BPro: Twins Are Not A "Small Market" Team

[nicksaviking]

 

  On 1/26/2016 at 5:44 PM, Mike Sixel said:

If money doesn't matter, and you are under budget, you just cut a guy that is blocking a player. Then call up a guy making less than $500K a year. Heck, I'd think you could fit that into any MLB budget....

 

I do get your point about not blocking players. I just don't agree that if it is about staying under a budget (not about spending the "right" way), that you can't just cut Nolasco (if he's bad) after a month. 

 

Which RP was blocked last year, that they just didn't have room to add one at the beginning of the year?

 

I would agree, but I think cutting players is more of a philosophical issue than a fiscal issue. Even though my fridge is full of leftovers I know I'll never eat, I don't throw them out because:

 

A ) I spent good money on that! I know the grocery store won't give me any money back if I try to take back a half eaten taco hotdish, but still.

 

B ) I'll be damned if the hobo going through my garbage takes it only to discover it aged well in the trash overnight and now he's got himself a delicacy I will long rue.

[Vanimal46]

 

  On 1/26/2016 at 7:43 PM, spycake said:

The Cardinals TV deal was similar in annual rights fees to the Twins current deal, until last summer:

 

"Cardinals Agree To $1 Billion Television Contract"

 

http://www.mlbtraderumors.com/2015/07/cardinals-tv-contract-billion.html

So they're around the same revenues from TV (35 to 29) as the Twins until 2017, same market size, but other than 2011, have had a significantly higher payroll than the Twins over the last 15 years.... That should say a lot.  

[diehardtwinsfan]

 

  On 1/26/2016 at 5:44 PM, Mike Sixel said:

If money doesn't matter, and you are under budget, you just cut a guy that is blocking a player. Then call up a guy making less than $500K a year. Heck, I'd think you could fit that into any MLB budget....

 

I do get your point about not blocking players. I just don't agree that if it is about staying under a budget (not about spending the "right" way), that you can't just cut Nolasco (if he's bad) after a month. 

 

Which RP was blocked last year, that they just didn't have room to add one at the beginning of the year?

 

You don't just cut a guy with a guaranteed contract.  You don't see that anywhere in baseball (not just here) and for good reason. 

[Major League Ready]

 

  On 1/26/2016 at 3:12 PM, tobi0040 said:

I think we get back to the definition of breakeven.  On a cash basis, the last few years they could have had a payroll about $20M higher and "broke even". If you factor in franchise value appreciation, they could have been about 100M more ever year.  The franchise continues to rise in value at a rate significantly higher than almost any other asset class. Stock market, bond market, metals, etc.  It is a recession proof business. 

 

Heck, a guy like George Steinbrennar started with some money, but his net worth was almost entirely based on the Yankees rising in value.  He bought the team for $8.8M.  The team was worth $1.6B when he died, but his net worth at the time of his death was actually $1.1B.  The gap relates to debt he has on the team.

This is a reasonable position on their need to earn a profit but what is COMPLETELY lost in this discussion is that the only difference a break-even model would make is that the players would make even more.  The payroll gap would be no different.  Many people here are looking at profit as the culprit when in fact the problem is very simply that several teams have significantly more revenue than the Twins and a handful have a really significant revenue advantage.  

[Major League Ready]

 

  On 1/26/2016 at 5:23 PM, DaveW said:

Front line starting pitcher, legit major league catcher, bullpen. Just to name a few....when the Royals were in this scenario they went out and traded for James Shields, then traded for Cueto and Zobrist a year later....the Twins go out and sign some minor leauge free agents!

How much money did they spend on those three players combined?  Probably about what is left on Nolasco's contract and about the same as what they pay Mauer per year.  Now, I am sure you will spin this but we are talking SPECIFICALLY about willingness to spend. 

[drjim]

 

  On 1/26/2016 at 8:12 PM, Vanimal46 said:

So they're around the same revenues from TV (35 to 29) as the Twins until 2017, same market size, but other than 2011, have had a significantly higher payroll than the Twins over the last 15 years.... That should say a lot.  

