The Sweet Spot

Yummm.... Guaranteed money…..

Something for you to keep in mind when you finally get that baseball GM job that you know you would be perfect for: there is a sweet spot for signing ballplayers to a long-term deal. It is the offseason when they are one year away from arbitration.

At that point you should know whether a long term deal is a good idea. And at that point they are still a year away from a lifetime of security. Anything can happen during that season – they can blow out a knee, or a shoulder, or face a prolonged slump, or watch their control vanish. Ballplayers are naturally risk takers – they almost need to be to choose that line of work – but a guaranteed deal provides them a lifetime of financial security a year early.

The Twins have six players who are currently in that sweet spot. And that sweet spot is even sweeter now, because recent history tells us that the Twins don’t like to come into Twins Fest empty-handed. And Twins Fest starts two weeks from today.

While fans and talking heads like to spout cliched opinions about long-term deals, the reality is the devil is in the details. There are amounts at which a long-term deal makes sense, and there are amounts at which it doesn’t. That's because the team already has a four-year contract with these players, whether we choose to call it that or not.

We'll delve into that and look at the various players in the sweet spot. And since we’re a blog, and thus journalistically irresponsible, let’s also speculate on what each deal might look like. We’ll even rank them from most likely to least likely, starting with:

Francisco Liriano
You can argue whether Liriano or Scott Baker should be the top long-term target on the roster. Either way, these two players are better fits for a long-term deal than the Twins have had for several years. They’re both relatively proven, they’re both a year away from big money, and they’re both high-ceiling players.

The only issue that might scare the Twins about Liriano – his health – is exactly the reason a long-term deal is probably so attractive to him. And after just missing arbitration last year, he’s faced with one more year of a team-dictated salary before a giant raise. So now’s the time, for both him and the Twins.

Here, very roughly, is what Liriano and the Twins can expect his salary to be over the next four years if he remains healthy and goes through the arbitration process:

2009 – $0.5M
2010 - $3.5M
2011 - $7.0M
2012 - $11.5M
2013 – free agent
Total - $22.5 million through 2012

Repeat after me: The Twins essentially already have a contract with Liriano. It is for four years and (roughly) $22.5 million. That's going to be the case for all these guys, and it’s the best kind of contract because they can renew it yearly, meaning there is almost no risk to them whatsoever. For them to guarantee all of that money ahead of time, they to need to get something substantial in return.

In this case, that something had better include at least one year of free agency. But the question for both sides is how long will they want to commit? If the Twins trust him to stay healthy, the longer the better. But if he comes down with an elbow injury next June, just how long do the Twins want to be on the hook?

Ideally, their offer would be for something like 3 years and $10M guaranteed, with team options for 2012 and 2013 at $11M and $13M respectively. Throw some guaranteed money buyouts ($1.5M?) for those last two years and Liriano is guaranteed $13M, even if he breaks down on March 15th. Given his arm issues, I would think he (and his agent) would have a hard time walking away from that.

Scott Baker
There was plenty of talk last season about Liriano and his service time, but the guy on the roster who was closest to arbitration but missed was Baker. He started the year with 1 year and 128 days of service time, and I’m pretty sure he was on the 25 man roster or DL for the whole year, so he finished with about 2 years and 128 days. “Super 2” arbitration usually kicks in somewhere between 2 years and 130 to 140 days. I wonder just how close he was?

Baker’s salary over the next four years closely mirrors Liriano’s. He isn’t the injury risk (in my mind) that Liriano is, so a lower per year salary with a longer deal makes more sense. Four years, $18 million, and a team option on the fifth year ($12M?) with a $2 million buyout seems fair. Congratulations Scott, your ship has come in.

Glen Perkins
It seems kind of early to sign Perkins to a long-term deal, but his service clock begs to differ. Perkins already has over two years of service time, so he’ll become expensive at this time next year, too, and this is the prime time to sign him long-term. His future isn’t as projectable, but I’d feel comfortable that he would be worth whatever he is paid through his second year of arbitration.

That Liriano profile above works for Baker, too, but it wouldn’t make as much sense to offer him as many years or as much guaranteed money. Three years and $8 million plus some buyout options seems fine, provided the Twins have some reasonable team options on 2012 and 2013.

Delmon Young
Ugh. Young represents exactly the kind of talent that a team would like to lock up with a long-term deal, and exactly the kind of attitude that makes that impossible. Given that the manager has resorted to offseason threats about benching him, I think it’s safe to say that we aren’t going to see Young receive a long-term deal this offseason.

