Revisiting Terry Ryan's Thoughts On Payroll

[Parker Hageman]

Since 2012 Twins Daily has had the opportunity to sit down with Twins GM Terry Ryan and discuss the impending offseason. One of the biggest questions has been regarding the team’s payroll.

 

In the 2013 Offseason Handbook, John Bonnes sat with Ryan.

 

Bonnes: You talked a little bit about limitations in terms of dollars. Do you know what your limitations are in terms of dollars this year?

 

Ryan: I don’t consider that a limitation.

 

Bonnes: OK, but you have a budget…

 

Ryan: But it’s always fluid. It’s never a concrete figure with the Pohlads. It’s not anything that’s a limitation. Just look at the teams still playing here [Note: The 2012 postseason included ATL, STL, WSN, CIN, SF, BAL, TEX, DET, NYY and OAK]. There are a couple well above where we are at and there’s about four or five that are well below where we’re at.

 

Bonnes: There’s a lot of things that determine success for an organization, there’s no question.

 

Ryan: It’s not payroll, usually. I don’t know exactly what Detroit is [NOTE: approximately $118M according to B-R.com], but they are fairly stiff. Cardinals are, what, $112 or so [NOTE: approximately $111M]?

 

Bonnes: In your division, the White Sox have been generally about $100 million. Detroit has been about $120…

 

Ryan: It’s never been a detriment to us to field what we thought was a competitive club. This year it was not a detriment. Two years ago we had a $113 million payroll and it didn’t work.

 

 

For the 2014 Offseason Handbook, I had the opportunity to talk with Ryan and our discussion on the payroll situation went like this:

 

Hageman: Last question, has your payroll budget be set for this year?

 

Ryan: I’ve got a pretty good idea where it’s at. It’s very reasonable to get things done.

 

Hageman: How big of a jump is it from where it is now? [NOTE: The 2013 Twins finished with an approximate payroll of $56M according to B-R.com]

 

Ryan: You don’t even know what our payroll is now.

 

Hageman: Well, the estimation at the end of the year was around 55 or 56 million.

 

Ryan: You counting [Nick] Blackburn?

 

Hageman: Probably not, no. [Note: Blackburn was owed $5.5M bringing the estimated payroll to $60-$61M.]

 

Ryan: OK, so you don’t know. I do so we’ll be OK.

 

Hageman: Triple digits OK?

 

Ryan: We’ll be OK, I’m not going to give you any words.

 

Hageman: I know.

 

Ryan: Don’t worry about our payroll.

 

Hageman: Our readers are worried about things like that.

 

Ryan: Why? I have told publicly I don’t know how many times: our payroll is way more than Oakland, way more than Cleveland, way more than Tampa Bay. Those teams are in the postseason. Payroll is not an excuse for success, it’s not an excuse for failure. We have had many better years in Metrodome with a payroll that’s been much less than it is today. Do people want me to use payroll as an excuse?

 

 

Naturally, with a significant investment from the taxpayers of Hennepin County contributing to finance the new stadium, fans want to know that the money generated by the fancy digs is getting spent on the on-field product. This, of course, has led to a robust debate and discussion.

***If you want to revisit the interviews from 2013 and 2014, you can download the Offseason Handbooks for FREE at the links above. Be sure to download a FREE SAMPLE of this year’s Offseason Handbook or PREORDER IT NOW for $3.99 until the end of the World Series***

[TheLeviathan]

http://lh5.ggpht.com/_KW8J2jaL8kg/TBuJX_uat9I/AAAAAAAACMY/BI-CIWiTJm4/charlie-brown-argh_thumb%5B1%5D.jpg

[Brock Beauchamp]

Well said, Levi.

[gunnarthor]

Give Ryan this: he will absolutely fall on the sword for the payroll instead of saying something bad about the Pohlad family.

[TheLeviathan]

Give Ryan this: he will absolutely fall on the sword for the payroll instead of saying something bad about the Pohlad family.