 

I think it does. The Dome was absolutely terrible for revenue.

 

Which, to bring it all the way back, is why it was justified to call the Twins a small market team. Though, I would admit it is probably more accurate to define that by revenue potential and not explicitly market size.

[DaveW]

 

  On 1/26/2016 at 8:53 PM, drjim said:

I think it does. The Dome was absolutely terrible for revenue.

 

Which, to bring it all the way back, is why it was justified to call the Twins a small market team. Though, I would admit it is probably more accurate to define that by revenue potential and not explicitly market size.

Revenue? I dunno. The Dome was bad for expenses since the Twins/Pohlads didn't own it, correct? They had to pay rent? Do the Twins pay rent at Target Field? (I honestly don't know)

[tobi0040]

 

  On 1/26/2016 at 8:35 PM, Major Leauge Ready said:

This is a reasonable position on their need to earn a profit but what is COMPLETELY lost in this discussion is that the only difference a break-even model would make is that the players would make even more.  The payroll gap would be no different.  Many people here are looking at profit as the culprit when in fact the problem is very simply that several teams have significantly more revenue than the Twins and a handful have a really significant revenue advantage.  

 

Nobody is questioning teams like the Yankees or Dodgers have more money to spend.  Their break even point would yield a higher payroll than ours.  No question. 

 

But the last few years, they could have spent more money on payroll and broke even on a cash basis and still seen unprecedented gains in the team value. And they didn't. 

 

Last year they had a bottom third bullpen by almost any metric.  They called it a priority.  And they have in turn signed a handful of guys to minor league deals. A collection of guys that were either not in the majors last year or cut midway through. They were not linked to any one of the top guys.  That is what irritates people. Especially considering relivers are the cheapest holes to fill.

 

 

[USAFChief]

 

  On 1/26/2016 at 8:35 PM, Major Leauge Ready said:

This is a reasonable position on their need to earn a profit but what is COMPLETELY lost in this discussion is that the only difference a break-even model would make is that the players would make even more.  The payroll gap would be no different.  Many people here are looking at profit as the culprit when in fact the problem is very simply that several teams have significantly more revenue than the Twins and a handful have a really significant revenue advantage.  

I don't believe all owners put the highest priority on profit.

 

Or rather, some owners measure success first by wins and losses, some by profits and losses.

 

Some will regularly eat into yearly profits if they think it will increase their chances of winning baseball games.  

 

So no, it's not a zero sum game.  An owner's willingness to spend CAN make a difference.

[drjim]

 

  On 1/26/2016 at 8:55 PM, DaveW said:

Revenue? I dunno. The Dome was bad for expenses since the Twins/Pohlads didn't own it, correct? They had to pay rent? Do the Twins pay rent at Target Field? (I honestly don't know)

 

You actually have this backwards. The Twins paid a small rent (relatively) for the Dome and operating expenses were paid by the Metropolitan Sports Facility Commission, who owned the Dome. The Twins now own Target Field and are now responsible for all operating expenses.

 

Expenses have increased significantly for the Twins in the operation of their park, but of course this is offset by significantly increased revenues. But also partially explains why revenue increases can't 100% be pumped into payroll in the move from the Dome to Target Field.

[tobi0040]

 

  On 1/26/2016 at 9:18 PM, drjim said:

You actually have this backwards. The Twins paid a small rent (relatively) for the Dome and operating expenses were paid by the Metropolitan Sports Facility Commission, who owned the Dome. The Twins now own Target Field and are now responsible for all operating expenses.

 

Expenses have increased significantly for the Twins in the operation of their park, but of course this is offset by significantly increased revenues. But also partially explains why revenue increases can't 100% be pumped into payroll in the move from the Dome to Target Field.

 

True, the biggest revenue boon is suites.  All the Dome suite revenue went to the Vikings. 

 

Revenues have grown faster than expenses, thus profits have risen quite a bit.  On a percentage basis, more than team payroll.

