Morosi: Boras in mid-season form

[Jeremy Nygaard]

LINK

 

My favorite Boras gem, on the $25m more that every team will get starting in 2014 (because of the TV deals):

 

"Every team can afford to keep a franchise player now. For the same product, major-league teams just got $25 million more. So, for players, the same performance should get you grandly more. The quid pro quo has to continue: If revenues go up, player salaries go up."

[Physics Guy]

I can't believe he would say such a thing. (sarcasm) Whether you like him or not, there's a reason why he's the top agent in the business. The guy knows how to squeeze money out of teams. He makes his mistakes, but he "wins" more often than not.

[Seth Stohs]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

[Badsmerf]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

I can guarantee the Twins have a manufactured response to this already.

[Bark's Lounge]

Boras is good at his job... maybe the best. If I were a high level post draft baseball player I certainly would want him as my agent. As far as his clients go in the draft, unless they are a Strasburg or a Harper type, I would always pass them over. Mark Appell will never be drafted as high again. Responding to the 25M+ teams will receive, he might be right in players receiving more money, but I only see that happening with the Top Shelf Market Teams. The Twins and many others organizations will exclude themselves from that ring of fire.

 

The 1950's had the communist/socialist trials. Maybe the 2010's need the Neo-Capitalist Trials - owners, players and agents are free game.

[johnnydakota]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

but there payroll went down 18.4 from 2011 to 2012 already,and twins llc claimed to have earned 26 million in profit while some have speculated they actually earned closer to 60 million... just jipppy squeezing more from the team ,same old ,same old...thanks for the new stadium folks now watch the worst team in the a.l. while i count my profits

[JB_Iowa]

I'm not a big fan of Boras but I can't deny that he is good at what he does.

 

I do disagree with what he says here: "Every team can afford to keep a franchise player now."

 

Maybe, but maybe not. Market forces will still be at work. Maybe the extra "salary" allotment is better used on mid-level players rather than franchise players. Maybe mlb will raise the minimum. Or maybe Boras will be arguing for a lot bigger salaries for franchise players thus pricing them out of the reach of a segment of teams.

 

ALL teams get the extra money so I'm not sure that it will impact how the market plays out.

[nicksaviking]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

 

I think that's about an additional $24 million for Detroit. Something like $8 million for Pittsburgh.

[James]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

but there payroll went down 18.4 from 2011 to 2012 already,and twins llc claimed to have earned 26 million in profit while some have speculated they actually earned closer to 60 million... just jipppy squeezing more from the team ,same old ,same old...thanks for the new stadium folks now watch the worst team in the a.l. while i count my profits

Where did you find that Twins LLC earned $26M in profit? I have seen some financial estimates on baseball teams, but I've only seen two real financial statements, and those were leaked during the early 2000's, I believe, and neither were from the Twins. Baseball teams are private companies that hold their financial information very close to the chest. I've never heard of a team intentionally disclosing profits to the public.

 

Are you sure you saw profit and not working capital or something like that? I would like to see a link if you find that.

[Guest USAFChief]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

 

If each team gets $25M more--including the Twins--with no additional expense, why would teams only have an extra $12.5M to invest in major league payroll?

 

My assumption is the Twins have a lot of fans hoodwinked with this "we can only, ever, under any circumstances, invest 50% of revenue to payroll" line they've been selling us for years. If that revenue to player payroll ratio was reasonable in the dome, there is no reason to believe it's still reasonable with the increased revenues of TF. And there sure as heck is no reason to believe only half of a $25M windfall can be invested in player payroll. Where would the other half go, besides into ownership's pockets? It's not like the Twins will incur any additional expense, they'll simply be getting a bigger national TV check.

[snepp]

If each team gets $25M more--including the Twins--with no additional expense, why would teams only have an extra $12.5M to invest in major league payroll?

 

My assumption is the Twins have a lot of fans hoodwinked with this "we can only, ever, under any circumstances, invest 50% of revenue to payroll" line they've been selling us for years. If that revenue to player payroll ratio was reasonable in the dome, there is no reason to believe it's still reasonable with the increased revenues of TF. And there sure as heck is no reason to believe only half of a $25M windfall can be invested in player payroll. Where would the other half go, besides into ownership's pockets? It's not like the Twins will incur any additional expense, they'll simply be getting a bigger national TV check.

 

I like the way you think.

[snepp]

Hmmmm, my post went in the mod queue.

