Bob Nutting - Good Businessman, Bad Owner

Bob Nutting became the principle owner of the Pittsburgh Pirates in 2007. Nutting was the Chairman of the Board for the Pirates since 2003 and has been part of 10 consecutive losing seasons in his tenure. A baseball man he is not, but a business man he certainly is. Aside from his interests with the Pirates, Nutting is also the Chairman of Seven Springs Mountain Resort and President and CEO of Ogden Newspapers. Bob Nutting may not be a baseball guy, but he knows how to run profitable organizations and grow them to their potential.

The Ogden family was part of an investor group (with Kevin McClatchy as the CEO) that purchased the Pirates in 1996 for only 95 million dollars. After numerous losing seasons, McClatchy decided to move on from the organization and Bob Nutting stepped in as the principle owner in 2007.

Bob Nutting, the business man, knows how to turn a lump of coal into a diamond. Since purchasing the club for 95 million in 1996, the team has grown in valuation exponentially to a 2013 value of 472 million. The 472 million valuation represents an astonishing 43% inrease over the 2012 valuation. Even with the 472 million dollar valuation, the Pirates are still ranked only 27th out of 30 MLB teams in net worth. In fact, the Yankees valuation is currently 2.3 billion (Approx 1.8 billion higher than the Pirates). However, here's where Bob Nutting flexes has mental muscles. The Pirates operating income is 19 TIMES greater than the Yankees. As of March 2013, Forbes reports the Yankees operating income as 1.4 mil compared to the Pirates' 26.8 mil. In fact, only 5 teams in the MLB have a higher operating income than the Pittsburgh Pirates (Cubs, Nationals, Orioles, Padres, and A's).

So, what incentive does Bob Nutting have to assemble a winning baseball team? Regardless of valuation, the Pittsburgh Pirates are a profitable organization. In fairness, Nutting has allowed the payroll to climb to 69 million this year and it appears the club is sticking to the plan set in place by Frank Coonely and Neal Huntington to build through the draft and sign their own players. At the end of the day, Nutting may not be the owner that will help assemble a winning baseball team, but he is the owner that will continue to make the team a successful organization from a financial perspective.

My issue with Bob Nutting is the amount of operating income. When your team hasn't experienced a winning season in two decades, you shouldn't have the 6th highest operating income in the league. I understand owning the team is a business for Nutting and he's running the business profitably, but as the owner of a professional sports organization, he owes it to the lifelong fans and the sport to do his best to put a winning team on the field. In his tenure with the Pirates, Nutting has not done his best assemble a winning team. I can't help but think how things might be different if Mark Cuban would have purchased the Pirates...


Forbes 2013 MLB Valuation - Pittsburgh Pirates

Owner: Robert Nutting
Championships: 5
Price Paid: $92 M
Year Purchased: 1996
Revenue : $178 M
Operating Income : $26.8 M
Debt/Value : 27%
Player Expenses : $69 M
Gate Receipts : $40 M
Wins-to-player cost ratio : 151
Revenue per Fan: $40
Metro Area Population: 2.4 M

Profile

The Pirates posted their 20th consecutive losing season in 2012. But the Pirates have improved a lot on the field and have been in the playoff picture for much of the past two seasons. Owner Bob Nutting has been spending a lot on drafting potential stars and has publicly stated he will use the increase in MLB's new national broadcasting television deal--worth $25 million a year more on average starting in 2014--on improving the team. Attendance jumped 8% last year to 26,148 per game.