BPro: Twins Are Not A "Small Market" Team

[drjim]

That's probably true about Forbes, but it seems to be a reasonable estimation. If we don't use it as at least directionally correct then anyway can't make up any number they want in either defense or anger.

 

Perhaps that's the better way. Everyone would be correct!

[USAFChief]

 

Why stop at $150mil? Let's do $180 or $200 or $250.

 

Though, to be fair, according to Forbes a $150 mil payroll would have been about a $25mil loss for the year. Not sure there is a team, no matter how much the owner prioritized wins, that would be willing to do that.

 

You can keep asking the expense question, keep getting answers, keep choosing to ignore the answers, and keep asking the same questions. Admittedly no one can lock it down perfectly, but directionally seems pretty close.

With all due respect, Jim, I haven't gotten a single answer (that makes sense.)  ""Dominican Academy" this and "Ft Myers" that, and "international spending" and "operating costs" aren't explanations.  They are poor excuses that don't come close to adding up.  Those things existed in the dome, and didn't change much if at all, or were one off expenses that still don't come close to accounting for the missing millions.

 

I have, however, supplied the answer...they didn't put any of their own money into stadium construction.

 

 

[DaveW]

 

That's probably true about Forbes, but it seems to be a reasonable estimation. If we don't use it as at least directionally correct then anyway can't make up any number they want in either defense or anger.

 

Perhaps that's the better way. Everyone would be correct!

Again, I am asking for $125-$130 million,  I am more then confident the Pohlads would still find a way to make a nice profit (even before calculating the value of the franchise increasing)

 

Hell, the total payroll amount now doesn't bother me nearly as much as how they have chosen to spend on players over the years:

 

Paying for a bunch of mid rotation guys: Hughes, Santana, Nolasco and overpaying mediocre veterans: Hunter, Willingham, Pelfrey instead of actually going after an impact player for once. Once again, with the money you are paying Hughes+Nolasco+Milone in 2016, the Twins could have had nearly any ace pitcher that hit the market iver the last couple years.

[drjim]

 

Again, I am asking for $125-$130 million,  I am more then confident the Pohlads would still find a way to make a nice profit (even before calculating the value of the franchise increasing)

 

Hell, the total payroll amount now doesn't bother me nearly as much as how they have chosen to spend on players over the years:

 

Paying for a bunch of mid rotation guys: Hughes, Santana, Nolasco and overpaying mediocre veterans: Hunter, Willingham, Pelfrey instead of actually going after an impact player for once. Once again, with the money you are paying Hughes+Nolasco+Milone in 2016, the Twins could have had nearly any ace pitcher that hit the market iver the last couple years.

 

That is all fair, I'm not especially enthusiastic with how they have spent their money either.

 

I'll feel much better when it is used to extend Sano, Buxton and others.

[drjim]

 

With all due respect, Jim, I haven't gotten a single answer (that makes sense.)  ""Dominican Academy" this and "Ft Myers" that, and "international spending" and "operating costs" aren't explanations.  They are poor excuses that don't come close to adding up.  Those things existed in the dome, and didn't change much if at all, or were one off expenses that still don't come close to accounting for the missing millions.

 

I have, however, supplied the answer...they didn't put any of their own money into stadium construction.

 

OK, here's another shot with estimated ranges:

 

Assume absolutely no changes, what would be the expected inflation rate on personnel expenses? 10%? That is about $5-6 mil.

 

Do you think there is additional personnel expenses in the org, including, but not limited to, additional personnel to run documented beefed up operations in Target Field, Ft. Myers and the Dominican? At least a couple mil.

 

Increased costs in amateur talent acquisition, even staying within the boundaries - about $5 mil a year on average

 

Increased operating costs per year on Target Field vs. Metrodome - about $20 mil a year

 

Money that has been pumped into Target Field improvements each year (think patios, etc) - about $5 mil a year, some years even more

 

Money pumped into Ft Myers and Dominican Academy above the government layout - about $5 mil, plus there will be increased operating expenses for staff, upkeep, etc each year

 

These are off the top of my head without even really trying and shouldn't even really be that debatable. And they equal about $40 mil more per year. I wouldn't be surprised if the inflation of current personnel is even higher and I suspect strongly that they have beefed up operations behind the scenes more than we fully realize.

