Don't expect increase in payroll

[Mike Sixel]

Here's a thought experiment.......

 

For the low budget teams that won a lot the last years, would they have won more or less if they had replaced one of their SP or regulars with a good FA? The stats are somewhat guaranteed not to be fully about payroll, since salaries are artificially constrained by the FA rules. TB was good and cheap for years. As their players got closer to FA, they dealt them, and they got worse.....what if they had been able to keep them? What if they had been able to add a legit FA in those cheap years? 

[tobi0040]

You're arguing against something that hasn't been said.  No one said there is NO correlation.  The facts show the correlation isn't all that strong.

 

 

Here is the actual quote, bolded for your convenience. It was this post that got me and others down the path of a correation existing betwen payroll and wins. 

.

 

diehardtwinsfan, on 01 Oct 2014 - 5:06 PM, said:

I think this right here is the rub for me. Higher payroll doesn't cause more wins. The Twins went out and spent 48M on Nolasco, 24M on Hughes, and 12M on Pelfrey. The first two were pretty much universally lauded on these boards. Which one was better? They also already had money tied up in KC and Hammer that they weren't just going to burn. They got rid of KC and Hammer, and the team improved. They spent big money on Morales, and that got them nothing. They got rid of him and called up Vargas, and the team improved.It's easy to look back an the FA market in hindsight and say 'you should have signed player X', but the reality is that with the exception of the top tier FAs, most of the others carry with them a pretty significant chunk of risk tied to that cash.

[drjim]

Here is the actual quote, bolded for your convenience. It was this post that got me and others down the path of a correation existing betwen payroll and wins. 

 

On a side note, I don't know why every one of your posts has to be so condescending.

 

diehardtwinsfan, on 01 Oct 2014 - 5:06 PM, said:

I think this right here is the rub for me. Higher payroll doesn't cause more wins. The Twins went out and spent 48M on Nola

 

Not sure why my initial response didn't show up.

 

Just that I would be careful with this accusation. People disagreeing with you does not make them condescending. It was an informative and spirited conversation that I thought shed a lot of light on multiple points of view. Why ruin that with accusations like this?

[drjim]

I also think that payroll conversations without some context loses some value.

 

To take straight payroll and compare that to winning percentage does lose where a team in on the competitive vs. rebuild arc of franchise cycles. It is not especially surprising that teams with lower payrolls will have lower winning percentages because lower payrolls can also correlate with rebuilding and playing younger (and thus cheaper) players. I would imagine a deeper dive into the context of payroll size would explain away a not insignificant amount of the 17% found in that study.

[Mike Sixel]

I also think that payroll conversations without some context loses some value.

 

To take straight payroll and compare that to winning percentage does lose where a team in on the competitive vs. rebuild arc of franchise cycles. It is not especially surprising that teams with lower payrolls will have lower winning percentages because lower payrolls can also correlate with rebuilding and playing younger (and thus cheaper) players. I would imagine a deeper dive into the context of payroll size would explain away a not insignificant amount of the 17% found in that study.

 

And as I've pointed out, the fact that a team that loses a ton, gets high picks that work out, can win a lot, but then lose eventually if they don't spend to keep their players around......and, that 17% is a bad number, that is ONE YEAR on the chart, 5 of the last 10 were over 20%.......

[tobi0040]

I also think that payroll conversations without some context loses some value.

 

To take straight payroll and compare that to winning percentage does lose where a team in on the competitive vs. rebuild arc of franchise cycles. It is not especially surprising that teams with lower payrolls will have lower winning percentages because lower payrolls can also correlate with rebuilding and playing younger (and thus cheaper) players. I would imagine a deeper dive into the context of payroll size would explain away a not insignificant amount of the 17% found in that study.

 

I agree with you.  But the context of the conversation was 52% of payroll and the fact that the Twins were at 35%.  The point was made that the additonal spending would not cause more wins.

