Don't expect increase in payroll

[tobi0040]

The difference, drjim, is that the Pohlads keep saying "see, we spent this much more on the stadium than we said we would"......when in fact, they kind of haven't (not to mention, they are still spending a lower percent than other teams).

 

Totally agree Mike.  This was really a silly comparison.  Businesses dont fund investment projects with tax payer money.  Some get TIF financing, but on a percentage basis they are a fraction of the 66% the Twins received for Target field.  I should know, I worked with the department that tracks and files for them.  Another reason why they are not even close, TIF financing for businesses almost always comes with many, many strings attached such as "number of employees hired at x salary by x date".   This exists so a business owner can't say "build a stadium and we can compete" and then get the stadium and lower payroll.

[drjim]

Totally agree Mike.  This was really a silly comparison.  Businesses dont fund investment projects with tax payer money.  Some get TIF financing, but on a percentage basis they are a fraction of the 66% the Twins received for Target field.  I should know, I worked with the department that tracks and files for them.  Another reason why they are not even close, TIF financing for businesses almost always comes with many, many strings attached such as "number of employees hired at x salary by x date".   This exists so a business owner can't say "build a stadium and we can compete" and then get the stadium and lower payroll.

 

Businesses don't fund investment with taxpayer money? Really?

[USAFChief]

I see a couple differences:

 

Most businesses don't ask the government (us) to kick in a good portion of the upfront costs of capital improvements.

 

Twins ownership said they would cover some of the costs of building TF. Others may disagree, but I don't view using revenues FROM the stadium to PAY for the stadium as meeting that obligation. Had the public understood this arrangement up front, perhaps the public changes their end of the arrangement, particularly given the statements made by the Twins about the need for greater revenues in order to keep their players. If that revenue isn't going to payroll, why publicly finance the stadium?

[tobi0040]

Businesses don't fund investment with taxpayer money? Really?

 

Please cite an example where a business has received a $300M payment from the governement and only put up $150M of their own money, with no strings attached.

 

I cited TIF financing, which is not even close to comparable.  Again, some companies are incentivized by certain cities or counties to relocate or build there.  They receive a reduction of future taxes IF they meet about fifteen sets of criteria.   The criteria ensures that the investment has a positive ROI for the city.

[bird]

Jim Pohlad said that when the new stadium was built the payroll would be about 52% of revenue. The last Forbes estimate was $240m. 

This year they were about 35%. You don't think Mr Pohlad mislead  us to get his new cash cow, would he do that?

I don't know how many times I've responded to this. But I do know that none of you has ever responded back with a rebuttal, so here goes:

 

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.

[tobi0040]

I see a couple differences:

 

Most businesses don't ask the government (us) to kick in a good portion of the upfront costs of capital improvements.

 

Twins ownership said they would cover some of the costs of building TF. Others may disagree, but I don't view using revenues FROM the stadium to PAY for the stadium as meeting that obligation. Had the public understood this arrangement up front, perhaps the public changes their end of the arrangement, particularly given the statements made by the Twins about the need for greater revenues in order to keep their players. If that revenue isn't going to payroll, why publicly finance the stadium?

 

I completely agree. This whole they kicked in more money thing is ridiculous.  They owned something that was worth $250M and is now worth $700M, most of that appreciation is a direct result of the stadium.  If you back out the $100M increase that was tied to the new cable contract....The Twins kicked in $170M and saw an increase of $350M.  They didn't pay anything. 

 

They could sell all or part of the team, or get a loan based on a valuation of $700M.  This is truly a financing discussion, not a discussion of kicking in money.

[USAFChief]

But they have spent the money. If they didn't, it would be even more profit to a smaller annual payment to repay the loan.

 

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.

[bird]

What is the upside of making this comment? 

 

They come out and say Terry has no limit every year. Yet he basically let it slip that he does already have a limit and clearly discussions have already happened.  We have ruled out several things already before all the uncertainty of the market, who is available via trade, etc. 

 

A comment like "it is way too early for us to have any clarity about next years payroll, our focus is identifying the next coach and we will go from there" would suffice for October first.

