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  • Twins Payroll Really is Resource Allocation


    Ted Schwerzler

    On Monday Seth did a great job of outlining where the Minnesota Twins were at as of January 14. His 25-man roster projection looks nearly spot on, and there are very few areas of contention. When the dust settled at the end of his article the 2019 payroll projection came in at $96.32 million. That number is a laughable sum, but if we were to reclassify it as an allocation of resources, how much additional hand-wringing would there be?

    Image courtesy of © Denny Medley-USA TODAY Sports

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    Let’s start off by clearing the air. There’s roughly a month left until pitchers and catchers report to Fort Myers for spring training. As was the case last offseason, free agents have been dealt an unnecessary blow in both offered and assumed contracts. The dollars for those agreed to are not there, and plenty more talent has yet to find new homes. Given that reality, there’s also the very real possibility that the Twins are not done spending (or adding through the trade market). Any additional acquisitions would cause the following discussion to be re-evaluated on a sliding scale, but the principles all still hold true.

    Now, when it comes to payroll, it’s less about a dollar figure than it is a percentage of allocated resources. In 2018, per Aaron Gleeman’s numbers, the average MLB payroll was roughly $135 million. At right around $129 million in 2018, Minnesota came very close to being at that mark. Where they are today puts them at a paltry 71% of that average and would be a throwback to the days of the Metrodome.

    Looking back to the last four teams standing in 2018, they came in with the 1st, 3rd, 11th, and 26th highest payrolls in baseball. While the Brewers were certainly an anomaly, the Athletics were the only other team to enter the postseason below the average spend. The expansion to a second wild card certainly incentivizes those fringe teams to win on a more frugal scale, but the best tend to separate themselves from the pack.

    Bringing this back to the Twins, Tony Wirt responded to me on Twitter as saying, “Money is a resource. Some teams have more, some less, but if you don't use the resources you have to the fullest, you're doing your organization a disservice.” This is exactly the issue when it comes to Minnesota’s payroll. It isn’t about dollars, but rather about sense. What opportunity cost is left on the table by failing to fully allocate all the resources at your disposal?

    In this space, as well as my personal blog, and Twitter, I have long defended the notion that the Twins haven’t needed to spend in recent years. Certainly, the opening of Target Field was seen (and pitched) as a new revenue stream. It is, but league- wide the greatest share of revenue still comes from lucrative TV contracts, which the Twins do not have. On top of that, doling out cash, err... resources, when the overall conditions (talent and competition) lack optimal opportunity for winning, is not ideal. That’s not to say I’m in favor of tanking but spending significantly while lagging behind the competition isn’t smart sports business. Right now, however, the contributing factors have changed.

    Going into 2019 the Cleveland Indians are the worst they’ve been in recent memory. Rocco Baldelli will field a team (as it sits now) that is substantially better on paper than it was at the end of 2018. Knowing full well that there are additional resources available, fans should be clamoring for them to be used.

    There are fringe players in the bullpen, and there are unknowns in the starting rotation. Can the front office improve upon Matt Magill, Tyler Duffey, or Adalberto Mejia? Can depth be improved by signing a player or two who pushes everyone else down a notch? With what’s left on the open market the answers would both seem to be a resounding yes. By failing to execute on that opportunity, the team is doing a disservice to those who are directly responsible for all the revenue streams.

    At the end of the day I don’t care if millionaires or billionaires make more money. The players certainly deserve a larger slice of the pie. What I do care about is that, as a fan, the team I’m invested in is operating within its means to utilize every resource available. At a payroll near $100 million, that’s not close to happening. Even at $130 million we have a debate. This isn’t about dollars though, it’s about sense.

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    Simple stats, but the Twins are actually very close to the median payroll of $108 million. What we have here is the teams that will be in the playoffs again,Red Sox, Yankees, Dodgers and Cubs spending almost twice as much as the rest of the league. So median is what to look at. The Twins are right in the middle so they can expect to compete for that 2nd wild card if things break right and have a 1 game playoff season.

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    I think that many people are missing the point about payroll. It's more about investing when the time is right.

     

    First, if the Twins get $260 million/year in revenues and plan to spend 50% of that, theoretically they should spend $130 million a year and therefore should spend another $30 million or more on payroll. Thus, people are looking at that single number and wondering why the Twins aren't spending more now, in an apparent belief that the $30 million will disappear into the ether.

     

    But that $30 million does not disappear. If the Twins are smart, and I'm going to assume that they are, then they will have that to spend in another year. Thus, if things work out right this coming season, they can spend more on the roster next year and theoretically can spend $160 million in 2020.