 

 

[Mike Sixel]

 

  On 1/26/2016 at 8:28 PM, diehardtwinsfan said:

You don't just cut a guy with a guaranteed contract.  You don't see that anywhere in baseball (not just here) and for good reason. 

 

Why not? If money doesn't matter, why not fire an employee that is not doing his job? I'm not being flip here, I'm actually trying to understand why not? It isn't money, if you are replacing him with an entry level employee. So why not? In other industries they tend to fire people that get a 1 on their performance review (though probably not fast enough, really).

[Mike Sixel]

 

  On 1/26/2016 at 8:35 PM, Major Leauge Ready said:

This is a reasonable position on their need to earn a profit but what is COMPLETELY lost in this discussion is that the only difference a break-even model would make is that the players would make even more.  The payroll gap would be no different.  Many people here are looking at profit as the culprit when in fact the problem is very simply that several teams have significantly more revenue than the Twins and a handful have a really significant revenue advantage.  

 

So, if the other teams spend the same as they do now, that does or does not stop the Twins from spending more? Really, the Twins decide how much they spend, right? If they really wanted to, they could have bid on an elite pitcher this year, but they didn't want to. What the industry does does not determine what the Twins do. It certainly influences it, but it doesn't determine it. 

 

I have no issue with the employees making more money......none at all. I'd love it if the Twins paid their employees more.

[drjim]

 

  On 1/26/2016 at 9:21 PM, tobi0040 said:

True, the biggest revenue boon is suites.  All the Dome suite revenue went to the Vikings. 

 

Revenues have grown faster than expenses, thus profits have risen quite a bit.  On a percentage basis, more than team payroll.

 

The biggest revenue boon was suites, now it's TV money.

[Vanimal46]

 

  On 1/26/2016 at 8:53 PM, drjim said:

I think it does. The Dome was absolutely terrible for revenue.

 

Which, to bring it all the way back, is why it was justified to call the Twins a small market team. Though, I would admit it is probably more accurate to define that by revenue potential and not explicitly market size.

Not sure if the old Busch Stadium was much better for revenue potential than the Dome. Could be wrong. That's getting back to a time when I wasn't old enough to know what was happening with the sport. 

Either way I think we've exhausted all angles of this discussion. I don't think you and I will see eye to eye on the subject, but it was good banter for 9 pages. You weren't bickering at me and hopefully I didn't come off as that way to you.  

[darin617]

Yeah, the Twins are pretending for sure. I hate to throw words out with backup but I recall hearing the Twins were clearing well over $100M after everything was paid out. So tell me they couldn't make ends meet and I don't know maybe just clear $75M and have an actual ace for once.

[tobi0040]

  On 1/26/2016 at 9:45 PM, drjim said:

The biggest revenue boon was suites, now it's TV money.

The TV deal was coming either way though, Dome or TF. The suite revenue was a boon tied to the stadium

[Major League Ready]

 

  On 1/26/2016 at 9:08 PM, USAFChief said:

I don't believe all owners put the highest priority on profit.

 

Or rather, some owners measure success first by wins and losses, some by profits and losses.

 

Some will regularly eat into yearly profits if they think it will increase their chances of winning baseball games.  

 

So no, it's not a zero sum game.  An owner's willingness to spend CAN make a difference.

No doubt some owners a more willing to spend than others.  It does not change the premise at all.  It makes no difference if a handful of owners are more aggressive now.  If the new norm is for all teams to accept a break-even model all teams are now equally aggressive.  So, the handful of teams no longer have a slight advantage because of their spending habits.  However, big picture, players make more money and the Twins in relative terms gain VERY little advantage.  All of the is secondary to the fact that the Twins are at a revenue disadvantage when competing with the top markets from a payroll perspective.  

 

The list below is Forbes estimated earnings.  If all of the team above the Twins went to a break-even model, these 14 would gain an additional $453M to spend on payroll which is an average of $26.7M.  Given the Twins had a profit of just over $21M, the average team would actually pick-up an incremental $5M advantage in the Twins.  There is also a couple anomalies in this year.  The Dodger had a loss of $12M and they are rectifying that problem as evidenced by recent moves and non-moves.  The Phillies lost $39M and that's not because they are less motivated to make a profit.  If the Dodgers and Phillies were normalized the difference would be an average of almost $10M/team if a break-even model became the norm.

