Monday, January 14, 2008

Charge of Betrayal

The Twins caravan started yesterday, meaning that players, announcers and some members of the front office will be making their way across the state. They'll play a promotional video, participate in some silly activities, and answer fan's questions. And, of course, hope that nobody in that community can do math.

Because the math this year is damning for the Twins. The math says that this year, the year after the Twins gained a ballpark on the public's dime, they're going to cut payroll. The only question is, how much?

Here's the numbers, with reasonable estimates of those players who will be entering arbitration:

Major league baseball's revenues have increased around 9% in the last year, and the Twins spent a little over $70 million last year. Which means that the Twins could have been expected to increase their payroll to around $80 million - if they were a team that wasn't due a huge boost in revenue.

But of course, that's exactly what they are due. On top of the increases that every other team is expecting, the Twins can expect a $30 million boost, by their own estimates, fueled by the new ballpark. So you tell me what a reasonable payroll level would be? $85 million? $90 million?

But like a gloriously bad infomercial, just wait, there's more. Because the estimate above contains Johan Santana's salary, and most Twins fans would conclude that the likelihood of him being on the payroll on Opening Day is slim. Which means the payroll would be closer to $53 million.

That's about $30 million less than it should be. That's more than A-Rod will make this year. And it's $18 million less than it was last year. Which is more than Torii Hunter will be making in Anaheim.

Think they'll just put that money towards some long-term deal? Wrong. That's not the way business works. It's not like it's going to go into some trust account to be used in case of an emergency. That money is for THIS year. And even if it rolls over to next year, it certainly isn't rolling over to 2010, which is when the real budget crunch hits. And it certainly isn't going to extend the number of years offered to Justin Morneau and Michael Cuddyer. That money needs to be there in 2011 and 2012.

This may not be the result of outright greed - personally I think it's more the result of the risk adverse nature of the organization - but it's certainly going to be perceived as such. And, frankly, as one of the bigger defenders of the frugal nature of some of their signings, they deserve any and all criticism they get, regardless of the cause. Maybe they were painfully conservative, afraid to offer big money to a free agent until they had moved Santana. Or maybe they were just unsuccessful in wooing a free agent that we don't know about. Either way, it doesn't reinforce a sense of confidence in managment. Or competence of management.

Or maybe the popular perception is right, and their owner is a greedy sucking pig. Certainly, the math seems to suggest as much. Hopefully the participants of the caravan (and Twins Fest) may soon find out that arithmatic is still alive and strong in Minnesota's eduational system.


h. said...

I vote greedy sucking pig.

fan said...

"greedy sucking pig" is a little too vitriolic for engaged conversational writing- it isn't wrong to question, disagree, or be passionate in position, but leave the personal attack aside. It isn't necessary and never adds to the ideas you so frequently present in a decent fashion. I love your writing and have been a reader for several years, but Carl may be a very decent man and the management of the Twins is not the sum of his story. Let someone else judge his character- judge the Twins decision. This is what fans' do.

Twayn said...

A fair payroll for 2008 would seem to be around $74 million. Forbes lists Twins revenues from 2006 at $131 million. If we assume the Twins (as opposed to MLB as a whole) actually saw a 9% increase, that brings 2007 revenues to about $143 million. Using the formula that ownership has been pretty consistent with (52% of revenue), that should give the team about a $74 million payroll for 2008. Which means that the team actually overspent on salary in 2007 by about $6 million. That would explain the trade deadline activity last year as what it really was - a salary dump. The new stadium has boosted team value, but won't actually impact revenue until 2010, so that's a bit of a red herring. I'd put your $30 million shortfall at closer to $20 million. But your point is still valid. Where is that money going if not into player salary?

beau said...

My family has had some business dealings with Pohlad and some of his associates. I agree that personal attacks are pointless, but knowing what I know, "very decent man" would be quite generous.

Of course, it still may not have that much to do with the payroll, but I would love to have an owner who passionately loved baseball and wanted nothing more than to see a world championship.

Twinkie said...

The new stadium will cause increased revenues. If, as you say, $30 million mroe in the coffers...then $15+ would go to payroll, but what does the other $15 million go towards. At some point, increased revenue doesn't necessarily mean more "operational" costs. Do they double the number of salesmen, tickettakers, janitors? Maybe they add more vcie presidents to the organization or something. But $15 million more to the operational costs? Excuse me.

Save $20-30 million in 2008. Maybe the same (if not more) in 2009. Hey, that check when the last cornerstone is laid won't have to be all that big. Truly a free stadium.

Anonymous said...

No doubt the Pohlads are setting up to strip the Twins of as much cash as they can and then sell off the team when the revenue plunges after the new-stadium euphoria wears off.

