The Detroit Tigers, for example, have been one of the most aggressive bidders in the market, landing only Troy Percival to date, but attempting to sign -- and thus influencing the market for -- Glaus, Edgar Renteria and Carl Pavano. Thanks to the NHL lockout, Tigers owner Mike Illitch doesn't have the operating costs for his Red Wings, so he can afford to free more capital for his baseball club.

 

Just saw this on ESPN.com in a Sean McAdam article. We have had numerous discussions about this topic, but this kinda confused me. So, can he use money earmarked for the Red Wings to upgrade the Tigers or not? Or am I not reading this right?

Just saw this on ESPN.com in a Sean McAdam article.  We have had numerous discussions about this topic, but this kinda confused me.  So, can he use money earmarked for the Red Wings to upgrade the Tigers or not?  Or am I not reading this right?

 

 

 

He can use his money however he wants. If it's personal $$ he was using for the Wings - which he obviously isn't using now - he can use it where he chooses. But $ that is already tied into the Wings.. no, he can not take that from the Wings and use it for the Tigers. I do question if these comments are based on facts or Sean just assuming. The Tigers have a lot of cash to spend thanks to the AS game. IMO, that's where the $$ is coming from. Illitch is too smart to be taking from Peter to pay Paul.

Thanks Steff...

 

I think the part that confused me was the "operating costs for his Red Wings." Isn't that money already tied into the Wings? Or is he, like you said, using personal money, that he would have used for the Wings, like new contracts that can't be signed or new unis or something like that...

lol I remember this discussion. I wasn't explaining well enough. But I'm glad ESPN has put that up there.

Its actually fairly simple. NHL teams budgeted and planned for this occurrence so they knew how much money it would cost to continue to run the club. He can do pretty much what he wants with his money.

 

For example, say the Sox had $75 million budgeted for player payroll and baseball had a strike/lockout. Reinsdorf could do whatever he wanted to with his own money and could spend and extra $50 million on the Bulls if he wanted to. Now I am guessing he can't just withdraw $50 million fron White Sox accounts, but if you have two businesses, there is nothing keeping him from spending money in one place that won't spend somewhere else. So he keeps the books straight. All that does is make the Sox more profitable than the Bulls by about $50 million (in theory based on the assumption that the additional $50 million doesn't create more revenues for the Bulls).

 

It's basically paper money.

 

Granted, this example would not work because I am assuming the investment groups for the Bulls and Sox are not the same and not all of the money is Jerrry's. But the principle is still the same. However you account for it, money can be allocated wherever the owner wants it.

Allow me to add that all of this is based on assumptions. We don't know the finances of a hockey team. Even if their "operating expenses" are way down, their revenues obviously would be the same.

 

My thought is if hockey teams were losing as much money as they said they were, that without revenues coming in, they can't be raking in profits now, just because their operating costs are down. If they were due to lose $20 million this year and now will only lose $10 million, would an owner spend the $10 million elsewhere? I guess if he thought it would help his other investment make money it is possible.

 

The bottom line is that there are ways he could do whatever he wanted with his money. Whether he is spending more on the Tigers simply because the Red Wings season is in the tank, is very assumptive and there is no way to know.

 

My guess is he is spending more on the Tigers because he got sick of seeing a less than half full brand new stadium. After a season like the Tigers had two years ago, he has to spend money just to bring them back to respectability and if Detroit fans will spend more money on the Tigers since there is no hockey then that is just a bonus.

Folks.. franchises are registered as separate corporations and it is a legal no-no for corporations to co-mingle funds without getting into serious legal trouble. Companies can do it legally by creating subsidiaries within and having funds transfer hands by "fake" contracts, but I can not even think of a single way for the two to legally "co-mingle" funds..... They are two completely separate businesses.

Folks.. franchises are registered as separate corporations and it is a legal no-no for corporations to co-mingle funds without getting into serious legal trouble.  Companies can do it legally by creating subsidiaries within and having funds transfer hands by "fake" contracts, but I can not even think of a single way for the two to legally "co-mingle" funds..... They are two completely separate businesses.

 

Is that true even if they are owned under an umbrella, let's say, for instance, let's say the Bulls and White sox are owned by the same group of owners that have incorporated. The new corp. is called SoxBulls, Inc. Would they be able to shift funds between teams then?

Is that true even if they are owned under an umbrella, let's say, for instance, let's say the Bulls and White sox are owned by the same group of owners that have incorporated.  The new corp. is called SoxBulls, Inc.  Would they be able to shift funds between teams then?

 

I think the professional leagues have by-laws against that actually. I think corporately it would be legal though...

Folks.. franchises are registered as separate corporations and it is a legal no-no for corporations to co-mingle funds without getting into serious legal trouble.  Companies can do it legally by creating subsidiaries within and having funds transfer hands by "fake" contracts, but I can not even think of a single way for the two to legally "co-mingle" funds..... They are two completely separate businesses.

 

What I am talking about has nothing to do with "transferring funds".

What I am talking about has nothing to do with "transferring funds".

 

 

 

I didn't say it did. I gave an example of how companies can do so. This is all moot because it can't be done. And if there was some way that it could be, it would give an unfair advantage to those that own two separate franchises. The single sport owners would be raising hell.

I think the professional leagues have by-laws against that actually.  I think corporately it would be legal though...

 

 

 

Yes, corporately it would be. I transfer funds daily from one division to the other at Bekins. However.. if our President owned Bekins and Mayflower.. and Mayflower was in financial trouble.. he could not use Bekins $$ to bail Mayflower out.