 

It was outside of the scope of the Twins being a rebuilding team, but the issue for me is the Twins never said they were rebuilding and a rebuilding team doesn't do many of the thing the Twins have done.  Pelfrey, Correia, play guys out of position, Morales, Kubel, Bartlett, etc.

[tobi0040]

And as I've pointed out, the fact that a team that loses a ton, gets high picks that work out, can win a lot, but then lose eventually if they don't spend to keep their players around......and, that 17% is a bad number, that is ONE YEAR on the chart, 5 of the last 10 were over 20%.......

 

If I understand the 17% as 17% more wins....and I have not had time to read the study. That is extremely significant.

 

About every team will land between 66 and 95 wins most years.  So a team that is 80-84 is now a 96 win team going to the playoffs with an additional 17%.

[Mike Sixel]

That's not what the 17% means......

 

The number being discussed is "how much of winning can be explained by payroll, not by other stuff". About 17% of how many wins is correlated, and maybe caused by, how much a team spends. 

 

But the focus on one year's number from a study covering 25 years is kind of depressing......

[jay]

diehardtwinsfan, on 01 Oct 2014 - 5:06 PM, said:

I think this right here is the rub for me. Higher payroll doesn't cause more wins. The Twins went out and spent 48M on Nolasco, 24M on Hughes, and 12M on Pelfrey.

 

Yep, missed that one.  My view would amend it to say "Higher payroll doesn't highly correlate to more wins."

[drjim]

That's not what the 17% means......

 

The number being discussed is "how much of winning can be explained by payroll, not by other stuff". About 17% of how many wins is correlated, and maybe caused by, how much a team spends. 

 

But the focus on one year's number from a study covering 25 years is kind of depressing......

 

I didn't mean to misrepresent that way, I thought you said 17% was the average over the course of the study, not the lowest number that was achieved only once. But the difference between 17 and say 25 doesn't strike me as all that massive either.

[tobi0040]

That's not what the 17% means......

 

The number being discussed is "how much of winning can be explained by payroll, not by other stuff". About 17% of how many wins is correlated, and maybe caused by, how much a team spends. 

 

But the focus on one year's number from a study covering 25 years is kind of depressing......

 

Got it, but if you can field a AAA team and still win 60-65 games by the nature of the sport, then you have a good chunk of winning that can't be explained by much of anything.   Versus say basketball where the worst team will go 15-67, or football where the worst team will go 2-14.

[Mike Sixel]

This might be our most respectful payroll thread ever......much more polite than previous attempts.

[TheLeviathan]

This might be our most respectful payroll thread ever......much more polite than previous attempts.

 

Well now that you've jinxed it....

[jay]

What do people think the payroll (right, wrong or indifferent) will be next year?

 

Put me down for $80M.

[Mike Sixel]

Eighty sounds about right to me, Jay.

[TheLeviathan]

What do people think the payroll (right, wrong or indifferent) will be next year?

 

Put me down for $80M.

 

I'd put it between 75-80.  My initial gut reaction was 78.

[jay]

I could see as high as 90 if the right deal is available to add a multi-year SP via trade. *fingers crossed*

[Winston Smith]

The reality is what we have been spending isn't producing wins. Now spending more if done poorly may not either. But if Ryan is good as many here claim spending more should produce a better team and more wins.

The problem I have with St Peter is setting a number this early because there is no reason to do that at this point.

[tobi0040]

I'd put it between 75-80.  My initial gut reaction was 78.

 

Going off the MLBtraderumors piece....they have us at $60M with 6 guys.  Of the arbitration guys, I think you have Plouffe, Milone, Schafer, and Swarzak back (least confident about Swarzak). They have those guys projected at $10M.

 

I think the only lock is that we add a LF for $5-7M.   Add another 15 guys making the minimum you have a total of $81M or so. 

 

I think the high number is about $90-92M if we add another starter but I don't see it.

