Friday, May 23, 2008

Another Look At The Browns' Debt

President Von der Ahe, of the St. Louis Base Ball Club, last week elected his Board of Directors. Of course, the stock holders went through the form of an election, but as Mr. Chris Von der Ahe owns about seven-eighths of the stock the election was merely a matter of courtesy. Anyhow the following directors were elected for the ensuing year or rather as long as they do what is right with the great base ball interests of Mr. Von der Ahe: Chris Von der Ahe, J.W. Peckington, Charles Higgins, Benjamin Steward Muckenfuss and Edward Becker...

Next week a meeting will be held and a statement will be made regarding the business done during last year in horse racing and base ball. It is stated that the Browns cleared $12,000 on the season.

Von der Ahe acknowledges that there was only one year in all his experience as a magnate in which he lost money on base ball. That was during the Brotherhood year. And in the future he promises to stick entirely to base ball and become a pillar in the church. This change in Chris' temperament is accounted for by an interview which appeared in the "Republic" the other day, in which a director of the St. Louis Club says:

"We buried about $40,000 in the chutes, which, all stories to the contrary, paid us about 25 per cent on the investment. That leaves us still $30,000 in the hole on the chute question. Then we paid Fred Foster $42,000 for his interest in that track and we lost some money running races in opposition to the other tracks. Oh, we had a mazy time of it when we went against the racing game. I think that we will make money out of the chutes, and we have it fixed so that we will not lose another cent on the race track, so I think we have gotten over our worst days."

It is hoped that this is true and that the St. Louis Club will use some of its profits in the future purchasing new players.
-From Sporting Life, January 23, 1897

Some notes:

-Based on this information, we can say that Von der Ahe still had complete control of the Browns going into the 1897 season, controlling "seven-eights of the stock" and that Edward Becker was already on board as a minority stockholder. Becker, within the next year and a half, would come to control eighty-five percent of the stock and rest control of the team from Von der Ahe.

-The Browns were a profitable organization from a baseball perspective. The financial difficulties that pushed the team into receivership were a result of outside economic interests rather than a failure of the Browns to make money.

-Based on the information from the Republic, it looks like Von der Ahe over-expanded between 1892 and 1896 (the new ballpark, the racetrack, etc) and was unable to generate enough cash flow to cover the debt that he took on in that expansion. In January of 1898, the total liabilities of the club would be listed as $58,718 and most of that was what was owed on the ballpark bonds and money lent to the club by Becker in an attempt to keep Von der Ahe afloat. A total debt of $127,000 was listed for the corporation itself and that included the investments in the racetrack and the chutes as well as the debts of the club. If my math is correct (and assuming the chutes brought in another $10,000 in 1897), the investments in the ballpark, the racetrack, and the chutes alone were responsible for more than seventy percent of the corporations' debt. Becker's loans to the club (which were a direct result of Von der Ahe's over-expansion) amounted to about ten percent of the debt.

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