 

 

Anyway, I'm with with Chief, is there any good reason the bulk of that money can't go straight to payroll?

[James]

Hmmmm, my post went in the mod queue.

 

 

Anyway, I'm with with Chief, is there any good reason the bulk of that money can't go straight to payroll?

There absolutely isn't any reason that it couldn't all go to payroll. It won't though. I have read many quotes from the Twins saying that they put about 50% of revenue into payroll. (I don't have a link to verify this right now, but with a little google, you could find it. I think this is pretty widely known though). So, it's not unreasonable to think that if revenue increased by $25M, that payroll would only go up by about $12.5M. Obviously, that's just an average as well. Some clubs will probably use more or less of that money, depending on the club. I would suspect that the Rays probably wouldn't use as much as a larger market team, but we won't really know until it happens.

[johnnydakota]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

 

If each team gets $25M more--including the Twins--with no additional expense, why would teams only have an extra $12.5M to invest in major league payroll?

 

My assumption is the Twins have a lot of fans hoodwinked with this "we can only, ever, under any circumstances, invest 50% of revenue to payroll" line they've been selling us for years. If that revenue to player payroll ratio was reasonable in the dome, there is no reason to believe it's still reasonable with the increased revenues of TF. And there sure as heck is no reason to believe only half of a $25M windfall can be invested in player payroll. Where would the other half go, besides into ownership's pockets? It's not like the Twins will incur any additional expense, they'll simply be getting a bigger national TV check.

we seldom agree on anything , but i totally agree chief, but you understand being a 1%er is a desease right?

[johnnydakota]

I'm definitely a big fan of Boras, and he's right again in this case. If each team gets $25 million more, that's about $12.5million additional in payroll. Now, of course, that's all else being equal, including all other revenue streams. My assumption is that the Twins overall revenues were down at least $12.5M from 2011 to 2012, so for the Twins, it might just help them remain the same.

but there payroll went down 18.4 from 2011 to 2012 already,and twins llc claimed to have earned 26 million in profit while some have speculated they actually earned closer to 60 million... just jipppy squeezing more from the team ,same old ,same old...thanks for the new stadium folks now watch the worst team in the a.l. while i count my profits

Where did you find that Twins LLC earned $26M in profit? I have seen some financial estimates on baseball teams, but I've only seen two real financial statements, and those were leaked during the early 2000's, I believe, and neither were from the Twins. Baseball teams are private companies that hold their financial information very close to the chest. I've never heard of a team intentionally disclosing profits to the public.

 

Are you sure you saw profit and not working capital or something like that? I would like to see a link if you find that.

i read it 1st here on a thread that had a link to another source, i have read it on twinkie town

[johnnydakota]

also there are many who could help you out with the links to this info like john , seth ,goblin or brock...

there pretty sharp guys , me i just read this or that , click on a link then click on another then another and not positive where sb nation twinkie town rumors whisphers fever hard ball espn1500 theres a couple houndred out there

[twinsnorth49]

also there are many who could help you out with the links to this info like john , seth ,goblin or brock...

there pretty sharp guys , me i just read this or that , click on a link then click on another then another and not positive where sb nation twinkie town rumors whisphers fever hard ball espn1500 theres a couple houndred out there

 

What???????????????

[old nurse]

Forbes puts out their lists on what teams earn when they assign their values. They guessed 16.6 million for the profit for 2011. They can figure out revenue from attendance, contracts that are public for broadcast rights and merchandise, and taxes paid on concessions. They can only guess at the operating costs.

[James]

Forbes puts out their lists on what teams earn when they assign their values. They guessed 16.6 million for the profit for 2011. They can figure out revenue from attendance, contracts that are public for broadcast rights and merchandise, and taxes paid on concessions. They can only guess at the operating costs.

I've seen the Forbes data too. Here's a link to the article:

http://www.forbes.com/mlb-valuations/#p_2_s_a0_

 

They list the working capital, which isn't the same as net income.

 

I found a link that talks about the linked financial statements for those that are interested:

http://www.hardballtimes.com/main/article/about-those-leaked-financial-statements/

 

I think the part that is the most pertinent to this conversation is the section that shows operating income for the Pirates and the Ray in 2007 and 2008. In both 2007 and 2008 the Rays net income was roughly $10M less than the operating income. Hence, profit is not equal to operating income. There's no way for the common fan to find out exactly what the net income (a.k.a net profit) for the Twins really is without their financial statement getting leaked.