 

He's been asked the question so many times, you'd think by now he'd have developed a better answer.  Responding to "well your fans care about it..." with what amounts to a verbal middle finger is just aggravating beyond explanation.

[Mike Sixel]

Parker tweeted recently that he doesn't get why people keep talking about the payroll. Since then, he's written two articles/threads here about it. I'm confused. Just as I'm confused that TR does not seem to understand that people that are paying for a new stadium to make the owners more money, would not be curious how that money is being spent.

[Parker Hageman]

Parker tweeted recently that he doesn't get why people keep talking about the payroll. Since then, he's written two articles/threads here about it.

 

 

I still don't fully understand it but gotta give the people what the want. Styx gotta play the hits, you know?

[nicksaviking]

Wow, that seemed a bit contentious. 

 

From the exchange, Ryan seemed on the defensive the second payroll was brought up and Parker's question was pretty benign.  Then he throws the unsolicited comps to Oakland, Cleveland and TB out there, it certainly sounds like he's already anticipating backlash for what he knows is going to be one of the lowest payrolls in the league again. 

 

Wake me up in March.  To be fair, I've been on the side of letting the young guys play anyway.  Still, it's hard not to resent the idea that the team intentionally put themselves in the position where spending money might not be the best move.

[USAFChief]

I still don't fully understand it but gotta give the people what the want. Styx gotta play the hits, you know?

Jusr to be clear...this is from last years interview, correct?

[Kwak]

It sure seems like there is something not mentioned that is germane to the payroll discussion.  Since there have been several opportunities for Ryan and other Twins' executives to expand on the subject it seems as if they treat the "payroll subject" as off-limits to discussion.

[jharaldson]

Any chance as a preview of the 2015 handbook you could give us the answer he gave this year?

[Otto von Ballpark]

Any chance as a preview of the 2015 handbook you could give us the answer he gave this year?

Based on his response from the 2014 offseason handbook, I wonder if anyone dared ask him that again this year?

[TheLeviathan]

Based on his response from the 2014 offseason handbook, I wonder if anyone dared ask him that again this year?

 

I was going to suggest that Parker's continued existence seems to indicate they left it off the list of questions.

[DocBauer]

No excuses, as I also pay attention to spending and payroll and rankings, but could I be allowed to play devil's advocate for a moment?

 

High payroll doesn't insure anything. And if you don't believe that, then you haven't been paying attention to team payroll numbers the last 20 years. There have been Yankees and Red Sox teams in recent years, amongst others, who might or might have not reached the playoffs, but didn't make or win the WS. The Dodgers this season are a great example of a team that, theoretically, disappointed or failed despite a seemingly successful season.

 

TR is right that payroll isn't an excuse, or at least, isn't always an excuse. And he's right that teams with lesser payrolls have done well, won, and reached the playoffs. It still comes down to smart decisions and smart roster construction. The Twins themselves were known to be smart in assembling teams while in the Metrodome.

 

What I've always stated and maintained is that larger payrolls allow for more margin of error, and most importantly, allow a quality team to stay together. I truly respect Ryan for everything he has done for the Twins over the years. And really, he's done one hell of a job. But my one concern has been, after years of building teams with limited payroll, does he understand the newer economics of baseball today? The revenue streams for all teams have greatly expanded the last few seasons, especially for the Twins with those new revenues as well as the economic influx brought about from being in Target Field. He began to spend in 2014, which marked a real change in philosophy. Is he learning? Or is he still stuck, somewhat, in the frugal nature of the Metrodome days?

[glunn]

I think that he would be wise to be consistent, and stick with what he said in the conference call with season ticket holders -- $100 million should be enough.  I don't understand why TR has stopped saying that.  Maybe someone told him to stop saying that?  I have no idea, but I think that many of us could be fairly happy if the Twins spent up to that level next year.  And I think that season ticket sales would increase if the Twins were to make one impact signing.

[Rosterman]

No excuses, as I also pay attention to spending and payroll and rankings, but could I be allowed to play devil's advocate for a moment?