 

http://www.forbes.com/mlb-valuations/list/

 

 

[Hosken Bombo Disco]

 

  On 1/26/2016 at 8:35 PM, Major Leauge Ready said:

This is a reasonable position on their need to earn a profit but what is COMPLETELY lost in this discussion is that the only difference a break-even model would make is that the players would make even more.  The payroll gap would be no different.  Many people here are looking at profit as the culprit when in fact the problem is very simply that several teams have significantly more revenue than the Twins and a handful have a really significant revenue advantage.  

What discussion? In all fairness, nobody is discussing a "break even" model for the Pohlads, except in response to a post you have made, after you have brought up the subject yourself.

 

Let's see Ryan and Jim Pohlad sustain a $240+ million payroll for a couple years running, then by all means we can test whether your statements might hold up. 

[clutterheart]

  On 1/27/2016 at 1:39 AM, Hosken Bombo Disco said:

What discussion? In all fairness, nobody is discussing a "break even" model for the Pohlads, except in response to a post you have made, after you have brought up the subject yourself.

 

Let's see Ryan and Jim Pohlad sustain a $240+ million payroll for a couple years running, then by all means we can test whether your statements might hold up.

Im hazy on my logical fallacies. Is he/she building and knocking down a strawman or is this something different?

[jay]

Since we've migrated to logical fallacies, there's a forest somewhere past that "break even" tree.

[Hosken Bombo Disco]

Appeal to authority is usually a big one. "Clearly, Ryan knows more about the Twins than we do, therefore it's obvious that the personnel moves he is making are better than the moves we are suggesting."

 

Or maybe in this case: since Pohlad is the owner of an MLB team, he must be smart about money, and all of the rest of us must be ignorant about money (which in my case is definitely true--I was neither a finance major or philosophy major)

[Major League Ready]

 

  On 1/27/2016 at 1:39 AM, Hosken Bombo Disco said:

What discussion? In all fairness, nobody is discussing a "break even" model for the Pohlads, except in response to a post you have made, after you have brought up the subject yourself.

 

Let's see Ryan and Jim Pohlad sustain a $240+ million payroll for a couple years running, then by all means we can test whether your statements might hold up. 

People may not use the term break-even model but the result of what many of you call for in half the discussions that come up here would result in a break-even model.  Just because the people calling for these actions don't understand the the result is break-even or a loss does not mean you are not suggesting a break-even model.

 

This $240M is a very good indicator of how little objectivity is demonstrated on this site on an every day basis.  Forbes reported the Twins income at just over $220M for 2013 & 2014.   That’s a $20M loss just on payroll.  Do you really not understand that they have a number of other substantial expenses?  You are suggesting they lose $20M plus the following expenses.

 

     Other employee’s salaries
     Payroll taxes on $240M + other employees
     Travel
     Accommodations
     Target field operations
     Marketing
     Minor league players
     Minor league operations
     Numerous other smaller expenses

 

If you takes Forbes numbers and subtract payroll from revenue you can get a pretty good idea of a total of “other expenses”  It would be somewhere in the $100M range.  So, now you are suggesting that the team should lose $120M.  Some of you don’t even try to look at this objectively and what really cracks me up is those who feel compelled to hit the like button for something this misguided. 

 

BTW … Name a team with the Twins level of revenue that EVER spent even $150M.  Yet, somehow you think $240M is reasonable.  You don’t have to have any financial aptitude at all to compare the Twins spending to other teams with similar revenue. 

[DaveW]

 

  On 1/27/2016 at 1:02 AM, tobi0040 said:

The TV deal was coming either way though, Dome or TF. The suite revenue was a boon tied to the stadium

Good point, I'm also curious on just how much suite revenue really is at the end of the day. In my expirence suites are generally "owned"/"given" to major advertising and other business partners of the team. (Single game suites are still used by families, parties, corporations, etc no doubt) but the majority seem to be included for said partners, so i wonder how much additional money they actually do bring in at the end of the day.

