What Do the Twins Save on Missed Baseball?

[Ted Schwerzler]

We have now heard plenty through the lockout and the Collective Bargaining Agreement (CBA) that owners are unmoved by missing April baseball. It doesn’t seem to hurt their bottom line, and it may actually help it. How does that relate directly to the Twins?

The financial impact of the lockout and CBA issues have primarily been the most contentious points. Players are looking to secure stronger futures for the next generation, while owners are looking to stretch their return on investment even further. We’ve been fed the notion that losses were substantial in 2020, and potentially even 2021, due to Covid, but I’m guessing the reality lies closer to a decrease in revenues.
 
With the assumption that these astute business people are not operating castle appreciating organizations in the red, they’re likely seeing this round of negotiating as a way to recoup some of those revenues. That would’ve been the case in 2020 when just a 60-game prorated portion of salaries was paid. MLB Commissioner Rob Manfred imposed that season instead of the league agreeing with the union to the longest season possible. It’s no secret that owners rake in their largest payouts from the postseason, and so a blueprint of reduced regular-season games would always stand to benefit those at the top.
 
Specifically for 2022, I wondered what the Minnesota Twins would be pocketing due to this shutdown. As of now, owners are arguing that canceled games will result in lost pay for players or no back pay on their salaries. Baseball-Reference and Spotrac currently have the Pohlad’s doling out an estimated $85 million for 2022. 
 
A traditional MLB calendar is defined as 186 days long, with 172 required for a full year of service. That regular-season calendar was set to begin on March 31, 2022. At this point, Rob Manfred has canceled the first two series of the season, and it seems a good bet more are coming. At $85 million, the Pohlad’s save roughly $456k per day wiped off the calendar. Seven days into the canceled action, they’ve already been able to pocket $3.198 million. We’re getting to a point where the month of April looks to be in jeopardy as a whole. In that scenario, 31 calendar days will have been torn up, a savings of $14.16 million.

What we’re getting at here is undoubtedly a logical assessment of what we’ve been told. The group of owners dug in on monetary issues may definitely be looking at the first month as an opportunity to cut losses. Most organizations have not filled out their rosters and have more to spend in doing so, but that significant reduction in costs would undoubtedly help them lick the wounds suggested in previous seasons. Assuming reports of rebates being unnecessary to Regional Sports Networks (RSN) if less than 25 games are canceled, it’s a perfect storm.
 
The sentiment that ownership is primarily out to maximize profits has been there for quite some time. As bad of a figurehead as Rob Manfred is, he’s representative of the wishes his owners are pursuing. Right now, it certainly looks plausible that the group is going for the least amount of action they need to pay for, with the most significant amount they earn on.

As fans, we all lose, and some have even funded this venture by offering interest on dollars paid for season tickets or Spring Training games that were never going to occur. It’s certainly possible none of this is desired, and it’s all just a byproduct of a nasty work stoppage instituted by the league. Maybe the union will negotiate back pay for the players. Right now, though, I’d be against any owner going on record with their intentions, and we’re left to connect the dots.

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[bean5302]

This has to be the most irresponsible, inflammatory and inaccurate take by a fan I've seen in the entire negotiation process. Canceling 1/6th of the baseball season doesn't hurt teams but helps them because they don't have to pay the players? @Brock Beauchamp brought out the threat of the ban hammer for an inaccurate statement made by a poster the other day. I assume so long as the take is critical of ownership the accuracy of the article or post isn't relevant, even if it damages the credibility of the staff at this site...

The average team in baseball lost $60MM in 2020. The losses ranged from $20MM for Cleveland Guardians to $190MM for the New York Yankees. Payments on debts still need to be made. Facilities still require maintenance. Training staff, coaches and front office employees who are working still need to be paid. All of that without virtually any revenue.

