by Linda “2×4” Pewterschmidt-Takayama, LRS Financial Analyst, Shin Seiki Post
November 11^th, 2012

According to data collected by Forbes.com, the LRS posted a $5.5M net loss for the 2012 season.  The modest loss was a tremendous improvement over the 2011 season, when the Japanese league lost a jaw-dropping $39.6M.

Though the league lost money overall, most teams either turned a profit or experienced only small losses.  This is to be expected, as GMs are now almost entirely free of contracts that were signed before the PEBA takeover in late 2009.  Things are looking up in the East.

Here is how each team fared in 2012, in order profitability:

1. Neo-Tokyo Akira – 2011 Profit: $-6.4M / 2012 Profit: $14M
   Not only were the Akira the most successful team on the field in 2012, they were the most successful financially.  Having built a young, talented team through their farm system and trades, the Akira find themselves in an enviable position, with $20M in cash on hand and the ability to afford over $30M in additional payroll for 2013.  That is quite a feat.  Their success should give hope to other teams in the process of rebuilding.
2. Naha Shisa – 2011 Profit: $-10.6M / 2012 Profit: $8.7M
   Though not quite as advanced on the talent side of things as the Akira yet, the Shisa are in a similar situation financially, with minimal contractual liabilities, a large cash hoard and financial flexibility for 2013.  Naha is a well-run organization with a very bright future, but they are going to have to work to win and increase attendance if they hope to grow their revenue stream in the future.
3. Kuwana Steel Dragons – 2011 Profit: $-2.4M / 2012 Profit: $8.3M
   Kuwana is one of the greatest success stories in the LRS.  Their revenue growth has been unmatched since the takeover and they show every sign of being on solid financial footing as they continue to contend over the next several seasons.  They will continue to place highly on this list in the future.
   
4. Kure Arsenal – 2011 Profit: $-4.5M / 2012 Profit: $6.2M
   It should be no surprise that this list is stocked with teams that made a decision to fully commit to a rebuild and are thus starting out from a much lower player payroll cost base.  Kure has excelled in that model, but at the same time has not hesitated to add payroll if it is thought to be advantageous.  This willingness to take risks to win (and thus profit) should help them continue to grow.
5. Shin Seiki Evas – 2011 Profit: $5.2M / 2012 Profit: $4.7M
   The Evas are the only team in the LRS to turn a profit in both 2011 and 2012.  They had another solid year revenue-wise in 2013, earning the third-highest single season revenue total ever collected by an LRS team ($66.6M).  That number could rise in 2013 with the addition of more seating at Genesis Park.  Will that translate into increased profits?  Depends on if they can find any inexpensive performers from their farm system.  If they can do that, they might be able to lower their stratospheric player expenses without putting themselves out of contention.  Contending is mandatory in Shin Seiki; massive profits are not.  Fans and investors should keep than in mind.
6. Kawaguchi Transmitters – 2011 Profit: $-4.3M / 2012 Profit: $-1.1M
   Kawaguchi has been stripped to the bone in an effort to cut costs and stop the bleeding.  Those efforts have been largely successful.  The Transmitters don’t have a dime over the league minimum in payroll committed so far for 2013.  That could put them deep in to the black this time next year, but at the same time, they need to worry about their attendance dropping precipitously.  They currently have the most disinterested fans in the LRS.  That is not good for their future revenue.
7. Fushigi Yugi Celestial Warriors – 2011 Profit: $-8.4M / 2012 Profit: $-1.4M
   The Celestial Warriors took a big step toward profitability in 2012, but their roster is old and their fans are not very interested.  They are no longer the same team that won the 2010 Neo-Tokyo Cup.  They need to either make big acquisitions to contend with Kuwana and Edo to sell more tickets now or sell off their aging assets and cut costs.  Their current path will not be profitable and could well put them in a big hole if their competitiveness falls off further.
8. Edo Battousai – 2011 Profit: $-1.4M / 2012 Profit: $-3M
   Edo is a powerhouse on the field, and despite posting modest losses each of the last two seasons, they are getting to be nearly as powerful in the LRS financial world.  They collected the second-most revenue of any LRS team in 2012 at $54.6M.  They are sitting on a decent cash cushion, but their 2013 payroll is currently slated to be the highest in the LRS by a significant margin.  They might want to consider unloading some non-critical salary to open up a little breathing room and actually turn a profit.
9. Seoul Crushers – 2011 Profit: $-12.4M / 2012 Profit: $-3.5M
   Oh, the Crushers.  No one has seen more red than they have.  Mr. Kierstead might want to consider picking up a pair of red contact lenses to save Seoul the cost of red ink.  Goodness knows they need every red cent.  Actually, I shouldn’t be so harsh.  Seoul has made tremendous strides towards solvency in 2012.  They’ve shed a lot of payroll and could end 2013 in the black.  That would not be an insignificant achievement, but like another team, they need to try to keep their fans interested and coming to the park so that when their “specs” are ready, they can afford the complimentary pieces that will no doubt be needed.
10. Lupin Cliff Hangers – 2011 Profit: $20.3M / 2012 Profit: $-7.3M
    How does a team go from tremendously profitable to losing a significant amount of money in one season?  Well, in 2012 they went out and added lots of talented, expensive players.  That blew though a significant portion (but not all) of their cash cushion, resulting in a loss.  While it showed a commitment to winning that their fans no doubt appreciate, it didn’t quite work out on the field.  The Cliff Hangers will probably have to trim a little payroll in 2013, but it shouldn’t be a blood bath.  They are on pretty solid financial footing.
11. Hyakujuu Shinkansen – 2011 Profit: $-1.8M / 2012 Profit: $-14.8M
    Though Hyakujuu posted a huge loss in 2012, it isn’t quite as bad as it seems.  They sent out $12.6M in cash via trades during 2012, accounting for almost all of their losses.  They should turn a profit in 2013 and are not falling apart by any means, but are still a fair ways away from being in the black as an organization.  Further cuts might be needed.
12. Niihama-shi Ghosts – 2011 Profit: $-4M / 2012 Profit: $-16.2M
    What happened to the Ghosts in 2012 is a nightmare scenario for all high-budget, high payroll teams such as Shin Seiki or Edo.  It wasn’t completely their fault.  They were hit hard by injuries (Takeji Iitsuka).  Some aging veterans that made up the foundation of the team hit the wall (Shigochiyo Memoto).  Other players who had performed well before inexplicably turned to dung (Sergio Manuel).  As a result, the Ghosts were a terrible team and revenue tumbled a disastrous $16.1M.  That is the reason for the Ghosts’ losses.  Unfortunately, things are not looking much better for them in 2013 financially speaking.  While they could turn a profit in fiscal 2013, they are loaded with bad contracts for the year and are starting off deep in the red.  They could turn things around on the field quickly being in such a large market, but it looks like it will be at least a couple seasons until they are back on sound financial footing.