 

This guy is totally inept.  I would not hire him to market a lemonade stand for my daughters.

Your last sentence is harsh, but I generally agree that St. Peter is a weak link for the organization, and has the PR instincts of a fart during mass. 

 

The guy needs to be pulled aside and told to shut his pie hole. At the least.

[Mike Sixel]

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......

[TheLeviathan]

I wouldn't even label these as "aggressive" moves. I won't fault him for passing on the bidding wars for Shields and Lester, but if Ryan doesn't at least deliver on his stated priority regarding "rotation depth" in an immediately impactful way, I'm coming over to the dark side.

 

Aggressive looks different to different people, but I think where it can be recognized equally is in the mentality behind the moves.  I don't need "aggressive" to be Lester or Scherzer, but I do need it to be a clear offseason initiative to come in with a stronger 25 man roster.

 

The tenor of St. Peter's remarks leads me to believe they already plan to scale back.  That I can't stand.

[jokin]

I don't know how many times I've responded to this. But I do know that none of you has ever responded back with a rebuttal, so here goes:

 

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.

 

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"-

:

 

 

Twins president Dave St. Peter on the team's payroll for next year:

 

"We haven't finalized a 2015 payroll budget but as in past years we think it's going to be somewhere in that 50 percent [range] of our overall revenues and I can assure you that we don't see it going down significantly. I think it will be comparable to the range we were in 2014," St. Peter said.

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

[tobi0040]

I don't know how many times I've responded to this. But I do know that none of you has ever responded back with a rebuttal, so here goes:

 

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.

 

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

[Mike Sixel]

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.....

[bird]

Isn't this how every single business pays off capital investment? They finance through a low interest loan, write off the yearly amortization, and pay off the loan through future profits with the hope of even bigger profits.

 

There is much to criticize, but slamming generally accepted business practices seems like a bizarre place to start.

 

From a state level it would have been nice if they paid a higher percentage of the total cost, but it wouldn't have changed a bit the underlying business practice you mentioned.

I think it's entirely reasonable to wish they'd pay down the loan a little slower and beef up the product.

[drjim]

I see a couple differences:

 

Most businesses don't ask the government (us) to kick in a good portion of the upfront costs of capital improvements.

 

Twins ownership said they would cover some of the costs of building TF. Others may disagree, but I don't view using revenues FROM the stadium to PAY for the stadium as meeting that obligation. Had the public understood this arrangement up front, perhaps the public changes their end of the arrangement, particularly given the statements made by the Twins about the need for greater revenues in order to keep their players. If that revenue isn't going to payroll, why publicly finance the stadium?

 

I certainly wouldn't argue that sports stadiums are unique because of the scale, but this is also upfront money instead of no interest loans or tax incentives/breaks that local governments provide other businesses. So in that sense, it is at least transparent.

 

Your second paragraph baffles me. How else would they pay for it? You can say there should be another way, but capital projects are funded through initial financing that is paid off through future revenues/profits. I'm not sure what other model there would actaully be. If they paid 100% of the costs they would still use this model.

 

Your last line is the right question. I'm not a fan of publicly financed stadiums, and the last two deals really took our state to the cleaners. No argument here.

 

One place I won't go and I sense you are hinting at is that I would never agree that there was some master plan to get financing and then slash payroll as much as possible (if that was the case, they wouldn't have signed Nolasco among others), but the fiasco of the last couple of seasons were not part of the plan. As much money as they still made the last four seasons, it is a fraction of what they would be making with a $110-120 million payroll team that was playoff caliber and selling out most games.

 

And finally, every payroll in Target Field has been bigger than any payroll in the Metrodome.

[Mike Sixel]

I guess, if you totally discount baseball inflation, the payroll is bigger.....but want to bet on if it is if you take into account the inflation in payroll in baseball?

[tobi0040]

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, DSP's attempt at "reassurance".

