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Article: From The Handbook: Twins Payroll

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#1 John Bonnes

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Posted 21 November 2017 - 11:12 AM

Every year we've published the Twins Daily Offseason Handbook, we've included a payroll analysis for the Minnesota Twins, along with salaries of likely free agents so you can build your own 2018 roster. Even with recent speculation that the Twins purse strings will be loosened, we're publishing this year's story. You can read a lot more by downloading your own copy at your own price, right here.

“Wait ‘Til Next Year!” has been the refrain of optimistic Twins fans for – well, pretty much the entire decade. The hope was that the next year would bring fewer injuries (2011) or new coaching (2014) or new management (2016) or breakthrough young talent (2012-2017).

Eventually, we’ve seen all of those, but there is one piece we have not seen: aggressive spending on free agents. We’ve seen a couple of significant signings – some good (Ervin Santana) and some bad (Ricky Nolasco) – but the Twins’ payroll has been at or below the same level since they moved into Target Field.With a competitive team on the upswing, and a new management team in place, could this be the year that the Twins leverage the free agent market for their ultimate push to a championship level team? An analysis of the Twins’ committed payroll suggests... probably not.

1. We don’t know exactly how much they’ll spend, but payroll likely won’t increase much.
Per Cot’s Baseball Contracts, the Twins opening day payroll has been stuck in the $105-108M range for spending the last three years. Plus, the MOST this franchise has ever spent was $113M, back in 2011.

Also, Twins General Manager Thad Levine has already told us not to expect a sudden change in payroll. This August, at Baseball Prospectus’ event at Target Field, Levine said, “We all know where Minnesota’s payroll ranks among the 30 clubs. We’re not going to be in the top 10, and we’re fine with that.”

Yes, they should see their revenues increase next year, so maybe they’ll be able to increase payroll a bit, but there is no indication that they will significantly. Forbes estimates that even in the midst of this decade of futility, the Twins gross revenues increased from $223M to $247M from 2015 through 2017. But we didn’t see any movement in payroll during that time. In fact, maintaining their same level of payroll moved the Twins downwards in spending compared to other teams as markets inflated.

I’ll be optimistic and predict a very moderate increase of $110-$115M next year.

2. That doesn’t give them a lot of payroll room this offseason; perhaps an additional $15-20M.
The Twins have about $96M committed to their 2018 roster, even if they don’t sign anyone as a free agent. The estimates are in the table after the story. Despite having many young and cost-controlled players, they have six commitments that account for over $72M of that $95M. $23M of that is the much-lamented Joe Mauer deal, but another $19.2M looks even worse: Phil Hughes is owed $13.2M and Byung-Ho Park has guaranteed money (for both him and his Korean team) of about $6M. And both of those deals will be in force in 2019, too, unlike Mauer’s contract which expires next year.

3. Speaking of bad contracts expiring, wait ‘til next year. (Maybe.)
This is the offseason before two consecutive big years of expiring contracts. Next year, the Twins could have as many as $45.5M come off the books when Mauer’s contract and two others expire. Unfortunately, those two belong to Brian Dozier and Ervin Santana (if they decline his 2019 option), but the good news is that $45.5M can add a lot of talent to replace them. Eduardo Escobar’s $5 million will also come off the books unless you extend him or re-sign him as a free agent.

Similarly, after 2019, the Twins could have as many as four contracts expire. Hughes’ and Park’s terrible contracts will come off the books, Jason Castro’s deal will end, and Kyle Gibson (if the Twins continue to offer him arbitration) will become a free agent. This year those four players are responsible for ~$31.7M in contracts.

Add them all up, and of the $95.2M that we estimate is committed for 2018, $82.2M could be freed up for the 2019-20 offseason. If you’re pumped about this offseason, that is little consolation. But it should free up the new management team to be more aggressive in the future on the free agent market, even more so if ownership unties the purse strings a bit more. But all of that is unlikely to take place this offseason.