 

All that said, I would concede they are not tapped out on payroll of what they could spend. But I generally buy that Forbes is directionally correct with expenses and revenue. And I do think if they have the talent they will extend it and they would have a higher payroll right now if they hadn't taken such a revenue hit by being the tank for 4 years (and would have players actually worth paying).

 

They could certainly spend a little more on free agents - but they have pumped well over $180 mil in free agent contracts since Target Field opened. That's at least something.

[Dr. Evil]

 

Good point, I would love $150M as well, but have resigned myself to the fact the Pohlads won't let that happen anytime soon. I would like to see it at $125-$130 (which seems more than reasonable and allows the Pohlads plenty of money)

At that number a couple dandy relievers would be well within reason and would make a world of difference.

 

When there were some quality free agent relievers available it would have been within our means to perhaps even pay a little above market for 1 or 2. A players real value IMHO is relative to the need of the team that want's him. In the case of the Twins, a quality reliever would be highly valuable. But, we don't seem to do anything but use hope as a strategy.

[Major League Ready]

 

I will.  I've thown out $150M in payroll before, and I'll throw out $150M now.

 

I still want to know why $60-70M over and above MLB payroll was fine in the dome, but the team needs $110M+ now.

If we could see their costs categories it would sure help.  Most likely influences off the top of my head.

 

---- Revenue Sharing – somewhere in the neighborhood of $25-30M year.  The Twins received revenue sharing funds in the dome and are now a contributor because of increased revenue from Target Field.
http://www.twinkietown.com/2010/10/19/1760846/the-minnesota-twins-revenue-sharing-and-payroll-flexibility

---- Interest on bank loan – Not sure of the terms but probably around $10M/year
---- Investments in minor league parks and operations
---- Operating cost for Target field
---- Increase in International operations
---- International signing bonuses

---- Increase in health care costs / insurance
---- Payroll Taxes on the higher team payroll and other personnel additions
---- Increase in travel and hotel cost from 10+ years ago
---- Whatever they have added in analytical personnel

 

I am sure there are several others.  I don't think there it is any mystery how the overhead could have increased by $40M.

[Vanimal46]

There has been more math calculated during the last page of this thread than I've done in the last 4 years since I graduated from college.... It still has the same effect on me though talking about math. 

http://organiceyourlife.com/wp-content/uploads/2013/07/sleep-desk.jpg

[DaveW]

 

There has been more math calculated during the last page of this thread than I've done in the last 4 years since I graduated from college.... It still has the same effect on me though talking about math. 

 

http://also.kottke.org/misc/images/simpsons-math.jpg

[Hosken Bombo Disco]

If we could see their costs categories it would sure help.  Most likely influences off the top of my head.

 

---- Revenue Sharing – somewhere in the neighborhood of $25-30M year.  The Twins received revenue sharing funds in the dome and are now a contributor because of increased revenue from Target Field.

http://www.twinkietown.com/2010/10/19/1760846/the-minnesota-twins-revenue-sharing-and-payroll-flexibility

---- Interest on bank loan – Not sure of the terms but probably around $10M/year

---- Investments in minor league parks and operations

---- Operating cost for Target field

---- Increase in International operations

---- International signing bonuses

---- Increase in health care costs / insurance

---- Payroll Taxes on the higher team payroll and other personnel additions

---- Increase in travel and hotel cost from 10+ years ago

---- Whatever they have added in analytical personnel

 

I am sure there are several others.  I don't think there it is any mystery how the overhead could have increased by $40M.

Only the Twins bear these costs? No other mid market MLB teams have to deal with any of this?

[drjim]

 

Only the Twins bear these costs? No other mid market MLB teams have to deal with any of this?

 

They all bear them, which is why the Twins have a payroll more or less in the same range of other teams that have similar revenues.

