Sid: Pohlads Ready To Spend

[howieramone1406390264]

That is all I needed to read. On a scale of 1 to 100, my confidence in Ryan spending for other than his typical blue light specials this offseason is about 2. It could happen. But I would be shocked. He just hates getting into bidding wars for guys. He hates spending more than he thinks they're worth right now. In other words, he hates doing his job. Unless and until he starts doing his job, he will end his career a failure.

 

The game has changed. You just can't win consistently if you refuse to use one of the primary talent acquisition methods. But Ryan can't or won't adapt to the evolving game. He'll sign Pelfrey. He'll get another bargain. But if he upgrades the front of the rotation, I would be shocked and elated. Without upgrading the front of the rotation, we are in for another 90-loss season.

You don't need to sign marquee free agents to win consistently, nor are they one of the primary talent acquisition methods/sources. It's the market of last resort to all GM's. Also, the free agent market is not made up of marquee free agents and dumpster diving. There is plenty of room in between which he consistently works. On a scale of 1 to 100, I would give a 2 on his chances to end his career a failure. He's been back 23 months.

[Major League Ready]

Do these teams spend 100 percent of their revenue on player payroll, or "52 percent" like the Twins? Or some other percentage? Unless its 100 percent, the figures above don't represent reality, right?

 

Not to mention, as Oxtung has pointed out, the Twins aren't using anywhere near their self imposed revenue-salary "cap."

 

Depends on how much variable expense is associated with the incremental revenue. I have not seen the financials but I suspect only a small portion is variable. For example, is there any varaible cost associated with the additional $25M in TV renenue the teams will be getting next year.

 

How much of their alloted 52-54% the Twins spend has little to do with the Macro view of available dollars to acquisition the available FA talent. That is a micro prospective. It is a measure of their available budget right room now. It is a not a relative measure of their ability to spend vs other teams on an on-going basis. More importantly, our desired strategy should be the one that produces the same level of productivity for roughly $4M average for players on the 25 man roster as the $9M/man the Dodgers and Yankees can spend. If we were the Rays or the As we would need to figure out how to do that for roughly $3M/man on the 25 man roster.

 

These ratios are not going to change much. So, I would suggest we should be really focused on drafting and development. When we get really good at drafting and development, we should sell high to continue to replenish the farm system. That won't be popular but there are a couple models that suggest it is effective. We should also follow the Rays model of locking up key individuals very early. This is a bit risky too but a much better risk than signing guys past their prime for big $$$. They might even fail at the same right but the mistakes won't cost nearly as much.

[drivlikejehu]

These ratios are not going to change much. So, I would suggest we should be really focused on drafting and development. When we get really good at drafting and development, we should sell high to continue to replenish the farm system. That won't be popular but there are a couple models that suggest it is effective. We should also follow the Rays model of locking up key individuals very early. This is a bit risky too but a much better risk than signing guys past their prime for big $$$. They might even fail at the same right but the mistakes won't cost nearly as much.

 

Developing players is important for every team. Pohlad is the one who said he was willing to spend to put a better team on the field.

 

Are you saying-

 

a) you don't believe him or

 

you do believe him but disagree he should be willing to spend

[Willihammer]

On a side note, the reported net incomes make no sense to me but without the detail that’s no surprise. I would not expect operating costs to vary dramatically but the reported NOIs suggest a substantial difference. Should the FO, scouts, travel, etc be substantially different from the Cardinals to the Twins? What is the variable expense? Yet, if you look at the revenue and salary information I posted earlier, this roughly 50% theme seems to hold true. Given it appears to exists in several teams, I am inclined to believe there is a reason

 

The Cardinals operate on a 79m budget. The Pirates on a 72m budget. The Twins? 131m budget. You think they're just a more expensive team to run than these other clubs? I don't know why you would assume that.

