Payroll vs Revenue?

[IdahoPilgrim]

Professional sports franchise economics are far beyond my understanding. What I find curious are two inconsistent fan rants: a) abuse heaped on the Pohlads for not spending more on personnel and abuse heaped on the Pohlads for paying market value for Mauer and Morneau.

That's the fun of being a fan. We don't need logic - we can gripe and moan at will whenever we feel like it.

 

P.S. We do the same thing in other areas of our life as well - we want all the luxuries and perqs, and then we want somebody else to pay for it.

[Nick Nelson]

Whoa. Did this thread just reach enlightenment?

[Rosterman]

I still haven't figured out that if the Twins payroll is 50% of revenue, why when it goes from $50 million to $100 million, team operation costs also doubled. Twice as many scouts, vendors, vice presidents, etc? Not really, minor league expenses remain flat, et al.

 

When the Twins moved from the Metrodome to Target Field, their in-house revenues increased, they actually soldout of tickets and didn't need the extra personnel that they usually ahd for that endeavor, and any number of other things kicked in (more sponsorships and such).

 

The Twins $130 million contribution was only a fraction of what the value of the team actually increased with target Field. Didn't they go from $250 million to $500 million at least? That means they could actually go to a bank and get a loan for the worth of the team, at lesser rates than Pohlad would charge himself, in all likelihood.

 

But, again...if team operations were say $40 million a few years ago, they can't be more than the $63 the Phillies have now. Why are the Twins spending $90 million, AFTER a $20+ million profit!

 

Calvin Griffith is rolling over in his grave!

[Riverbrian]

Whoa. Did this thread just reach enlightenment?

I agree with you Nick. We have people on this site who talk about Mauers leg iron of a contract and how it has crippled the organization and we have people who want to spend more money on potential leg irons.

 

Being prudent isn't always a bad thing. Money spent does not always lead to victories. Just ask the Mets.... It works for the Yankees or seems to but maybe they spent on the right people and they spent a huge amount.

 

Edwin Jackson would not have fixed what ails by himself.

[Shane Wahl]

In retrospect, perhaps the state should have demanded such language.

 

Since that obviously didn't happen, the Pohlads are free to do as they wish. And I'm free to think that's somewhat dishonest on their part, and contributes to payroll not meeting what I think are reasonable expectations as a fan, and reasonable expectations from those who ARE paying for the stadium (of which I am not, on any kind of regular basis.)

 

Not that it matters, but do you work in some sort of PR role for the Pohlad family?

I agree with you. It is laughable that anyone defends the billionaires in this. My GOD and a half. Billionaires are greedy and have found innumerable ways to take advantage of the public for profit. It seems pretty clear, that profit is more important for the Pohlads and has been forever. One big jump in payroll does not negate that.

 

I am not saying that payroll is everything. But clearly people like Aaron Gleeman are not idiots in maintaining that something is amiss with a new ballpark and a drop in payroll one year later.

 

Edwin Jackson might not have turned 2012 around. But, damn, signing him for 2013, 2014 and 2015 would make the picture look quite a bit brighter, right? Furthermore, who knows what kind of effect another pitcher like that, expected to be the ace, would have had on A: Liriano and his head, B: the Twins attitude towards Pavano's obvious arm problems, and C: the use of Liam Hendriks. It baffles me that people think that moves are made in complete vacuums . . .the truth is that dominoes fall all the time. One signing can bring a chain reaction.

[glunn]

So if you were with the Ballpark Authority you would have put language in the agreement that the Twins contribution must come from the owners of the Twins and it may only include revenues NOT derived from the operation of the Twins?

 

Sheesh? Really?

If I were with the Ballpark Authority I would have held out for a written agreement that over any 3 year period, the player salaries must be at least X% of gross revenues, and would have stressed that the taxpayers' investment would greatly increase the value of the team.

[Guest USAFChief]

I still haven't figured out that if the Twins payroll is 50% of revenue, why when it goes from $50 million to $100 million, team operation costs also doubled. Twice as many scouts, vendors, vice presidents, etc? Not really, minor league expenses remain flat, et al.

 

When the Twins moved from the Metrodome to Target Field, their in-house revenues increased, they actually soldout of tickets and didn't need the extra personnel that they usually ahd for that endeavor, and any number of other things kicked in (more sponsorships and such).

 

The Twins $130 million contribution was only a fraction of what the value of the team actually increased with target Field. Didn't they go from $250 million to $500 million at least? That means they could actually go to a bank and get a loan for the worth of the team, at lesser rates than Pohlad would charge himself, in all likelihood.

 

But, again...if team operations were say $40 million a few years ago, they can't be more than the $63 the Phillies have now. Why are the Twins spending $90 million, AFTER a $20+ million profit!

 

Calvin Griffith is rolling over in his grave!

