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Thread: The Pohlad's and the Cry for Them to Spend More Money

  1. #21
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    Quote Originally Posted by USAFChief View Post
    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.

  2. #22
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    What exactly is the point of this entire thread?

  3. #23
    Head Moderator All-Star glunn's Avatar
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    Quote Originally Posted by USAFChief View Post
    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/...sota-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.

  4. #24
    Senior Member All-Star Badsmerf's Avatar
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    This thread sucks.

  5. #25
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    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.

  6. #26
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    "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.

  7. #27
    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.

  8. #28
    Head Moderator All-Star glunn's Avatar
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    Quote Originally Posted by clutterheart View Post
    "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.

  9. #29
    Senior Member Big-Leaguer Highabove's Avatar
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    This definitely gets my thread of the year vote.


  10. #30
    Quote Originally Posted by edavis0308 View Post
    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.
    "Baseball is like church. Many attend, few understand."

  11. #31
    Senior Member Big-Leaguer Boom Boom's Avatar
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    Quote Originally Posted by powrwrap View Post
    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.

  12. #32
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    Quote Originally Posted by powrwrap View Post
    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.

  13. #33
    Quote Originally Posted by clutterheart View Post
    "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.
    Last edited by powrwrap; 07-10-2012 at 09:27 AM.
    "Baseball is like church. Many attend, few understand."

  14. #34
    Quote Originally Posted by Boom Boom View Post
    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.
    "Baseball is like church. Many attend, few understand."

  15. #35
    Quote Originally Posted by edavis0308 View Post
    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.
    "Baseball is like church. Many attend, few understand."

  16. #36
    Senior Member All-Star JB_Iowa's Avatar
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    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)

  17. #37
    Quote Originally Posted by JB_Iowa View Post
    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.
    "Baseball is like church. Many attend, few understand."

  18. #38
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    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....
    Lighten up Francis....

  19. #39
    Senior Member Big-Leaguer Highabove's Avatar
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    How many private corporations receive a 390 Million dollar subsidy from the public?

    I will wait for my answer.
    Last edited by Highabove; 07-10-2012 at 12:13 PM.

  20. #40
    Quote Originally Posted by Highabove View Post
    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.
    "Baseball is like church. Many attend, few understand."

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