Article: Falvey, Levine Well-Suited To Solve Roster Riddles

[drivlikejehu]

 

Actually many businesses do operate that way (spreading out costs over multiple years).
It's pretty common for a company to invest in an expensive piece of equipment and spread that cost over the expected life of the equipment.
And, in Minnesota at least, it's legal to do it that way for tax reporting.

 

For capital assets, yes, depreciation is often mandatory for financial accounting and tax purposes. States follow federal tax depreciation rules for the most part, save sometimes for bonus depreciation.

 

For the portion of Target Field that the Twins paid for, for instance, they would depreciate the structure over 39 years for tax, concessions equipment over 5 years, and so on. But teams do not treat players like capital assets, even though baseball contracts do have some characteristics of a capital investment. They treat payroll like . . . payroll. I don't know how else they could really do it, since it would be a pro forma method of accounting that they couldn't use for anything other than internal decision-making.

 

 

Major Leauge Ready, on 02 Nov 2016 - 9:59 PM, said:

 

You don't understand the definition of a sunk cost and neither do a number of people here who keep using it incorrectly.  If there is still hope of a return it's not a sunk cost.

 

A simple google search contradicts you because you misunderstand "return."  A sunk cost is one that has been incurred and cannot be recovered. The financial commitment to a player cannot be recovered financially - on-field production is irrelevant from that standpoint, though of course a team will want to keep productive players.

Edited November 3, 2016 by drivlikejehu

[nytwinsfan]

OK . . . so when does Falvey show up at Target Field? Let's get this show on the road!!!

Edited November 3, 2016 by nytwinsfan

[Mike Sixel]

 

You don't understand the definition of a sunk cost and neither do a number of people here who keep using it incorrectly.  If there is still hope of a return it's not a sunk cost. 

 

Help me out here.....you can have hope of a return, and still have a sunk cost. A sunk cost is money already spent, that cannot be returned or recovered. But, you could still sell that crappy piece of technology you bought, even if just for parts. The concept, in terms of what it really means for decision making isn't really about that....

 

If people are using "sunk cost" when they should use "prospective cost" or another term.....well, not everyone here is an economics major. But, they are using the concept fairly well. They are saying "just because we are paying Mauer does not mean we should play Mauer". That is so dang close to sunk cost fallacy arguments, in terms of how a business should make rational decisions, that to argue otherwise is pretty darn pedantic. 

 

We all know what people are saying when they use that phrase in this context, to argue they aren't using the actual right phrase is not fair to them, their argument, or their intelligence. IMO.

[Mike Sixel]

Yikes, I can't see how FA will fix much:

 

http://mlb.nbcsports.com/2016/11/03/2016-17-top-111-free-agents/

 

[Doomtints]

 

Yikes, I can't see how FA will fix much:

 

http://mlb.nbcsports.com/2016/11/03/2016-17-top-111-free-agents/

 

Some of the names on that list are OK.  But the ages associated with those names ... ugh.

 

FA isn't the only way to get veterans, though ... trades are possible.  

[ericchri]

 

The money is already spent. Nobody is asking to spend someone else's money. It's already spent.
 

Actually, you are asking to spend someone else's money, if indirectly. 

 

Perkins and Hughes for instance are getting paid no matter what, so the outlay on them is the same regardless of whether they actually play. But by arguing to just chuck them aside we then have to bring in somebody else who now gets paid (even a couple rookie minimums is over a million dollars in additional wages). It might be the best thing to do, especially as relates to building a winning team which has indirect benefits in other financial matters, but it is still spending additional money that doesn't technically have to be spent.

 

I'm in favor of doing so, btw, assuming it looks like neither can contribute to the level we need, so I'm not trying to argue against, but people need to acknowledge that a sunk cost doesn't necessitate spending more money just because the sunk cost cannot be recovered. It might be the "right" thing to do, but it is not the "necessary" thing to do.