[diehardtwinsfan]

 

I agree with you.  But the context of the conversation was 52% of payroll and the fact that the Twins were at 35%.  The point was made that the additonal spending would not cause more wins.

 

I'd like to jump on this a sec. I understand the desire of some (even if I don't agree) to keep payrol at 52%. That said, I think I can safely say that we have no idea if that payroll number is at 35%. This, to me at least, hilights a lot of my frustrations with this debate. What we do know is that revenues have dropped due to lower attendance and that the Twins now get a comp pick which could be b/c of this or simply a change in their revenue percentage in relation to the league, or both.

 

I think it's a very dangerous precendent for us to determine what exactly that number should be when we only have educated guesses as to what the revenue actually is.

[TheLeviathan]

Going off the MLBtraderumors piece....they have us at $60M with 6 guys.  Of the arbitration guys, I think you have Plouffe, Milone, Schafer, and Swarzak back (least confident about Swarzak). They have those guys projected at $10M.

 

I think the only lock is that we add a LF for $5-7M.   Add another 15 guys making the minimum you have a total of $81M or so. 

 

I think the high number is about $90-92M if we add another starter but I don't see it.

 

I think there is a very good chance Ricky Nolasco is no longer a Twin by next year.

[tobi0040]

 

 

I'd like to jump on this a sec. I understand the desire of some (even if I don't agree) to keep payrol at 52%. That said, I think I can safely say that we have no idea if that payroll number is at 35%. This, to me at least, hilights a lot of my frustrations with this debate. What we do know is that revenues have dropped due to lower attendance and that the Twins now get a comp pick which could be b/c of this or simply a change in their revenue percentage in relation to the league, or both.

 

I think it's a very dangerous precendent for us to determine what exactly that number should be when we only have educated guesses as to what the revenue actually is.

 

This is not an exact science, I will give you that.  But I would not get too carried away with the fact that we are using third party estimates or projections for two reasons:

 

-We are certainly closer 35% than 52%.  That I assure you.  The point is we are nowhere near the mark.

 

-payroll is almost entirely set at the beginning of the year, whereas an underperforming team that falls short on the revenue side is a product of the on the field team to an extent.  The Twins has third party estimates of $215M in revenue last year.  So they would have had to forecast a drop all the way to $153M with an all star game to be at 52% this year.

[tobi0040]

I think there is a very good chance Ricky Nolasco is no longer a Twin by next year.

 

I really don't see it.  If we can get someone to take the contract then yes.  But if we were the high bidder before the awful year, why would someone take the rest of it?

 

I don't see TR paying him to play somewhere else and I think that is the only way. Maybe a bad contract swap, but that would be payroll neutral then.

[USAFChief]

I'd like to jump on this a sec. I understand the desire of some (even if I don't agree) to keep payrol at 52%. That said, I think I can safely say that we have no idea if that payroll number is at 35%. This, to me at least, hilights a lot of my frustrations with this debate. What we do know is that revenues have dropped due to lower attendance and that the Twins now get a comp pick which could be b/c of this or simply a change in their revenue percentage in relation to the league, or both.I think it's a very dangerous precendent for us to determine what exactly that number should be when we only have educated guesses as to what the revenue actually is.

that is a fair point. But I would feel more inclined to give them the benefit of the doubt if the difference wasn't so large, if there were evidence the difference would disappear if we used multi year averages, or if there were no clear needs to improve the team.

 

I dont see any of those things in evidence, but that's just me perhaps.

[jay]

Plenty of quotes and stories out there about going for it and stretching the payroll in 2011.  They sure make it sound like they were above their 50-52% number that year, whatever that number actually was.  

 

Here's one such article talking about it:

http://www.1500espn.com/sportswire/Mackey_Like_it_or_not_scaling_back_payroll_is_right_move_for_Twins010512

[Kwak]

Financial Accounting

 

Definition of Terms

MTBT is the Twins (Corporation or whatever legal entity it really is)

Pohlad Entity #1A, and asssume there maybe be several of these--all separate legal entities from each other, though "owned" by the family in some way.