 

No doubt its a good amount and at the very least it makes it much more appealing to being an advertising partner with the Twins when you can bring your own company, clients, whoever and sit in premium seating.

 

Also, I will give them this, Target Field as a whole was magnificently done.

[clutterheart]

 

  On 1/27/2016 at 1:09 PM, Major Leauge Ready said:

People may not use the term break-even model but the result of what many of you call for in half the discussions that come up here would result in a break-even model.  Just because the people calling for these actions don't understand the the result is break-even or a loss does not mean you are not suggesting a break-even model.

 

This $240M is a very good indicator of how little objectivity is demonstrated on this site on an every day basis.  Forbes reported the Twins income at just over $220M for 2013 & 2014.   That’s a $20M loss just on payroll.  Do you really not understand that they have a number of other substantial expenses?  You are suggesting they lose $20M plus the following expenses.

 

     Other employee’s salaries
     Payroll taxes on $240M + other employees
     Travel
     Accommodations
     Target field operations
     Marketing
     Minor league players
     Minor league operations
     Numerous other smaller expenses

 

If you takes Forbes numbers and subtract payroll from revenue you can get a pretty good idea of a total of “other expenses”  It would be somewhere in the $100M range.  So, now you are suggesting that the team should lose $120M.  Some of you don’t even try to look at this objectively and what really cracks me up is those who feel compelled to hit the like button for something this misguided. 

 

BTW … Name a team with the Twins level of revenue that EVER spent even $150M.  Yet, somehow you think $240M is reasonable.  You don’t have to have any financial aptitude at all to compare the Twins spending to other teams with similar revenue. 

 

Boy this is a tough one.  On one hand He/She is clearly beating up a strawman...but then the ad hominem on the financial aptitude of those in disagreement...hmmm, I wish I paid attention during my logic classes.  

[diehardtwinsfan]

 

  On 1/26/2016 at 9:40 PM, Mike Sixel said:

Why not? If money doesn't matter, why not fire an employee that is not doing his job? I'm not being flip here, I'm actually trying to understand why not? It isn't money, if you are replacing him with an entry level employee. So why not? In other industries they tend to fire people that get a 1 on their performance review (though probably not fast enough, really).

 

Well, for one, money does matter.  Like it or not.  I'm not sure how having less payroll constraints somehow translates to money not mattering. It's been said in this thread a bazillion times that the Pohlads run the team like a business.  Businesses will dump sunk costs from time to time, but when you invest significant capital into a resource, they are going to do everything they can to make that resource succeed.  I'd add that in the example you gave, the employee's salary is not guaranteed, nor is there a golden parachute attached to it more often than not.  That's a big reason why your average joe will find themselves unemployed when they have a bad review... and that's before you factor things into it like injury (which affects performance)... something that only athletes have to deal with.

 

They may have excess funds to spend, but they don't just cut cut and cut.  Teams in general don't do this if you haven't noticed.  This isn't just a Twins thing.  That will come to bite you in a number of ways, whether it's players refusing to sign or the fact that they still have to pay these contracts when that guy is playing for someone else.

 

There's a time to cut a guy, I won't argue that.  But the way people on this site clamor for it makes me glad that Twins Daily doesn't run the Twins.  That strategy will fail if it was used as often as we fans thought it should happen. 

[Major League Ready]

 

  On 1/26/2016 at 9:43 PM, Mike Sixel said:

So, if the other teams spend the same as they do now, that does or does not stop the Twins from spending more? Really, the Twins decide how much they spend, right? If they really wanted to, they could have bid on an elite pitcher this year, but they didn't want to. What the industry does does not determine what the Twins do. It certainly influences it, but it doesn't determine it. 

 

I have no issue with the employees making more money......none at all. I'd love it if the Twins paid their employees more.