[Major League Ready]

 

Only the Twins bear these costs? No other mid market MLB teams have to deal with any of this?

That has absolutely nothing to do with Chief's question.  He has been asking what could possible account for what appears to be a $40m/year increase in operating costs.  These are contributors.   The relative impact on payroll is not present in Chief's question.  His question is specific to how the twins now need roughly $40M/year to cover operating expenses.

 

Ignoring for a moment that if other teams had these costs are not are relevant to Chief's question, the two biggest changes are not present for most teams.  Those two costs being the difference in revenue sharing and interest.

[Don Walcott]

 

You don't think Forbes factors in Advanced Media and TV revenue in this calculation?

 

I generally agree with your second point, but I think part of the payroll calculation is based on renewal rates, both with season tickets and corporate sponsorships.

Forbes does not factor MLBAM money, it's not technically income for the baseball franchises, but a separate investment by the owners.  Future revenue from TV is factored into the franchise value, but not last year's revenues.

[tobi0040]

 

My issue is as much about how it is spent as well.   We have for a long time been okay with one year deals to veterans that are not good, and frankly provide no more value than a replacement player at $500K in costs.  To me, you either spend the money or you go with a rookie.  We are in no man’s land all too often on these silly one year deals.

 

2015 - we could have had a good $5M reliever and a rookie instead of Duensing and Stauffer.

 

2014 – A good pitcher and a rookie would have have been better than Correia and Pelfrey

 

2013 – See 2014

 

And so on.  Livan Hernandez.  Ramon Ortiz, etc.

[Hosken Bombo Disco]

I also agree. It may have been true that the Twins needed to simply field a team, thus the contracts to Burton, Pelfrey, Correia, Doumit, Suzuki, and so on.

 

This is no longer the case. We do not need to sign or extend 0.0 WAR players anymore. We do not need another bargain bin bullpen veteran out of the belief that we cannot afford one of the top guys.

[drjim]

My issue is as much about how it is spent as well. We have for a long time been okay with one year deals to veterans that are not good, and frankly provide no more value than a replacement player at $500K in costs. To me, you either spend the money or you go with a rookie. We are in no man’s land all too often on these silly one year deals.

 

2015 - we could have had a good $5M reliever and a rookie instead of Duensing and Stauffer.

 

2014 – A good pitcher and a rookie would have have been better than Correia and Pelfrey

 

2013 – See 2014

 

And so on. Livan Hernandez. Ramon Ortiz, etc.

I agree with you in a general sense if not necessarily specific signings.

 

Who they have signed and the structure of contracts is certainly a mixed bag (to be kind). I personally think signing one of the relievers that signed this year at the contract it would have taken is not worth it and a bad use of resources, but I appreciate the other position.

 

That said, this strikes me as a different discussion than what was mostly talked about in the thread so far. I think starting with a realistic baseline of what their payroll range should be is pretty important and much of the talk here had unrealistic assumptions and much of the angst is misguided and never, ever going to be resolved satisfactorily based on fundamentally erroneous assumptions.

[drjim]

I also agree. It may have been true that the Twins needed to simply field a team, thus the contracts to Burton, Pelfrey, Correia, Doumit, Suzuki, and so on.

 

This is no longer the case. We do not need to sign or extend 0.0 WAR players anymore. We do not need another bargain bin bullpen veteran out of the belief that we cannot afford one of the top guys.

And I would argue this is precisely why they didn't sign the relievers that have been advocated for this offseason.

[USAFChief]

 

OK, here's another shot with estimated ranges:

 

Assume absolutely no changes, what would be the expected inflation rate on personnel expenses? 10%? That is about $5-6 mil.

 

Do you think there is additional personnel expenses in the org, including, but not limited to, additional personnel to run documented beefed up operations in Target Field, Ft. Myers and the Dominican? At least a couple mil.

