Fair or Foul?

Over the past three years the Pittsburgh Pirates, under owner Bob Nutting, have made more money selling tickets, hot dogs, beer and other concessions at PNC Park than they’ve spent on the teams they’ve fielded.

The Pirates collected $215.6 million in net ticket and concession revenues between 2022 and 2024. Over that same period, player salaries totaled $214 million — or about $1.6 million less, based on a Pittsburgh Post-Gazette analysis of the club’s audited financial statements.

In all three of those seasons, the team’s payroll was among the lowest in Major League Baseball — even as the club hauled in additional revenue from MLB and national TV deals estimated by Baseball Prospectus to be in the ballpark of $60 million a year.

The findings for the three seasons after the 2020 and 2021 pandemic years probably won’t sit well with Pirates fans fed up with losing and what they perceive as the team’s penny-pinching ways.

In the past year, some of those disgruntled fans have rented billboards to express their displeasure or have started to show up at Sports and Exhibition Authority meetings to plead with the PNC Park owner to change its lease with the team to force Mr. Nutting to spend more or sell.

But the Pirates argue that any analysis comparing ticket and concession revenue to player payroll is as errant as a wild pitch, failing to take into account the many other costs that major league teams face.

“We’re not taking any dollars out of it,” Pirates President Travis Williams said in an interview. “We’re not paying Bob. We’re not making a distribution to the ownership group. All the proceeds that we generate are being reinvested back into the ballclub in some form or fashion.”

The three post-pandemic years aren’t the only ones in which the lion’s share of the Pirates payroll has been funded by ticket and concession sales, as the Post-Gazette first reported in a 2022 analysis.

For instance, in 2014 — when the Pirates made the playoffs — the year-end payroll totaled $78.8 million while ticket and concessions revenues tallied nearly $79.8 million, the audited numbers showed. In 2015, another playoff season, the payroll ended up at $96.1 million while ticket and concession revenues landed at $95.8 million — a difference of $285,563.

For some, the findings showing little has changed despite year after year of disappointing results on the field call into question how serious Mr. Nutting is about competing.

When PNC Park opened in 2001, it came with the expectation that the sparkling ballpark — built largely with taxpayer money — would help the team financially, allowing it to become more competitive, officials said.

Former Mayor Tom Murphy, who was the main force behind the drive to build the North Shore gem, said in an interview recently that the Pirates simply haven’t lived up to their end of the bargain.

Mr. Nutting’s Pirates have produced winning teams in only four of the 18 seasons he has owned the franchise. The last winning season was 2018; the only playoff success under Mr. Nutting came in 2013, when the Pirates beat the Cincinnati Reds in a wild-card game.

“We built the best ballpark in America and they had the worst team in America the last 20 years. So it’s sort of evident they have not invested in the team even though we built a great baseball park for them,” Mr. Murphy said.

The Pirates see it differently. The team maintains that the Post-Gazette analysis doesn’t factor in all of the other costs of running a major league franchise.

Those expenses include funding eight minor league teams, 270 players overall, a 150-person support staff including coaches and trainers, front office personnel, developmental costs, operating and maintaining PNC Park, Pirate City, LECOM Park in Bradenton, Fla., facilities in the Dominican Republic, game day expenses, scouting, analytics and travel costs.

The revenue the team generates locally and through MLB go toward supporting that ecosystem, the team stressed.

As for Mr. Murphy’s assessment, Mr. Williams insisted that the club has lived up to its end of the deal — by generating $2.3 billion in economic impact across the state and $1.7 billion in Pittsburgh between 2017 and 2023, minus the pandemic years, and by bringing development to the North Shore in partnership with the Steelers.

The team also estimated that it produced more than $650 million in direct and indirect spending and $11.2 million in state tax revenue in 2023.

“So we are absolutely driving significant economic impact to the region. I think those were the things that people were most concerned with when they were sitting down and formulating the plan for PNC Park,” Mr. Williams said.

Putting together the financial pieces

The Post-Gazette secured the ticket and concession information for the 2020 through 2024 seasons through a Right to Know request to the SEA. It was a follow-up to a similar request the newspaper made in 2019 for seasons dating to 2007.

Under the team’s lease, the Pirates are required to submit financial statements related to the operations of PNC Park, which is consistently rated as one of the top ballparks in America.

The Post-Gazette obtained the first round of documents after a two-year legal fight with the Pirates that resulted in a settlement. In the settlement, certain duplicative information related to the request was not received by the newspaper because it was asserted to be legally protected confidential information, proprietary information or a trade secret under the state’s Right to Know law.

As part of the Post-Gazette’s most recent request for the information, the Pirates provided the documents that the team had submitted to the SEA under the same terms as before, as well as providing a breakdown of ticket and concession revenues and year-end player salaries based on their audited financial statements. The audited numbers were used for this story.

The latest figures show that the Pirates’ year-end payroll last season totaled $86.5 million, while ticket and concession sales generated $84.8 million.

In 2023, Mr. Nutting spent $69.6 million on player payroll while hauling in $77.7 million in ticket and concession sales — or $8.1 million more.