[Craig Arko]

“As Ken Rosenthal of The Athletic outlines, local television contracts don’t call for rebates from teams until roughly 25 games are lost. Jeff Passan of ESPN adds some specifics, writing that avoiding rebates requires broadcasting between 138 and 150 games (with slight team-to-team variation). That plays into the owners’ ability to hold out, as does the general fact that their wealth considerably outpaces that of the players. In cold-weather states, April is a relatively poorly attended month anyhow — at least after the early rush of the opening series.”

https://www.mlbtraderumors.com/2022/03/mlb-television-deals-25-missed-games.html

[bean5302]

2 minutes ago, Craig Arko said:

“As Ken Rosenthal of The Athletic outlines, local television contracts don’t call for rebates from teams until roughly 25 games are lost. Jeff Passan of ESPN adds some specifics, writing that avoiding rebates requires broadcasting between 138 and 150 games (with slight team-to-team variation). That plays into the owners’ ability to hold out, as does the general fact that their wealth considerably outpaces that of the players. In cold-weather states, April is a relatively poorly attended month anyhow — at least after the early rush of the opening series.”

https://www.mlbtraderumors.com/2022/03/mlb-television-deals-25-missed-games.html

Here is an actual statistical analysis of attendance including month to month variances.

https://eda.seas.gwu.edu/showcase/2020-Spring/mlb_attendance.html

Quote

While each venue clearly sees a variance by each month there is no clear, consitient trend as which months has higher or lower attendance.

The Twins are scheduled to play 27 games prior to May 1, which means rebates would already be hitting before the end of April. In an normal year (25k average attendance, $33 per ticket, 27 games) which I expect 2022 would be for attendance, the Twins would lose approximately $23MM in ticket revenues alone. Another $5MM in concessions revenue. That's in addition to the start of rebates for TV broadcasts.

[MABB1959]

When do the players feel the hit?

[LastOnePicked]

1 hour ago, bean5302 said:

This has to be the most irresponsible, inflammatory and inaccurate take by a fan I've seen in the entire negotiation process.

Did we read the same article?

I see Ted asking questions here - good questions that any fan of the game would ask at this point. Why doesn't it appear that the owners are taking negotiations seriously, or with any sense of urgency? Why did they threaten MLBPA that they were prepared to cancel an entire month of games, when previously Manfred indicated that lost games would be "disastrous?" 

The broadcast contract clauses about allowing MLB up to 25 missed games without needing to give rebates fits perfectly here as at least a partial reason why the owners aren't giving this much effort yet. It's possible that losing the first month isn't a financial hit to owners. And since you don't cite any sources for the 2020 revenue losses you mention, nor do MLB teams make their finances transparent, how can we accept your defense of the owners' actions as fact?

Ted, I appreciated this. We're all left with questions about this mess at this point.

[Brock Beauchamp]

1 hour ago, bean5302 said:

 @Brock Beauchamp brought out the threat of the ban hammer for an inaccurate statement made by a poster the other day. I assume so long as the take is critical of ownership the accuracy of the article or post isn't relevant, even if it damages the credibility of the staff at this site...

I'm not the editor, I'm the community manager. I'm not really involved with the news section of the site other than the code that powers it.

And the poster you're referring to had been warned by at least four separate moderators over the past year previous to my post so let's not pretend this is anywhere close to the same thing. Feel free to disagree with Ted's assertions all you want - pick them apart piece by piece if you like - but I'm not going to get involved.

[chpettit19]

1 hour ago, bean5302 said:

The average team in baseball lost $60MM in 2020. The losses ranged from $20MM for Cleveland Guardians to $190MM for the New York Yankees. Payments on debts still need to be made. Facilities still require maintenance. Training staff, coaches and front office employees who are working still need to be paid. All of that without virtually any revenue.

What does the average team in baseball make every year outside of 2020?

[adorduan]

2 hours ago, bean5302 said:

This has to be the most irresponsible, inflammatory and inaccurate take by a fan I've seen in the entire negotiation process. Canceling 1/6th of the baseball season doesn't hurt teams but helps them because they don't have to pay the players? @Brock Beauchamp brought out the threat of the ban hammer for an inaccurate statement made by a poster the other day. I assume so long as the take is critical of ownership the accuracy of the article or post isn't relevant, even if it damages the credibility of the staff at this site...