 

Increased costs in amateur talent acquisition, even staying within the boundaries - about $5 mil a year on average

 

Increased operating costs per year on Target Field vs. Metrodome - about $20 mil a year

 

Money that has been pumped into Target Field improvements each year (think patios, etc) - about $5 mil a year, some years even more

 

Money pumped into Ft Myers and Dominican Academy above the government layout - about $5 mil, plus there will be increased operating expenses for staff, upkeep, etc each year

 

These are off the top of my head without even really trying and shouldn't even really be that debatable. And they equal about $40 mil more per year. I wouldn't be surprised if the inflation of current personnel is even higher and I suspect strongly that they have beefed up operations behind the scenes more than we fully realize.

 

All that said, I would concede they are not tapped out on payroll of what they could spend. But I generally buy that Forbes is directionally correct with expenses and revenue. And I do think if they have the talent they will extend it and they would have a higher payroll right now if they hadn't taken such a revenue hit by being the tank for 4 years (and would have players actually worth paying).

 

They could certainly spend a little more on free agents - but they have pumped well over $180 mil in free agent contracts since Target Field opened. That's at least something.

I agree these are off the top of your head, I do not agree they are not debateable:

 

1.  If we assume a 10% inflation rate, in order for other payroll costs to go up $5-6M over 2009 (last yr in the dome), other payroll would have been $50-60M in 2009.  That's...high.  Way too high.  That would be most of their "other" expenses in 2009.

 

Some quick, back of the napkin calculations (guesses)--extremely generous ones at that--puts other payroll in the range of $20M.  And by generous, I mean generous...I estimated no employees at less than $50K per year, for example, and have 20 at $150K or more (including $2M each for TR and DSP).

 

So a more reasonable estimate (and 10 percent over the past 6 yrs is in itself generous) is $2M more than 2009.

 

I'm not sure what you mean by "additional personnel to run documented beefed up operations", but let's go with it.  $2m more.  Although, to be fair, they were in the Dominican before 2009, they've been in Ft Myers forever, so that's a pretty nebulous additional $2M.  That would be 20 extra employees at $100K each.  

 

2.  In 2009, the Twins paid the 22nd pick (Gibson) $1.85M.  In 2015, the 22nd pick cost Detroit $2.15m.  Rule 4 draft costs are capped now, so an argument can be made the Twins have LOWER cost risks for the draft now than they did in 2009.  For example, Stephen Strasburg cost the Nats $15M in 2009, number one pick Dansby Swanson cost the D'backs $6.5M in 2015.  We'll say, generously, the Twins can expect to be exposed to an additional $1M on average per year, although again, I think that's generous.

 

As for adding international FA's, there is now a cap, based (like the draft) on your W/L record the previous year.  In 2015, the Twins, with the 6th most money to spend, had just under $4M.  They spent more than that in 2009.  

 

So add $1M per year.  Again...generous.

 

3.  Operating costs for TF are tough to estimate.  I think you're high, but I really can't find any confirmation one way or the other.  The Twins themselves, in lobbying for a new park, estimated "in excess of $10M".  http://minnesota.twins.mlb.com/min/ballpark/new_banter.jsp?content=qa

 

Let's split the difference...$15M annually.  Take away the costs the Twins were paying in the dome anyway...office furniture, phones, internet, office supplies, etc etc etc.  We'll say $2M.  I can't find what the Metrodome lease cost the Twins in rent, so I'll say zero.

 

Make it $13M.

 

4.  This year the Twins will spend $5M on renovations...the most they've ever spent.  http://ballparkdigest.com/2015/10/26/cf-improvement-on-tap-for-target-field/

 

So it hasn't been "$5M every year, some years more."  It's been less every year.  In fact, it looks like they've spent around $11M total on renovations, or less than $2M per year.  And most, if not all, the renovations have been designed to increase revenue.  So I'll give you $2M per here, but in reality, they probably MADE money on the deal.

 

5.  The Twins opened their Domican Academy in 2004, so I'll need more than your word for it their expenses have increased greatly in the last 6 years.  I'm not sure how they could be spending a million more, but I'll give you a million.

