On the Minnesota Twins Front Office, Faith and Being Fickle 

1 hour ago, spanman2 said:

I thought somewhere along the line years ago Jim said payroll should be around the low 50's% range of revenue?  

The first thing that comes to my mind is did he mean 50% with the inclusion of payroll tax and benefits which is a touch over 11% the last time I saw something written on the topic.  Guys in charge of the P&L or that have significant influence on the P&L don't omit things.  So, my guess is that if that was said, he meant total payroll cost and player salary is roughly 89% of that number.  Fans hear or read this statement and assumes a payroll of 50% of revenue means salaries equal to 50%.  

Many people have absolutely clung to this 50+% of revenue sound bite.  Salaries at 52% plus taxes and benefits equate to roughly 63% of revenue.  Operating costs have definitely gone up since that soundbite.  What I have seen written about operating costs suggest the average is around 1/3 of revenue.  That's 96% of revenue which is why you are seeing salaries closer to 40% of revenue.

1 hour ago, roger said:

Can't agree with those that say there isn't pitching in the pipeline.  Its just that with the screwed up year last year, that pitching isn't ready to help in 2021.  Have been watching a lot of the Wichita games the last six weeks.  Yes, Balazovic had a clunker the last time out, but he hasn't pitched much this year due to his late start.  But Balazovic and Winder certainly appear to be for real, starters who should turn into those Cleveland like starters.  Will it happen, remains to be seen.  But they are two great prospects who are getting closer every week.

 

I watched the Wichita game last night.  Not so sure Winder is not becoming our top SP prospects.  It sure seems to me like he and Balazovic have top of the rotation stuff.  I also think that Ober has always had plus command and the odds of him being a solid contributor for the next several years is quite good.  There are a couple other guys like Varland that could end up being nice surprises.

I think we are starting from the end. When there is a failure, first you have to revise the extent of the failure, what is bad and what is still good. The causes why the failure happened. What processes have to change. And then, after all that (which might take months or even more than a year if it is done right) you have to decide if the people you have can do the necessary changes or not. I think that was what they went through in2016 and up to this year the results had been good (not exceptionally good, I am not forgetting about the playoffs). Starting from whom to fire it is tempting, it shows that you do something, but rarely accomplishes anything 

Yeah, I think we should just sign guys who are going to play well. ?

5 minutes ago, Dodecahedron said:

The 50% thing was said over a decade ago, when the elder Pohlad said he would raise the spending to that level.  This was before TF was built.  The promise was once TF was built, they would spend more even more.

Note that wages paid out in the US are 100% tax deductible.  If the Twins pay any amount of federal tax, they could be paying players and staff more without affecting their profits.  (Note that I doubt the org is paying any federal tax.)

You don't understand.  Every company pays Payroll taxes regardless of their level of profit. 

Looking back at last winters FA relievers, there aren't very many pitching very well and there are quite a few out for the season or who have missed big chunks of time. FA is crapshoot at best, especially with pitching.

Nobody saw this big of a fall off from Maeda, though he has time to turn it around, or Pineda getting hurt. Happ is a bit of a disappointment, but not much was expected of Shoemaker, who may have found a spot in the BP.

Sano's fall off is also highly disappointing, as are the injuries to just about everyone.

I believe Simmons was originally signed as a bridge to Lewis, but things happen. I like one year of Simmons, not sure if I like two. 

To put this year completely on the front office is unjust, only so many players can be signed/traded for. The personnel on the field has to perform.

I think it's fair to question when we're a handful of years in now and this season all of a sudden starts so poorly. I read this and the article you linked on The Athletic by Aaron Gleeman going over the free agent signings since 2017. This along with Aaron's article are good breakdowns. I don't think it's fair to judge their free agent signings without also looking at how the rest of the league has performed in the same period. We all know relievers can be very volatile year to year, so free agent relievers carry inherent risk. 

It certainly seems like they have tried to sign the high end starting pitchers. Key word there is tried though. I'd still be very curious to see how the rest of the league has performed in free agent signings during that time period. I could be wrong, but to me it seems like a lot of teams now build from within or trades.

I do agree with what Vanimal said about pitching prospects. I'd definitely like to see them be more aggressive with guys like Duran, Sands, Winder, Canterino, Enlow, Balazovic, Vallimont, plus any other SP prospect if they are putting good starts together. Obviously health permitting. The Twins seem to be at a point where we may need 1-2 of those guys in a rotation spot very soon. All those prospects I mentioned are 22-24.

1 hour ago, Dodecahedron said:

You don't understand.  I'm talking about federal tax liability, not payroll taxes.  Payroll taxes are paid by companies, but those funds are pulled directly from paid wages.