Hopefully, he’ll make the Twins regret that decision somewhat this year. One thing that is overlooked in Young’s performance last year is that he didn’t have a ton of incentive to put up huge numbers. He’s still going to be paid whatever the Twins decide. Why not work on that inside-out swing in preparation for a salary drive this year, when he’s playing for that arbitration award?

Frankly, Young might be the kind of guy that you never give a long-term contract to. Better to stick with the existing “four-year deal” the Twins have with all of these players and have him play for pay.

Brandon Harris
Harris started the year as the everyday second baseman and ended the year as the short end of the platoon at third base. And with Ty Wigginton still available (and Cleveland no longer in the market for him), Harris might not even have that role come Opening Day. Either way, considering the Twins have spent the better part of the offseason looking for a right-handed third baseman, it doesn’t look like they consider Harris worth a long-term investment.

Carlos Gomez
It’s hard to believe that a player who is this raw has almost two years of service time. But if Gomez stays on the Twins major league roster for the entire year, he will almost surely qualify as a “Super 2” for arbitration at this time next year.

Hmmm. If only the Twins could figure out a way to keep him in Rochester for the first month of the season…

I’ll say what I’ve been saying for the last two months – don’t believe the bluster about him starting in center field on Opening Day. With five outfielders and four spots, you tell me who the odd man out will be. Gomez is the player who struggles the most offensively (and it’s not particularly close). Gomez is the player who could most benefit by spending some time in Rochester. And it will save the Twins several million dollars if Gomez isn't on the major league roster for 20 games.

Take your time. Don't rush into a decision.

That’s why Gomez is at the bottom of the list. You don’t sign a guy to a long-term contract if you expect him to start the season in Rochester. And despite what the manager is saying, barring an injury, he’ll be starting the season in Rochester. It just makes too much sense.

But hopefully not for long. He could have a very bright future, and I'm looking forward to watching im for years, as are most fans. Hopefully we'll see him back on this list next year, much closer to the top, and nearer the sweet spot. Yummmm…….

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This year I'm trying to be very active in Facebook (which I've largely ignored before now) because it provides a nice easy way to keep in touch with my brother who lives in Australia. Part of that includes setting up a Twins Geek blog network on Facebook. If you're a Facebook user, I'd love to have you sign up as part of the network. I'm hoping to put some smaller posts on the wall there to make it worth your while. Just visit the site and click on "Join Blog Network". I'm looking forward to getting to know you all better.

Hot Stove Night

Hey gang,
I'm working on a post about the long-term contract opportunities the Twins face, but it's not going to be ready until tomorrow. Instead, I'd like to pimp an event that I've always enjoyed and will be participating in this year: 2nd Annual "Final" Ballpark Tours Hot Stove League Banquet and Charity Auction for St. Paul's own Dunning Field Little League.

I've been to this a couple of times, and this year GameDay will have a table there where you can pick up some free issues from last year. In addition, I may be participating in the Q&A session at the end of the event. And since it's going on the same weekend as Twins Fest, you can get an absolute overdose of Twins Talk that weekend. I'd love to see all you (and as many blogger as we can get) there. Here are the details:

WHEN: Saturday, 1/24. Doors Open: 5:30 pm. Festivities Begin: 7:10 pm.

WHERE: Harriet Island Pavilion Building (across from Dtwn St. Paul via the Wabasha Avenue Bridge).

PRICE: $30, adults; $25, ages 16 or younger. $5 more at the door.

TICKETS: Anodyne @ 43rd, 4301 Nicollet Avenue South in Minneapolis; Golden Thyme Coffee & Cafe, 921 Selby Avenue in St. Paul or at the door.

MORE INFO: 651-227-3437, 651-644-9254 or ballparktours@qwest.net.

Since1982, Ballpark Tours has been hosting this yearly winter gathering where young, middle age and elder baseball fans join up with each other to disect the previous year and celebrate the upcoming season. We guarantee a fun, irreverent and raucous time for all of you who need a baseball fix during this cold and dark time of year.

It is also held to raise needed funds for the Little League organization at
Dunning Field in St. Paul. Our annual charity auctions have raised over
$50,000 to help them offer their excellent youth baseball programs and for field improvements at this intercity park.