The Twins late season surge gave fans a glimpse of what their team will look like for the next five years. But the familiar mantra – “Wait ‘til next year” – will likely apply regarding the team’s offseason spending, unless you get creative or get the uncharacteristic go-ahead on a big increase.

  This is part two of a five-part series of excerpts from the Twins Daily Offseason Handbook we published earlier this year. You can also check out Part 1 or just download the Handbook at whatever price you deem fair.  

Click here to view the article

#2 dbminn

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Posted 21 November 2017 - 12:25 PM

I hope the Pohlads and the FO don't look at each year's financials as isolated from either the past or the future. Money saved the past few years has been invested somewhere. If the Pohlads believe they can make a better return with the Twins, they will invest it in player contracts. (They have already invested a bit in the FO).

 

IMO, the payroll will depend on who is available through free agency or trade. The Twins might get to $120M+, if the FO believes it is the best investment. It will be less if they can't make the deals. It might also be less if they trade for a player under control, moving assets instead of spending cash. In any case, I suspect they're looking at costs and revenues for the next 3-4 years, not this year alone. 

 

For example, what if the Twins sign Cobb? One could argue that they should still sign 2 FA relievers. That would bust the $120M mark but might make sense based on the age of the signed players and any expected revenue increase. Probably won't happen but it is a possibility.

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#3 Mike Sixel

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Posted 21 November 2017 - 01:06 PM

They go year to year on payroll, they've said that, outsiders have said it, it's what they do.
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One of the best opening day rosters in years. Now go get 'em.


#4 Vanimal46

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Posted 21 November 2017 - 01:35 PM

Yep, as Mike said, every sports team goes year to year on payroll. That's one of the biggest myths in sports fandom thinking their favorite team's owner saves money from previous years to make a big splash in the future.

 

I am rooting for the Twins to break open the piggy bank this winter instead of waiting until 2019. All of the big boys (Cubs, Yankees, Red Sox, Dodgers, etc.) are waiting until 2019 so they can wildly overspend for Harper, Machado, Kershaw, and others. The Pohlads are going to be dumbfounded in 2019 when these players break salary scales as we know it. 

 

 

Edited by Vanimal46, 21 November 2017 - 01:35 PM.

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#5 dbminn

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Posted 21 November 2017 - 02:25 PM

Some proof would be nice. On the other hand, I can show you many years of teams fluctuating by +/- $10-20M


#6 Brandon

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Posted 21 November 2017 - 02:30 PM

they have tje space for a 1 year blip on payroll. they can spend 35 million on Darvish and 2 relievers next year knowing Mauers contract is off the books along with others.
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#7 USAFChief

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Posted 21 November 2017 - 02:39 PM

Nitpick: Park is owed $3m in 2018, not $6m.

The posting fee was paid at the time he signed. that money was budgeted for that year and is almost certainly not included in the 2018 budget.

http://www.startribu...ract/359660611/
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#8 tvagle

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Posted 21 November 2017 - 03:35 PM

It's time for some heavy lifting by the FO and the Payroll department before the Armageddon that will hit Salary Structures when Machado, Harper and Kershaw (resigns with Dodgers) are Free Agents and to set the Twins up for some cost certainty for the impending 6 consecutive year playoff run (and I don't mean 6 wild card games)

 

Below is a 6 year plan (names will obviously change in some positions and dollars will move around a little) that would add Starters and Relievers, extend a few grizzled vets and keep the core together all while maintaining a fairly flat payroll for the next 3 years

 

Payroll totals including any Dead Pool Money

2018

$136.09M

2019

$138.15M

2020

$121.80M

2021

$151.70M

2022

$167.40M

2023

$175.40M

 

I call this Pay As You Know rather than Pay As You Go...you can still look at things from year to year but at least you have some certainty moving forward

 

Do trades become more difficult? Only if players don't perform...that's what the farm is for (also why I wouldn't move young players at this time in block buster trades) controlled expenditures in the future should this Titanium plan not work out

 

edit - Here's link to the plan as the image was too big to be little

 

6 year plan

 

Extensions are always an approximation that I extrapolated from Seth's Series and the reactions by TwinsDaily peeps


#9 Brock Beauchamp

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Posted 21 November 2017 - 04:03 PM

 

Nitpick: Park is owed $3m in 2018, not $6m.