 

I'm sure most people already acknowledge most of my post without it being stated, but it does get back to the issue of "someone else's money" or arguments about "how much profit is enough" or the like which as a fan and not the owner are really easy to decide. I'd rather the owner make 2 million dollars in profit and build a winning team than make 20 million dollars in profit and field a losing team, but I don't get to decide how he runs his business, I just get to complain about it on the internet.

[drivlikejehu]

 

I'm in favor of doing so, btw, assuming it looks like neither can contribute to the level we need, so I'm not trying to argue against, but people need to acknowledge that a sunk cost doesn't necessitate spending more money just because the sunk cost cannot be recovered. It might be the "right" thing to do, but it is not the "necessary" thing to do.

 

I'm sure most people already acknowledge most of my post without it being stated, but it does get back to the issue of "someone else's money" or arguments about "how much profit is enough" or the like which as a fan and not the owner are really easy to decide. I'd rather the owner make 2 million dollars in profit and build a winning team than make 20 million dollars in profit and field a losing team, but I don't get to decide how he runs his business, I just get to complain about it on the internet.

 

Businesses need customers. The Twins do benefit from some MLB-wide earnings but they certainly rely heavily on ticket sales, radio & TV revenue, etc. due to Twins fans specifically. So you individually, and Twins fans collectively, are inseparable from the business of Twins baseball. 

[Mike Sixel]

 

Actually, you are asking to spend someone else's money, if indirectly. 

 

Perkins and Hughes for instance are getting paid no matter what, so the outlay on them is the same regardless of whether they actually play. But by arguing to just chuck them aside we then have to bring in somebody else who now gets paid (even a couple rookie minimums is over a million dollars in additional wages). It might be the best thing to do, especially as relates to building a winning team which has indirect benefits in other financial matters, but it is still spending additional money that doesn't technically have to be spent.

 

I'm in favor of doing so, btw, assuming it looks like neither can contribute to the level we need, so I'm not trying to argue against, but people need to acknowledge that a sunk cost doesn't necessitate spending more money just because the sunk cost cannot be recovered. It might be the "right" thing to do, but it is not the "necessary" thing to do.

 

I'm sure most people already acknowledge most of my post without it being stated, but it does get back to the issue of "someone else's money" or arguments about "how much profit is enough" or the like which as a fan and not the owner are really easy to decide. I'd rather the owner make 2 million dollars in profit and build a winning team than make 20 million dollars in profit and field a losing team, but I don't get to decide how he runs his business, I just get to complain about it on the internet.

 

You realize a rookie costs 500K, right?

[Mr. Brooks]

Actually, you are asking to spend someone else's money, if indirectly.

 

Perkins and Hughes for instance are getting paid no matter what, so the outlay on them is the same regardless of whether they actually play. But by arguing to just chuck them aside we then have to bring in somebody else who now gets paid (even a couple rookie minimums is over a million dollars in additional wages). It might be the best thing to do, especially as relates to building a winning team which has indirect benefits in other financial matters, but it is still spending additional money that doesn't technically have to be spent.

 

I'm in favor of doing so, btw, assuming it looks like neither can contribute to the level we need, so I'm not trying to argue against, but people need to acknowledge that a sunk cost doesn't necessitate spending more money just because the sunk cost cannot be recovered. It might be the "right" thing to do, but it is not the "necessary" thing to do.

 

I'm sure most people already acknowledge most of my post without it being stated, but it does get back to the issue of "someone else's money" or arguments about "how much profit is enough" or the like which as a fan and not the owner are really easy to decide. I'd rather the owner make 2 million dollars in profit and build a winning team than make 20 million dollars in profit and field a losing team, but I don't get to decide how he runs his business, I just get to complain about it on the internet.

Is there a reason you cut out the part where I went on to disclaim that you'd have to spend the $500k league minimum replace them?

[Major League Ready]

 

Help me out here.....you can have hope of a return, and still have a sunk cost. A sunk cost is money already spent, that cannot be returned or recovered. But, you could still sell that crappy piece of technology you bought, even if just for parts. The concept, in terms of what it really means for decision making isn't really about that....

