to MLB Central and they re-distribute it to certain teams like the Pirates.
  • Radio rights — It’s probably not a lot, but the Pirates aren’t letting 93.7 The Fan broadcast the games for free
  • Local sponsorships — All the ads on the walls, the PNC naming rights, any company you see at PNC — they paid some money for that privilege
  • Suite rentals, event rentals — Ever go to a suite for a Boys Night Out or to get pitched by a vendor on some product you’ll never buy? They paid for that. Ever go to a wedding or other event at PNC? (I went to a wedding last fall). They paid for that. It all adds up.


Since I can’t put an accurate dollar figure on the “other revenue streams”, let’s just look at the increases from the 2013 revenue to the 2014 revenue for attendance/TV/food and merchandise. By my gorilla math, I have the Pirates getting an additional $25M last year. Using the 50% rule of thumb, that would mean a potential re-investment of $12.5M (just from these streams) back into the 2015 payroll. This is how the Pirates will go from an end-of-season payroll in the mid-$70M range to a projected payroll of $90M+ this year.

Many people like to bring up that Bob Nutting is allegedly the 11th richest owner in MLB and is worth over $1 billion dollars. By their logic, he should be willing to raise payroll up just using his own personal money. Do you know the best way to become a millionaire? Be a billionaire and start putting your own money into the franchise.

There is so much money rolling in the door already, there’s not a need for an owner to personally invest. And even if he would (he won’t), he can’t because the team is not solely owned by Bob Nutting. It’s a partnership with legally binding documents. They can sell additional ownership shares if they choose, but it’s not like they pass the hat and collect a few million every year.

Teams set payroll at what the market allows them. Having an artificially high payroll and not having the revenue to support it is a way to show a negative on the balance sheet and lead the team on the road to financial ruin.

So if the Pirates had 2013 revenues of $204M and there’s at least a $25M increase in 2014, let’s say their revenues were roughly $230M. Using the 50% rule of thumb, the 2015 payroll should be around $115M. But it’s not, as Frank Coonelly has stated that it would be in the low $90M’s range. If the Pirates sign Jung-ho Kang, it may be about $95M.

The question is — where is the extra $20M? Some is surely profits, some be debt repayment, but I hope that in the midst of this contention window with a top-5 player in all of MLB, that the Pirates are putting every available dollar into the team.


Follow The Point of Pittsburgh on Twitter @thepointofpgh or like us on Facebook.



Nerd engineer by day, nerd writer at night. Kevin is the co-founder of The Point of Pittsburgh. He is the author of Creating Christ, a sci-fi novel available on Amazon.

25 Comments on A Discussion on the Pirates’ Revenue and Payroll

  1. Lots of assumptions and estimates. You have no idea what the pirates revenue’s are, or any other team for that matter. I have read that MLB players get about 42% of revenue in salaries (its one of the arguments for a salary cap that players would get more if a cap was in place).

    While I appreciate the effort, you basically have no idea what you are talking about.

    • Kevin Creagh // January 13, 2015 at 6:39 PM //

      Never intended for it to be held as gospel, but rather as a conversation starter on the murky subject of revenue/expenses.
      Some of the numbers, though, were given to me directly from senior management on the business ops side of the Pirates, so they’re better than just a wild guess.

      Thanks for reading and taking the time to comment, even if you don’t agree with it.

  2. TSweeneyG7 // January 14, 2015 at 3:40 PM //

    I’d be interested in the real numbers of the other revenue streams. I would guess that it isnt too different from Forbe’s numbers from last year.

  3. Kevin

    There are breakdowns for revenue streams that you propose, including the MLB revenue sharing process. Please note their are costs that you are ignoring outside of MLB such as farm clubs, scouts , coaches , senior management.
    Additionally investment cost for both the international and MLB draft. Player salaries is not the only attribution , there are insurance issues for medical, disability and pension plans. So costs are attributing from a revenue increase cannot be solely given to players salary increase.
    For 2015 revenue from MLB including the revenue streams share of licensing product , MLBLAM , and the Lerner sale totals $102 million. This does not include revenue for being a small market team. This amount for 2015 revenue will be a small incremental growth over 2014.
    The figure of $90 million does it include the player benefit costs , which would make players salaries at $80 million approx plus players benefits. Would appreciate a response

    • Kevin Creagh // January 18, 2015 at 12:31 PM //

      Correct. That’s why teams in all leagues aim for no more than 50% of revenue on Major team payroll. There are secretaries, scouts, coaches. But you need 20 “office folk” at $50K to equal $1M — meaning that for the cost of Jared Hughes, you get most of the front office folk. Insurance and medical like you said (est. around $10M) is not accounted for here as an expense.

