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View Full Version : The Pohlad's and the Cry for Them to Spend More Money



powrwrap
07-09-2012, 07:14 PM
Lots of Twins fans pine away for the Pohlad's to spend more money on payroll. Did you ever stop and think about the transactions that must take place before they can do that? In other words, where does the money come from?

The Minnesota Twins LLC is a limited liability corporation. Jim Pohlad is the CEO, Dave St. Peter is the President. The board of directors include Jim Pohlad, Bob Pohlad, Bill Pohlad, Dave St. Peter, and Jerry Bell. It is likely that these five individuals own stock in the LLC and that the Pohlad's own a controlling interest. There are probably other shareholders as well. So if the Twins want to increase payroll they have to find the money somewhere. It's either in a bank (or other financial) account under the corporation's name or they have to get a loan from a bank or from individuals. I'm guessing that if the Twins need money they don't take out a bank loan, rather they get it from the Pohlad personal fortune.

So how does the Pohlad's money get into the Minnesota Twins' bank account(s)? I'm guessing that the Pohlad's make a personal loan out to the Minnesota Twins LLC, with the expectation of getting paid back at some point. I doubt that they issue more shares of stock, but they could. In other words when fans clamor for the Pohlad's to quit being so cheap and spend more money in essence they are asking them to loan their personal money to a corporation. The Pohlad's don't write out personal checks to Joe Mauer every two weeks to cover his contract. The money comes out of the LLC. So the calculation that the Pohlad's and the Twins board of directors must make is: 1. How much money should I loan to the company? and 2. When and how will I get paid back?

The construction of Target Field helped the owners capture more revenues than they were getting at the Metrodome. That's why payroll went from $65M in 2009 to $98M in 2010. The Twins owners knew they could recoup their money. It also helps to explain why the Twins had such lousy payrolls in the mid to late 90's. With the MetroDome lease they couldn't see a way to get their money back.

Some owners might have a higher tolerance for the time frame needed to recover their money, or they have more revenue streams than the Twins, or both. For example, it is easy for the Steinbrenners to sink their money into the Yankees because they own the YES TV network, the new Yankees stadium, etc. etc. and they can be (mostly) assured that they will recoup their money. When fans yell for owners to spend more money on the team what they are really asking them to do is make riskier loans to the corporation. Their personal wealth is not the deciding factor. No baseball owner is going to throw money away on their team without the expectation of getting it back.

My point is that there is the wall of separation between an owner's personal money and the money that the corporation controls.

gunnarthor
07-09-2012, 07:21 PM
We don't know and, if the owners have their way, never will know, where all avenues of revenue come from. Agents and the player's association are not allowed to look at owner's books. The Dodger fiasco showed how some owners are willing to hide/move money into different places to lower official revenue. Other owners have paid family members huge sums of money for "work" which came out of the teams budget. Sports Illustrated (I believe) noted that most people inside baseball believe that player salaries have not grown as fast as owner's revenues and that today player's might make less than 50% of baseball revenues, as opposed to a decade or so ago when they made something around 57%. Sorry I'm too lazy to look for that link.

powrwrap
07-09-2012, 07:31 PM
We don't know and, if the owners have their way, never will know, where all avenues of revenue come from.

This is true but by examining new stadium deals and digging up info from the CBA, we can make good guesses. The concession revenues at Target Field are basically an ATM for the Pohlads. The profit margins on everything is incredible. How many beers an hour do they have to sell at $7.25 a bottle to show a profit, including paying the guy hawking the beer? Two beers? I'm pretty sure that beer vendors sell more than two beers an hour. Ha!


Sports Illustrated (I believe) noted that most people inside baseball believe that player salaries have not grown as fast as owner's revenues and that today player's might make less than 50% of baseball revenues, as opposed to a decade or so ago when they made something around 57%.

I've heard similar things about the player's share decreasing, but I think it's still above 50% but just barely. The Twins have said their payroll is 55% of their gross revenues, to which I would respond--Yeah, and what year was that and for how many years?

In any event, if the Pohlads want to increase payroll beyond their percent of revenue threshold, they probably make a personal loan out to the company. They simply cannot keep doing this, unless they are idiots for businessman, and I don't think they are.

USAFChief
07-09-2012, 07:35 PM
Do you have a source reference for "The Minnesota Twins LLC" as the owner of the Twins?

powrwrap
07-09-2012, 07:45 PM
Do you have a source reference for "The Minnesota Twins LLC" as the owner of the Twins?



http://mblsportal.sos.state.mn.us/Business/SearchDetails?filingGuid=963c4846-8fd4-e011-a886-001ec94ffe7f

birdwatcher
07-09-2012, 07:48 PM
Terrific writeup, powrwrap. The Twin's LLC DOES have other shareholders. The board has a fiduciary responsibility to them that supercedes any "responsibility" they have to us as fans. I opposed the public financing of the stadium. Not because Carl Pohlad was rich, but because I was irritated by the incongruity of public financing without full financial disclosure on the part of the Twins, and because of the structure of the deal. The team has no obligation to the players and their union to open the books, but I really think we as taxpayers deserve more transparency.

If I was the Czar, I'd step in and stifle the greed all around: players, owners, agents, and fans. How ridiculous is it that games are out of reach financially for so many families? As Czar, ticket prices would go down, salaries would go down, public financing would cease. And the players would still play, even at a frifth of what they make right now.

USAFChief
07-09-2012, 07:52 PM
http://mblsportal.sos.state.mn.us/Business/SearchDetails?filingGuid=963c4846-8fd4-e011-a886-001ec94ffe7f

This reference proves none of claims in your original post.

powrwrap
07-09-2012, 07:56 PM
This reference proves none of claims in your original post.