[BabyJesusBuxton]

I have been on this site for almost a year now(I had other names) and I feel like you are the only other person that truly gets what the Twins are all about. I know a lot of people on here know baseball but I feel like a bunch of them defend the Twins just because they don't know what else to do. They would rather do that than except that we are hopeless. What you just said is exactly what im thinking. And I also feel like I cant give a true explanation because of site rules. I will probably get banned for this comment. Ever since our real owner died the team has gone straight down the hole. Our payroll in 10' was over 110mil, right now its lower than 50mil lol. If we kept our players our lineup could have Cuddyer, Hunter, Hardy, Revere, Gomez and others. Our rotation could have Garza, Liriano, Santana(Who knows what would of happened if he stayed) and others. I mean we would be an annual playoff team like usual.

You do realize that 3 different players you list as "our players" that we could have were the results of consecutive trades starting with Santana? It isn't feasible to think we could have Santana and Gomez or Gomez and Hardy or Santana and Hardy for that matter. Not to mention the Twins didn't have the payroll to keep Hunter and Santana when they left. IMO keeping one of them may have been possible but there wouldn't have been any way to keep both AND have a shot at keeping Mauer.

[BabyJesusBuxton]

Does anyone really trust Kazmir's production this year? I haven't looked into his actual numbers the past few years to see what changed this year. Is it just a health thing with him? Obviously he couldn't be worse than what the Twins rotation has included the past two years so I'm all for going after him. I just wonder if he isn't a middle of the road pitcher as apposed to an upper tier free agent some people seem to think he is based on one year of production.

[Alex]

You don't need to sign marquee free agents to win consistently, nor are they one of the primary talent acquisition methods/sources. It's the market of last resort to all GM's. Also, the free agent market is not made up of marquee free agents and dumpster diving. There is plenty of room in between which he consistently works. On a scale of 1 to 100, I would give a 2 on his chances to end his career a failure. He's been back 23 months.

 

No, you certainly don't, but you have to do something better than the other teams and the Twins don't have many options for the immediate future outside of FA. As far as they next year or two is concerned, they are at a "last resort" type measure.

 

As for part two, he is very likely to succeed at some point with the farm system, but he'll have done so with a large portion of core players that weren't acquired while he was GM.

 

Then, of course, he's presided over two 96+ seasons and likely a third unless he actually improves the major league club. As I mentioned in another thread, some people find this acceptable and natural, but I disagree and see a GM who did very little to help the big league club at best and at worst, tried and failed miserably.

[Major League Ready]

The Cardinals operate on a 79m budget. The Pirates on a 72m budget. The Twins? 131m budget. You think they're just a more expensive team to run than these other clubs? I don't know why you would assume that.

 

I am not sure how you are calculating these numbers. There is a 98M dollar difference in revenue to payroll with the Pirates and $123M with the Cardinals. The Yankees show a $241M differential and it does not show up as NOI. Regardless, I was asking the same question as you. Why does it cost substantially more to run one club over another? However, when you look at the reported NOI, it would appear it does. Why? We don't have nearly enough information to conclude anything.

[howieramone1406390264]

No, you certainly don't, but you have to do something better than the other teams and the Twins don't have many options for the immediate future outside of FA. As far as they next year or two is concerned, they are at a "last resort" type measure.

 

As for part two, he is very likely to succeed at some point with the farm system, but he'll have done so with a large portion of core players that weren't acquired while he was GM.

 

Then, of course, he's presided over two 96+ seasons and likely a third unless he actually improves the major league club. As I mentioned in another thread, some people find this acceptable and natural, but I disagree and see a GM who did very little to help the big league club at best and at worst, tried and failed miserably.

Who cares where the players come from? Ryan is trying to rebuild a baseball team, not take credit. It's far from a given that the Twins will lose 96+ games next season and he's constantly at work improving the team as are all GM's. It's like Theo recently said, you don't have 4 drafts a year and signing free agents is not just putting an "X" in the box. Maybe it would be best to wait until ST to make predictions on whether the team is improved. No one said it was acceptable, but it certainly is natural for a mid-market team, 23 months into a rebuild to be losing. The Twins are not the first team in to be in a rebuilding mode.

[Willihammer]

I am not sure how you are calculating these numbers. There is a 98M dollar difference in revenue to payroll with the Pirates and $123M with the Cardinals. The Yankees show a $241M differential and it does not show up as NOI. Regardless, I was asking the same question as you. Why does it cost substantially more to run one club over another? However, when you look at the reported NOI, it would appear it does. Why? We don't have nearly enough information to conclude anything.