     

     

    This is not how it works. The budget is like the government. Use it or lose it. Any profit goes to buy Pohlad another yacht.

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    This is not how it works. The budget is like the government. Use it or lose it. Any profit goes to buy Pohlad another yacht.

    We don't know with certainty what becomes of unused payroll. It may get applied to different purposes within the organization to make it stronger. It may go to charity. What we do know with some certainty* is that it doesn't get banked to the next year's payroll, which does align with your main point.

     

    * No, I haven't invested further time locating an interview transcript from several years ago.

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    We don't know with certainty what becomes of unused payroll. It may get applied to different purposes within the organization to make it stronger. It may go to charity. What we do know with some certainty* is that it doesn't get banked to the next year's payroll, which does align with your main point.

     

    * No, I haven't invested further time locating an interview transcript from several years ago.

    can’t I just have a little hyperbole?
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    This is not how it works. The budget is like the government. Use it or lose it. Any profit goes to buy Pohlad another yacht.

     

    Do you know this or are you just saying this?

     

    And yeah, actually it is how these things should work, at least. Most companies work to generate a profit, and that profit goes into cash, which can be used to either pay investors through some form of a dividend or to reinvest back into the company. 

     

    Theoretically, the Twins should use this $30 million in savings to reinvest back into the team in future years. 

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    Do you know this or are you just saying this?

     

    And yeah, actually it is how these things should work, at least. Most companies work to generate a profit, and that profit goes into cash, which can be used to either pay investors through some form of a dividend or to reinvest back into the company.

     

    Theoretically, the Twins should use this $30 million in savings to reinvest back into the team in future years.

    They've said they don't do that, not in terms of salary. No, I don't have a link handy.

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    You ask a fair question, and a quick bit of web-searching didn't turn up the particular interview I was thinking of. Such articles are sometimes hard to find if you don't remember the exact phrase that would identify it. I was hoping someone else might have spoken up with a link they found, but so far, no luck. Russia, if you are listening, I hope you're able to find the links I am thinking of. Until such a link is found, please amend my previous statement with "I believe" - since I still do. :)

     

    I have repeatedly seen the 50% number but I have not seen anything that says anything to the contrary of what I wrote. I do not know whether they would do that or not. But I'm going to keep some faith in the current regime until I see evidence otherwise.

     

    The problem the past few years is that the Twins have not been competitive enough where it would have been a good idea to invest in free agents, which has pulled down their payroll figure. They spent 50% of their revenue last year on payroll and the team stunk. 

     

    I'm not terribly excited about it. I'll admit I'd rather see them sign someone like Manny Machado. But I understand the move given the big question marks surrounding players like Byron Buxton and Miguel Sano.

     

    Way too many people harsh on the Twins to spend for spending's sake. But I would much rather see this team make intelligent decisions, which means holding back during uncertain years and then going after it when the team is close to contention. As I said in the original post, if they fail to make moves when the time is right (in other words, no holding back when you get the chance to trade for Alfonso Soriano or signing a top pitcher) then I will be at Target Field with a pitchfork, in the front row. 

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    They've said they don't do that, not in terms of salary. No, I don't have a link handy.

     

    I have listened to and read an awful lot of Twins pieces and nothing has given me that indication. So my comment stands until I see otherwise.

     

    Not one person has been able to produce a link to back up their assumption that excess profits from keeping salaries low are not reinvested back into the team. 

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    No one is asking them to spend for spends sake. We are asking them to sign better, more expensive, players. To make the team better. If they miraculously end up with too many good players, I'm sure other teams will trade for them. If they end up with a bad team, but the free agents are good, they can trade them. If the free agents all end up bad, then they aren't good at the jobs.....

     

    But no one is asking them to spend for any reason other than we are fans and want better players.

    Edited by Mike Sixel
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    Do you know this or are you just saying this?

     

    And yeah, actually it is how these things should work, at least. Most companies work to generate a profit, and that profit goes into cash, which can be used to either pay investors through some form of a dividend or to reinvest back into the company.

     

    Theoretically, the Twins should use this $30 million in savings to reinvest back into the team in future years.

    Judy from Big Lake is my hero http://twinsdaily.com/topic/31775-article-rundown-judy-from-big-lake-baldelli-buxton-meeting-and-more/?fromsearch=1

     

    https://www.twincities.com/2018/11/17/charley-walters-vikings-need-back-to-back-north-conquests/

     

    Quote

     

    Mauer’s retirement leaves the Twins without a $23 million salary commitment for next season. But that doesn’t necessarily mean an extra $23 million for free agency, club owner Jim Pohlad said.