Asked and answered your question. What is your beef?

birdwatcher
07-09-2012, 08:01 PM
USAF, there may be innaccuracies, but remember, his point was simply that there is a "wall" (distinction?) between Twins money and personal money. That particular claim is spot on.

powrwrap
07-09-2012, 08:27 PM
USAF, there may be innaccuracies, but remember, his point was simply that there is a "wall" (distinction?) between Twins money and personal money. That particular claim is spot on.

Yes, that is my main point, separation between corporate funds and personal funds.

Also, I am speculating as to how the Twins' get their money which is why I used words like "I'm guessing", "probably" and "might".

Highabove
07-09-2012, 08:33 PM
In 2010 the Twins showed an operating income of 26.5 million dollars
2011 the Twins showed an operating income of 16.6 million dollars

Those are not bad before tax earnings.


The Business Of Baseball, 2011 (http://www.forbes.com/lists/2011/33/baseball-valuations-11_land.html)

The Business Of Baseball (http://www.forbes.com/mlb-valuations/#p_2_s_d6_)

mike wants wins
07-09-2012, 08:43 PM
Regardless of the ownership situation, they can spend more money if they want to. They choose not to. That's their right. It is also the fans' right to stop spending money on a AAAA product at MLB prices. Which will only decrease revenue, which will lead them to get a lower payroll, and a vicious cycle will be borne out, until either the cheap youth is great, or the owners spend more money on legit free agents.

USAFChief
07-09-2012, 09:09 PM
Asked and answered your question. What is your beef?

I have never before heard that people outside the Pohlad family own any part of the Twins, nor that an LLC "owns" the Twins. I want to see some proof before I believe any of those claims.

USAFChief
07-09-2012, 09:13 PM
In 2010 the Twins showed an operating income of 26.5 million dollars
2011 the Twins showed an operating income of 16.6 million dollars

Those are not bad before tax earnings.

The Business Of Baseball, 2011 (http://www.forbes.com/lists/2011/33/baseball-valuations-11_land.html)

The Business Of Baseball (http://www.forbes.com/mlb-valuations/#p_2_s_d6_)

Nor is the return on investement of the original purchase, which went for $45M when purchased, to the team's current estimated $500M value.

Ownership could chose to spend more, quite a bit more, on major league salary if they wanted, and not lose money. They don't. It's as simple as that.

Top Gun
07-09-2012, 09:30 PM
Wait till he sells the team then you will see that he made 5 times what he paid for it.

powrwrap
07-09-2012, 09:56 PM
I have never before heard that people outside the Pohlad family own any part of the Twins, nor that an LLC "owns" the Twins. I want to see some proof before I believe any of those claims.

I showed you that the Twins are an LLC. It's a given that if you are on the board of directors of a corporation and active in the day-to-day running of the company you are going to own stock in that company.

powrwrap
07-09-2012, 10:02 PM
Regardless of the ownership situation, they can spend more money if they want to.

Yes, they COULD spend more money, which at this juncture probably means they are throwing it away.


It is also the fans' right to stop spending money on a AAAA product at MLB prices.

Absolutely.


Which will only decrease revenue, which will lead them to get a lower payroll, and a vicious cycle will be borne out, until either the cheap youth is great, or the owners spend more money on legit free agents.

I'm sure the Twins have figured out their break even attendance numbers vs. payroll. Quick guesstimate, one point on the graph could be around 18,000-20,000 fans a game and around $80M in payroll. That sounds a lot like next year.

USAFChief
07-09-2012, 10:02 PM
I showed you that the Twins are an LLC. It's a given that if you are on the board of directors of a corporation and active in the day-to-day running of the company you are going to own stock in that company.

You have shown that a corporation named "Minnesota Twins LLC" was registered. You have not shown what, if anything, that corporation does. You have not shown they own the Twins, or if they do, what the corporate structure looks like or who owns stock. You could be correct, but nothing you've posted is in any way proof of that.

I do know the Twins formed an LLC to facilitate stadium funding and construction. Perhaps that's what this is. Perhaps not. I don't know, but I'm skeptical at best that the Pohlad family has given ownership to people outside the family.

powrwrap
07-09-2012, 10:04 PM
Ownership could chose to spend more, quite a bit more, on major league salary if they wanted, and not lose money. They don't. It's as simple as that.

On a year-by-year basis, I don't think so. If they were to sell out every game, as they almost did in 2010, how high would you say their payroll can go and they still break even?

powrwrap
07-09-2012, 10:09 PM
You have shown that a corporation named "Minnesota Twins LLC" was registered. You have not shown what, if anything, that corporation does. You have not shown they own the Twins, or if they do, what the corporate structure looks like or who owns stock. You could be correct, but nothing you've posted is in any way proof of that.

Yes, privately held corporations don't need to divulge anything to the public. If Minnesota Twins LLC don't own the team, what the heck do they do? David St. Peter is listed as the manager.


I do know the Twins formed an LLC to facilitate stadium funding and construction. Perhaps that's what this is. Perhaps not. I don't know, but I'm skeptical at best that the Pohlad family has given ownership to people outside the family.

I think that is Twins Ballpark LLC.

Target Field is managed and operated by Twins Ballpark, LLC, a limited liability company ("Twins Ballpark").

http://minnesota.twins.mlb.com/min/downloads/y2010/events_policies_procedures.pdf

Oxtung
07-09-2012, 10:44 PM
Ownership could chose to spend more, quite a bit more, on major league salary if they wanted, and not lose money. They don't. It's as simple as that.

I think it's funny that you demand someone to show documentation of exactly who owns the Twins and what "Minnesota Twins LLC" is but then throw out this claim off the cuff. Me thinks there is a double standard here somewhere.

edavis0308
07-09-2012, 10:59 PM
What exactly is the point of this entire thread?

glunn
07-09-2012, 11:07 PM
You have shown that a corporation named "Minnesota Twins LLC" was registered. You have not shown what, if anything, that corporation does. You have not shown they own the Twins, or if they do, what the corporate structure looks like or who owns stock. You could be correct, but nothing you've posted is in any way proof of that.