The posting fee was paid at the time he signed. that money was budgeted for that year and is almost certainly not included in the 2018 budget.

http://www.startribu...ract/359660611/

I thought I read somewhere the Twins deferred the posting fee over the length of the contract but my memory is pretty dodgy nowadays.


#10 dgwills

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Posted 21 November 2017 - 04:33 PM

"I’ll be optimistic and predict a very moderate increase of $110-$115M next year." Sounds good to me. We could get a whole new pitching staff for that.

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#11 USAFChief

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Posted 21 November 2017 - 04:56 PM

I thought I read somewhere the Twins deferred the posting fee over the length of the contract but my memory is pretty dodgy nowadays.


I guess it's possible but why would his KBL team agree to that?

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#12 Buddy Holly

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Posted 21 November 2017 - 05:29 PM

I don't think there will be as big of contract clearing next year as everyone dreams. 

 

If Joe Mauer has a similar 2018 as 2017, wants to continue playing, he will get a ​  contract in the $15 mil range from the Twins for a few years. 

 

Dozier is more valuable to the Twins than what they can get in a trade. I would expect $18-20 mil range extension for 4 years min. This is probably light.

 

Some of the Berrios, Kepler, Rosario, and Buxton will get contracts going forward.

 

Unless someone steps it up Castro will be extended beyond 2019.
 

I expect the Twins to spend but not in $100 mil plus range everyone is dreaming.


#13 Brock Beauchamp

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Posted 21 November 2017 - 05:34 PM

I guess it's possible but why would his KBL team agree to that?

I thought it was for book-keeping purposes, not actual payout.

Again, really hazy memory here. I could easily be wrong.

#14 Broker

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Posted 21 November 2017 - 05:47 PM

I think the payroll is dependent on who is signed rather than part of some overall budget. The Pohlads have always been very hands off when it comes to what the FO does. It wouldn't surprise me at all if the Twins sign some expensive free agent pitching.

 

Ryan is on record saying that the Pohlads never told him how much to spend or not. I doubt it's any different with the new guys.


#15 Darius

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Posted 21 November 2017 - 09:39 PM

The thing with the Twins payroll, is it's actually gone down since 2010-2011, even though various revenue streams and players salaries have increased drastically.

Frankly, it's a joke. The Pohlads groveled, swore up and down to the taxpayers of Minneapolis, and the baseball fans of Minnesota, that they needed a stadium to compete for free agents. They eventually sunk to what basically amounts to extortion IMO (contraction, move the team, etc). They got the stadium, and the payroll decreased for over half a decade.

The excuses were always made that it's not the right time to spend (which is total BS, IMO). Well, now that excuse has dried up. I keep hoping that the Pohlad family will hold their word, and spend some GD money. But, deep down I know they won't.

The apologists will continue to make excuses. The asinine narrative that signing free agents is bad, and moneyball is the way to go will persist (spoiler, the A's don't win the World Series). The team will burn up this short, once in 25 year, window to compete once some of these guys hit FA, we'll all pat them on the back for making the playoffs and getting bounced immediately 3-4 times, and we'll start this process all over again, for all eternity. This is the life (or purgatory) of a Twins fan.

Edited by Darius, 21 November 2017 - 09:41 PM.


#16 Seth Stohs

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Posted 22 November 2017 - 12:33 AM

 

They go year to year on payroll, they've said that, outsiders have said it, it's what they do.