In 2022, the first full season with fans coming out of the pandemic, the Pirates spent $4.8 million more on payroll ($57.9 million) than they collected in ticket and concession revenues ($53.1 million).

Besides 2014 and 2015, there were two other years — 2012 and 2010 — when payroll and concession and ticket totals fell within $1.6 million and $6.1 million of each other, respectively.

There were also seasons when player spending far outstripped concession and ticket revenues.

In 2018, for instance, the Pirates’ year-end payroll totaled $91.9 million, while concession and ticket revenues tallied $64.5 million, a difference of $27.4 million.

The next year, payroll was $77.1 million and ticket and concession revenues were $57.4 million, a $19.7 million gap. And in 2017, Mr. Nutting spent $13.1 million more on payroll ($95.5 million) than he received in ticket and concession revenues ($82.4 million).

’They could increase payroll and still make money’

How the Pirates’ spending practices, in relation to ticket and concession revenues, stack up against other major league teams is almost impossible to tell. Such information is privately held and guarded more closely than some state secrets. The only club with books that are publicly available is the Atlanta Braves.

Nonetheless, several experts said it is unusual for a team’s payroll to track so closely with gate receipts and the sale of nachos, hamburgers, Primanti Bros. sandwiches and other concessions.

“If this is what they’re doing, I would say it’s quite rare,” said Marc Ganis, president of Chicago-based Sportscorp Ltd., a sports industry consultant. “Most baseball teams take local broadcast revenue and their share of MLB distributions into account, as well.”

A team that can cover the bulk — or all — of its payroll before factoring in TV, luxury tax, or other MLB revenues “is going to wind up with a positive bottom line,” added Rob Mains, a writer for Baseball Prospectus, a website dedicated to the analysis of the sport.

And that apparently is exactly what has happened. In its latest Business of Baseball tallies, Forbes ranked the Pirates as the third-most profitable team in the major leagues in 2023, with a net operating income of $68 million. The magazine projected the team’s total revenue at $309 million — or more than four times its player payroll that year.

The only teams with a higher net operating income — essentially profit before taxes and interest — were the Seattle Mariners and the Baltimore Orioles, at $76 million and $99 million, respectively.

Pittsburgh tied with the Tampa Bay Rays, another small-market team, and the Chicago Cubs for third place. The Rays’ year-end player payroll in 2023 was $83.8 million and the Cubs was $195.5 million.

If the Pirates are in fact able to cover payroll using mainly ticket and concession revenues, that tells Mr. Mains that “they are not as aggressive in expanding payroll as other teams are who are able to preserve profitability.”

“They could increase payroll and still make money,” he said.

‘All of that money is being reinvested’

The Pirates’ Mr. Williams disputed the Forbes estimates, calling them “patently wrong.”

Such projections, he contended, do not reflect the amortization of signing bonuses for minor league players, taxes, or the “significant” capital that the team, like others, must put into its business and the facilities it operates.

In other words, Mr. Nutting is not pocketing profits, Mr. Williams said.

“All of that money is being reinvested in some form or fashion,” he said.

And while some fans may look at the ticket, concession and payroll numbers over the past 14 years and conclude that Mr. Nutting is a miser, the team claims that the numbers show the opposite — that as ticket and concession revenues have risen, so has player payroll.

That means the much-maligned owner is reinvesting the money into the Pirates, the team said.

Beyond the gate receipts and concession revenue generated by Pirates games, SEA documents show that concerts at PNC Park from 2021 through 2024 produced $55 million in ticket earnings. Mr. Williams said the vast majority of that money went to the performers and the promoters and to pay for stages, seats and other production costs. The Pirates said they may have earned $500,000 on each of those shows.

“We’re not going out and signing a free agent on that revenue,” Mr. Williams said.

Still, some are skeptical of the Pirates’ economic and revenue arguments.

Mr. Mains, a former equities analyst, pointed out that MLB’s other 29 teams have the same expenses as the Pirates — things like supporting minor league teams, support staff and so on.

Based on the Forbes estimates, he said: “The fact remains that the team is still making a pretty nice chunk of change each year despite those increased expenses.”

He also noted that tickets and concessions are far from the Pirates’ only revenue streams.

In addition to advertising and other sponsorships at PNC Park, the Bucs get a slice of all MLB national revenue. That would include sponsorships and TV revenue — which has been estimated at $60.1 million a year by Craig Goldstein of Baseball Prospectus.

Other sources of income include revenue sharing as well as the luxury tax, under which the highest-spending teams whose payrolls exceed a set threshold contribute to a pot of money distributed to those clubs under the threshold.

While the exact disbursements are not known, the pot itself totaled a record $311 million last year, with nine teams contributing to it, ESPN reported. After deductions for player benefits and retirement funds, that left $153.7 million to be divided among the other 21 clubs — or as much as $7.3 million per team.

Mr. Williams countered that the Pirates have seen a “significant decline” in local TV revenue after the expiration of their previous deal with AT&T SportsNet and the subsequent co-ownership of SportsNet Pittsburgh with the Penguins.

He would not say by how much.

The old deal was believed to be worth $50 million to $60 million a year. But with the new partnership, that reportedly has been cut in half.