 

If people are using "sunk cost" when they should use "prospective cost" or another term.....well, not everyone here is an economics major. But, they are using the concept fairly well. They are saying "just because we are paying Mauer does not mean we should play Mauer". That is so dang close to sunk cost fallacy arguments, in terms of how a business should make rational decisions, that to argue otherwise is pretty darn pedantic. 

 

We all know what people are saying when they use that phrase in this context, to argue they aren't using the actual right phrase is not fair to them, their argument, or their intelligence. IMO.

Mauer is an interesting example.  You may recall I have said it might be time to let him go if he did not bounce back last year.    However, I don’t think his cost is sunk.  I say I don’t think it’s sunk because I would guess someone would give him a 2 year contract if he were a free agent.  He was only a 1 war player last year.  Would anyone care to guess what Mauer would get?  Could he get 2/13?

 

This discussion started with players I think it much harder to determine if they will ever have value.  Mauer seems to simply be in decline.  Hughes was quite good before his velocity feel off.  I don’t like his odds but there is still substantial potential if he comes back from this surgery.  The scenario is about the same as Perkins.  IMO, the definition of sunk is very different for a fan and the people responsible for P&L or the person who’s money is being spent.,  Many fans have great difficulty accepting MLB is a business.  At least their comments often suggest the put very little value in someone else’s 10s of millions. 

 

BTW … If Mauer would bring 2/13, $13 million is not sunk.  While we might like for ownership to flush that $13M in value, its not quite so easy to just give up on a player when it’s your $13M or if you are the guy responsible for P&L it’s not so easy either.  This is one of those things that are much easier to understand or appreciate if you have been in that position. 

[Willihammer]

If Mitch Moreland, Justin Morneau, Matt Joyce, and Adam Lind find jobs this winter then Mauer isn't a sunk cost. Is that fair to say?

[Mr. Brooks]

Mauer is an interesting example. You may recall I have said it might be time to let him go if he did not bounce back last year. However, I don’t think his cost is sunk. I say I don’t think it’s sunk because I would guess someone would give him a 2 year contract if he were a free agent. He was only a 1 war player last year. Would anyone care to guess what Mauer would get? Could he get 2/13?

 

This discussion started with players I think it much harder to determine if they will ever have value. Mauer seems to simply be in decline. Hughes was quite good before his velocity feel off. I don’t like his odds but there is still substantial potential if he comes back from this surgery. The scenario is about the same as Perkins. IMO, the definition of sunk is very different for a fan and the people responsible for P&L or the person who’s money is being spent., Many fans have great difficulty accepting MLB is a business. At least their comments often suggest the put very little value in someone else’s 10s of millions.

 

BTW … If Mauer would bring 2/13, $13 million is not sunk. While we might like for ownership to flush that $13M in value, its not quite so easy to just give up on a player when it’s your $13M or if you are the guy responsible for P&L it’s not so easy either. This is one of those things that are much easier to understand or appreciate if you have been in that position.

It's a bit more nuanced than your last paragraph.

There are a limited number of roster spots. You have to take into account the production could get by giving someone else that roster spot.

If Mauer can give you 1 WAR, but a guy making the league minimum can give you 1.5 or more WAR from that roster spot, then to me it's a better use of resources cut Mauer and give that spot to the guy making the league minimum.

[jimmer]

It's a bit more nuanced than your last paragraph.

There are a limited number of roster spots. You have to take into account the production could get by giving someone else that roster spot.

If Mauer can give you 1 WAR, but a guy making the league minimum can give you 1.5 or more WAR from that roster spot, then to me it's a better use of resources cut Mauer and give that spot to the guy making the league minimum.

especially when you take into account 1/2 WAR is worth 3.5-4M, yeah.

[drivlikejehu]

 

BTW … If Mauer would bring 2/13, $13 million is not sunk.  While we might like for ownership to flush that $13M in value, its not quite so easy to just give up on a player when it’s your $13M or if you are the guy responsible for P&L it’s not so easy either.  This is one of those things that are much easier to understand or appreciate if you have been in that position. 