I do know the Twins formed an LLC to facilitate stadium funding and construction. Perhaps that's what this is. Perhaps not. I don't know, but I'm skeptical at best that the Pohlad family has given ownership to people outside the family.

Chief, I am pretty sure that he is correct about the LLC.

Please keep in mind that "LLC" refers to "limited liability company", which makes it seem like a corporation. An LLC would be an ideal vehicle for the Pohlads to own the ball club (better than a corporation), because of various tax advantages over a corporation. I googled this and found a link to what appears to be the LLC's retirement plan -- http://401k-plans.findthebest.com/l/60898/Minnesota-Twins-LLC [please notice the address and # of employees]

I am not 100% sure that this is the same LLC, but it sure seems that way.

And LLC or not, there is no evidence of ownership by anyone other than the Pohlad family. In that regard, I believe that Chief is correct, as he usually is.

Badsmerf
07-09-2012, 11:10 PM
This thread sucks.

Kobs
07-09-2012, 11:10 PM
If Minnesota Twins, LLC does indeed own the Twins, it is basically guaranteed that it's either to reduce the Pohlad's taxes or to reduce the team's reported revenue. No one has ever made any claim that anyone other than the Pohlads have any control over the club. If Ol' Carl threw Jerry Bell 1% of the team in his will, it's not impacting the team's ability to spend money.

clutterheart
07-09-2012, 11:26 PM
"Loan"
The only way a "loan" would be needed is if there is a shortfall between cash-on-hand and liabilities. I would bet by bottom dollar that such a shortfall does not exist.

"Wall"
There is no "Wall" between the Twins' money and Pohlad's money. Its a one way pipeline from the Twins to the Pohlads. Revenue is disbursed as a dividend and does not include their salaries. Those dividends go directly into the Pohlad's bank account.

"When fans yell for owners to spend more money on the team what they are really asking them to do is make riskier loans to the corporation."
No.
That is not correct at all. Fans are asking the ownership to bets that if they raise the payroll they can gain more revenue. Ownerships only risk is less dividend. Not their personal money.

Rosterman
07-09-2012, 11:37 PM
I seemed to remember reading that the Twins were leveraged with bank loans from banks other than Pohlads (better loan interest rate, perhaps). The get money from revenue and/or perceived worth of the Franchise. Supposedly they banked close to $200 million in revenue last season, and the Franchise has gone from something like $160 million in value to $459 million, with an outstanding loan to the corporation of $140 million or so to cover partial stadium costs and upgrades...which at $10 million a year in profits will be paid back in.......

So if the family cashed out today with the worth of the organization at $450 million, they would come out pretty well. Major league baseball allows franchises to carry loans for 70% of the amount of worth...

So, yes, someone other than the Pohlads have paper on the Twins.

glunn
07-09-2012, 11:55 PM
"Loan"
The only way a "loan" would be needed is if there is a shortfall between cash-on-hand and liabilities. I would bet by bottom dollar that such a shortfall does not exist.

"Wall"
There is no "Wall" between the Twins' money and Pohlad's money. Its a one way pipeline from the Twins to the Pohlads. Revenue is disbursed as a dividend and does not include their salaries. Those dividends go directly into the Pohlad's bank account.

"When fans yell for owners to spend more money on the team what they are really asking them to do is make riskier loans to the corporation."
No.
That is not correct at all. Fans are asking the ownership to bets that if they raise the payroll they can gain more revenue. Ownerships only risk is less dividend. Not their personal money.

I think that what you are saying is essentially correct.

I would note that the owners of an LLC pay taxes on the income of the LLC whether or not the income is distributed. Usually, the owners take distributions that will at least cover the taxes on the imputed income for each calendar year. The owners can take more if they wish or they can leave the balance in the LLC to make an investment in the business.

If the LLC needed extra money, then the Pohlads could either loan money to the LLC or make a capital contribution. But I think that you are correct that the money generally flows only in one direction.

I also think that you are correct that the owners are being asked to make bets that they hope will increase revenues. However, because the LLC is a pass through entity as described above (the owners pay taxes on the net income whether or not it is distributed by the LLC), I do not think that it is accurate to say that they would not be risking their personal money. Any extra money paid to players reduces the amount that the LLC can distribute to the Pohlads.

On a more positive note, player salaries are deductible for income tax purposes, which has the effect of making the IRS a partner in all player decisions. If a $10 million player increases revenues by $20 million, then IRS gets its 35% tax on the extra net revenue. But if the Twins sign a $3 million pitcher who actually reduces revenues (cough Marquis cough), then the IRS loses, because there are less net revenues to tax.

Baseball is just another business, and the Pohlads are classical capitalists. They seek to maximize their economic returns. And they have had success with their business model and seem unlikely to change it. I would rather have an owner who has a burning desire to win a World Series and who does not mind taking a risk of losing a lot of money on a very risky contract (cough Prince Fielder). But it seems to me that there are a lot of other owners who are even more conservative.

Highabove
07-10-2012, 12:01 AM
This definitely gets my thread of the year vote.

https://encrypted-tbn3.google.com/images?q=tbn:ANd9GcRNQlhc8Vd9YElBa2i3MKDm8jVAdgENg eA1DidATqN9CuArPEZm

powrwrap
07-10-2012, 09:08 AM
What exactly is the point of this entire thread?

The point is that Twins fans that demand the Pohlad's spend more money on payroll should understand that they don't use their personal money to purchase contracts for free agents, the money gets funneled through the LLC. The Pohlads make a business decision. Owning a baseball team is not a hobby for them where they don't expect to get paid back. I'm kind of reacting to the idea that if the Twins don't sign Cole Hamels, Zack Greinke (or whomever) in the off season then the Pohlads are cheap. It's not that simple.