      As I showed in the other streams, I mentioned the MLBAM and the Lerner sale (referred to as the BELP investment). That goes to the $230M total estimated revenue.

      The 2007 leaked audit on Deadspin for the Pirates is outdated in terms of figures, but the line items still hold true.

      • If I made 50k working in the city for the Pirates I would probably walk. Don’t get be wrong.. dream job but i think you are low balling the average salary by at least 25% but that is just my opinion and really doesn’t effect the final number much.

        There are more scouts and assist scouts, coaches assistant coaches, medical staff, etc… and don’t forget about the millions of sporting and medical equipment, the time and money to charity and community work, oh yeah and facilities and uniforms.

        There is A LOT left out of these types of discussions and usually are just time fillers until spring training starts. That said I will say it does look like you put some thought into the story and isn’t bad just missing a couple things to get a more realistic estimated final number… this story probably gets it as close as any i’ve seen recently

        I’d like to see the bucs spend more for talent, and they have been now that they have the potential to be a winning team. as you said though it is a business in the end and anytime you over pay for product (in this case talent) you run the risk of going in the red. the past few years they’ve done a pretty good job of finding talent at wholesale prices. There just are not those players who fit the payroll. everyone knows the jays overpaid Martin but the Bucs offered him similar with one less year that would have been ‘close’ to the same money on average yearly after you take into account Canada’s taxes.

        I know if I ran the team.. I probably would’ve bankrupted it by signing Garrett Jones to a 20mill 10 year contract though hes probably 2-4 mil on a good day.

        • Kevin Creagh // January 18, 2015 at 6:56 PM //

          Joe — remember, the article was about the total revenue versus JUST the MLB payroll. If I’m assuming $230M of total revenue, that would leave $115M for the “other stuff”.
          Baseball pays notoriously low. Minor leaguers get $1000/month in the low levels. Yes, scouts and low level entry people are making $50K (or less) just to be in and around the game. Many front office people start off as unpaid interns.
          Here’s an article discussing it, with comments from Mark Cuban:

          • that article does little to back up the little pay. It just suggests how to get in to front office. Cuban and you say ridiculously low pay which is probably twice as much as the average non-billionaire fan makes. I wouldn’t say i doubt Cubans claims but he isn’t in baseball to my knowledge though i’m sure his team researched it pretty extensively when putting bids on teams.

            I now what your article was about, I just think you left things out.. like anyone of these people:

            Why not do an article on all the “other stuff” and maybe compare it to a team like the dodgers or another huge payroll team.

    • The farm clubs are independently owned and operated. I think if anything they are a small source of revenue, not an additional cost.

      But, each team has HUNDREDS of employees making 50K TO 100K a year. Literally HUNDREDS.

  4. Indianapolis resident. Pirates sign quality AAA vets every winter and have top notch prospects for us to see here. Team draws very well. The Indians run a profit too while ticket price is quite below the AAA norm. $5 grass area is great. MLB teams can challenge without spending like those in AL East.

    • Kevin Creagh // January 18, 2015 at 12:26 PM //

      Agree, but you don’t get extra credit for being successful on a lesser payroll. The money is there. There’s so much money in MLB right now, it’s like stuffing it under a mattress until it’s spilling out the sides. Last year’s average MLB payroll was $110M, so the Pirates will prob be at $95M with a $120+M average league payroll.

      Again..not saying spend to spend. Spend to improve the team during the current contention window on a key need.

  5. Doobydoobydoo // January 18, 2015 at 10:59 AM //

    How much of this revenue goes out the door to pay federal, local, and state tax?