Apparently you are confusing employee tax deductions with employer paid payroll expense.  Social Security and Medicare taxes are imposed on both the employee at a flat rate of 6.2% for social security and 1.45% for Medicare and the employer 's single flat rate of 6.2% and 1.45%, respectively, creating a combined FICA tax rate of 15.3% (12.4% for Social Security and 2.9% for Medicare). Self-employed individuals are responsible for paying the entire 15.3% tax themselves.  Teams also pay medical benefits and a retirement fund.   

This is an example of one of those things where fans don't have all the information and get bent out of shape about something they simply don't fully don't understand.  

1 minute ago, Dodecahedron said:

I'm not the one confusing anything, nor am I getting bent out of shape about anything.  Let's just move on.

Please enlighten me.  This is a very important clarification where the team budget is concerned.  What part do I have wrong?  Does every other company in America pays SS and Medicare but teams don't.   Do MLB teams get their medical coverage for free?  I mean players get medical benefits for life.  Who pays for this.  How about other retirement benefits?  If you want to take a stand my position is ignorant you should be prepared to prove you point with facts and don't say let's just move on when you realize you are not too well informed.

2 hours ago, Major League Ready said:

The first thing that comes to my mind is did he mean 50% with the inclusion of payroll tax and benefits which is a touch over 11% the last time I saw something written on the topic.  Guys in charge of the P&L or that have significant influence on the P&L don't omit things.  So, my guess is that if that was said, he meant total payroll cost and player salary is roughly 89% of that number.  Fans hear or read this statement and assumes a payroll of 50% of revenue means salaries equal to 50%.  

Many people have absolutely clung to this 50+% of revenue sound bite.  Salaries at 52% plus taxes and benefits equate to roughly 63% of revenue.  Operating costs have definitely gone up since that soundbite.  What I have seen written about operating costs suggest the average is around 1/3 of revenue.  That's 96% of revenue which is why you are seeing salaries closer to 40% of revenue.

People often quote costs ranging up to 25%, or more, for payroll taxes, insurance and other payroll related costs.  I don't think that holds true for the Twins players, just as I don't think 11% is accurate.

Some tax accountant can correct me, but I understand that most payroll taxes are limited to the first $x of payroll.  So the normal payroll taxes for someone making the minimum would likely be the same as Donaldson at $21,000,000.  Lets say the payroll taxes are the 11% you quote (I think the employer's share is 6%-7%), but on the first $150,000...that would be $16,500.  Add whatever the cost is for health insurance and other costs and maybe you get to $35,000-$40,000.  Even on the minimum, that is only 6.7%.  On the average salary of $5,000,000+, that is less than 1%.  So unless I am missing something, payroll taxes and other employment costs are almost insignificant insofar as players are concerned.

2 minutes ago, USAFChief said:

Nobody, including Pohlad, had any doubt what he meant when he promised payrolls a little over 50% of revenue. 

Nobody but you.

And for the record, he's more or less kept his word recently. Payroll hasn't been lower than needed or warranted. 

But he wasn't talking about payroll taxes or medicare.

Actually, I would hope it's the first question anyone with a financial education or experience managing a P&L would ask.  To omit a portion of payroll expense when speaking of payroll expense is without question negligent.  It might have happened but it should not have.  They did not teach us this in an MBA program.  This is finance 101.  Maybe 201.

37 minutes ago, roger said:

People often quote costs ranging up to 25%, or more, for payroll taxes, insurance and other payroll related costs.  I don't think that holds true for the Twins players, just as I don't think 11% is accurate.

Some tax accountant can correct me, but I understand that most payroll taxes are limited to the first $x of payroll.  So the normal payroll taxes for someone making the minimum would likely be the same as Donaldson at $21,000,000.  Lets say the payroll taxes are the 11% you quote (I think the employer's share is 6%-7%), but on the first $150,000...that would be $16,500.  Add whatever the cost is for health insurance and other costs and maybe you get to $35,000-$40,000.  Even on the minimum, that is only 6.7%.  On the average salary of $5,000,000+, that is less than 1%.  So unless I am missing something, payroll taxes and other employment costs are almost insignificant.

I got the 11% from an article.  I am not going to search for it.  You are absolutely right about how those taxes are engaged and the total is far less than a typical company.  25% would be quite low.  Our clients typically spent 30%+ on taxes/benefits.  One assessment we did for a state government was almost 40%.  However, in this case you have ignored other benefits like lifetime medical and I am not sure how their pension is funded and those costs are fairly significant.  I can only tell you I recall the article breaking it out and to the best of my recollection it was 11.5%.