MIke,

 

Let me see if I have this right.  The other teams should continue to follow their current financial guidelines but the Twins should spend considerably more.  We can quibble about the exact impact but it is a fair characterization to say fans here are asking the Twins to spend any profit on payroll or in other words operate at break-even.  The last two years Forbes reported just over $20M in profit so any of the elite FAs discussed here would consume any profit the team has earned.  Therefore, it seems clear you and others are suggesting all of the other teams should continue to make a profit but our owners should be willing to operate at break-even or a loss.  Is this really what you are suggesting? 

 

We are really talking about what is reasonable to expect from ownership.  I would seem fair to me to expect the team earn the industry average percentage of revenue.  We don't have nearly enough information to make an informed assessment.  However, any financial reporting I can find suggests the Twin's spending is very much inline with the industry.  Do you have any evidence this is not the case or are you really advocating that it is fair to us to expect the Twins to have no regard for profitability.

 

Detroit has shown the least regard for profitability and I would love it if we had ownership that was ok with spending after last dime of profit.  I just think it is in very unfair and unreasonable to expect it.

 

[DaveW]

 

  On 1/27/2016 at 1:28 PM, diehardtwinsfan said:

Well, for one, money does matter.  Like it or not.  I'm not sure how having less payroll constraints somehow translates to money not mattering. It's been said in this thread a bazillion times that the Pohlads run the team like a business.  Businesses will dump sunk costs from time to time, but when you invest significant capital into a resource, they are going to do everything they can to make that resource succeed.  I'd add that in the example you gave, the employee's salary is not guaranteed, nor is there a golden parachute attached to it more often than not.  That's a big reason why your average joe will find themselves unemployed when they have a bad review... and that's before you factor things into it like injury (which affects performance)... something that only athletes have to deal with.

 

They may have excess funds to spend, but they don't just cut cut and cut.  Teams in general don't do this if you haven't noticed.  This isn't just a Twins thing.  That will come to bite you in a number of ways, whether it's players refusing to sign or the fact that they still have to pay these contracts when that guy is playing for someone else.

 

There's a time to cut a guy, I won't argue that.  But the way people on this site clamor for it makes me glad that Twins Daily doesn't run the Twins.  That strategy will fail if it was used as often as we fans thought it should happen. 

I agree with this, unfortunately it is too early to cut Nolasco, but damn I would love to see them try to ship him and 50% of his salary off to some sucker!

On the other side though, I think the Twins have waited too long to cut bait on certain guys in the last year of their contracts. I get not cutting a guy with multiple years left, but when a guy is in his last (or only) season on his contract, then I think they should be much more aggressive in cutting bait when there are clearly better options behind them (Pelfrey comes to mind) but to give the Twins credit they have cut bait on Stauffer and Kubel somewhat early the past couple years.

[tobi0040]

  On 1/27/2016 at 1:38 PM, DaveW said:

I agree with this, unfortunately it is too early to cut Nolasco, but damn I would love to see them try to ship him and 50% of his salary off to some sucker!

 

On the other side though, I think the Twins have waited too long to cut bait on certain guys in the last year of their contracts. I get not cutting a guy with multiple years left, but when a guy is in his last (or only) season on his contract, then I think they should be much more aggressive in cutting bait when there are clearly better options behind them (Pelfrey comes to mind) but to give the Twins credit they have cut bait on Stauffer and Kubel somewhat early the past couple years.

We had a financial incentive to cut Stauffer. We gave him 2.2m. But if he pitched past 15 innings, it went up a fair amount. If he stuck with us all year and had 50 or so innings his salary was on the 4.75m range of memory serves.

[DaveW]

 

  On 1/27/2016 at 1:57 PM, tobi0040 said:

We had a financial incentive to cut Stauffer. We gave him 2.2m. But if he pitched past 15 innings, it went up a fair amount. If he stuck with us all year and had 50 or so innings his salary was on the 4.75m range of memory serves.

I forgot all about that, I guess I blocked those painful memories

 

That makes sense though, thanks for the correction.