After Hunter, Santana, and Nathan, the next Twin to go will be Morneau.

David Wintheiser said...

Welcome to the party, Geek -- those of us in the 'there's no way that the Twins will actually increase payroll' camp have been saving your seat since late May.

In defense of Pohlad, I will point out that the $30 million increase in revenue from the new stadium is, as best as I can figure, only for 2010 -- the studies I've seen suggest that any revenue boost gained from the first-year opening of a new ballpark fade within two to three seasons, unless you open another Camden Yards, which nobody actually involved in this process has ever suggested.

But yeah, I think the old pro-stadium argument 'but the Twins can use that money to sign players' just got debunked...eight months too late.

TT said...

but what does the other $15 million go towards.

You might have noticed that baseball spends a lot of money on scouting and player development. For the next two years the Twins have zero revenue, and a rather large expense in their share of the cost of building it, associated with the new stadium.

Some people wait until they actually get their pay raise before they start spending it. I suspect that is especially true of bankers like Pohlad.

it isn't wrong to question, disagree, or be passionate in position, but leave the personal attack aside.

I agree entirely.

In fact, the Twins have been one of the most successful franchises in baseball over the last few years, in part because of Carl Pohlad. Unlike some owners, he lets the people he hires do their job even when the immediate results weren't what he would have liked. As Twins fans, we have had the benefit of that patience.

Anonymous said...

I vaguely recall a Twinsgeek article from a few years back chastising the Brewers for having a new ballpark and only spending about $35M on salaries. I think most Brewer fans would be pleased with their current roster. My point is that sometimes even when you have the money there is no point in spending it on parts you don't need.

I'll miss Torii for the next two years but not the last three of his deal, I'll miss Cy-tana as well but they did offer him $93.5M for five years! After his four for $40M contract who thought that the Twins would ever make that kind of offer for anyone?

In light of the current trade stalemate it is obvious that the club is willing to deal on their terms and are comfortable making business decisions vs. loyalty/emotional decisions. The Indians payroll did the same thing not that long ago and they are well respected for their player & payroll management. With that being said if they don't tie up Morneau soon then I they deserve any and all the flak they'll receive.


JimCrikket said...

If Morneau is under the Twins' control through 2010, why rush to give him an extension at this point? If he had followed up his MVP season with another comparable year, I might see some sense to it. Likewise, if his less superhuman 2007 would mean his salary demands in an extension would be lower, I could understand. But it sounds like he's looking for a very long and very high priced contract and I'd be inclined to see what kind of 2008 he has before I commit to him beyond 2010.

As for the overall payroll, I'm not sure what you all are suggesting the Twins should have done at this point. Is anyone seriously suggesting meeting/beating the Angels' deal for Hunter would have been wise, just because it would have raised the payroll to the level you think it would be?

Should they have spent $10-15 on another FA outfielder? Doing that would have pretty much locked the Twins in to trading Santana, removing any remaining leverage Smith has with potential trade partners. It certainly would have removed ANY possibility of continuing to negotiate with Santana.

I don't know the Pohlad family. They may be the scum of the earth for all I know. But it's just too easy to look at the projected payroll and say, "look how low it's going to be". If you think the payroll should be $78 million, I expect more than just a number thrown out there. I think some suggestion as to what the Twins should have done differently, to this point, would be in order.

It's easy to criticize when you don't have to be responsible for at least suggesting how to do better.

shimrod said...

All you have to know about Pohlad is the team is still claiming to "lose money" after debt service. He's a banker, those loan payments come out of one pocket and right into the next. Remember also, that the contraction talk ended only after a judge demanded that the Twins open their books.There's no way the state should have paid for a stadium. Pohlad will spend as much as it takes to win, as long as he makes a big profit at the same time. His choice, as it's his team, but the taxpayers shouldn't be financing his third Billion.

Ed said...

You all missed the point! The stadium land deal cost the Pohlads another $25m over budget because the County screwed up. That's where the money is going--to compensate them for having to fork over the overage on the stadium land. Of course, they were going to take it out of payroll.

Anonymous said...

John, I for one do not have a problem with a cut this year and a major cut if Johan is traded. The team in 2008 is shaping up to be a rebuilding year, albeit, one that just could shock the hell out of everyone if Johan is around for a few more years. I do not think it is necessary to go out and spend a bunch of money on players just to spend money. Other than center field, where they still may spend some $$$, where and whom should they be overspending for? Resigning Torii Hunter made absolutely no sense when one was talking about $18.0mm in 2012. Signing Silva to a $48.0mm four year deal with all the pitchers in the wings, well that made less sense. So whom should they be spending the extra $25.0mm on?

I can't figure out how to make this stuff work, Roger