Don't expect increase in payroll

[diehardtwinsfan]

Moderator Note:

 

Before this gets out of hand, let's remember to stay civil. Also, let's drop the 52% thing. We've had this argument a million times at TD. No one is changing anyone's opinion on it, and at this point all it does is stir the pot.

 

EDIT: I should phrase this different. The 52% thing is a valid argument, however, that guy has derailed it's fair share of threads. Let's keep it civil and try not to let this thread get lost in it, especially since people are pretty entrenched on it.

[USAFChief]

I think this is an interesting thread (duh...I have, like a go zillion posts in it already), and I believe payroll, what it is, what it can be, what it should be, is a legitimate topic for Twins fans.

 

I also see potential for this thread to go off the rails and get personal or insulting...lets all resist that urge. Me included. And lets remember we can have opinions on ownership without being crude or mean.

[bird]

So yes, we were mislead on many fronts.  Payroll has not been 50-52% sans 2010.  It has not made a difference.  And these guys are laughing all the way to the bank.  

I'll continue to disagree, tobi. Spending 50% of revenues on payroll in each and every one of the last four years would not have brought the sustainable  results we all want to see. Following the Yankees' formula doesn't produce sustainable results. If you doubt this, take a look back and build a roster of FA's that you think would have competed against KC and Detroit for this year's title, using $120M as your annual 52% budget.

 

In my opinion, the Twins have not yet been in a position where that kind of payroll spending would have made sense. But we're getting there, and we'll see if your understandable skepticism is justified. 

[tobi0040]

I'll continue to disagree, tobi. Spending 50% of revenues on payroll in each and every one of the last four years would not have brought the sustainable  results we all want to see. Following the Yankees' formula doesn't produce sustainable results. If you doubt this, take a look back and build a roster of FA's that you think would have competed against KC and Detroit for this year's title, using $120M as your annual 52% budget.

 

In my opinion, the Twins have not yet been in a position where that kind of payroll spending would have made sense. But we're getting there, and we'll see if your understandable skepticism is justified. 

 

I guess I take the comment at face value.  That payroll will be around 50-52%.  I don't take it as, when the stars and moon align and we feel like we are one player away, then we will go up to that point. 

 

If I tell my wife I am committed to bringing her to Manny's, she probably thinks it will happen more than once in five years and counting (2010 - 2015)

 

If it needs to go down to 35% in a rebuild, truly being committed to 52% means you should meaningfully go over on the upswing.

[USAFChief]

I'll continue to disagree, tobi. Spending 50% of revenues on payroll in each and every one of the last four years would not have brought the sustainable  results we all want to see. Following the Yankees' formula doesn't produce sustainable results. If you doubt this, take a look back and build a roster of FA's that you think would have competed against KC and Detroit for this year's title, using $120M as your annual 52% budget.

 

In my opinion, the Twins have not yet been in a position where that kind of payroll spending would have made sense. But we're getting there, and we'll see if your understandable skepticism is justified.

 

That's fair, IMO.

 

There probably was no level of reasonable spending that could have turned 370 losses into 370 wins.

 

I think we can agree that DSP's comments are, at the least, discouraging though, right?

[Rosterman]

Somewhere in baseball talk, there is a minimum team's do have to spend, according to revenue and organizational operational costs, in baseball. Partly because of player contracts. If you do spend less and justifiably so, you get a rebate, so to speak, from baseball. You also can't overspend for some reason, unless you want to share your really rich overhead profits with other teams. You hope that it all evens out in the end. The players hope that it all evens out in the end, that it supplies really well paid jobs for most all of the players in the association. 

[drjim]

In about one minute of looking, I found St. Peter saying the stadium will allow us to retain stars.  I am guessing you can find comments about competing.   Here is a quick list of players that left due to money and lets not nitpick here.  Maybe a guy or two would have been around one year in the dome but a majority of the deal would have been target field money.

 

Nathan, Santana, Hunter, Cuddyer, Kubel (when he was still good), et.   Payroll is about where it was the last year in the dome.

 

As far as I am concerned, St. Peter is Pohlads mouth piece.

 

http://bismarcktribune.com/sports/dave-st-peter-talks-twins/article_ffb7a737-cf70-55be-9942-4a5beaf29bca.html

 

Hunter and Santana left well before Target Field was done, Cuddyer wanted to go (and was good one out of three years anyways), and using Kubel and Nathan as examples is a little comical considering their production since they left.

 

The Twins aren't in the position because they let Cuddyer, Kubel and Nathan walk, especially since they signed free agents that basically replaced the first two.

 

But yes St. Peter is Pohlad's mouthpiece, that's his job.

[drjim]

Or more money available for player acquisition and retention, as implied during negotiations for said stadium.

 

They could have paid their share out of pocket. Not for nothing, it still would have been a great deal for them...the value of their franchise is up by at least double the cost of what that out of pocket expense would have been.

 

They have higher payrolls in Target Field than they ever had at Metrodome, so that part was true, if not to the extent we might have expected.