 

Actually I did make a mistake with the Cardinals, their operating costs are about 100m even. Still, the Twins had the 5th highest operating costs this year. If they are going to make cuts, why not cut from operations instead of payroll?

 

I am taking Revenue - Payroll - NOI to arrive at operating costs.

 

Here is a representation of leaguewise operating costs as a function of revenue

 

http://i.imgur.com/SVeRPS8.png

 

Now, here is a graph of Wins as a function of the difference between actual operating costs and expected operating costs (as expressed by the equation y=1.3238x + 90.175).

 

http://i.imgur.com/RoomSWV.png

 

The Teams on the negative (righthand) side ran efficient operations, and quite a few of them wound up in the playoffs this year.

 

Seems to me one could make an argument that the Twins ought to cut money from operations, instead of payroll. Compared to the average 214m revenue-team, they are wasting over 20m on inefficient operations.

[Oxtung]

Can you confirm your theory that the Twins have the 3rd or 4th most money to spend in Free Agency in all of baseball?

 

No, I'm not willing to put that much time and effort into it.

 

I do know the Cubs are going to have a ton of money available this off season. The Yankees, if they truly want to get under the luxury cap, will have quite a bit of money (~$70MM) but they also have to replace/re-sign 6 starting position players, 3 starting pitchers and Mariano Rivera. Assuming they approach the luxury cap, the Red Sox will have ~$50MM to spend but they also have to replace 4-5 starting position players. The White Sox could have a lot to spend but like the Twins it is doubtful they will invest heavily during their rebuild. Who knows about the Dodgers? The Giants could spend $40-50MM but they have to replace 3 starting pitchers in Lincecum, Zito and Vogelsong and they have to replace Hunter Pence in RF. With that many pieces to find and coming off a 76-86 season are they going to dive in to FA heavy?

 

Now all of those above numbers have a few caveats. I only included guaranteed dollars and 2/3 of their arbitration eligible dollars, assuming some will get non-tendered, as their "committed payroll". I also only listed starting pitchers and position players above so each of those teams probably have to also replace some bullpen pieces and backups. Then they also have to fill out the remainder of their roster with pre-arbitration players from within their organization.

 

So, for instance the Giants might have $50MM but they ultimately have to fill the 4 starting spots listed above, a relief pitcher, a swing man, a backup OF and 6-10 spots with pre-arbitration players (depending on how they fill the previously listed positions). I only listed the starting pitchers and position players above because presumably that is where they will spend most of their money in FA. Just remember that a chunk of their available money has to go to fill out their roster after their big signings. So in the end the Giants probably only have $30-40MM to spend on their 4 starters.

[DJL44]

"The Twins had the 5th highest operating costs this year."

 

How much of that is paying for Target Field? They can't cut back on debt service.

[Oxtung]

The incremental revenue has Everything to do with. I am making a point of market economics. You are calculating how much payroll room a specific team has at a specific point in time which has very little to do with how the total available dollars impact market economics .

 

The point here is relative ability to spend on payroll and/or free agents. Total revenue is not germane to that discussion. The relative ability to spend is determined by the incremental revenue. If Team A has $50M more in revenue than Team B, they can spend and additional $2M per player on their 25 man roster. If two teams each generate $50M more than the Twins, collectively they have $100M in revenue more than the Twins to spend on their payroll.

 

More importantly, when competing in the FA market those aggregate dollars represent the collective advantage of those teams in payroll/free agent spending. That’s the macro view.

 

If you prefer a micro view … The cardinals have roughly an incremental $50M, they can retain or sign in free agency four players at $12M/yr where the Twins roster will have to be filled by a league minimum player.

 

On a side note, the reported net incomes make no sense to me but without the detail that’s no surprise. I would not expect operating costs to vary dramatically but the reported NOIs suggest a substantial difference. Should the FO, scouts, travel, etc be substantially different from the Cardinals to the Twins? What is the variable expense? Yet, if you look at the revenue and salary information I posted earlier, this roughly 50% theme seems to hold true. Given it appears to exists in several teams, I am inclined to believe there is a reason

 

You seem to be making a rather general point that has no foundation in the real world and that nobody is arguing against. Of course the Twins can't have salaries that average close to the Yankees. Of course the Twins can't go out and sign big contracts in perpetuity. Of course the market price of the top salaries is going to be driven by what the big spenders are willing to pay.