Boom Boom
07-10-2012, 09:17 AM
The point is that Twins fans that demand the Pohlad's spend more money on payroll should understand that they don't use their personal money to purchase contracts for free agents, the money gets funneled through the LLC. The Pohlads make a business decision. Owning a baseball team is not a hobby for them where they don't expect to get paid back. I'm kind of reacting to the idea that if the Twins don't sign Cole Hamels, Zack Greinke (or whomever) in the off season then the Pohlads are cheap. It's not that simple.

Huh?

LLC or not... the Pohlads own that money. It's theirs, regardless of how they launder it.

edavis0308
07-10-2012, 09:21 AM
The point is that Twins fans that demand the Pohlad's spend more money on payroll should understand that they don't use their personal money to purchase contracts for free agents, the money gets funneled through the LLC. The Pohlads make a business decision. Owning a baseball team is not a hobby for them where they don't expect to get paid back. I'm kind of reacting to the idea that if the Twins don't sign Cole Hamels, Zack Greinke (or whomever) in the off season then the Pohlads are cheap. It's not that simple.

I think you are bringing this up to the wrong crowd. I would think that a very high majority of people here are pretty understanding and accepting about how the Twins' money spending ways are.

powrwrap
07-10-2012, 09:25 AM
"Loan"
The only way a "loan" would be needed is if there is a shortfall between cash-on-hand and liabilities. I would bet by bottom dollar that such a shortfall does not exist.

Because if the nature of LLC's--profits or losses must be passed through to the owners each year--if the Twins want to sign Cole Hamels and Zack Greinke next year I bet they don't have $40M per year lying around waiting to be spent on that. Ask yourself--how are the Pohlads going to get $40M a year more in revenues? Raise ticket prices $100 per seat? No, so they are going to have to find the money somewhere else.


"Wall"
There is no "Wall" between the Twins' money and Pohlad's money. Its a one way pipeline from the Twins to the Pohlads. Revenue is disbursed as a dividend and does not include their salaries. Those dividends go directly into the Pohlad's bank account.


Not quite. There is a legal separation between the Twins money and the Pohlads money. Any dividends paid to the shareholders of the LLC will show this as income on the shareholder's tax return. Or losses will be deductions from their personal taxable income. How many dividends did the Pohlads put "directly into their bank account" in the losing years of 1994 through 2001? In these years the Pohlads likely had losses flow through to their form 1040.


"When fans yell for owners to spend more money on the team what they are really asking them to do is make riskier loans to the corporation."
No.
That is not correct at all. Fans are asking the ownership to bets that if they raise the payroll they can gain more revenue. Ownerships only risk is less dividend. Not their personal money.

We don't know the Pohlads tax situation. They do have other investments in other companies. Maybe for tax reasons they don't want the Twins to have more revenues, which would mean more profit, which would mean more dividend payments to them from the LLC, and more personal tax liability. Owners of LLC's and S-Corps can manipulate their expenses and dividends to minimize their personal tax liabilities. Ownership has the risk of paying higher personal taxes if their LLC has higher revenues.

powrwrap
07-10-2012, 09:30 AM
Huh?

LLC or not... the Pohlads own that money. It's theirs, regardless of how they launder it.

Yes, and they are owners of multiple businesses. Maybe they don't want to put more money back into the Twins for a couple of years because that money is needed for another business. Maybe they WANT to lose money with the Twins. I often wonder if Carl was purposefully losing money on the Twins in the 90's because his investments elsewhere were raking in the dough and he could more easily manipulate profits and losses with the Twins to adjust his personal income tax payable compared to manipulating his other businesses profits and losses.

powrwrap
07-10-2012, 09:31 AM
I think you are bringing this up to the wrong crowd. I would think that a very high majority of people here are pretty understanding and accepting about how the Twins' money spending ways are.

Hey, it's a Twins discussion forum. I can't think of a better place to bring it up.

JB_Iowa
07-10-2012, 10:36 AM
Without going into the details of ownership (which NONE of us know unless there is a Pohlad posting here), I have one simple question: What is the Twins "profit margin"? We know that they earmark about 50%-52% for player's salaries. Then we know that there is the whole range of other costs: minor league operations, scouting, day to day operations of TF, executive compensation, etc., etc., etc. BUT somewhere in there, I'm sure that they also "plan" a profit margin.

Presumably that margin was not big enough last year -- leading to this year's payroll cut.

BUT at what point do you sacrifice current profits to acquire the on-field talent that will allow you to continue making a nice profit and to perhaps increase those profits?

We all know that baseball is profitable -- even for losing teams -- but how much risk do you want to take of getting into a continually downward spiral?

(For the record, I'm not one who says the team needs to spend, spend, spend -- because I believe that the team's current difficulties go beyond acquring a few good pitchers -- but I DO believe that management of this club needs to fish or cut bait: either be upfront about rebuilding so that fans know what to expect OR invest the resources necessary to avoid rebuilding and be truly competitive)

powrwrap
07-10-2012, 11:23 AM
I have one simple question: What is the Twins "profit margin"?

Most companies run a net-net profit of between 5% and 10%. Of course, MLB is not most companies, so who knows? If the Twins have revenues of $180M and they have a 7.5% net-net profit, that would mean dividend distributions of $13.5M to the owners.

mike wants wins
07-10-2012, 11:28 AM
Most companies aren't bought for $45MM, and later valued at $500-700MM though either. Now, that's not liquid or real unless they sell, so I understand the cash flow implications.....all that said, if I was a billiionaire, and had other businesses making money, and owned a baseball team, I'd just want to break even or even lose a little money on that, to make it great. But, unfortunately, I'm more of a tenthousandaire....

Highabove
07-10-2012, 12:11 PM
How many private corporations receive a 390 Million dollar subsidy from the public?

I will wait for my answer.

powrwrap
07-10-2012, 12:17 PM
How many private corporations receive a 390 Million dollar subsidy from the public?

I will wait for my answer.

How much of that $390M goes into payroll?

I will wait for my answer.

USAFChief
07-10-2012, 12:20 PM
How much of that $390M goes into payroll?