The average team in baseball lost $60MM in 2020. The losses ranged from $20MM for Cleveland Guardians to $190MM for the New York Yankees. Payments on debts still need to be made. Facilities still require maintenance. Training staff, coaches and front office employees who are working still need to be paid. All of that without virtually any revenue.

So, you have seen the actual books of all these MLB teams?  do tell...

[bean5302]

56 minutes ago, adorduan said:

So, you have seen the actual books of all these MLB teams?  do tell...

I have professional, published, nationally respected data sites. How about you? Do tell!

[bean5302]

2 hours ago, chpettit19 said:

What does the average team in baseball make every year outside of 2020?

No numbers have been released for 2021 yet. Profits for MLB teams, on average, have followed an odd trend. Slowly increasing before tumbling at during the 2007-2011 CBA, quickly diminishing in the early years of the 2012-2016 CBA, and then skyrocketing after the last CBA started in 2017.

https://www.statista.com/statistics/193478/mlb-franchises-average-operating-income-since-2005/

If I were to hazard a guess on 2021 using Forbes' game day revenue projections based on 2019 of $165MM per team and the 33% reduction in average attendance from 28,000 to 19,000, game day revenues would have dropped about $55MM per team. Payrolls also decreased, between 2019 and 2021, but by $6MM.

https://www.forbes.com/sites/mikeozanian/2020/04/17/the-mlb-stadium-revenue-at-risk-for-every-team-if-games-are-played-without-fans/?sh=38e35f287a35

The net impact would be an average profit of about $1MM per team ($55MM - $6MM = $49MM decrease subtracted from 2019's average profit of $50MM). So half the league probably lost money again in 2021, but certainly not like 2020. It's really tough to say since a beer was like $9,821,187 or something at Target Field last year. Maybe a brutal price hike in concessions increased revenue... or maybe it was too high and decreased revenue? Not sure on that so all I can do is throw a hypothosis out there based on normal season league revenues and sources.

2005 = $13MM (3 CBAs ago)
2006 = $17MM
2007 = $17MM (2 CBAs ago)
2008 = $17MM
2009 = $17MM
2010 = $16MM
2011 = $14MM
2012 = $13MM (2 CBAs ago)
2013 = $10MM
2014 = $20MM
2015 = $23MM
2016 = $34MM
2017 = $29MM (1 CBA ago)
2018 = $40MM
2019 = $50MM
2020 = ($60MM)
2021 = $1MM *ball park estimate based on numbers explained above

 

[bean5302]

2 hours ago, Brock Beauchamp said:

I'm not the editor, I'm the community manager. I'm not really involved with the news section of the site other than the code that powers it.

And the poster you're referring to had been warned by at least four separate moderators over the past year previous to my post so let's not pretend this is anywhere close to the same thing. Feel free to disagree with Ted's assertions all you want - pick them apart piece by piece if you like - but I'm not going to get involved.

It was rhetorical. @Ted Schwerzler contributes an enormous amount to the site and threatening him with the ban hammer would have been absurd. Sorry, Ted. It wasn't fair of me to use your article in this fashion.

[Richmond Dude]

6 hours ago, bean5302 said:

This has to be the most irresponsible, inflammatory and inaccurate take by a fan I've seen in the entire negotiation process. Canceling 1/6th of the baseball season doesn't hurt teams but helps them because they don't have to pay the players? @Brock Beauchamp brought out the threat of the ban hammer for an inaccurate statement made by a poster the other day. I assume so long as the take is critical of ownership the accuracy of the article or post isn't relevant, even if it damages the credibility of the staff at this site...

The average team in baseball lost $60MM in 2020. The losses ranged from $20MM for Cleveland Guardians to $190MM for the New York Yankees. Payments on debts still need to be made. Facilities still require maintenance. Training staff, coaches and front office employees who are working still need to be paid. All of that without virtually any revenue.

I don't believe for a second that the Yankees lost $190M that year.  They may have made $190M less profit and they may even have lost some money as a result, but I don't believe that they spend that much more on their basic franchise, absent player salaries, than everyone else does.