     

    “It’s not like ‘OK, we’ve got this money now, and we didn’t have it before, so we can do so much more,’ ” Pohlad said. “I don’t feel that way.”

     

    End Quote

     

    I’m still pissed

    Edited by Sconnie
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    I have listened to and read an awful lot of Twins pieces and nothing has given me that indication. So my comment stands until I see otherwise.

     

    Not one person has been able to produce a link to back up their assumption that excess profits from keeping salaries low are not reinvested back into the team.

    It's not an assumption. It's been reported. Not being able to find a link is not the same thing as not existing.

    I don't know if or how much savings they reinvest in the organization, but as far as actual payroll, they've explicitly said they do not carry over savings to future years.

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    Judy from Big Lake is my hero http://twinsdaily.com/topic/31775-article-rundown-judy-from-big-lake-baldelli-buxton-meeting-and-more/?fromsearch=1

    https://www.twincities.com/2018/11/17/charley-walters-vikings-need-back-to-back-north-conquests/

    Quote

    Mauer’s retirement leaves the Twins without a $23 million salary commitment for next season. But that doesn’t necessarily mean an extra $23 million for free agency, club owner Jim Pohlad said.

    “It’s not like ‘OK, we’ve got this money now, and we didn’t have it before, so we can do so much more,’ ” Pohlad said. “I don’t feel that way.”

    End Quote

    I’m still pissed

     

    Thank you for providing a link.

     

    You're inferring an awful lot from a single, one-sentence quote. 

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    that's the one I could remember/find - Pohlad and Ryan have said as much a few times times over the last 5-6 years or so

     

    Look, I'm just reserving my criticisms for now. I'm just OK with years like this if, when the team really is ready to contend, they spend more than that 50% number on payroll. If they don't, then that's a problem. 

     

    I think free agency is a crapshoot. I'd rather they use it when they are legitimately in contention and that they spend to keep existing players. Given the sheer uncertainty of the roster, I have no problem holding off. But if they DON'T spend, or make bold moves, when there is less uncertainty then I will start screaming.

     

    And despite the debates I'm having with people on this topic, I'll say this: Fans have every reason to criticize this team about spending. From 2001 to 2010 this team had a core to contend for a championship but repeatedly failed to get the one guy who could have made a real difference. This, after that whole contraction nonsense. And then we gave them a stadium. And then their team has sucked for most of the past eight years. So they deserve this, IMO. 

     

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    Look, I'm just reserving my criticisms for now. I'm just OK with years like this if, when the team really is ready to contend, they spend more than that 50% number on payroll. If they don't, then that's a problem. 

     

    I think free agency is a crapshoot. I'd rather they use it when they are legitimately in contention and that they spend to keep existing players. Given the sheer uncertainty of the roster, I have no problem holding off. But if they DON'T spend, or make bold moves, when there is less uncertainty then I will start screaming.

     

    And despite the debates I'm having with people on this topic, I'll say this: Fans have every reason to criticize this team about spending. From 2001 to 2010 this team had a core to contend for a championship but repeatedly failed to get the one guy who could have made a real difference. This, after that whole contraction nonsense. And then we gave them a stadium. And then their team has sucked for most of the past eight years. So they deserve this, IMO. 

    My point in this is 2019 could be 2002 all over again, where a couple of well placed pitching improvements could be the difference between winning/losing a wild card game and winning the division maybe making a playoff push. 

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    My point in this is 2019 could be 2002 all over again, where a couple of well placed pitching improvements could be the difference between winning/losing a wild card game and winning the division maybe making a playoff push. 

     

    And if it is then they have the flexibility to go out and get a costly starter or reliever at the trade deadline -- something the previous regime almost never did.

     

    Simple fact is this: The Twins in 2019 are going nowhere if the current core doesn't put it together, and that's a big question mark. To me, it's a defensible strategy to hold off on major expenditures given those question marks. 

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    And if it is then they have the flexibility to go out and get a costly starter or reliever at the trade deadline -- something the previous regime almost never did.

     

    Simple fact is this: The Twins in 2019 are going nowhere if the current core doesn't put it together, and that's a big question mark. To me, it's a defensible strategy to hold off on major expenditures given those question marks.

    2002 they won 70 games in the second half of the season. How do you predict that at the trade deadline?
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