I will wait for my answer.

Apparently not very much. That seems to be the issue.

We do know a couple hundred million plus of that has gone into the Pohlads pocket, in the form of doubling the teams value.

Highabove
07-10-2012, 12:28 PM
How much of that $390M goes into payroll?

I will wait for my answer.

Last year's Revenue was 213 million. 97million dollars of that is going torwards this year's payroll. Its not that complicated.

SweetOne69
07-10-2012, 12:31 PM
How many private corporations receive a 390 Million dollar subsidy from the public?

I will wait for my answer.

Why deal with private corporations?

While the subsidy may not be $390M per company, virtually all corporations get public subsidies in one form or another as incentives to build a new facility in their location.

Highabove
07-10-2012, 12:37 PM
A separate county sales tax was instituted specifically for this Cooperation.

Outside of the three other Sports Franchises, what other private Corporation has received this consideration?

drivlikejehu
07-10-2012, 01:14 PM
The OP just has no idea what he's talking about. There is no "legal separation" between the Pohlads and the Twins. Whatever unincorporated business entities they use is irrelevant for anyone except their lawyers and accountants. The Pohlads have 100% control of the team. They have instant access to all cash inflows and are responsible for all cash outflows. They are free to sign contracts as they see fit.

When they choose to cut payroll, the reason is that they are cheap. It's not complicated. They own the team and that is their right. Likewise, the First Amendment gives me the right to say they have fleeced taxpayers and arguably perpetuated non-actionable fraud in their pursuit of said taxpayer money. We see now that the purpose of the stadium is only to enrich the Pohlad family, rather than fully support a competitive baseball club.

powrwrap
07-10-2012, 01:35 PM
The OP just has no idea what he's talking about. There is no "legal separation" between the Pohlads and the Twins. Whatever unincorporated business entities they use is irrelevant for anyone except their lawyers and accountants. The Pohlads have 100% control of the team. They have instant access to all cash inflows and are responsible for all cash outflows. They are free to sign contracts as they see fit.

The legal separation has to do with the savings and checking accounts of the individuals and the team. The team is a legal entity separate from the individuals. In real life execution of business duties it may not appear to be that way. My point is that when fans yell for payroll to be increased, it's not as simple as Jim Pohlad writing a personal check.


When they choose to cut payroll, the reason is that they are cheap. It's not complicated.

No, it could be for other reasons, such as adjusting their year end dividend they receive from the team's profit (or loss.) Is that being cheap? Or avoiding taxes? If people decide they don't want to pay taxes are they cheap?


They own the team and that is their right. Likewise, the First Amendment gives me the right to say they have fleeced taxpayers and arguably perpetuated non-actionable fraud in their pursuit of said taxpayer money. We see now that the purpose of the stadium is only to enrich the Pohlad family, rather than fully support a competitive baseball club.

You're funny. "We now see..." after only 2 1/2 years of operation? The payroll numbers have been: $98M, $112M, and $94M. These numbers come on the heels of a $65M payroll in 2009.

powrwrap
07-10-2012, 01:37 PM
Last year's Revenue was 213 million. 97million dollars of that is going torwards this year's payroll. Its not that complicated.

How much of the $390M subsidy that the Twins received to build Target Field went into payroll? Where did you get the $213M revenue number from?

Boom Boom
07-10-2012, 01:45 PM
[QUOTE=powrwrap;32715]If people decide they don't want to pay taxes are they cheap?[QUOTE]

Well... not to get too political here, but I'd venture a guess that half of everybody would consider that to be very cheap.

Highabove
07-10-2012, 01:56 PM
How much of the $390M subsidy that the Twins received to build Target Field went into payroll? Where did you get the $213M revenue number from?


Fobes Magazine links below

These numbers are cited by numerous publications.


The Business Of Baseball, 2011 (http://www.forbes.com/lists/2011/33/baseball-valuations-11_land.html)


The Business Of Baseball (http://www.forbes.com/mlb-valuations/) 2012

powrwrap
07-10-2012, 02:03 PM
Fobes Magazine links below

These numbers are cited by numerous publications.


The Business Of Baseball, 2011 (http://www.forbes.com/lists/2011/33/baseball-valuations-11_land.html)

Says the Twins had $213M in revenues and $26.5M in operating profit (before depreciation, amortization, and interest expenses). So how many big impact free agents can you buy with less than $26M? Who was available?



The Business Of Baseball (http://www.forbes.com/mlb-valuations/) 2012

Says the Twins had revenues of $213M and $16.6M in operating profit (before depreciation, amortization, and interest expenses). So how many free agents can you buy with less than $16M? I'm guessing not a big impact player. Not Zack Greinke or Cole Hamels. Looks like you're going to have to find some money elsewhere.

powrwrap
07-10-2012, 02:06 PM
If people decide they don't want to pay taxes are they cheap?


Well... not to get too political here, but I'd venture a guess that half of everybody would consider that to be very cheap.

Really? So it's wrong to take all the legal deductions you are entitled to by law to lower your tax burden? For example, if you take the home mortgage interest deduction to lower your taxes, you're cheap? Or put pre-tax money into a 401k to reduce your taxable income, you're cheap? Wow.

Highabove
07-10-2012, 02:08 PM
Says the Twins had $213M in revenues and $26.5M in operating profit (before depreciation, amortization, and interest expenses). So how many big impact free agents can you buy with less than $26M? Who was available?



Says the Twins had revenues of $213M and $16.6M in operating profit (before depreciation, amortization, and interest expenses). So how many free agents can you buy with less than $16M? I'm guessing not a big impact player. Not Zack Greinke or Cole Hamels. Looks like you're going to have to find some money elsewhere.

In 2011, the 16 Million is realized AFTER the Twins had payed out a 113 million payroll.

The operating income number is taken AFTER operating expenses INCLUDING players cost.

powrwrap
07-10-2012, 02:09 PM
In 2011, the 16 Million was realized AFTER the Twins had payed out a 113 million payroll.