 

You keep saying this but it isn't accurate. Mauer's WAR $ value is an abstract concept that has zero connection to the Twins' payroll costs (and, by extension, P&L). The "value" of Mauer's production is an on-field baseball quantity that is very loosely related to the overall business of the team.

 

The business of the team is best served by winning. So winning more by letting Mauer go is an obviously correct move, if possible, because the Twins win more by having a greater overall level of on-field production. Whether Mauer is "worth" $10 million, $15 million, or some other amount is completely meaningless from a business standpoint.

[jimmer]

You keep saying this but it isn't accurate. Mauer's WAR $ value is an abstract concept that has zero connection to the Twins' payroll costs (and, by extension, P&L). The "value" of Mauer's production is an on-field baseball quantity that is very loosely related to the overall business of the team.

 

The business of the team is best served by winning. So winning more by letting Mauer go is an obviously correct move, if possible, because the Twins win more by having a greater overall level of on-field production. Whether Mauer is "worth" $10 million, $15 million, or some other amount is completely meaningless from a business standpoint.

assuming we have a better option for Mauer and whoever replaces him actually makes our team better. Neither of which seems to be the case at present.

[drivlikejehu]

 

assuming we have a better option for Mauer and whoever replaces him actually makes our team better. Neither of which seems to be the case at present.

 

Well right, though a rebuilding team may value improved production in future years if that is a benefit of playing someone else instead of Mauer in the present.

[jimmer]

 

Well right, though a rebuilding team may value improved production in future years if that is a benefit of playing someone else instead of Mauer in the present.

I believe if we had a guy who was a top 1B prospect, it would be an easier decision.  26 year old Vargas isn't that guy.  30 year old Park isn't that guy (at least he won't be that guy whenever we might be contenders).  If we had a talent like Rizzo being blocked by Mauer, he wouldn't be blocked by Mauer ;-)

Edited November 4, 2016 by jimmer

[TheLeviathan]

I don't think we need to have Rizzo to justify reducing Mauer's playing time.

 

And it's going to be hard to see what kind of replacement we have until they can actually play.  Mauer's not going back to what he was and what he is isn't worth holding on to any more.  Time to see if we can catch some lightening.

[jimmer]

 

I don't think we need to have Rizzo to justify reducing Mauer's playing time.

 

And it's going to be hard to see what kind of replacement we have until they can actually play.  Mauer's not going back to what he was and what he is isn't worth holding on to any more.  Time to see if we can catch some lightening.

Yeah, it was an exaggeration to prove a point.  Who is our highest prospect at the 1B position? That's the issue when the TEAM has to decide whether or not to make a move.  Having a real quality prospect knocking on the door would make the move easy for the team, but that's not the case so their decision is not an easy one right now no matter how many people say it is.

Edited November 5, 2016 by jimmer

[Mike Sixel]

Mauer is an interesting example. You may recall I have said it might be time to let him go if he did not bounce back last year. However, I don’t think his cost is sunk. I say I don’t think it’s sunk because I would guess someone would give him a 2 year contract if he were a free agent. He was only a 1 war player last year. Would anyone care to guess what Mauer would get? Could he get 2/13?

 

This discussion started with players I think it much harder to determine if they will ever have value. Mauer seems to simply be in decline. Hughes was quite good before his velocity feel off. I don’t like his odds but there is still substantial potential if he comes back from this surgery. The scenario is about the same as Perkins. IMO, the definition of sunk is very different for a fan and the people responsible for P&L or the person who’s money is being spent., Many fans have great difficulty accepting MLB is a business. At least their comments often suggest the put very little value in someone else’s 10s of millions.

 

BTW … If Mauer would bring 2/13, $13 million is not sunk. While we might like for ownership to flush that $13M in value, its not quite so easy to just give up on a player when it’s your $13M or if you are the guy responsible for P&L it’s not so easy either. This is one of those things that are much easier to understand or appreciate if you have been in that position.

I would just like to say....this is a very polite reply. Thanks.