9 minutes ago, Major League Ready said:

I got the 11% from an article.  I am not going to search for it.  You are absolutely right about how those taxes are engaged and the total is far less than a typical company.  25% would be quite low.  Our clients typically spent 30% on taxes/benefits.  One assessment we did for a state government was almost 40%.  However, in this case you have ignored other benefits like lifetime medical and I am not sure how their pension is funded and those costs are fairly significant.  I can only tell you I recall the article breaking it out and to the best of my recollection it was 11.5%.

Interesting, but I will continue to question that amount.  Seeing the average Twins salary this year is over $5,000,000 (roughly $130M payroll divided by 26 players), 11% would be costs of $550,000 per player.  I can't fathom anything approaching that when the gov't required payroll taxes are probably $10,000 or so (7% of < $150,000).  Expect they have Cadillac health insurance, but even if that costs $50,000/year, we are only 12% to $500,000 per player.   

7 hours ago, cHawk said:

They should extend Berrios and Buxton. 

So who's job is it to tell Buxton and Berrios that they have to sign an extension because the fan base mandates it?

22 minutes ago, roger said:

Interesting, but I will continue to question that amount.  Seeing the average Twins salary this year is over $5,000,000 (roughly $130M payroll divided by 26 players), 11% would be costs of $550,000 per player.  I can't fathom anything approaching that when the gov't required payroll taxes are probably $10,000 or so (7% of < $150,000).  Expect they have Cadillac health insurance, but even if that costs $50,000/year, we are only 12% to $500,000 per player.   

Yep.  Hear ya.  I might get curious enough to track this down.  Part of the disconnect is that we have to include all players to get averages.  Teams will probably have something like 36-40 guys play and many of them qualify for lifetime benefits.  Plus, just the fact that they are lifetime changes the math wildly.  The auto makers found out these benefits really added up.  In this case, you have employees retiring very young and receiving benefits for a very longtime.  Those benefits cost 40X the annual amount if they are collected for 40 years.  

BTW, I remember the article documented the details so I accepted it at the time but I would not be surprised if this was not entirely accurate.  

The average is actually 38%.   https://www.bls.gov/news.release/ecec.nr0.htm#:~:text=Wages and salaries averaged %2433.20,and accounted for 38.1 percent.

3 hours ago, Blyleven2011 said:

Why not put the blame on falvy , levine and rocco ,  they fired and cleaned house on all the personal in the entire system , ( rookie ball all the way to AAA , managers , coaches , trainers , scouting etc ...  ) when they took the helm  and i quote words from falvy from then,,, ( " we went out and hired the top personal in the industry in all phases of the system " ) ..... 

Falvy  takes the lime light with media and you never see levine when twins are playing great and winning  ,,, now that the twins are playing awful baseball because of mostly signing below average pitching and no clutch hitting and bad fundamentals  , levine is in the lime light with the media ....

Falvy does an interview when media finally calls him out  ...

Nobody in front office or managing takes any accountability  for the losing season  .,,,

Rocco  of course is terrible with any in game decisions , improvisation and any kind of consistency with the players ,, as some post have said , let the players know their role , they seem lost imo  .

Adding average or below average pitching may win games during the season and draw fans but what they add does not win playoff games ( proven against better teams during the season and the past playoffs )

, i did not get my expectations to this season as high as some twins fans and i am still a faithful follower every game and just laugh at their total disaster system failure  ,,,

Also we need new owners , the pohlads today don't love baseball as much as carl and eloise ....

Its great to have baseball  but some changes are needed  ...

 

If all those changes you list "must" happen to make you a happy fan, I think it would be far easier to pick another team to cheer for.

58 minutes ago, Dodecahedron said:

I'm not the one confusing anything, nor am I getting bent out of shape about anything.  Let's just move on.

That is the most common comment of someone realizing that finance isn't their strong suit.

50 minutes ago, USAFChief said:

Nobody, including Pohlad, had any doubt what he meant when he promised payrolls a little over 50% of revenue. 

Nobody but you.

And for the record, he's more or less kept his word recently. Payroll hasn't been lower than needed or warranted. 

But he wasn't talking about payroll taxes or medicare.

Define revenue as you see it.

31 minutes ago, USAFChief said:

To get this back on subject...

I'm not ready yet to call for jettisoning Falvine, but my confidence level has certainly fallen way off.

I felt, for example, they did a really poor job of assembling a pitching staff this past winter, and felt that way PRIOR to the season, particularly the pen. In retrospect, the "add 40 percent of a staff on 1 year, make good deals every winter" plan has been pretty risky, and likely not routinely possible. Maybe that was necessity rather than plan, but they've surely had enough time to get away from that.