Yes, and your point is...?

drivlikejehu
07-10-2012, 02:10 PM
The legal separation has to do with the savings and checking accounts of the individuals and the team. The team is a legal entity separate from the individuals. In real life execution of business duties it may not appear to be that way. My point is that when fans yell for payroll to be increased, it's not as simple as Jim Pohlad writing a personal check.

Sorry, you just don't understand the law. Legal separation is only the case with incorporated business. Unincorporated businesses, such as LLCs, are pass-through entities that have no independent existence. The Pohlads control any Twins-related LLCs just like their own personal bank accounts.

There is zero difficulty in adding payroll, unless it would mean operating at a loss. Even then it would not be a real problem unless the amount was quite large.



No, it could be for other reasons, such as adjusting their year end dividend they receive from the team's profit (or loss.) Is that being cheap? Or avoiding taxes? If people decide they don't want to pay taxes are they cheap?


LLC's don't pay dividends, they make distributions as someone else already pointed out. Again, you do not understand what you're talking about. Cutting payroll doesn't save the Pohlads anything on their taxes.

What is it about the internet that makes people think they can just randomly spout off on a subject despite complete ignorance of that topic?

Highabove
07-10-2012, 02:14 PM
Yes, and your point is...?


The point is (After paying out 113 million dollars in payroll, the Twins still realized operating income of 16.6 million dollars.)

Where is the out of pocket expense? A 16.6 million dollar surplus to turn over to the Accountants is not bad.

tobynotjason
07-10-2012, 02:15 PM
At first this read like laughable apologetics, but further statements by the OP make me think it's just a matter of emphasis (notwithstanding factual inaccuracies re: real world ownership).

If you want to make an argument like, "Look, MLB owners are greedy capitalists. They're incredibly rich people that got incredibly rich the way pretty much all incredibly rich people get incredibly rich: by screwing people over in generally legal and applauded ways. Getting the public to hand them a $300 million asset is par for the course. The Pohlads are no different. Carl Pohlad got started foreclosing on farms in the Depression. He fleeced the public for his ailing bus company. Fundamentally he made his fortune in that noblest of productive arenas: [pause to vomit] banking. So don't expect the Pohlads to sink one cent of personal money or their expected profits back into the team. I want to have a realistic discussion, and that's just naive," that would be perfectly reasonable.

You'd basically be saying: let's have a debate that's relevant to readily-potential reality. And that's actually worth saying, since a discussion about the best course of action for the Twins (or any MLB franchise) that relies on "the owners should worry less about their bottom line" is only ever going to be pie-in-the-sky, and it might be more intellectually interesting to say "what would I do if I were GM" than "what would I do if I were God."

The thing is, lots of people don't want to have a debate relevant only to the status quo and its most likely permutations. Lots of people think people like the Pohlads kind of utterly suck, and don't really care about their expected profits or net worth. People like this are always going to criticize them for not spending enough on the payroll. They're right from their point of view, and irrelevant from the viewpoint of the status quo. But pointing out that there's a board of directors has nothing to do with who owns the Twins, nor with excusing the state of the payroll.

powrwrap
07-10-2012, 02:22 PM
Sorry, you just don't understand the law. Legal separation is only the case with incorporated business. Unincorporated businesses, such as LLCs, are pass-through entities that have no independent existence. The Pohlads control any Twins-related LLCs just like their own personal bank accounts.

Sorry, but LLC's, like corporations, provide a shield for the owners against debts incurred by the LLC's as well as protections against other liabilities the LLC may incur. There is a separation.



LLC's don't pay dividends, they make distributions as someone else already pointed out.

You are correct about the terminology. LLC's pay distributions, not dividends. I was merely repeating what others had said so as not to introduce new terminology. The income or loss of a partnership is reported on Schedule K-1.


Again, you do not understand what your'e talking about. Cutting payroll doesn't save the Pohlads anything on their taxes.

I don't believe I said that cutting payroll would save Pohlad's taxes. Cutting payroll would (likely) increase the LLC's profit, which would increase their distributions, which would probably increase their personal taxes. I did say that fiddling with payroll is a method for the Pohlad's to manipulate their personal tax exposure. Of course, they likely have other ownership in other companies that would enter into the overall equation as well.

powrwrap
07-10-2012, 02:28 PM
At first this read like laughable apologetics, but further statements by the OP make me think it's just a matter of emphasis (notwithstanding factual inaccuracies re: real world ownership).

The thing is, lots of people don't want to have a debate relevant only to the status quo and its most likely permutations. Lots of people think people like the Pohlads kind of utterly suck, and don't really care about their expected profits or net worth. People like this are always going to criticize them for not spending enough on the payroll. They're right from their point of view, and irrelevant from the viewpoint of the status quo. But pointing out that there's a board of directors has nothing to do with who owns the Twins, nor with excusing the state of the payroll.

You've got a handle on what I'm trying to say. Basically, it boils down to this: The Pohlads are going to run the Twins like a business, not a hobby. They are going to make financial decisions, not emotional ones. Saying the "Pohlads are extremely wealthy and because they don't outbid the Yankees for such-and-such free agent means they are cheap" is a simplistic argument that ignores real world situations.

Fire Dan Gladden
07-10-2012, 02:30 PM
Excuse me from reading anymore of this thread, my eyes are burning and I need to go gouge them out.

Can somebody please go find the teeth I pulled out about 15 posts ago?

tobynotjason
07-10-2012, 02:32 PM
I wouldn't say every such argument is "simplistic" (unless it's really merely "THEY'RE RICH AND THEY'RE CHEAP!"), although "ignores real world situations" is absolutely accurate.

powrwrap
07-10-2012, 02:32 PM
Excuse me from reading anymore of this thread, my eyes are burning and I need to go gouge them out.

Can somebody please go find the teeth I pulled out about 15 posts ago?

