I Am Not A Financial Journalist, But...

Blogs such as this one serve as a corrective to the faulty journalism produced by the big media companies.

We’re all part of the scrum.

If DG Lewis is not a financial journalist. . .more’s the pity. Bishop 1973 also makes an excellent point re: Ron Burkle, the moneybag behind Mario.

I’ve thought for a long time that baseball’s business model is broken. Small market/low attendance teams are greatly disadvantaged; consequently their fans suffer.

And yes, there is an agenda behind the relentless Nutting-bashing.

…part of the agenda, too, is that the Nuttings do appear to have a legitimate reputation for being cheap with how they run their newspapers (cue bucdaddy!). Who reports to us on the Pirates? Other newspaper people.

Oh yeah, and John Perroto, who was fired by a Nutting-owned publication and just won’t let it go.

A lot of Nutting fans on this thing but I am not one of them.

I like what Neil Huntington has done, but I would obviously love to see BN and FC gone asap, although it won’t happen.

-Just my thought

The old regime dug this organization a deep, deep hole. And, as I was saying NH is doing an unbelievable job, and I support him 100 percent.

They are at a such greater spot than years past.

Just am not a fan of Nutting

I like the trades. We trade below average players who sucked.
Good. Pay attention. I like NH I just don’t rlly like Nutting that’s all. And the people who say they aren’t all nutting fans are jumping down my throat for a simple opinion

But we don’t know if Nutting will fully “turn it around” fully except insofar as he supports NH. Having said that, if Mario/Burkle committed to KEEPING THIS PLAN IN PLACE and retaining NH or getting a like-minded GM, then I would absolutely like them to own this team.

Agree 100 percent with you. It would be perfect. Thank you for understanding

I am not calling on him to sell the team but I am a huge fan of Mario, regardless if he could do it I believe I would like to see him try because I believe in him.

And I believe in him and his decisions on drafts and international players.

The draft is where we must build and it appears they are doing just that.

Not send their business/financial reporter to this meeting??

I think nearly all at Bucs Dugout agree DK is a good baseball reporter and he owns the Pirates beat, but he shouldn’t be tasked with covering this amount of finance stuff. Sloppy.

I love Mario, and always have. I am anything but a bandwagon Pens fan. A lot of people forget, how bad the pens were, and for how long. Not as long as the Pirates, but they were definitely bad. As many here have pointed out, the stars aligned for the Pens to allow them to improve so quickly.

The one thing Mario has to offer that Nutting can’t compete with is the Penguins themselves. We all know that Mario’s interest in the Pirates has nothing to do with some overwhelming love for baseball. They want to own both franchises to maximize profits of a new television network that would feature both teams games. Since the Penguins seem to be able to spend to the cap right now with what they have, this could potentially have a positive financial effect for the Pirates. It could make a lot of revenue available to them if they chose to use it to increase salary.

The current administration seem to be making the right moves, which it obviously why everyone is so cautiously optimistic. i can’t wait to see how the plan unfolds. I hope they get a chance to try. I will say, that i get the same positive feelings around this team that I got from the Pens when they began to turn the corner.

Sorry for rambling.

This post starts by trying to back-out the amount of the loan from the cash payment in 2008 and the standard corporate bond rate of 6.76%. The estimated amount of the 2003 loan is $25,000,000 (at that rate of return).

Good thing the poster isn’t a journalist, because the 2008 Financial Statement provides the information in black-and-white on pages 27-28.

The Nuttings lent PBC $20,000,000 (not $25 million) in 2003, at an interest rate of 15%.

Furthermore, the holders of the “Preferred LP Units” — i.e., the Nuttings — have all the rights under the agreement. During the redemption period, a three-year period beginning in 2008 and ending in 2011, the holders of the Preferred LP Units may elect to receive the accrued interest and principal (called the Cumulative Preferred Conversion Amount) in either cash or Common LP stock.

According to the 2008 Financial Statement (on p. 28), the holders “required” PBC to pay $9.6 million of the Cumulative Preferred Conversion Amount in cash. The holders “elected” to receive another $20,000,000 of that amount in Common LP stock. The holders “reserve all rights” with respect to the $10,400,000 balance of the Cumulative Preferred Conversion Amount — i.e., they haven’t decided yet whether to take that $10.4m in cash or equity.

The only obstacle to them exercising their rights however they want — in common stock (equity ownership) or cash — according to the financial statement, is the requirement that PBC’s “lenders” — not the limited partners, but the creditors, all of which are basically MLB itself — consent to cash payments. There does not appear to be any obstacle to the holders of the Preferred LP units taking the stock conversion. Nowhere in the financial statement does it indicate that Common LP share-holders get a vote in the matter.

The exact quote is this (p. 27): “To the extent permitted by PBP’s lenders, during the Redemption Period, each Preferred LP unit holder has the right to require PBP to redeem all or part of the Preferred LP units in an amount equal to the Preferred Conversion Amount as of the applicable redemption date.”

In case you haven’t figured this out yet, the deal was for a cool doubling of $20,000,000 in five years (which is almost exactly 15%, compounded annually).

Now here’s the question for y’all: If the premise of this post was that a return of $9,600,000 on a $25,000,000 investment five years earlier was not so bad as the media are portraying, how do you feel about the return of $20,000,000 on an investment of $20,000,000 five years earlier?

This is a case of people here attempting to blow this loan *in*to proportion in support of an agenda that can only be explained by determined contrarianism or the self-delusional desire to believe that better days are always right around the corner.

People here and in the media appear to be treating the disclosed 2008 Financial Statement as though it pertains to 2007. While the 2008 statement includes information about the fiscal year in 2007, it is provided for comparison purposes and to show how they arrived at the 2008 numbers — which would be incomprehensible without showing where they were the year before.

While it appears that profits from 2007 were used primarily for capital expenditures and to repay about $5,000,000 in debt, there is absolutely no way to know that no distributions were made in 2006, for example.

Similarly, attempts to back out the 2006 profits based on disbursements made to cover 2006 taxes are unlikely to be reliable.

was the plurality owner and managing general partner from 1996 until 2005. The Nuttings became plurality and then majority owners some time in 2005, and McClatchy was replaced by Bob Nutting as managing GP in January 2007.