[drjim]

So basically he is just lying, or every source is way off on the revenue.....I know which side of that bet I'd take.

 

"we don't see it going down significantly" sounds a lot like "it's going down, but not so much you poor suckers should worry about it anymore than you did about Kubel and Bartlett being signed last year".....but that could be my personal lens on the team.....

 

I think revenue this next season will be much lower than you might think.

[tobi0040]

They have higher payrolls in Target Field than they ever had at Metrodome, so that part was true, if not to the extent we might have expected.

 

I said it was misleading.  It was true, but when revenue has gone up 61% and payroll has gone up 4%.....I don't really care that the payroll is technically higher. 

[tobi0040]

I think revenue this next season will be much lower than you might think.

 

I actually agree, unfortunately.

 

We are at $60M. I think we cut Burton.  I think Plouffe and Duensing bring payroll up $5M (or let Duensing walk and replace him in the same range). I think we sign a LF for $5-7M.  Then throw the typical low risk/low reward minor league free agents and call it a day.

 

We may really swing for the fences and add another #6 starter, a vet for $6M a year so he can block promising prospects.

[Mike Sixel]

He said revenue, not payroll, though I agree with both.

[drjim]

"How else would they pay for it?"

 

Out of pocket. Out of their own pocket. Completely independent of TF revenues. Up front, written off, out of the current budget,

 

The Pohlod family is $150m poorer, and the Twins have $20 or $30m more in available revenue each year.

 

This isn't hard to understand.

 

They don't have $150 million sitting in their pockets. It is tied up in assets that make a higher return than the interest they would pay in loans (and they can also write off a percentage of interest of that loan). It is much more profitable deal for them to finance than to pay cash.

 

If they paid $150 million cash by selling off assets, they would probably "repay" themselves through amortizing the cash spread out over some time frame into the future (probably the length of the loan).

 

That doesn't strike me as particularly hard to understand either.

 

The bigger point is that you think the means of financing would make a difference in how the account for credits and debits. No it wouldn't. And I don't think they are exactly against their payroll ceiling anyways so this discussion is extra moot at the moment.

 

The big test will hopefully be in a couple of years when the team is good and players are starting to emerge and need to get paid. It will be interesting to see if they hold on to all of them.

[drjim]

Clearly they spent more money.....but as we all know, if you borrow it, then pay it back over time, you didn't effectively spend that much up front....especially if your investment is going up faster than the interest. 

 

Let's just say that a: they spent some, not enough, money on the stadium and we got suckered, b: they have not lived up to any semblance of a commitment to fund payroll higher than the what they had (and yes, they said they needed the stadium to be competitive, which they mostly have not been, being competitive is code for "we need more money to pay more salary" isn't it?), c: we don't know with certainty what will come to pass, but we can generate some hypothesis based on the past......

 

I don't necessarily buy "b" here. Funding a stadium didn't guarantee a good, competitive team. Incompetent management can certainly derail the best of plans.

 

I don't parse all of their quotes because I don't really care, but if the Twins promised this there were fools.

[Mike Sixel]

b meant, to me, "we needed more money to remain competitive", not that they would succeeding being competitive.....that's the whole reason for the stadium, more money so they can spend more on players, right?

[drjim]

We can get around the hangup of the extra money.   The Twins could sell a 3% interest in the Twins for $21M and paid for the cost overrun.  They would then own 97% of a team valued a $700M, or $679M.    This is vastly more than the Metrodome value of $250M at 100%.

 

The Target field payroll comment is misleading at best.   2007 payroll was 71M on 131M in revenue.  2013 payroll was 75M on 215M in revenue.  Operating income more than doubled, from 14M in 2007 to over $30M in 2013.

 

Not sure where you got the 2013 figures. I would use this:

 

http://www.baseballprospectus.com/compensation/cots/american-league/minnesota-twins/

 

Admittedly it is only a $7 mil difference.

 

And I am not the least bit surprised that operating income went up since they moved to Target Field. Would anyone claim otherwise? I'm actaully surprised it only went up that little, it appears operating expenses are a lot higher at Target Field than we think, which may explain why the payroll won't be quite as high next year as we might think. Revenue is going to take a massive hit this offseason.

[drjim]

Maybe revenue is lower than we think b/c of the loans/interest they have to pay (to themselves) so total revenues might not actually be total revenue. Esp since our revenue numbers aren't coming from the Twins themselves.

 

Anyone remember how the former Dodgers owner gutted that team for a personal fortune.  Things like parking weren't revenue for the club.  And the club owed him tons of money. It was really impressive.

 

Anyhow, **** the Pohlads.

 

Loan repayment would have no impact on total revenues. It would be an operating expense and show up in lower operating income.

[drjim]

So yes, we were mislead on many fronts.  Payroll has not been 50-52% sans 2010.  It has not made a difference.  And these guys are laughing all the way to the bank.  

 

2011 too, despite loss of revenue sharing money. And then they started to rebuild. Probably not a coincidence that payroll went down.