I'm glad you like it!

I get much of the same enjoyment reading about hypothetical lineups the Twins should employ in 2015.

Highabove
07-10-2012, 02:33 PM
I have proved my Case. I'm out

https://encrypted-tbn2.google.com/images?q=tbn:ANd9GcQKu3_KqS6GsNh31opQDpvq-2qorftMBSynQLADKM9MHgCLclI-_w

drivlikejehu
07-10-2012, 02:35 PM
Sorry, but LLC's, like corporations, provide a shield for the owners against debts incurred by the LLC's as well as protections against other liabilities the LLC may incur. There is a separation.


That is just totally irrelevant. Pohlad can make bank transfers (or anything else) all the same. The banker doesn't say, "But Mr. Pohlad, you aren't liable for debts exceeding the LLC's capital accounts!"

He has complete, 100% control, with no impediments. The LLC form just provides some legal and tax benefits that don't have anything to do with Twins operations.



You are correct about the terminology. LLC's pay distributions, not dividends. I was merely repeating what others had said so as not to introduce new terminology. The income or loss of a partnership is reported on Schedule K-1.


Nice try but you should have checked Wikipedia before making error-filled posts in the first place.

powrwrap
07-10-2012, 02:48 PM
That is just totally irrelevant. Pohlad can make bank transfers (or anything else) all the same. The banker doesn't say, "But Mr. Pohlad, you aren't liable for debts exceeding the LLC's capital accounts!"

He has complete, 100% control, with no impediments. The LLC form just provides some legal and tax benefits that don't have anything to do with Twins operations.

I'm not arguing that Pohlad doesn't have control of the Twins with no impediment. I'm trying to point out that there is more to spending money on payroll than for Pohlad to open his wallet. Ultimately that's what he will do but he has to take into consideration how it will affect his overall business operations and tax situation. These are the "legal and tax benefits" that you say has nothing to do with Twins operations. I say they do.


Nice try but you should have checked Wikipedia before making error-filled posts in the first place.

Let's be clear: You are saying that there is no legal or tax difference between the Pohlads and the Minnesota Twins?

TheLeviathan
07-10-2012, 03:00 PM
I'm not arguing that Pohlad doesn't have control of the Twins with no impediment.

So he can do what he wants? And all anyone else is saying is "if he can do what he wants, he should spend more money"

You just overly complicated a very simple issue. You think it's unfair to criticize him for not going beyond the business revenue on player salaries because then it dips into his non-baseball wealth. Fine - all this other stuff was a giant cluster-funk that turned this thread into an obnoxious series of puffy nonsense.

powrwrap
07-10-2012, 03:06 PM
You think it's unfair to criticize him for not going beyond the business revenue on player salaries because then it dips into his non-baseball wealth. Fine - all this other stuff was a giant cluster-funk that turned this thread into an obnoxious series of puffy nonsense.

I plead innocent to creating "all this other stuff". I pretty much tried to stay with my original point but others tried to derail it.

TheLeviathan
07-10-2012, 03:08 PM
I plead innocent to creating "all this other stuff". I pretty much tried to stay with my original point but others tried to derail it.

You dressed your original post in a bunch of legal nonsense and excusatory drivel. The results were completely driven by you.

drivlikejehu
07-10-2012, 03:10 PM
I'm not arguing that Pohlad doesn't have control of the Twins with no impediment. I'm trying to point out that there is more to spending money on payroll than for Pohlad to open his wallet. Ultimately that's what he will do but he has to take into consideration how it will affect his overall business operations and tax situation. These are the "legal and tax benefits" that you say has nothing to do with Twins operations. I say they do.

Let's be clear: You are saying that there is no legal or tax difference between the Pohlads and the Minnesota Twins?

The Pohlad family has complete control of the Twins. The law allows the use of LLCs to limit liability, but that doesn't impact operations at all. Well, unless the stadium caves in on top of 30,000 people or something.

Unincorporated businesses can experience some tax benefits in general, but in this case it is pretty unlikely. I'd explain but you would require a background in the legal and tax accounting issues in order to understand.

So, to sum up, your point remains wholly incorrect. The only issue with raising payroll is that it would mean less profit for the Pohlads. Like I said, it's their money, but that doesn't mean fans have to justify their thrifty ways.

Fire Dan Gladden
07-10-2012, 03:28 PM
Ahh good, the bleeding stopped. Now if I could only find my keyboard...

Is this inane thread still going on? Please direct yourself to the following website for a rousing discussion on Limited Liability Corporations:

http://www.findlaw.com/

Now, on to the discussion of how Kirby Butera will be the MinnDakota Twins backup catcher in 2034...

roger
07-10-2012, 05:00 PM
I showed you that the Twins are an LLC. It's a given that if you are on the board of directors of a corporation and active in the day-to-day running of the company you are going to own stock in that company.

I am in agreement with most of your claims until this one. Being a director or officer of a corporation in no way signifies that you are also a shareholder. Most closely held corporations, which this is, will have many officers who are not in fact shareholders.

As for the comment about the operating income. They do not show their source or explain what they mean by operating income. Normally however, normal GAAP accounting standards would have operating income different than 'net income.'

Thanks for an interesting post!

BD57
07-10-2012, 05:47 PM
Always amusing to see how many people think they should have a say in spending other people's money .....

ya'll have a future in politics.

etspaceman
07-10-2012, 10:00 PM
The point is (After paying out 113 million dollars in payroll, the Twins still realized operating income of 16.6 million dollars.)

Where is the out of pocket expense? A 16.6 million dollar surplus to turn over to the Accountants is not bad.

This goes directly back to the OPs point -> The owner would have to loan his company the money and hope that they can pay him back. People don't make good money by making poor decisions like that. You don't just pour money into a black hole of payroll because you happen to have it; that's how business owners go bankrupt. You would never see that money again. Your business that is driving that payroll should be able to support that on their own, and I think the Twins payroll is able to support a competitive staff.

