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Twins Payroll Really is Resource Allocation

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
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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80 Comments

Sano and Buxton are the keys and both have suffered from injuries and regression since 2017. It would be unwise to assume a return to All-Star level performance for either. 2018 was too much of a disaster.

I for one am going to cross my fingers that they do, but it doesn’t make any sense to invest heavily in multi year contracts until the core prove themselves.


My point was, they already proved themselves in 2017. Or do we think they need to be good two years in a row? In which case, they wouldn't try next off season either
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twinkiesfan11
Jan 18 2019 06:45 PM

But of course, they didn't really need to invest heavily in multi-year contracts. They could have added any number of solid relievers or starting pitchers with a one or two-year commitment.

It may be that they tried and failed, similar to a roto owner realizing he has way too much of his budget leftover and very few desirable players left. I don't know if screwing up is better than being cheap, but a sub-$100M payroll is just embarrassing for a team whose core players are not into their arbitration years.

They have 4 veteran pitchers, each potentially with some upside left and a slew of young starters worthy of a shot. Corbin wasn’t coming here and no other starters were worth the investment and/or blocking a younger, cheaper option in an evaluation year. Expensive Free Agent Relievers are a bad investment, unless you are a bonafide contender. I for one would rather see them sit back and wait for a Brad Brach type to fall to them on a good deal.

I don’t get the obsession with an arbitrary payroll figure. Would you like to see them spend money just to spend it? Again, they need to see what they have. Why waste roster spots on mediocre veterans when you have young players that need to be evaluated?

I don’t mean to be argumentative but there seems to be this strange outrage this week out of Twins fans and bloggers over payroll and the timing seems to relate to Ottavino and Allen signing elsewhere. Neither of those two is going to move the needle this year.
    • Dman likes this
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Hosken Bombo Disco
Jan 18 2019 06:48 PM

 

Link? I have not seen anything that suggests they wouldn't do this. 

also, radio :) 

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twinkiesfan11
Jan 18 2019 06:50 PM

My point was, they already proved themselves in 2017. Or do we think they need to be good two years in a row? In which case, they wouldn't try next off season either


How about one full, healthy, productive season out of either one of them. Neither has accomplished that yet.
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Major League Ready
Jan 18 2019 06:57 PM

 

There needs to be a balance for sure. TD member gunnarthor took the time to calculate how players were acquired on recent playoff teams, and the Twins. The playoff teams had a pretty even split 33% draft, 33% free agents, 33% IFA/Trades. The Twins rely on draft picks for over 50% of their MLB roster. It's simply not healthy to rely that much on draft and development.

 

Is it relevant how the most productive players were acquired vs the lower performers on the roster. What counts is the difference makers right? It would be far more meaningful if the acquisition method for the top 10 most valuable players was measured or all of the players with a given level of WAR.

 

It also makes no sense to lump all trades together. Were they acquired as minor league players or before they were established ML players or were they established ML players. One strategy is the antithesis or the other. 

 

I posted an analysis of the players from the mid market teams who made the playoffs last year. The vast majority of their WAR was from players who were drafted or acquired before becoming established MLB players. 

 

Funny how the masses don't want to rely solely on drafting and player development to jump-start the franchise...

 

...after the better part of two decades of horrible drafting and player development.

 That's why the FO's first call last week should have been to Brian Bridges and Roy Clark.

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Regular Sized Rudy
Jan 18 2019 07:41 PM

 

They have 4 veteran pitchers, each potentially with some upside left and a slew of young starters worthy of a shot. Corbin wasn’t coming here and no other starters were worth the investment and/or blocking a younger, cheaper option in an evaluation year. Expensive Free Agent Relievers are a bad investment, unless you are a bonafide contender. I for one would rather see them sit back and wait for a Brad Brach type to fall to them on a good deal.

I don’t get the obsession with an arbitrary payroll figure. Would you like to see them spend money just to spend it? Again, they need to see what they have. Why waste roster spots on mediocre veterans when you have young players that need to be evaluated?

I don’t mean to be argumentative but there seems to be this strange outrage this week out of Twins fans and bloggers over payroll and the timing seems to relate to Ottavino and Allen signing elsewhere. Neither of those two is going to move the needle this year.

But.... the thing is, adding an Ottavino-type reliever or two would have moved the needle. Every single one of the middle- to upper-tier relievers that were available this offseason have track records and/or recent performances better than most of the Twins' current relievers. And none of those relievers ended up signing contracts that would prove to be a bad investment for the Twins with the incredibly flexible payroll situation they find themselves in. Obviously, though, there is still some offseason left for them to make some moves.

    • SQUIRREL, TheLeviathan and Dman like this
Wondering how many teams outside the top 1/3 of payroll have won the WS in recent years. Off the top of my head; Royals, White Sox?, Marlins, Angels? Not many. Payroll isn’t the end all be all money can’t buy happiness, but it sure is a good down payment.


....
 
Setting a target budget based on percentage of revenue is good business. It's the refusal to use the money saved by coming under budget I find infuriating. It's an arbitrary rule that handicaps the team's ability to compete. 
 
Normal people don't budget that way.
 
...


Not to be argumentative, but most “normal people” in the U.S. carry large amounts of burdensome debt. I’d guess that the Pohlads and others who do not spend beyond their budgets only carry debts that are advantageous to their overall financial picture.

Another article about payroll and the Twins. Who would have thought?

The Twins even with the opening of Target Field have a limited amount of revenue. You said it yourself, without a big TV contract that's the way it is. So, the biggest question then is HOW DO THE TWINS GET A BIG TV CONTRACT?

The answer is not just from winning but probably more so from fielding the best team that you can, every year. Why would anyone want to sponser them or any Team for that matter when you have money to spend to make your Team better and you don't even try? The Twins are notorius for being CHEAP! The top Free Agents always go somewhere else because the Twins don't commit to winning or even fielding the best team that they can.

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.
    • Craig Arko and KGB like this

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.
    • lukeduke1980 likes this

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.

    • Sconnie likes this

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?
    • SQUIRREL, ashbury, Mike Sixel and 2 others like this

can’t I just have a little hyperbole?


A little hyperbole is the most difficult thing to achieve in the history of the internet.
    • TheLeviathan, spycake and Sconnie like this

 

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. 

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.
    • Sconnie likes this

 

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. 

 

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. 

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.
    • Twins33 and Sconnie like this

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.co...e/?fromsearch=1

https://www.twinciti...orth-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

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.
    • Sconnie likes this
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TheLeviathan
Jan 21 2019 07:59 PM

There is an even more direct quote I believe.It's floated around here many times in the past.

 

They do not use excess profits in future seasons.They've said so themselves.  

    • Sconnie likes this

 

Judy from Big Lake is my hero http://twinsdaily.co...e/?fromsearch=1

https://www.twinciti...orth-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. 

    • Sconnie likes this

 

Thank you for providing a link.

 

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

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


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