[Richmond Dude]

6 hours ago, bean5302 said:

Here is an actual statistical analysis of attendance including month to month variances.

https://eda.seas.gwu.edu/showcase/2020-Spring/mlb_attendance.html

The Twins are scheduled to play 27 games prior to May 1, which means rebates would already be hitting before the end of April. In an normal year (25k average attendance, $33 per ticket, 27 games) which I expect 2022 would be for attendance, the Twins would lose approximately $23MM in ticket revenues alone. Another $5MM in concessions revenue. That's in addition to the start of rebates for TV broadcasts.

Two issues here:  all of those games wouldn't have been at home and the average attendance includes both lower attendance spring games and often sold-out summer games.  The Twins (and most other teams) lose a lot less cancelling April and early May games than they do cancelling June, July, and August games.  It's one of the reasons why the Twins several years ago began selling huge mark-down tickets in April, basically saying they'll let you come in for virtually nothing in the hope you'll buy concessions, because the attendance is so low that they're happy for every body they can get.

[bean5302]

5 hours ago, Richmond Dude said:

I don't believe for a second that the Yankees lost $190M that year.  They may have made $190M less profit and they may even have lost some money as a result, but I don't believe that they spend that much more on their basic franchise, absent player salaries, than everyone else does.

Put up your own data or shut up.

[bean5302]

4 hours ago, Richmond Dude said:

Two issues here:  all of those games wouldn't have been at home and the average attendance includes both lower attendance spring games and often sold-out summer games.  The Twins (and most other teams) lose a lot less cancelling April and early May games than they do cancelling June, July, and August games.  It's one of the reasons why the Twins several years ago began selling huge mark-down tickets in April, basically saying they'll let you come in for virtually nothing in the hope you'll buy concessions, because the attendance is so low that they're happy for every body they can get.

Same thing. Find a credible source. Credible statistical analysis or shut up.

[Major League Ready]

When we submit business reports with conclusions in the real world, we list our assumptions as they are generally crucial in validating the conclusions being presented.  In this case, there is an assumption an agreement will be reached in less than X days where X represents the number of missed games before television revenue has to returned.  Of course, if this went on until near that date, the players would just hold out because their leverage would change significantly once that date was reached.  Without that revenue, teams would be losing the nearly all their revenue sources.

We are also missing fixed operating costs.  If you are not familiar with this term, it’s costs that are not variable.  For example, player travel is a variable operating cost.  In this case, the cost of the all of the non-player personnel is ignored.  Do they have debt service to pay?  Leased equipment, office space, etc?   

Determining if there would be a profit or loss is not all that complicated if our assumption is that it is not reasonable to assume that a CBA will be reached within days of the TV rebate deadline.  In that case, the loss would be estimated as whatever revenue streams remain which is next to nothing, less the cost of all non-player personnel, debt service, equipment, monthly contracts such as data center, security services, and monthly subscription services. 

The players on the other hand won’t be making anything but there expenses are limited to whatever the spend to stay in shape.  The premise that the side that gains the most if this persists is the side with hundreds of employees to pay is not credible unless you believe the players are so monumentally stupid they would cave just before the league had to return tv revenue.  

[Richmond Dude]

11 hours ago, bean5302 said:

Put up your own data or shut up.

I don't need to.  The data you put up shows my interpretation rather than yours.  Attendance is lower for the Twins in April than it is in July.  It's right in your link.  We all know what the capacity of the stadium is and we all, if we watch the Twins, know that they offer special packages at an exceptionally low ticket price for April and May and still have lower attendance.  If attendance is lower in April and higher in July and the average ticket price is lower in April and higher in July, it doesn't take some statistical genius to figure out that it costs more to cancel a game in July than in April, since the salaries and per diem are constant.

 

Additionally, I'm not sure I should have to post the actual game schedule to prove that we don't play *all* 27 games in April at home.  I think everyone knows that.  But here's a hint if you didn't realize they play half their games away: if you turn on the TV and the Twins are wearing grey, the game is in the other team's stadium.

[USAFChief]

Let's real in the personal attacks, please.

[Richmond Dude]

52 minutes ago, USAFChief said:

Let's real in the personal attacks, please.

Sorry.  I thought I was being funny/snarky, but clearly was too sharp and didn't pull it off.