“While it is true ticket and concession revenues have increased every year over the past five years, it is also true that our television revenues have been negatively impacted in the past couple of years due to the downturn in the cable industry,” Mr. Williams said.

“We have continued to increase player payroll and our investments in all of these other areas over this same period. We continue to pour all of our resources back into the team and the ballpark. This full economic picture helps to dispel the false narrative around our finances and demonstrate our owner’s commitment.”

‘We want to do this the right way’

Beyond the Pirates’ 2023 operating income and revenue, Forbes estimated the overall value of the Pirates franchise at $1.32 billion — a team that Kevin McClatchy bought for $92 million in 1996. Mr. Nutting took control in 2007.

The club has proven to be quite an investment — one that has outperformed the stock market, according to Mr. Mains’ computations. He estimated the Pirates’ compound annual growth rate over the past 28 years at 9.9%. During the same period, the S&P 500 stock index’s compound annual growth rate through 2024 was been 7.71%.

Meanwhile, the Pirates’ opening day payroll this year is estimated at between $88.6 million and $89.9 million — $2.2 million to $3.5 million more than last season’s opening day payroll estimates.

For some fans, it all adds up to one dreadful reality: that Mr. Nutting has no interest in spending more to improve the team — not even with a strong young pitching core headed by the dazzling and dominant Paul Skenes.

Fans and pundits feel that with Mr. Skenes in the fold, the Pirates should boost the overall payroll now to take advantage of the window in which the 22-year-old phenom is in Pittsburgh — before he becomes a free agent and, most likely, bolts for richer pastures.

Mr. Murphy, for one, said he believes that if the Pirates spent more money, they would make more money.

“I do feel if the Pirates fielded a better team they would be more competitive and bring in more money,” he said. “But they’ve chosen not to do that.”

Other observers calculate that Mr. Nutting is hurting himself by keeping payrolls relatively low. The belief is that if he spent more on players and regularly fielded a playoff-caliber team, it would put more fans in the stands, who in turn would buy more concessions and generate more revenue — and give him the resources to further increase payroll.

That appears to be what happened during and shortly after the Pirates’ most recent playoff years, when the team in 2015 and 2016 had its two best seasons for ticket and concession revenues over the past 14 years. Those were also the team’s two highest payroll years.

Mr. Williams rejected the idea of increasing payroll with the goal of generating revenue for more spending, saying it’s “not a sustainable business model and not responsible, either.”

“I can tell you, in sports there’s a trail of owners who have had to sell their teams or file for bankruptcy,” Mr. Williams said.

“We want to do this the right way. We want to do it the responsible way. We want to do it in a way that provides a winning product. But we also want to do it in a way that makes sure that we have the Pittsburgh Pirates in Pittsburgh for a long time.”

‘The bottom line is that it’s up to him’

Some fans have grown so frustrated with the Nutting Way that they have appealed to the SEA, the ballpark owner, to raise the rent that the team pays or to include in the next lease clauses tied to on-field performance or attendance. The Pirates’ PNC Park lease expires in 2030.

But as much as state Sen. Wayne Fontana, the SEA board chairman, sympathizes, he’s not sure what leverage the authority would have to demand such clauses. As he sees it, the issue isn’t so much the lease as it is a commitment by Mr. Nutting to improve the team.

“As a Pirates fan, I don’t think there’s any secret that the current ownership isn’t spending money, more money or extra money over and above, to get quality players,” the Brookline Democrat said. “The bottom line is that it’s up to him — what does he want to do?

“If [fans] don’t like it, don’t buy a ticket, don’t buy a shirt, don’t watch it on TV.”

Likewise, Mr. Murphy isn’t sure that the SEA can include clauses in the lease to force the team to spend more or be more competitive. “It would be extraordinarily difficult to figure out how you would phrase that,” he said.

While Mr. Williams said he appreciates the passion of the fans who are demanding such action by the SEA, he added that he’s unaware of any situation in which a public sector sports venue owner has dictated to a team how it should run its business.

“It would be like the owner of a building Downtown leasing the space to a company and telling that company how to run their business,” he said.

Mulugetta Birru, an SEA board member who was executive director of the city’s Urban Redevelopment Authority during the 1996 sale of the Pirates and the negotiations over PNC Park, remembers being told that the new venue would help to produce a championship team.

“Obviously our expectation is that we would build the best ballpark in the country and we would be awarded with a winning culture,” he said.

Yet, while the Pirates’ winning seasons have been few and far between since the ballpark’s 2001 opening, Mr. Birru said he still believes the franchise brings value to the region by attracting anywhere from 1.5 million to 2 million fans to the North Shore most seasons.

“The economic impact is still significant. Do we want a winning team? Absolutely. Do we measure them only by winning? I don’t think so,” he said. “I think they still bring huge benefits to our region.”

Mr. Mains, the Baseball Prospectus writer, said he doesn’t believe Pirates fans should have to settle for just that.

Mr. Nutting, he believes, has the financial wherewithal to increase payroll and still be profitable.

“You have this young core. If you can build around that with some established veterans who aren’t going to break the bank, you can compete in one of the more winnable divisions in baseball and still make money,” he said.