I think their actions over the next month or so will be incredibly important to their and the team's future. Mess it up, and this could be a long term fix, which they probably won't be around for. I have to believe the team will look a lot different come August, and next April. They deserve to make that happen.

 

 

I agree this trade deadline may be the most important one for them so far. They need to get value for players on one year deals and it will be interesting to see how they handle the Berrios and Buxton situations.  They have guys they could trade early in Kepler, Rogers,  Arraez, and Polanco if they so choose or they can stand pat. They could try and work a deal to remove Donaldson, they have lot's of option's but they need to choose wisely because if things continue to move sideways they might be out of a job in the next couple of years.

5 hours ago, Major League Ready said:

It’s quite interesting to look at how other front offices approached their off-season.  What did Boston do after losing a superstar to free agency in 2020 and finishing last? Did they use their considerable financial resource to extend their CFer.  No they let him go to free agency.  Did they sign any expensive FA?  No.  They signed veteran SP Garret Richards and Enrique Hernandez for $7M.  The rest were bargain signs like our old friend Marwin Gonzales.  I bet many Boston fans thought the FO was incompetent. Where are they now?  1^st place in the AL East.

What did Tampa do after their WS run?  Did they trade for a SP to replace Morton or did they sign a big free agent.  No.  They traded away Blake Snell and signed Chris Archer for $6M and 6 other guys for a total of $12M.  I bet their fans were having a fit.  Where are they?  ½ game out of 1^st place.

How about Houston.  They lost Cole the year before and now Spring.  Did they trade for big name SPs or did they get them via free agency.  Neither.  They resigned Brantley and signed Odorizzi for under $8M.  I have to believe the Twins would have given $8M in a heartbeat which just goes to show it can be very difficult to resign players who believe they can get more.  Houston did sign a fairly expensive RP in Pedro Baex for $6.25M.  He has missed the entire season so far.  I bet even after all their success some of their fans were critical.  Where are they now?  Best record in the AL.

How about Oakland?  They lost Hendricks and Semien to free agency as well as De La Stella, Minor, and Grossman.  Who did they add?  Rosenthall who has not played and a half dozen guys for 3.5M or less.  Those dumpster diving cheap skates.  Bet they are at the bottom of the standings.  Nope.  14 games over 500.

I won’t go over the NL.  The point is that a fair number of fans cling to spending big and making block buster trades.  We should pay more attention to how winners are built, especially among teams with average or less than average revenue.  The trades that count most for average revenue teams are more often than not trades for players that have not been established.  Give me Tatis Jr. for James Shields or Bauer for whoever he got traded for or the haul that Seattle got for Cano and Diaz.

I don't like the Betts example. You said it yourself, Boston has ample cash to play with. They didn't need to move MVP, even if they wanted out from under Price's terrible contract. They finished last in their own division the previous season, and the team to which they traded Betts, one know for making big moves, won the WS with him as their CF. It's hard to call that move W for Boston, let alone a winning strategy. 

I've said this in another thread; "do what Tampa does," sounds great, but unless the Twins get markedly better at player development and talent evaluation overnight copying the type of moves that organization makes isn't a surefire path to success. Right now the Twins are more likely to be the Pirates of the 2000's than the current version of the Rays if they start trading away their best players and rely on internal replacements and then FA to patch any remaining holes.

Houston went out and traded for Cole, Verlander, and Greinke. Those are massive moves. 

I'd call Oakland TB light, and similar to the Rays, if the Twins or any other team can replicate what they do on a budget that'd be great, but unless Beane can be lured to MN I don't know how repeatable that process is from a distance. 

There's more than one way to skin a cat right? Spending big, whether it's FA or a trade, shouldn't be avoided altogether, rather a measured approach and a plan to supplement should go hand in hand with such moves. I'm all for the Tatis trades ect if  they're there. A team like the Twins shouldn't be ruling out options to improve this club, even if we as fans have been conditioned to be averse to "big," spending. 

The next month will be critical in the evaluation of FalVine,

1. If the club has a good July and gets into contention, what will they do?

2. If they have a bad July, what moves will they make?

3. If they play around .500, what will they do?

We all have our prejudices and preferences. The decisions they make before the trade deadline could define them or condemn them.  Whatever happens: WIN TWINS!

2 hours ago, KirbyDome89 said:

I don't like the Betts example. You said it yourself, Boston has ample cash to play with. They didn't need to move MVP, even if they wanted out from under Price's terrible contract. They finished last in their own division the previous season, and the team to which they traded Betts, one know for making big moves, won the WS with him as their CF. It's hard to call that move W for Boston, let alone a winning strategy. 