 

High payroll doesn't insure anything. And if you don't believe that, then you haven't been paying attention to team payroll numbers the last 20 years. There have been Yankees and Red Sox teams in recent years, amongst others, who might or might have not reached the playoffs, but didn't make or win the WS. The Dodgers this season are a great example of a team that, theoretically, disappointed or failed despite a seemingly successful season.

 

TR is right that payroll isn't an excuse, or at least, isn't always an excuse. And he's right that teams with lesser payrolls have done well, won, and reached the playoffs. It still comes down to smart decisions and smart roster construction. The Twins themselves were known to be smart in assembling teams while in the Metrodome.

 

What I've always stated and maintained is that larger payrolls allow for more margin of error, and most importantly, allow a quality team to stay together. I truly respect Ryan for everything he has done for the Twins over the years. And really, he's done one hell of a job. But my one concern has been, after years of building teams with limited payroll, does he understand the newer economics of baseball today? The revenue streams for all teams have greatly expanded the last few seasons, especially for the Twins with those new revenues as well as the economic influx brought about from being in Target Field. He began to spend in 2014, which marked a real change in philosophy. Is he learning? Or is he still stuck, somewhat, in the frugal nature of the Metrodome days?

Yes, the more money you have to spend, the more mistakes you can make and cover. So you spend it and hope the mistakes don't sink you. 2014 had one major mistake sitting out the season, and three high paid players badly underperforming. One of them you write off as a franchise investment and because you got him young and you essentially are still not at the breakeven. But you were also vastly under payroll last season, too. Again, the ability to spend money allows you to gamble, maybe make mistakes, or maybe score big. You score big if all the pieces come together and you win, draw people, get ratings, corporate sponsors and such. You can play it safe, but then you end up playing to empty houses or going home from the table early.

[The Wise One]

People on this board have a disconect with the budget and the quality of free agents available for the money

[TheLeviathan]

People on this board have a disconect with the budget and the quality of free agents available for the money

 

Then TR should say "Our payroll budget is flexible, if we see quality players that fit our needs then we can move to add them.  if the market just doesn't fit our needs, we can explore trades or look for in-house replacements"

 

Rational people will understand rational answers.  What TR said managed to be both irrational and insulting at the same time.

[Linus]

I'm sure answering the same question for 7534th time may have had something to do with it.

[Major League Ready]

Is there any wonder why fans and management disagree.  Anyone who has kids knows that they don't consider a budget or what is financially feasible in what they desire.  Same is true of fans.  Many have absolute disregard for expenditures, risk or profit.  The Minnesota Twins area business.  It is incredibly naive to believe the won't or should not act accordingly.

 

I have on several occasions during the economic downturn provided consultation to state governments (including the state of Minnesota) and large cities when declining tax revenues forced them to become better at capital investment and expense control.  I regret to inform all of you that the prevailing thought that our tax dollars are squandered is quite accurate.  When profit and risk mitigation are not focal points, the core principals that govern management decision process go out the window.

 

Fans are short-sighted and definitely do not give risk adequate weight.  Fans think they can back seat drive because somehow they think they possess all of the skill necessary to manage the assets, personnel, operations, and P&L of an organization generating hundreds of millions of dollars.  The frustration is a product of not having the requisite skill set and/or experience to understand why things are done the way they are.

 

Fans also assume things based on a fraction of the information.  I assess organizations for a living and I would never begin to think I could evaluate the MN Twins or the relative or specific abilities of the individuals running the organization without a much closer look and all of the relevant inputs.

 

Just one mans opinion but I think many here would be far less frustrated if they considered the possibility that they might have a different opinion if they had actual experience running a $250M business and all of the relevant information.

[amjgt]

I'm generally not a Mauer hater, but those other "low payroll" successful franchises don't have a $23M payroll anchor at first base. The fact that he is being paid by the Twins means that the Twins "base" payroll number needs to be about $22.5M higher than those other teams in order to be on a level playing field. 