This year our line up includes former Minnesota Twins and Millwaukee Brewers great Corey Koskie, Major League Baseball Umpire Tim Tschida and a tribute to our friend the late Andy Nelson (who was a great local sports and mural artist). StarTribune scribe LaVelle E. Neal III, another Twins Alumni (TBA) and other special guests are expected to join us as well.

Howard Sinker has signed on to be our our host this year. Cribbed from his web site, "A Fan's View From Section 220": "In a former life Howard has covered the Twins for the StarTribune. Today, he is a commentator on baseball and other sports for Minnesota Public Radio's Midday program. He grew up rooting for the Cubs, back before it was trendy, has settled quite nicely into a season-ticket package in Section 220 of the Metrodome and owns two XM Radios."

Festivies are at a new location in 2009, the Historic Harriet Island Pavilion Building (which is right across from Downtown St. Paul via the Wabasha Avenue Bridge). The doors open at 5:30 and festivities begin at 7:10 pm.

Tickets can be purchased at Anodyne @ 43rd, 4301 Nicollet Avenue South in Minneapolis and Golden Thyme Coffee & Cafe, 921 Selby Avenue in St. Paul. They remain priced at an affordable $30 for adults and $25 for ages 16 or younger. Folks can call 651-227-3437 or 651-644-9254 for more info or to reserve their tickets.

Monday's Followup:On Budget and Betrayal

Thanks to everyone for all the great comments on Thursday and Friday. This declining payroll issue still isn't getting the attention I think it deserves, but I guess that's not overly surprising. While ranting about payroll plays well in public (and we have our share of that in the comments), it's difficult to talk about the details on the radio or on TV without people's eyes glazing over. But while risking that, I want to make a point that I feel I didn't hammer enough:

This time it is different.

A sect of Twins fans has always been outraged by the Twins "never getting a big free agent" or "Carl not spending any of his billions", but for those that were paying attention to salaries and payroll levels, the moves often made sense. Given a slightly escalating payroll that matched the rise in MLB revenues, one could understand (and even applaud) moves like trading Eric Milton, while they might have been criticized by others.

But this is different. As was explored and detailed so well by comments, there is almost no reasonable explanation for a lower payroll level over the last couple of years. Casual fans likely view this offseason the way they viewed other offseasons. But for the payroll geeks, this offseason (and last one, for that matter) represent an enormous opportunity lost.

I'm not sure how to best represent that difference to the greater majority of Twins Territory, but I think we had better continue to talk about it, because it shouldn't get lost in the shuffle. Or among the grander more traditional (and caustic) rhetoric.

In that spirit, let's dive into some of the other issues that were raised in the comments:

The Twins have tons of cheap talent, particularly pitching, that is too valuable to part with.
Agreed, but most of that value isn't because it is irreplacable. It is because it is cheap. And that is only of value if you use the money that is saved to upgrade the team. Can we be proud that the Twins have done such a nice job of developing a competetive team for so little? Sure. But you don't fly any flags for the most wins per dollar spent.

If you like, you can attribute the $30 million they are under budget to the five pitchers who they are paying half a million dollars instead of $6.5 million, which would be a much more reasonable figure (and probably low) given their performance. But if you don't spend that $30 million on something else, does it really matter whether those guys each cost $.5M or $6.5M?


Not to the fans. The only person it matters to is the guy who keeps the $30M.

This isn't how the Twins do things. They build their organization from within.
Hey, anyone who follows this site knows that philosophy is one of the better reasons to follow this team obsessively. Nobody is saying this isn't a key skill for a lower-revenue team like the Twins. And this site has pimped young minor league talent more than most fans would find palatable.

But it's unreasonable to think that every piece for a championship team is going to be able to be provided from a farm system. The Twins face enough disadvantages due to their ballpark and revenue stream - they don't need to avoid free agency even when they have the money to spend.

In fact, I would argue that the Twins do a disservice to their other skills when they waste an opportunity like this. It's like hitting a lead-off triple in extra innings, only to have the next three batters fail to get the run home. The hard part - developing an abundance of major league caliber players through years of investement - is done. Now you just have to put the ball in play. The players are there. The money is there. Do the little things to get this run home, dammit.

The skeptic view - they're pocketing money for the stadium, just in case.
When I wrote about this same subject last year, this was brought up, and I more or less dismissed it. I wasn't as critical last year because the truth is that the timing for spending that money was tough. The biggest reason they were under payroll last year was because they needed to have money available in case they didn't trade Johan Santana. And since they traded him so late in the offseason, there just wasn't much to spend money on.