 

I've been asking that very point for a couple years now. Why would Twins payroll expenditures need to stay at/around 50% of revenue after moving to TF?

 

For example, the Twins have stated they could afford, for example, roughly a $65M MLB payroll on roughly $130M in revenue in the dome, leaving $65M for all other expenses, plus a tidy profit. I have no doubt they have significant other expenses: minor leagues, travel, other salaries, medical expenses, etc etc etc. But they've publicly stated they need around $55-75M to cover those expenses.

 

Why should those other expenses increase drastically with the move to TF? Why wouldn't the same $55-75M be enough, leaving something like $140-150M for current major league salaries (if Forbes' estimated $213M in revenue is anywhere close)? They didn't expand their minor leagues. They didn't suddenly start staying in nicer hotels on the road. I get they need to hire more people to work at TF, but c'mon...how much can that cost? Plus those employees are paying for themselves anyway...you can't tell me it is COSTING the Twins money to hire someone to sell $7 beers and $5 hotdogs.

 

Where is that money going?

[Guest USAFChief]

We have people on this site who talk about Mauers leg iron of a contract and how it has crippled the organization and we have people who want to spend more money on potential leg irons.

 

.

Can't speak for others but I've never referred to Mauer's contract as "a leg iron." Also don't want the Twins to sign any "potential leg irons."

 

Sort of a strawman argument, if you ask me. Spending money foolishly, and spending money to improve your team, are not the same. If the Twins don't have people in place capable of spending money wisely, that's a different issue, and not an argument against spending money.

[Riverbrian]

I wasn't directing it at anyone in particular. Just pointing out that Twins lit up the scoreboard to the tune of 23 million a year and we have threads dedicated to how it killed this team... I don't agree with that but I'm pointing it out. We also have threads with people saying that the Twins should have went after free agent X Y and Z. I don't agree or disagree with that but am pointing out that there are times the Anti Mauer contract folks contradict themselves with pro money spending. I'm not saying you are one of those people.

 

Chief I hope you know that I assume that any attempt to spend money is done so with the hope of improving the team. I understand that there are hits and misses.

 

I just believe that a temporary hit in payroll may be prudent at this juncture. George H.W. Bush explained it to me that way... Or was it Dana Carvey playing Bush.

 

I cling to the hope that if pitching stabilizes and the pieces are in place for contenderdom... the money will return. I'm also hopeful that the Twins are not basing payroll on some pre determined percentage structure and basing payroll upon on the current status of the club and the pieces in place.

[glunn]

The local government put up hard earned taxpayer dollars to build Target Field, knowing that this would greatly increase the revenue and the value of the franchise. I suspect that they were swayed, at least in part, by promises to use some of the extra revenues to increase payroll. And as others have pointed out on other threads, the Twins have significantly increased payroll.

 

I wished at the time that the government has cut a better deal, to insure that the Pohlads did not enjoy a huge windfall at taxpayer expense. I have not studied the deal in detail, but my sense is that the Pohlads negotiating with the stadium commission was like buying Manhattan from the Native Americans. On the other hand, I am glad that payroll has gone up a lot since the Metrodome days.

[Highabove]

In 2009, their last year at the Dome, the Twins realized a very large payday.

 

Their revenue came in at 162 million. The Twins starting payroll was 65+ million. Way below the 50% of payroll which the Twins have sold us for years.

 

The Twins operating income came in at 25 million, which was the 9th highest in Baseball.

 

Twins fans are constantly reminded about how the Twins overpayed the payroll last year.

 

Did we ever hear about the huge under payment in 2009, which result in a large pretax profit for the Twins? I don't think so.

 

The Business Of Baseball - Forbes.com

 

2009 Baseball Team Payrolls - Total and Average Salaries for Major League Baseball Players

[Yoosh]

I still haven't figured out that if the Twins payroll is 50% of revenue, why when it goes from $50 million to $100 million, team operation costs also doubled. Twice as many scouts, vendors, vice presidents, etc? Not really, minor league expenses remain flat, et al.

 

But, again...if team operations were say $40 million a few years ago, they can't be more than the $63 the Phillies have now. Why are the Twins spending $90 million, AFTER a $20+ million profit!

 

This is what I'm getting at... I know that I picked two teams with large discrepancies in spending. But this post hit's the nail on the head. Where do we get our number of an acceptable payroll amount? It factors greatly into the feelings of Mauers contract because at 125 million his contract doesn't hurt the team as much when he put's up a 2011 performance. But this post isn't about if we're getting our money from Mauer (get over the contract people, he's performing up to his pay this year and Yes I wish every year could be '09 but it isn't going to happen).

 

 

 

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As far as paying for the stadium... People just need to grin and bear it. Because ALL professional sports franchises have their city over a barrel when it comes to stadium funding. It's sad but it's the reality these days, if you want pro sports the owner is more than likely going to make a profit off of the taxpayers...