The Cardinal Nation blog

Brian Walton's news and commentary on the St. Louis Cardinals (TM) and their minor league system

Rochester group increases share of money-losing Batavia Muckdogs

Each year Rochester Community Baseball operates the Batavia Muckdogs, they pick up five percent ownership – but there is a catch.

    Batavia residents might have breathed a sigh of relief last week when the impending move of a New York-Penn League team to Norwalk, Connecticut for the 2010 season was finally announced and it wasn’t their Muckdogs packing their bags. Instead, the citizens of Oneonta, New York lost their minor league treasure, as the Tigers will be on the move.

    Batavia MuckdogsAny euphoria in the upstate New York burg may have been extremely short-lived, however. On Saturday, at least one uneasy shareholder at the annual meeting of the Muckdogs’ funding source, Rochester Community Baseball (RCB), was asking tough questions about Batavia’s professional baseball future.

    In their two years of operating the St. Louis Cardinals affiliate in Batavia, RCB has lost just under $400,000 in the venture, roughly $250,000 the first season and $150,000 in 2009. This has pulled the larger entity, which operates the Rochester Red Wings of the International League, into the red for the first time since 1997. While RCB leaders assure constituents the Triple-A franchise remains their priority, continued losses for both clubs will only increase the level of protest.

    In a very interesting disclosure, RCB president Gary Larder explained that the Muckdogs’ owner, Genesee County Baseball Club, is ceding RCB five percent equity in the team for every season RCB operates it – if the team is sold. With a commitment already in place to operate the Muckdogs in 2010, the Rochester share of ownership will grow to 15 percent this year.

    If one assumes the franchise is worth $4 million to $5 million, RCB could net $600,000 to $750,000 from a sale of the Muckdogs next winter. That would be enough to cover a potential third year of continued losses in 2010 and perhaps even allow for a small profit if the flow of red ink can be stemmed this season.

    As reported by the Rochester Democrat and Chronicle, Larder said the following. “We really don’t know what’s going to happen with Batavia.”

    Apparently nobody does. There is no indication the Batavians want to sell their team anytime soon and unlock RCB’s slowly-growing share. At this rate, they will still own the majority of the team for six more years.

    It is unclear what RCB gets if they decide to walk away before then. Are they essentially stuck in an arrangement that forces them to operate the team until they gain over 50 percent ownership before they could collect their ownership stake and get out? Would they and their shareholders be willing to endure potentially ten years of losses?

    Apparently none of the shareholders posed these questions on Saturday.

    Perhaps Genesee County Baseball Club remains satisfied to watch their share erode at the rate of five percent per year. Maybe the local community will get sufficiently behind the team that it finally makes money for RCB, alleviating some of their shareholder pressure.

    Even if so, this arrangement seems only to be buying Batavia ownership time until the day finally comes when they can no longer live off their equity.

    Follow me on Twitter.

    Leave a Reply

    You must be logged in to post a comment.