[USAFChief]

They don't have $150 million sitting in their pockets. (.

I disagree, in principle, but if true, then they shouldn't have implied such during stadium negotiations.

[drjim]

That's fair, IMO.

 

There probably was no level of reasonable spending that could have turned 370 losses into 370 wins.

 

I think we can agree that DSP's comments are, at the least, discouraging though, right?

 

I think this is the heart of the matter in my opinion. Looking at raw numbers they get killed, but I personally think that the Twins spent a proper amount from 2012-14 for a rebuilding team, and I think St. Peter is probably right that payroll is not going to change much and I even think that is defensible based on what the team is probably going to do.

 

It may seem like I am defending the Pohlads, I'm really not. I don't really care what they said to get the stadium passed, the county was taken to the cleaners no matter what. I don't really care if they make a bunch of profit either, as a fan of this team I want them to make good baseball decisions - and while they made mistakes and we can disagree about specific signings, I think the big picture is pretty close to right. I know others really disagree.

 

So, I'm not discouraged by his comments, I think they are reality and really won't have much impact on what happens in the offseason.

[drjim]

I actually agree, unfortunately.

 

We are at $60M. I think we cut Burton.  I think Plouffe and Duensing bring payroll up $5M (or let Duensing walk and replace him in the same range). I think we sign a LF for $5-7M.  Then throw the typical low risk/low reward minor league free agents and call it a day.

 

We may really swing for the fences and add another #6 starter, a vet for $6M a year so he can block promising prospects.

 

I think they sign a better starter but that is the plan, unless they are able to unload Nolasco somehow.

 

I'll wait and see who they get, but I'm actually OK with it.

[drjim]

I disagree, in principle, but if true, then they shouldn't have implied such during stadium negotiations.

 

I don't understand why that is a problem, if it was actual cash or approved financing. If you buy a house does it matter if it is done in cash or an approved mortgage?

[drjim]

b meant, to me, "we needed more money to remain competitive", not that they would succeeding being competitive.....that's the whole reason for the stadium, more money so they can spend more on players, right?

 

And they have spent more and I suspect will spend more when the time comes.

 

As a fan I'm actually quite happy that they don't have a bloated payroll while rebuilding.

[tobi0040]

I think they sign a better starter but that is the plan, unless they are able to unload Nolasco somehow.

 

I'll wait and see who they get, but I'm actually OK with it.

 

I think Lester, Max, Ervin, and Shields are out on payroll concerns.

 

If you take Nolasco's 5.38 ERA this year.....we can improve upon that in the market.  But if you take his carer 4.37 ERA I am not sure we sign anyone who is a lock to be better than that.

 

Some guys are more lotto ticket types that could be much better, or much worse.  Volquez, Liriano, Mccarthy, etc. Wandy Rodriguez.  Dempster.

[Winston Smith]

I really feel that what St Peter said was stupid. He should be saying something like we'll do what we need to in order to field a better team (even if he didn't mean spend more money). There was no reason, at this time, for him to already semi-limit the payroll number like he did.

 

He should go back to the PR dept and they should bring in a baseball guy to run the team, imo.

[DJL44]

Minor league costs have actually gone down wrt inflation after the latest CBA capped international bonuses and added a strict slot for draftees.

 

The Twins need to ask themselves how much marginal revenue you make off an empty seat.

[jay]

Then why does the organization repeatedly and unabashedly harken back to that now-apochryphal quote? Dave St Peter just this last Monday assured reporters that the 2015 budget would include a continuation of the payroll being set at "around 50%"?  Except that $85-86M isn't anywhere near 50% of overall revenues, nevertheless, here's  DSP's attempt at "reassurance"-

:

 

http://www.1500espn.com/sportswire/Notebook_Terry_Ryan_will_remain_Twins_general_manager092914

 

When the Twins say they will spend 50-52% of revenues on payroll, we believe them.

 

When the Twins say they are spending 50-52% of revenues on payroll, we don't believe them.

 

[amjgt]

The Twins paid for the whole stadium. Hennepin County just offered them a very generous -100% APR loan for $350M of it.

[tobi0040]

When the Twins say they will spend 50-52% of revenues on payroll, we believe them.

 

When the Twins say they are spending 50-52% of revenues on payroll, we don't believe them.

 

 

Unfortunately we know math.

[nicksaviking]

 

Jim Pohlad NEVER SAID that payroll would be around 52% each and every year. In fact it originally surfaced in a discussion about guidelines. While poorly articulated, there has never been a promise. Find me something along the lines of " hey, if you build me a stadium, I'll spend 52% of revenues on payroll every year". You don't have to believe me, but I can share with you that, from two personal conversations I've had with more than one person who can make a decision like this, the intention was and is 1) to pay attention to and adhere to industry standards regarding payroll expenditures, and 2) to spend, ON AVERAGE, around 52% of revenues on payroll.

 

So, no, Winston, I don't think you've been misled.

 

 

Regardless if he put down in stone a percentage to spend, neither of those two points are true.