    • Kevin Creagh // January 18, 2015 at 12:23 PM //

      Teams have all kinds of economic/auditing tricks to show a profit/loss. These numbers in the article are referred to as EBIT (Earnings Before Interest Taxes). Like all good American corporations, MLB teams can offset a lot of taxes

  6. Fred Andrews // January 18, 2015 at 11:28 AM //

    As someone who used to work for an MLB team in finance, you are missing somethings from the calculations, but interesting. For tickets you say that the Pirates keep 90% of the revenue, I am assuming 10% is tax, but teams also pay the visiting teams out of the gate, which when I was there was 35%. Why do you think teams didn’t want to play in Montreal when they were only drawing 5K/game? With hotel & per diem payouts to players, you couldn’t cover your expenses when you played there. Based on your calculations that would be a $10M drop in revenue, however it would be more than made up for in road receipts the team would earn as I think Pittsburgh has one of the lower priced ticket in MLB. Go Buccos!

    • Kevin Creagh // January 18, 2015 at 12:21 PM //

      Thanks for reading. I would like to hear about your time with an MLB team. Feel free to email, if you wish, to kevin [at]

  7. Kevin, I realize your numbers are ballpark numbers.
    Some of that 20mil is probably going to Kang and some of it must be held in reserve, possibly to be used at the trade deadline.
    One major point of note in the article about Nutting. I don’t know of any owner that spends his own money on his team, why that fact is so hard for the public to absorb is beyond me. Revenue drives the bus.

    • Kevin Creagh // January 18, 2015 at 12:19 PM //

      In the article, I was presuming a $95M payroll figure and including Kang. Since this went up on Monday, it was revealed that Kang’s commitment is much less than anticipated — $16M v. $21M total. The posting fee is a lump cost, but his actually salary is very small.

      And I agree about the owner-money thing. That was why I wanted to stress that in the article, in an attempt to advance the conversation on that to the general public.

    • Mike Illich famously dips into his own money for the Tigers.

      George Steinbrenner used to like 30 years ago.

      But typically, no owner does.

  8. thanks for article. Seems pretty thorough. One question on debt is who are creditors? I’m assuming the debt is owed to banks but would be interesting to know for certain.

  9. I am ok with arbitrary estimates. It’s a thought exercise, after all.

    I am not ok turning $18.13 into $20 for no reason. You have the correct number – no need to artificially inflate it 10%. Is it to support the narrative of your article better?

    I also used to work for a team – the Pirates, in fact. Season Ticket Sales. I understand we didn’t have access to the books, but we used internal estimates on how much buyers would spend on food. On average, a family of four spends less than a young couple. We want people buying drinks, not food. And $25 is crazy high. I don’t have a number but I know they didn’t make anywhere near $25 in concession sales per person. Not even close.

    The front office salary is much higher. Most executive teams make +/- $10 million a year.

    Lastly, again, not knowing the details – but there was compensation for parking, at least enough to cover attendants and security.

    • Just to fair – this was 2004/2005. I don’t know what 9+ years of inflation and a better on-field product has done to food and beverage prices. Back then we still had the buzz of a new stadium but weren’t very good.

      I do know that beverage was better than food. Drinks are quicker, higher profit margin and repeat, whereas food clog the line, have less margin and aren’t repeat purchases.

    • Kevin Creagh // January 18, 2015 at 6:52 PM //

      The $25 was for food AND merchandise. If a person buys a Coke and a Hamburger, that’s probably $10 at a minimum, off the top of my head. Beer? $6-8. Primanti’s? Pulled Pork Pierogie Stacker? Crab Fries? Those are around $10 each. It adds up. If you buy virtually anything in the Clubhouse, you are at the threshold. Yes, prices have gone up in 10 years.

  10. Didn’t the Pirates get anything from MLB for making the playoffs the last two years, or do only the players and coaches themselves get pieces of the playoff share pie?

  11. paul maggio // January 19, 2015 at 1:17 PM //

    Fans who complain about Nutting need to look closely at the mess in Philadelphia. Yes, they won a World Series in 2008 but at what cost. John Middleton, their 3+ billion dollar owner dipped into his fortune to pay toward the bad contracts they are now stuck with. Now they are having a fire sale. Believe whatever figures you want, but the Pirates can’t afford mistakes like that.

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