 

As we know the MTBT was to "front" $ Millions for Target Field.  Let me hypothesize that the MTBT sold a major revenue stream (let me say the suites) for $X Millions to Pohlad entity #1.  Maybe the MTBT sold other revenue streams to different entities for cash--enough cash to meet the required "front money".  Since these revenue streams do not belong to MTBT the Forbes estimate overstates the revenue to the MTBT--it will be much lower.  Therefore, if suffient revenue streams are removed from the MTBT, the 52% claim could be valid even though the revenue to the family is unchanged and is roughly equivalent to the Forbes estimate.  They simply moved money to different pockets--but their claim of a 52% payroll of revenue,  applies only to the pocket that holds the MTBT--not to all of the pockets.

[tobi0040]

Financial Accounting

 

Definition of Terms

MTBT is the Twins (Corporation or whatever legal entity it really is)

Pohlad Entity #1A, and asssume there maybe be several of these--all separate legal entities from each other, though "owned" by the family in some way.

 

As we know the MTBT was to "front" $ Millions for Target Field.  Let me hypothesize that the MTBT sold a major revenue stream (let me say the suites) for $X Millions to Pohlad entity #1.  Maybe the MTBT sold other revenue streams to different entities for cash--enough cash to meet the required "front money".  Since these revenue streams do not belong to MTBT the Forbes estimate overstates the revenue to the MTBT--it will be much lower.  Therefore, if suffient revenue streams are removed from the MTBT, the 52% claim could be valid even though the revenue to the family is unchanged and is roughly equivalent to the Forbes estimate.  They simply moved money to different pockets--but their claim of a 52% payroll of revenue,  applies only to the pocket that holds the MTBT--not to all of the pockets.

 

Companies create legal entities primarily for tax reasons and to shields other entities from risk, financial and otherwise.  If this was a public company all of the legal enities would roll up through the parent. Much like say GE reports their sales, earnings, etc. numbers on a consolidated basis but probably has 100's of entities underneath.   If this structure did that, they would not have payroll that equals 52% of the parents consolidated revenue.

[jay]

Companies create legal entities primarily for tax reasons and to shields other entities from risk, financial and otherwise.  If this was a public company all of the legal enities would roll up through the parent. Much like say GE reports their sales, earnings, etc. numbers on a consolidated basis but probably has 100's of entities underneath.   If this structure did that, they would not have payroll that equals 52% of the parents consolidated revenue.

 

Does that mean you believe they should be held accountable to maintaining payroll at 52% of the consolidated revenue across all entities? 

 

I think we can agree that isn't their approach.  Or at least the numbers don't support saying it is.

[nicksaviking]

Hypothetically, if the Twins end up playing this offseason off of PR motives, what will their goals regarding payroll be?  Instinct says the right PR move is to increase payroll if they were truly trying to appease the fans and show them they want to win.

 

However they just fired their manager and everyone is pointing fingers at themselves saying they didn't do enough to give him talent.  Perhaps getting a new manager and giving HIM an increased payroll actually looks like they screwed Gardy over.  Of course this course of action has the added bonus of not spending money.

 

Just a though.  Anyway my prediction is the payroll sits at $90 million as the front office will make some knee jerk reactions to try to course correct.  I do not predict the $90 million will be well spent and I do predict that more prospects will be blocked. 

[tobi0040]

Does that mean you believe they should be held accountable to maintaining payroll at 52% of the consolidated revenue across all entities? 

 

I think we can agree that isn't their approach.  Or at least the numbers don't support saying it is.

 

That was my long winded answer explaining that I don't really care if one entity is over 52%, the consolidated group is what should matter.  

 

I am guessing MLB's recommendation of payroll (52%) was a consolidated view.  Not backing out suite revenue, or Bud Light revenue but counting hot dogs or whatever.