:

 

http://www.1500espn.com/sportswi

re/Notebook_Terry_Ryan_will_remain_Twins_general_manager092914

 

People act like TD posters arbitrarily made up this 50-52% thing.  IT CAME FROM THE TWINS

[Winston Smith]

Birdwatcher to quote:

Sept. 14, 2007 Star Tribune;

 

Jim Pohlad; "We're committed to spending 50-52% of revenue, and with the increase in revenue from the new stadium, there's going to be ample dollars to pay players, It will make a huge difference".

[USAFChief]

"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.

[USAFChief]

I don't know how many times I've responded to this. But I do know that none of you has ever responded back with a rebuttal, so here goes:

 

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.

He won't have been misled if the Twins go over 52 percent by enough in the coming years to make up for the past four, you mean, right?

[tobi0040]

I certainly wouldn't argue that sports stadiums are unique because of the scale, but this is also upfront money instead of no interest loans or tax incentives/breaks that local governments provide other businesses. So in that sense, it is at least transparent.

 

Your second paragraph baffles me. How else would they pay for it? You can say there should be another way, but capital projects are funded through initial financing that is paid off through future revenues/profits. I'm not sure what other model there would actaully be. If they paid 100% of the costs they would still use this model.

 

Your last line is the right question. I'm not a fan of publicly financed stadiums, and the last two deals really took our state to the cleaners. No argument here.

 

One place I won't go and I sense you are hinting at is that I would never agree that there was some master plan to get financing and then slash payroll as much as possible (if that was the case, they wouldn't have signed Nolasco among others), but the fiasco of the last couple of seasons were not part of the plan. As much money as they still made the last four seasons, it is a fraction of what they would be making with a $110-120 million payroll team that was playoff caliber and selling out most games.

 

And finally, every payroll in Target Field has been bigger than any payroll in the Metrodome.

 

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.

[Boom Boom]

Lester and Shields didnt look that valuable last night.

 

Just sayin...

 

Actually I thought Shields was doing pretty well until Ned Yost gave in to his itchy trigger finger.  

 

After allowing runners on 1st and 2nd with no outs in the 6th, if Yost had left Shields in, I don't think it's possible plausible he could have allowed more damage than Yordano Ventura did.

[gunnarthor]

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.

[TheLeviathan]

He won't have been misled if the Twins go over 52 percent by enough in the coming years to make up for the past four, you mean, right?

 

Yeah, I think that's the problem - none of us believe we'll ever exceed that number to make the average work out.

[tobi0040]

Birdwatcher to quote:

Sept. 14, 2007 Star Tribune;

 

Jim Pohlad; "We're committed to spending 50-52% of revenue, and with the increase in revenue from the new stadium, there's going to be ample dollars to pay players, It will make a huge difference".

 

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.  

[tobi0040]

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.

 

Maybe it is higher?   I trust the folks at Forbes over the Pohlads.

[jokin]

"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.

All true, except the Pohlad's only would have been $150M CASH poorer, which was more than made up multiple times by the increase in net value of the franchise, plus the yearly cash flow on the back end of the deal- the concept of retained earnings doesn't apply here.

[Rosterman]

Lots of fun stuff pops up here.

 

Okay, the Twins right now sit at a $60 million payroll going into 2015 and have to make arbitration decisions on Plouffe, Schafer. Duensing, Swarzak and considerations on Dozier and Escobar, maybe. But there are also sitting with a roster of also-rans (Parmelee, Fryer, Herrmann, Nunez, Thompson, Fien, Thielbar, Thompson, Pressly and more more more or who really only demand minimum wage, but the better joy would be REPLACE THEM WITH SOMEONE GOOD, EVEN IF IT COSTS MORE!

 

How much did the Twins pony into Target Field? $150 million, another $30-40 million for improvements (for their own betterment). If revenue is anywhere over $200 million a year, what has been done with that extra money. Like someone said, they were at 35% of payroll/income, and not only this year, but also last year.