 

But none of that has any bearing on whether or not the Twins can, should or will sign a big free agent this off season. In reality the Twins have a lot of money available this off season. That money is not "ear-marked" for anything until perhaps 2018-2020 when significant arbitration increases or long term contracts are going to be signed. That also happens to be the time at which Mauer's $23MM comes off the books. So, there is a bunch of money available for the forseeable future. What should the Twins do with it? That is the question, IMO.

[Alex]

Who cares where the players come from? Ryan is trying to rebuild a baseball team, not take credit. It's far from a given that the Twins will lose 96+ games next season and he's constantly at work improving the team as are all GM's. It's like Theo recently said, you don't have 4 drafts a year and signing free agents is not just putting an "X" in the box. Maybe it would be best to wait until ST to make predictions on whether the team is improved. No one said it was acceptable, but it certainly is natural for a mid-market team, 23 months into a rebuild to be losing. The Twins are not the first team in to be in a rebuilding mode.

 

Some people continually give him more credit than I believe he's due, and that's the part of your post I was responding to. Not to mention that looking at what he's done is important in actually evaluating him. For my part, I would have liked to see a better team at Target field than the one we've seen the last two seasons, but instead we've had little action taken by Ryan on that end, and he's also made very little difference in adding to the farm system while that has happened.

 

We've disagreed about whether it is actually natural in other threads, especially for a team to be this bad and I've highlighted several teams that avoided that did that are in the Twins position or worse in terms of markets. I'm not arguing that they aren't rebuilding rebuilding, but we'll have to agree to disagree on that and whether "rebuilding" means you have to lose 291 games in three seasons. You certainly don't have to win divisions doing it, but at a certain point they're just doing a poor job.

 

As for next season, I'll be happy to re-evaluate when Spring Training roles around, but outside of free agency, I'm incredibly interested to see what path they'll take that will help them be a better team next season. I don't see how they'll make a significant trade without sacrificing that precious depth in the minors and they have nothing of real value on the major league team. I'm sure we'll see a couple of our prospects move up, but to think they are going to come in and start turning the team around instantly as they try to figure out the big leagues is a bit much.

[Oxtung]

"The Twins had the 5th highest operating costs this year."

 

How much of that is paying for Target Field? They can't cut back on debt service.

 

Their debt was 17% of their value ($578MM) which, at a glance, appears to on the lower end of the spectrum. A couple teams are >50%

[Major League Ready]

As I said earlier, this raises some interesting questions. However, we don't have even remotely close to enough information to draw any conclusions. For starters, we are looking at a single year and there are many transactions and/or anomalies that could acccount for the difference. At first I though maybe theyhad an unusual way of accounting for revenue sharing but that does not make sense looking at the numbers and how do you account for the enormous difference in operating cost between the Yankees and the Dodgers?

 

Bottom line is that you can't jump to conclusions about operating costs with the very limited detail we have at our disposal.

[Willihammer]

Even if their stadium debt is outrageous, the contract the Twins made with Minnesota was "help us finance a new park and we'll put a better product on the field," not "help us finance a new park and we'll put a better product on the field after we've paid off our portion of the debt needed in order to build said park."

[Kwak]

"The Twins had the 5th highest operating costs this year."

 

How much of that is paying for Target Field? They can't cut back on debt service.

 

Debt service is low. They are (have been) using a policy of accellerated short-term debt sevice repayment. They have provided no explanation why, because short-term debt is at a much lower interest rate than the bonds underwritten (6% coupon if memory serves me right).

[Major League Ready]

Even if their stadium debt is outrageous, the contract the Twins made with Minnesota was "help us finance a new park and we'll put a better product on the field," not "help us finance a new park and we'll put a better product on the field after we've paid off our portion of the debt needed in order to build said park."

 

So if we could swap teams with the Angels or the Rays, which would you take. How about the Yankees or the A's?