[USAFChief]

Is there any wonder why fans and management disagree.  Anyone who has kids knows that they don't consider a budget or what is financially feasible in what they desire.  Same is true of fans.  Many have absolute disregard for expenditures, risk or profit.  The Minnesota Twins area business.  It is incredibly naive to believe the won't or should not act accordingly.

 

I have on several occasions during the economic downturn provided consultation to state governments (including the state of Minnesota) and large cities when declining tax revenues forced them to become better at capital investment and expense control.  I regret to inform all of you that the prevailing thought that our tax dollars are squandered is quite accurate.  When profit and risk mitigation are not focal points, the core principals that govern management decision process go out the window.

 

Fans are short-sighted and definitely do not give risk adequate weight.  Fans think they can back seat drive because somehow they think they possess all of the skill necessary to manage the assets, personnel, operations, and P&L of an organization generating hundreds of millions of dollars.  The frustration is a product of not having the requisite skill set and/or experience to understand why things are done the way they are.

 

Fans also assume things based on a fraction of the information.  I assess organizations for a living and I would never begin to think I could evaluate the MN Twins or the relative or specific abilities of the individuals running the organization without a much closer look and all of the relevant inputs.

 

Just one mans opinion but I think many here would be far less frustrated if they considered the possibility that they might have a different opinion if they had actual experience running a $250M business and all of the relevant information.

Just one man's opinion, but If it's a $250M business, then they should have a $125M payroll. I don't need to have actual experience running such a business to read and comprehend the statements they've made.

[Rosterman]

There is risk involved. You also have to create a demand for your business model to succeed. 

 

At some point, if the tax base starts to drop, you do have to bite the bullet and give business incentives to open their doors, people breaks to purchase housing, all with the thought that the tax area core will grow and maintain and eventually create more revenue. You have to take the risk that people will buy into your plan and...invest, in themselves and their money/spending.

 

Right now, the Twins are asking radio stations across the midwest to buy their product, and still allow the Twins to keep x-amount of ad revenue. But can a radio station, with the current team, recoup that ad revenue that they need to cover the Twins? If they believe the Twins will be successful, they will invest. But right now, it appears to be a loss leader.

 

Does Budwiser want signage in the stadium that will be seen by 16,000 people a game, or 35,000. They  re paying good money for visual hits. I am not going to pay 20,000 hit money for 16,000 hits. I may take a chance, if the Twins are salesmen, and do it. But I start to look at the Gophers, Vikings, Linx or elsewhere...even the Saints that will probably have a full house with the entry of their new field in the marketplace.

 

Why do I, as a season ticket holder, want to renew? I get 10% off of my other expenditures if I go to a game. C'mon. Last year, you could easily buy seats for $6-10, half-off prices in many of the more expensive sections (but why even pay $20 or $50 if you can get into the stadium for the price of parking). Less season ticket holders means less cheap seats in the secondary market...as the major renewals will be for more choice seats, fans with money to spare and the need to not lose those locations when the team does turn good.

 

The Twins can play their own wildcard, that the cheap team will thrive and ALL non-season-ticket fans will then have to start paying Twins fullprice for tickets. If the Twins continue to be bad, maybe we can recoup with group specials some of our lost revenue.

 

And that is the kicker. Loss revenue. You don't take my $500 and say you are only going to spend $5. When I buy an arts ticket, I expect to see my money up on the stage, and like baseball they can give you more of a bang than your buck because there is often a lot of public financing involved in some venues. But I'm not paying a couple of hundred a seat for a play to see the local fan fave sing and dance on stage. I want to see a star!

 

I want to see a mix of that on the playing field. Joe Mauer has big shoes. He has to be the guy people pay to see when the Twins play in town or on the road. He's being paid enough. I want to see solid defense, clutch-hitting, moving the runners. If the clutch hitting doesn't happen, I expect the outs to happen because of expert pitching, not base running mistakes or missed calls. I expect pitchers to make their starts, players to be in the mindset to play. If they have an injury, okay, tell us about it. If you need a rest, then let's have a roster that has a solid bench of long-relief guy that we aren't seeing a Thursday afternoon B-squad game because we want all the players to get their innings in.