 

The Twins have been holding spring training in Ft Myers forever, I'm not sure where you're getting huge increased costs.  According to this:  http://ballparkdigest.com/2015/10/26/cf-improvement-on-tap-for-target-field/

the entire cost of renovations was paid by Lee County.   

 

The Twins are operating a dorm now, but surely they decided that was cheaper than rent/per diem.  Call it a wash.

 

Total, $1M

 

Add it all up, with very generous estimates, and I come up with $21M.  If I was conservative, more like $12-15M.

 

That leaves a lot of space.

[jay]

I think most are simply articulating for one relief pitcher in the 3-4M range per season.

10+ pages on a mid-priced relief pitcher?

 

For some reason, I've interpreted a lot more than that from this thread.

[jay]

Good point, I would love $150M as well, but have resigned myself to the fact the Pohlads won't let that happen anytime soon. I would like to see it at $125-$130 (which seems more than reasonable and allows the Pohlads plenty of money)

Where do either of those numbers fit relative to the Twins revenue position?

[jay]

I have, however, supplied the answer...they didn't put any of their own money into stadium construction.

While I do think that is true, it's not any different than the norm.

 

I think this whole debate boils down to whether or not we expect the ownership to support doing things that aren't the norm -- whether that's payroll levels, stadium funding, financial transparency, you-name-it.

 

The ironic part of that (which has been pointed out elsewhere in this thread) is that if all teams listened to their fanbase and did that, you would no longer have any relative advantage whatsoever as a new norm has been established.

[tobi0040]

10+ pages on a mid-priced relief pitcher?

 

For some reason, I've interpreted a lot more than that from this thread.

I believe we can count on one hand the number of people asking for $150m payroll. I don't think there is a theme about asking for a Greinke type signing

 

That was my point. Most expected and wanted a better reliever than what we got.

[tobi0040]

While I do think that is true, it's not any different than the norm.

 

I think this whole debate boils down to whether or not we expect the ownership to support doing things that aren't the norm -- whether that's payroll levels, stadium funding, financial transparency, you-name-it.

 

The ironic part of that (which has been pointed out elsewhere in this thread) is that if all teams listened to their fanbase and did that, you would no longer have any relative advantage whatsoever as a new norm has been established.

I totally agree they have been the norm in terms of stadium financing. But I don't know that their activities this offseason are the norm.

 

I would like to think that coming off a second place finish and 83 wins, most teams would spend a little bit to address the pen if they were in our shoes. They had very little room to add to the rotation or position players, etc. I don't think two minor league deals is the norm in that situation and a payroll a shade under the prior year.

[jay]

I would like to think that coming off a second place finish and 83 wins, most teams would spend a little bit to address the pen if they were in our shoes. They had very little room to add to the rotation or position players, etc. I don't think two minor league deals is the norm in that situation and a payroll a shade under the prior year.

If we use just this offseason to assess the "norm", you'd think the Yankees don't ever sign FAs. They're literally the only team that hasn't signed anyone.

 

The Twins revenues since the move to TF will typically keep them in the 15-20 range among MLB teams. Their payroll will typically be in that range as well. Makes perfect sense to me. The data available is too questionable to infer much beyond that anyway.

 

I'll digress a bit here...

Ripping TR and the Pohlads here and in most every thread for not signing a reliever or whatever the flavor of the day is quite frequently ignores plenty of other data points. There's room to criticize around how resources are allocated and priorities, but I'd categorize a good share of what I see around here as "unrealistic". If the response to that is simply that our fan demands don't have to be realistic, so be it -- that's just not a world I live in.

[USAFChief]

If we use just this offseason to assess the "norm", you'd think the Yankees don't ever sign FAs. They're literally the only team that hasn't signed anyone.

The Twins revenues since the move to TF will typically keep them in the 15-20 range among MLB teams. Their payroll will typically be in that range as well. Makes perfect sense to me. The data available is too questionable to infer much beyond that anyway.

I'll digress a bit here...