 

Correct, as presumably, all teams and all businesses do. They forecast revenues based on a number of factors. Things like TV and radio revenues are given numbers. Attendance for next year? Because of the winning this year, one would assume that they can project a 20-25% attendance increase (maybe more). And I'm sure there are other factors. Then they'll figure out a dollar value somewhere between 48-52% of those revenues and that's where they'll set the target. Then Falvey and Levine will be able to go to Jim Pohlad and ask for more if they want it and have to make a case. 

 

Then again, I'm sure every company does the same thing. 

 

I think they can jump to 120+... 


#17 drjim

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Posted 22 November 2017 - 05:59 AM

 

The thing with the Twins payroll, is it's actually gone down since 2010-2011, even though various revenue streams and players salaries have increased drastically.

Frankly, it's a joke. The Pohlads groveled, swore up and down to the taxpayers of Minneapolis, and the baseball fans of Minnesota, that they needed a stadium to compete for free agents. They eventually sunk to what basically amounts to extortion IMO (contraction, move the team, etc). They got the stadium, and the payroll decreased for over half a decade.

The excuses were always made that it's not the right time to spend (which is total BS, IMO). Well, now that excuse has dried up. I keep hoping that the Pohlad family will hold their word, and spend some GD money. But, deep down I know they won't.

The apologists will continue to make excuses. The asinine narrative that signing free agents is bad, and moneyball is the way to go will persist (spoiler, the A's don't win the World Series). The team will burn up this short, once in 25 year, window to compete once some of these guys hit FA, we'll all pat them on the back for making the playoffs and getting bounced immediately 3-4 times, and we'll start this process all over again, for all eternity. This is the life (or purgatory) of a Twins fan.

 

It's a talent issue. They had no internal guys to pay, and they can only spend so much on overpaid mediocre free agents. (Frankly, they spent too much on bad free agents, and weren't smarter about who they targeted to flip and add young talent for the rebuild).

Papers...business papers.

#18 Rosterman

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Posted 23 November 2017 - 10:56 AM

I still always have a tough time with this 55%. When the Twins spend, say, $98 million, they still manage to run the front office, manage the minor leagues, do signing bonuses and such with the 55% allocated for those expenses. If they suddenly are able to spend, say, $120 million on payroll, where does that extra $20 million go that they can now spend on...operations. Or is it to further pay down the Target Field debt (which I understand is nearly clear). At some point, a cap happens on operational expenses, so if the Twins would, say, make $300 million in revenue in a season, what would prevent them from spending $200 million on payroll instead of a max of, say, $160 million or so.

 

They have to be happy with 2017. Attendance didn't dive. Season ticket sales might've been down, but the flip side of that was that fewer seats were available from STubHub, and the Twins were able to maximize many walk-up sales...plus it also meant overall concessions had to be betetr than the previous season when many of those September seats were paid for, but sat empty and the lines were short at concessions.

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#19 USAFChief

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Posted 23 November 2017 - 12:00 PM

I still always have a tough time with this 55%. When the Twins spend, say, $98 million, they still manage to run the front office, manage the minor leagues, do signing bonuses and such with the 55% allocated for those expenses. If they suddenly are able to spend, say, $120 million on payroll, where does that extra $20 million go that they can now spend on...operations. Or is it to further pay down the Target Field debt (which I understand is nearly clear). At some point, a cap happens on operational expenses, so if the Twins would, say, make $300 million in revenue in a season, what would prevent them from spending $200 million on payroll instead of a max of, say, $160 million or so.
 
They have to be happy with 2017. Attendance didn't dive. Season ticket sales might've been down, but the flip side of that was that fewer seats were available from STubHub, and the Twins were able to maximize many walk-up sales...plus it also meant overall concessions had to be betetr than the previous season when many of those September seats were paid for, but sat empty and the lines were short at concessions.


Been saying the same for years...the only explanation that makes sense is, the Pohlads really aren’t contributing a dime to the cost of building TF.

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