 

I want the games to be something, to mean something. 

 

Telling me that an up and comer will be the real deal (Durbin, Benson) works only if they are, otherwise the results are the same as if you threw a highly paid free agent that fails onto the field. You lost. The player gets another chance or two. But eventually you have to part ways and write off the expense, be it $12 million for a starting pitcher or a $1 million draft fee for a promising high schooler. But you move on. You don't stop signing promising players for a good rate. You don't avoid the free agent market. You evaluate WHY your system failed and make adjustments or changes. 

 

Why aren't we signing certain international free agents. Why are our promising pitchers coming up lame. Why are we drafting okay players, but they still don't make it to the bigs. What are we missing when are primary free agent pitcher signings are guys like Nolasco and Correia and they show that they are consistent (maybe) but were more safe (and then sorry) signings. Why do we wait to cut ties with a Delmon Young or a Josh Willingham. Yet we also let a Mike Lamb walk, or a J.J. Hardy go for peanuts, or not allow a Gomez t go to Rochester and try some things his way to show us what he is saying instead of jettisoning him when he won't do what we think is right.

 

But this is about money. It doesn't seem to rollover. If it did/does, then the Twins could have a $150-200 million payroll in 2-3 years when they really need it. But that ain't happening unless the Twins can sell every seat 2-3 times in one of those seasons.

 

It's marketing 101 folks. Say the right things ("we wish to field a competitive team and will spend our budget to do it" or "we are going to go cheap and rebuild...come along with us, support us, invest in use beyond what you have already given us as we work to achieve that goal") or shut up.

[Mike Sixel]

Ah, the appeal to authority technique. A classic.

[Oxtung]

The "look at all the teams with low payrolls winning!" and "high payroll doesn't guarantee any wins" arguments are strawmen.  Nobody is arguing against those assertions.

 

The relevant points being made are first, payroll is correlated with winning.  The more you spend the better your chance of winning.  Second, the Twins are on record stating that ~50% of revenue will go toward player payroll.  Based on the Twins actions this seems to have come with a caveat, it only applies during expected winning seasons.  Third, the tax payers of Minneapolis and the fans buying tickets are paying good money and rightfully have expectations that a competitive team will be fielded.  

 

When the Twins fail to provide a good product and fail to address these issues, or even worse ignore or dismiss them, it should be expected that there will be backlash.  No amount of strawmen, poo pooing, or ignoring is going to fix this issue.  The solutions are to fix the product or address your customer experience issue.

[nicksaviking]

Is there any wonder why fans and management disagree.  Anyone who has kids knows that they don't consider a budget or what is financially feasible in what they desire.

 

Kids have no clue, how about a wife? I have one.  I can tell you that if I got a raise but told her that we were going to start putting 70% of my paycheck into our retirement accounts and we were getting rid of the internet, cable, and we were going to sell the cars and start riding the bus to afford it, that decision would not go over well.

[nicksaviking]

The caveat the Twins never bring up about payroll is that they have one player on a 25 roster making up 31% of the entire payroll balance. In the history of all Sports franchises, when has there ever been a World championship team in major sports where one player made up 31% or more of the entire payroll base?

 

That's the Twins choice that it makes up 31% of the payroll.  If they had an payroll reflective of their new stadium and inferences made to fans, Mauer's contract would probably only make up about 20% of the payroll.

 

If this team wanted to garner sympathy using this theory, they could simple continue to drop their payroll until Joe's salary eats up 50% all while saying it was Joe Mauer's contract that was forcing their hand.  Mauer's contract is only an albatross when it's convenient for it to look that way.  And to be fair, I don't recall the team ever indicating that it was.

[diehardtwinsfan]

Kids have no clue, how about a wife? I have one.  I can tell you that if I got a raise but told her that we were going to start putting 70% of my paycheck into our retirement accounts and we were getting rid of the internet, cable, and we were going to sell the cars and start riding the bus to afford it, that decision would not go over well.

I think I want to try this...