No such excuse is available this year. They have had that money all offseason. They have watched free agent after free agent sign deals that would have been unthinkably cheap just four months ago. Letting any one of those pieces go is understandable. Letting them all go looks criminal.

What they really need to do is take that money and spend it on long-term contracts.
Long-term contracts don't work that way. In the NFL, you might sign players to a big signing bonus and give them money up front. That's necessary because in football the team can cut the player (and the contract) at any time.

But in baseball, the contract is guaranteed, so it doesn't matter much whether you give up front money - it just pays down future years minimally. For instance, last year's signing bonus for Justin Morneau just means that the latter years of his contract are cheaper by a million dollars or so per year. That's not going to make much difference to a $90 million payroll. It's not a bad strategy if you find yourself with leftover money (like the Twins had last year) but it's not a strategy you use if you could improve your team.

Should we really expect increased revenue given the economy?
I think the comments answered this question pretty well all by itself as the revenue sources for the Twins were each examined. I really appreciate these comments, by the way. For seven years I've been meaning to do a thorough examination (with estimates) of the various revenue sources for the Twins, and I've never come close. But my sense is that the ticket revenue is only a very small part, and that many of the revenue sources are quite resistant.

The $20-30 million that the Twins are short represent somewhere between 25% and 33% of their total payroll, and since they claim payroll is a percentage of their total revenue, that would imply they expect revenue to fall 25-33% short this year. There is no way that is the case considering how much of the revenue is from previously negotiated TV and media contracts.

As Opening Day approaches, we'll be able to see the payroll level for the rest of the teams, and then we'll be able to see if MLB thinks revenues are going to be going up or down this year. It looks to me like for MLB as a whole, they're (at worst) holding steady. And there is certainly no reason to expect the Twins, with their new ballpark on the way, to be suffering more than the average MLB team.

BTW, for anyone who wants to dive into the Twins revenue streams in detail, I'll be happy to help. Or if someone knows anyplace that has taken a legitimate stab at this for any major league team, I'd love to see it.

Maybe they're just preparing for future years? Won't all these guys become expensive soon?
Remarkably enough, I examined this before I started going all crazy and writing last Thursday's post. Payroll does escalate significantly in 2010, but (in my mind) not so significantly that significant dollars couldn't be spent this offseason. It jumps about $20 million in 2010, and about another $10 million in 2011 by my back-of-the-napkin calculations. For those who like to dissect this stuff, I've added the details to the right ==>

Could they just roll the money they didn't spend this year into future years?
I examined this question back in 2000 when they cut the payroll back to about $15 million and pocketed that revenue sharing money. I hoped the same thing back then, and it didn't happen, and it turns out there is a very good reason it doesn't.

A business can't save money like you and I do. If we have money leftover at the end of the year, we can just throw it into an investment vehicle, becdause the money has already been taxed. But for a business, any money they have leftover at the end of the year is income that has not yet been taxed. And if it is spent on the business, it is never taxed, because it's just part of the operating expenses.

But if it is NOT spent, it's profit, and it's taxed. So the remaining money could be 'saved', but only after Uncle Sam gets his cut.

So the Twins have the option of either spending that $30 million this year, or carrying over about $20 million to next year (with the IRS and MN Dept of Revenue getting the other $10M). Even if they did keep that money in house instead of distribute it, does anyone believe that $20 million next year is going to buy a better group of free agents next year than $30 million is going to buy this year?

So what's left? Why aren't they meeting payroll?
I'll be honest - I'm still not sure the Twins are intentionally trying to pocket payroll. It might be a logical result of feeling like this team is "good enough" (a question I mean to examine), or being really afraid of any kind of long-term deal, or truly convinced that they don't want to mess with this team much. I am sure, at least, that they will claim as much.

That sounds staid, and it sounds staid at exactly the wrong time. When a team is on the verge of becoming great, that's when a little boldness is called for. But the bigger problem is that they could be wrong. By sitting on their hands, they might doom themselves to be a second place team to the Indians or Tigers this year, or to the Royals or White Sox in future years.

So it could be greed, but maybe just as deadly, it could be timidity. After last offseason's dice rolls(like Young for Garza), many of which crapped out, we probably shouldn't be surprised that the organization is acting awfully conservative. But the surest path to failure is to fail to ever take a risk.

And for fans, the motivation doesn't really matter. Either way, this team is not being improved, and we're watching available resources languish unused.