Ripping TR and the Pohlads here and in most every thread for not signing a reliever or whatever the flavor of the day is quite frequently ignores plenty of other data points. There's room to criticize around how resources are allocated and priorities, but I'd categorize a good share of what I see around here as "unrealistic". If the response to that is simply that our fan demands don't have to be realistic, so be it -- that's just not a world I live in.

But there's the rub. This isn't just about this offseason.

 

And for the record, it's not unrealistic to think that when ownership committed to financing part of the costs of TF, they would actually follow through.

[jimmer]

 

But there's the rub. This isn't just about this offseason.

And for the record, it's not unrealistic to think that when ownership committed to financing part of the costs of TF, they would actually follow through.

Pure blind unrealistic optimism

[jay]

And for the record, it's not unrealistic to think that when ownership committed to financing part of the costs of TF, they would actually follow through.

It probably is unrealistic given the Twins are doing the exact same thing just about every other owner has done. Doesn't make it right.

 

NFL does it too with their "seat licenses" and what other garbage.

[tobi0040]

If we use just this offseason to assess the "norm", you'd think the Yankees don't ever sign FAs. They're literally the only team that hasn't signed anyone.

 

The Twins revenues since the move to TF will typically keep them in the 15-20 range among MLB teams. Their payroll will typically be in that range as well. Makes perfect sense to me. The data available is too questionable to infer much beyond that anyway.

 

I'll digress a bit here...

Ripping TR and the Pohlads here and in most every thread for not signing a reliever or whatever the flavor of the day is quite frequently ignores plenty of other data points. There's room to criticize around how resources are allocated and priorities, but I'd categorize a good share of what I see around here as "unrealistic". If the response to that is simply that our fan demands don't have to be realistic, so be it -- that's just not a world I live in.

I think you have taken the outlier opinion as the norm. Again for every person saying we should have a 150m payroll you will find six upset about not getting a good reliever.

 

As for me, I don't think spending a nickel on the rotation, or position players this offseason would make any sense. In fact, I would have traded Plouffe to make room for Sano and that would have reduced payroll. But last year we finished second and the easiest spot to close that gap is the pen. They are top 5 and we are 23-25 depending on the metric. So a 2-8 or 2-10 type deal or 5-6M on a one year deal would give us a pretty solid top 3 and provide some insurance if Perkins gets hurt again.

[jay]

Again for every person saying we should have a 150m payroll you will find six upset about not getting a good reliever.

That's all good and fine, but inferring they didn't get that reliever due to being cheap or payroll concerns or hiding revenues is quite the same in the end.

[drjim]

I'll digress a bit here...

Ripping TR and the Pohlads here and in most every thread for not signing a reliever or whatever the flavor of the day is quite frequently ignores plenty of other data points. There's room to criticize around how resources are allocated and priorities, but I'd categorize a good share of what I see around here as "unrealistic". If the response to that is simply that our fan demands don't have to be realistic, so be it -- that's just not a world I live in.

Uh, yes.

 

I'll add my own personal perspective as a postlude. I took this topic on a little more aggressively than I have others recently. I like the board and I like conversation about the Twins and I really like engaging opinions different than mine, if for no other reason than to sharpen my own thinking and explore what I really think.

 

But I think this topic is poison, a big lie. The revenue rank and the payroll rank more or less line up every year and pretty much have since the Twins got good again in 2001. Anything before that really doesn't really matter anymore.

 

It's fine to say they should blow past the limits set by basically every other team, but probably not realistic. I just find the payroll/revenue situation so boring because, based on all evidence we have, relative to all organizations, it is about where it should be.

 

As jay mentioned, constantly falling into thay discussion distracts so much from what should be interesting discussions (in my mind anyways) about resource allocation and priorities and strategies and player performance and the like.

 

And in a more real sense it lets Terry Ryan off the hook. Some people say they are fans of Ryan but hate the Pohlads. What does that even mean? The Pohlads give him the budget the market allows and Ryan makes the decisions. The Pohlads didn't force him to pump $49 mil into Nolasco.

 

I guess more than anything I'm amazed at the lengths people will go to to convince themselves that the team they are a fan of is trying to screw them.