Highabove
07-10-2012, 11:36 PM
Always amusing to see how many people think they should have a say in spending other people's money .....

ya'll have a future in politics.

Who's Money built the Stadium for the Pohlad's?

jorgenswest
07-10-2012, 11:47 PM
The best I can take from this discussion is the Twins are ranked somewhere between 12 and 16 in revenue, salary obligations and operating income. It seems like the numbers are what should be expected of a midmarket team.

glunn
07-11-2012, 12:06 AM
It appears that there are 3 Pohlad brothers and they consider themselves equal. Here is a quote from an article in the Strib from 2010:

"The brothers consider themselves equals in the overall Pohlad organization, although Jim oversees the Twins and Bill is CEO of his movie production company, River Road. Bob supervises the organization's other companies. All three sit on a six-member board of directors that governs the businesses, along with three nonfamily members who were advisers to Carl before the brothers took over."

Here is a link to the article: http://www.startribune.com/business/112456709.html?page=2&c=y

It seems pretty clear that the three brothers have lots of choices in investing their pooled money, including real estate, motion pictures and free agent pitchers. Like all smart capitalists they weigh the potential risks and returns of all potential investments.

As for the debate about what restrictions might apply to an LLC, I would note that operationally and for tax purposes, an LLC with multiple owners is basically the same as a partnership, and the members of the LLC can easily put money in or take money out based on what investments they want to make at any given time.

I would prefer ownership that is more committed to winning for the sake of winning. I like how the owner of the Tigers is paying $20 million+ this year to keep Verlander, and just agreed to pay $23 million per year to Fielder. Will these investments pay off? Probably not, but this owner really wants to win. And I suspect that if the Tigers had Johan Santana, they would not trade him to the Mets because they could not "afford" to keep him.

I don't think that the Pohlads are cheap. They are typical conservative capitalists who are running the Twins like a business, and who are not willing to take extra risks because they crave a championship. I would prefer an internet billionaire who wants a World Series win and who could care less about $20 million here or there. But most owners seem to be like the Pohlads, and a lot of them seem worse.

Top Gun
07-11-2012, 12:19 AM
Harmon Killebrew once held out all one spring training for a $500 raise and Calvin Griffith didn't give in, owners can be bitches.

Land Of 10,000 Beasts
07-11-2012, 02:26 AM
Thank you sir for posting this. It's easy for us as fans to blame the owners for all of our troubles. The reality is that if something is not a smart business decision, then why do it? This is a business, not a charity.

Highabove
07-11-2012, 03:49 AM
Thank you sir for posting this. It's easy for us as fans to blame the owners for all of our troubles. The reality is that if something is not a smart business decision, then why do it? This is a business, not a charity.

This Business expected and received a 350 million dollar charitable donation from the Public.

raindog
07-15-2012, 06:39 AM
So we, as typical fans, rhetorically oversimplify the issue of the Pohlads not spending more money on improving the team. Shocker.

The Pohlads are uber-rich businessmen who run a baseball team like a business. Coming out even, or taking a minor loss would not devastate them financially. As a lover of baseball, I cannot understand this, and would like to call them cheap.

Shane Wahl
07-15-2012, 08:12 AM
Well, that was interesting.

I agree with the general sentiment about the Pohlads here and I don't like the argument that it is "their money, so . . . ." Wealth is not created in a vacuum. A lot of "my wealth" is generated socially and depends on other people (who pay to take my classes, who build roads, cars, etc. etc. etc.). And clearly in this case there is a DIRECT connection between the Pohlads and other people's money! That's generally how that economic class of people gets wealthy, after all. But enough about that.

I still wouldn't judge on this year's spending. Now if payroll drops again this coming year, then everyone should really take issue with how these greedy jerks are "spending their money."

MWLFan
07-15-2012, 09:20 AM
So the final analysis of this thread is that it is the Pohlads team, with maybe a few other people involved, the Team is run as a business by the owners, The Team spends about 50% of it's revenue on payroll, in order to spend more the team has to go beyond team money to sign a big name free agent with that has risk attached to the spend due to injury and performance drop, that this money would come from the Pohlad family who are very rich, that the Tax payers spent a lot of money on the beautiful state of the art stadium which is a major source of civic pride that the millionaire players play in and the billionaire owner gets revenue from in the form of 8 dollar beers and some cuban sandwiches, that people who have no financial interest in the teams performance on the balance sheet thinks they should spend more money on said risky free agents in order to make them feel better about spending a couple hundred $$$ to attend a game with a family of four, and if they don't they will not suppport the team with their money unless of course the team starts winning through some miracle and the beautiful park becomes full of rubes dropping their cash on the Bud and Steak Sandwiches. And did I mention that the Pohlads are rich and the Tax payers of Minnesota paid for the stadium? Does that cover it? Well I didn't know any of that before. Thanks guys.

Actually I should have read Powrwraps original post and just stopped. But it sucked me in like a bad performance on American Idol or a Nick Blackburn start, so bad you just can't take your eyes off it even though you no the ending. I have learned my lesson and will not do this again I hope, but I am weak.

powrwrap
07-16-2012, 05:08 PM
that people who have no financial interest in the teams performance on the balance sheet thinks they should spend more money on said risky free agents in order to make them feel better about spending a couple hundred $$$ to attend a game with a family of four

Very nice.


Does that cover it?

Almost. An important point is that the Pohlads are not like other sports team owners such as Mike Illitch, the Steinbrenners, Mark Cuban (and others) that consider their teams a hobby rather than a business and thus make emotional rather than sound business decisions when it comes to spending money.


Actually I should have read Powrwraps original post and just stopped. But it sucked me in like a bad performance on American Idol or a Nick Blackburn start, so bad you just can't take your eyes off it even though you no the ending. I have learned my lesson and will not do this again I hope, but I am weak.

Resistance is futile! You will become like us!