 

And I still don't buy at all that 51% of revenue is payroll. Again, I need this magic question answered: You were in the Metrodome and had $100 million in revenue and spent $51 million on payroll. The other $49 million covered front office, ticket sales, ushers, stadium rental, cleaning, marketing, running your minor league system and their management on the field, drafting players, drafting international players, paying minor league players and all that.

 

Suddenly, you now have $200 million in income. You CAN spend $101 million on players and have $99 MILLION, a full double of what you had years ago, to spend on management, minors, marketing (much of which is tied in with co-sponsors). Did EVERYONE ELSE double their salary? Are ushers making $20 an hour. Is the front office receptionist suddenly getting a significant payraise? Are you actually spending 2-3 times more on drafting players? Which is fine, if you are, but you still aren't spending 51% on payroll.

 

And you make loan payments to your own bank (or maybe someone else who gave you the money cheaper) and the price of your franchise, win-or-lose, still goes up each year by at least 5-10%

 

So, Dave St. Peter, keep payroll at the same level as this year. But looks like you better figure out a way to flip many of these players for others and hope they succeed significantly better, especially if you aren't adding anyone to the on-field competitive mix. You pay players to perform, to push others out of baseball (if I can be so cold), and to succeed. If they don't succeed, you cut them loose, like you did your manager, like you should your general manager, like the president of the club should also do -step down! Because if you aren't earning your money, don't ask the fans to pay for it, 10% concession discount be damned!

[bird]

Aggressive looks different to different people, but I think where it can be recognized equally is in the mentality behind the moves.  I don't need "aggressive" to be Lester or Scherzer, but I do need it to be a clear offseason initiative to come in with a stronger 25 man roster.

 

The tenor of St. Peter's remarks leads me to believe they already plan to scale back.  That I can't stand.

You and I share a similar perspective, I think, on what would pass as aggressive. As I've stated, I think St. Peter needs to be pulled aside by Jim Pohlad and told to shut up. And while I find his comments troubling, I'm not terribly concerned about them.

 

I believe the opinions of the baseball people about moves they can make to get better will resonate more strongly with the Pohlads these days. We're not necessarily talking about commitments of $200M to make a splash here.

 

I believe there's another factor that will come into play. The boys have kids that are hanging around town now for the most part, and I doubt the sons care to have their kids and grandkids saddled with the kind of insults and vitriol that they were subjected to themselves. My understanding is that back in the early 2000's a lot of the talk about unloading the franchise centered on how ownership of it might impact the lives of those family members. I really believe that Jim Pohlad, in particular, wants to have a winning ball club soon.

[Rosterman]

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.  

 

Birdwatcher to quote:

Sept. 14, 2007 Star Tribune;

 

Jim Pohlad; "We're committed to spending 50-52% of revenue, and with the increase in revenue from the new stadium, there's going to be ample dollars to pay players, It will make a huge difference".

 

Do you think they have paid off their investment yet? It is all about dollars and cents. Butts in the seat. And let's just say if I was the boss of a company, and we were failing, and if I needed to take a significant pay cut to keep my business going and alive, I would do it and hope that I would succeed so I could continue to pay myself ... not that I would probably have to worry in the end, I could always eat free (on my dime, I guess) at the stadium and sleep in my great office, and swim in the clubhouse pool, and get a massage from the trainer, and not have to pay ever to see a baseball game.

 

But look at the Big Picture. Your fan base is dwindling. Your sponsors are cyring. Your ratings have slumped. You are still making money and, supposedly are succeeding, as long as you can keep cutting costs. Less fans means less ushers, less ticket employees, lower printing costs, you can drape off sections and not have to worry about cleanup. Wow, saved a bunch there. I can always find minimum-wage players hoping to increase their own stock. Wow, if only they would play for free, I could really clean up, and maybe even trade them for cash. Everyone else is paying me to broadcast the games, so no real worry if their ratings tank, and who cares about my own station, that disappears for about three miles when one traverses the river heading into that distant suburb of St. Paul...we weren't going to score in that inning anyways.

 

I think there's a party going on at Hrbek's. Maybe I'll slip in and get a free beer and brat, someone will recognize me and feel sympathy for me being the owner of this mess.