 

I'm not trying to be a jerk about this, I just want to make sure people are clear that the Twins aren't profiting that $16.6M reported in Forbes. There's a little more to it than that.

 

Or maybe I've just been too entrenched in my MBA classes and need to get a life.

[johnnydakota]

Forbes puts out their lists on what teams earn when they assign their values. They guessed 16.6 million for the profit for 2011. They can figure out revenue from attendance, contracts that are public for broadcast rights and merchandise, and taxes paid on concessions. They can only guess at the operating costs.

i believe it was published in the star tribune 26 million profit for 2011

[70charger]

also there are many who could help you out with the links to this info like john , seth ,goblin or brock...

there pretty sharp guys , me i just read this or that , click on a link then click on another then another and not positive where sb nation twinkie town rumors whisphers fever hard ball espn1500 theres a couple houndred out there

 

What???????????????

 

Don't feed the trolls.

[Steve J]

Of course, as usual Scott Boras says something self service and a bit ridiculous. Question, this $25 million teams are seeing next year, how is this free money? doesn't this in part replace other TV deals at least some of the teams are seeing revenue from now?

[snepp]

It's $25 million more per team, per year, than the previous national media deals it's replacing. So yes, it's free money.

[Guest USAFChief]

It's $25 million more per team, per year, than the previous national media deals it's replacing. So yes, it's free money.

 

I'm still wondering, BTW, why the Twins can only spend half of that money on payroll. Nobody seems to have an answer.

[snepp]

I'm still wondering, BTW, why the Twins can only spend half of that money on payroll. Nobody seems to have an answer.

 

$12 million in additional accounting fees?

 

[JB_Iowa]

It's $25 million more per team, per year, than the previous national media deals it's replacing. So yes, it's free money.

 

I'm still wondering, BTW, why the Twins can only spend half of that money on payroll. Nobody seems to have an answer.

 

I wonder about that as well -- although I'd leave out the "only" part. I don't want to get into an argument about revenues and the Twins operating costs at Target Field (it does seem to me that they may be somewhat higher than at the Dome).

 

But my question is this: should the team always be locked into a relatively narrow margin on percentage spent on player salaries (e.g. 50% -52% as I think I've seen at times) or should the range be larger (e.g. 43%-60%)? It would seem to me that a rebuilding team would have lower salary costs than a "mature" team and that you'd want to allow for that -- so that when you have a truly competitive team and want/need to add some finishing touches, there wouldn't be financial constraints on doing so.

 

Maybe with the larger revenue stream at TF, the Twins would be willing to forego some profit and do that anyway if they ever get a competitive team again. But maybe they should plan for that eventuality but harboring some funds when the team is less competitive. I've thought about this argment for several years as we've discussed the costs of "buying an ace" (and people repeatedly saying that the Twins can't afford it). Is the Twins business model (as they've explained it in public) too rigid?

 

I know that no one wants to talk about lower payrolls but if, for example, the Twins bring up a number of minor league players over the next few years that save them money, should they be spending all the savings while the young core of players is still raw? Or should they be saving that money until those players are mature and the use of the $$$ might make a bigger impact? (oh, if they do that, they'd better make it clear that's what they are doing -- not just making a bigger profit for now).

[twinsnorth49]

Hmmmmm, why would Jim Pohlad want to keep $12.5m? Hmmm, I wonder why?

 

The Twins model is to peg payroll at a percentage of projected revenue, that's it, look no further. It's not a matter of can't, it's a matter of won't.

This whole thing is pretty basic business fundamentals, it's not tied to profit, it's the other way around.

[70charger]

I know that no one wants to talk about lower payrolls but if, for example, the Twins bring up a number of minor league players over the next few years that save them money, should they be spending all the savings while the young core of players is still raw? Or should they be saving that money until those players are mature and the use of the $$$ might make a bigger impact? (oh, if they do that, they'd better make it clear that's what they are doing -- not just making a bigger profit for now).

 

You're absolutely right about this. Of course, none of the cynics here would give the GM or the ownership the benefit of the doubt if they tried it, but that's neither here nor there.

 

Sometimes you've got to go all in to win. Counterintuitively, sometimes, you've got to spend to less with your good players if they're not ready for the final push to the summit.

[snepp]

I'm pretty sure that Ryan has been on record in the past stating that they can't/won't carry budget savings forward.

[twinsnorth49]

I'm pretty sure that Ryan has been on record in the past stating that they can't/won't carry budget savings forward.

 

Most sound businesses don't, certainly not when it comes to payroll.