I've said this in another thread; "do what Tampa does," sounds great, but unless the Twins get markedly better at player development and talent evaluation overnight copying the type of moves that organization makes isn't a surefire path to success. Right now the Twins are more likely to be the Pirates of the 2000's than the current version of the Rays if they start trading away their best players and rely on internal replacements and then FA to patch any remaining holes.

Houston went out and traded for Cole, Verlander, and Greinke. Those are massive moves. 

I'd call Oakland TB light, and similar to the Rays, if the Twins or any other team can replicate what they do on a budget that'd be great, but unless Beane can be lured to MN I don't know how repeatable that process is from a distance. 

There's more than one way to skin a cat right? Spending big, whether it's FA or a trade, shouldn't be avoided altogether, rather a measured approach and a plan to supplement should go hand in hand with such moves. I'm all for the Tatis trades ect if  they're there. A team like the Twins shouldn't be ruling out options to improve this club, even if we as fans have been conditioned to be averse to "big," spending. 

I agree with everything you said but you have changed the context of the discussion.  Many complain non stop that we dumpster dive while ignoring the successful mid to low revenue teams consistently employ this strategy.  Other complained allowing any of veterans to leave is sure to result in catastrophe.  We already have one.  Doing the same thing while spending more on current players so that  our free agent spending has to be less does not sound like a great plan.

The argument we can't develop like Tampa drives me nuts.   The implication of that thought process is that we should follow other practices that are know to be inferior especially when considering our modest revenue.  I can't tell you how many times my team was hired to reorganize companies where this kind of thinking prevailed.  Get better at the best practices instead of following less successful practices. 

I would add we don't know how much our player identification and development has improved.  Pitchers like Winder, Ober and Varland coming from later rounds gives me hope.  There are quite a few other guys starting to look like they could play at the MLB level too.  Position players breaking out like Miranda and Palacios are a good sign and it looks like they did a pretty good job developing Kirillorr, Larnach, and Jeffers.  Those guys looked like MLB players in short order.

1 hour ago, Major League Ready said:

I agree with everything you said but you have changed the context of the discussion.  Many complain non stop that we dumpster dive while ignoring the successful mid to low revenue teams consistently employ this strategy.  Other complained allowing any of veterans to leave is sure to result in catastrophe.  We already have one.  Doing the same thing while spending more on current players so that  our free agent spending has to be less does not sound like a great plan.

The argument we can't develop like Tampa drives me nuts.   The implication of that thought process is that we should follow other practices that are know to be inferior especially when considering our modest revenue.  I can't tell you how many times my team was hired to reorganize companies where this kind of thinking prevailed.  Get better at the best practices instead of following less successful practices. 

I would add we don't know how much our player identification and development has improved.  Pitchers like Winder, Ober and Varland coming from later rounds gives me hope.  There are quite a few other guys starting to look like they could play at the MLB level too.  Position players breaking out like Miranda and Palacios are a good sign and it looks like they did a pretty good job developing Kirillorr, Larnach, and Jeffers.  Those guys looked like MLB players in short order.

Every team dives to some extent, I think the point of contention is the degree to which the Twins do it. A backup catcher, 26th man, back end bullpen arm, ect is fine; 40% of your starting rotation isn't. As far as expiring contracts, sometimes it makes sense to say farewell (Rosario) other times if there isn't an in house replacement (Berrios) or the player is an elite level talent (Mauer) it makes sense to hold on rather than gamble in FA. I don't understand your last two sentences in that paragraph. 

What has this FO done that makes you think they're capable of operating at, or even near, the level of TB? I don't hear the argument that the Twins shouldn't strive to be as elite as the Rays. I'm simply pointing out that realistically they're unlikely to reach that status, and currently they're nowhere near it, which is why I said the practice of dumping stars rather than paying them won't yield the same results. TB has been doing this for 15ish years now, I'm certain all other franchises have taken notice. If the TB process was truly replicable I have a hard time imagining 29+ other executives choosing to ignore it. 

At the major league level player identification is lacking; the results speak for themselves. I think "we don't know," in regard to player development won't hold up much longer. I'm totally fine with the draft strategy we've seen, but I had hoped that some of these early round college bats, or the players they replace would be packaged for pitching. There's a lot riding on only a few pitching prospects, and I agree with an earlier comment, none of them are the prospect that even Berrios was. This team needs help at the front end of the rotation. A guy like Ober sliding into a back end spot is valuable, but it doesn't move the needle much. Maybe Winder makes multiple leaps this season; lets hope so, because Duran's year might be done.