Dear Terry Ryan... Take a look at the AL Central and factor that in

[Major League Ready]

 

For my statement regarding writing off losses against profits from other businesses, I trusted information I read on a Vice Sports article:

 

https://sports.vice.com/en_us/article/your-poor-baseball-team-owner-is-lying-to-you

 

I'm not a tax attorney, so if you know something I don't, that's fine.  However, I read another article in the LA Times that discussed the ability of sports franchise owners to take tax deductions as being one reason Steve Ballmer buying the LA Clippers.

 

http://www.latimes.com/sports/clippers/la-sp-ballmer-clippers-taxes-20141117-story.html

 

Anyway, it's beside the point since owners aren't losing money.  In fact, the players' share of revenues has been steadily decreasing since 2002, when it was 56%, down to 40% today.  So the owners are actually making a lot higher percentage of much better revenues.  Additionally, all owners share profits in MLBAM, the on-line streaming company.  The owners are probably making $50-100 million per year from this business whose revenues are expected to be $1 billion in 2016.  So the owners aren't anywhere close to taking a deduction on losses from this investment, and we shouldn't be fooled into thinking they can't afford a few big free agent signings.

 

As I said above, I'd prefer if our owners used some of the money they are banking to make this team competitive now, which is a good time to take advantage of all of our homegrown, young and inexpensive talent.  This is not just what I think would be wise in a business sense, but would make me happy as a fan.

 

You may have some expertise that I don't regarding business appraisals, but the last time I was involved in one (last year), income is not the only method of valuation (and actually it's revenue and not income that is used).  There are also the asset approach and the market approach.  Of particular relevance to the valuation of MLB franchises is the market approach.  Baseball franchises are local monopolies, and there are a limited number of these available.  Again, the Twins' owners bought the franchise for $44 million, it's value is closing in on $1 billion this year, and it will continue to appreciate in value.  So there's no reason to worry too much about the value of the franchise.

 

As for wanting the money from the operation of these businesses to be used for more worthy causes than paying the talent, I don't think we're going to be able, legally, to require anyone to donate the profits they make in this industry.  However, I suspect that it would be more likely that the money ends up being donated to worthy causes after it's paid out to players, as opposed to being banked by owners.

In 2002 MLB in aggregate lost $239M.  Arizona won the WS that year and despite their success on the field had an operating loss of 32.2M   Using the 56% number from 2002 is disingenuous or very inept from a financial perspective.  Does that percentage have something to do with profitability.  Of course.  Is this a reasonable assertion given the entire league was in severe financial stress?  No.  The MLB owners went overboard and paid out a percentage that was simply not sustainable and that practice was modified.

 

The LA Times story is referencing tax breaks specific to new franchise owners ability to write off a portion of the salaries paid to players.  It has nothing to do with the scenario of the Minnesota Twins.  The Vice Sports article is a rant about the wealth of franchise owners as evidenced by outlining the tremendous wealth of numerous owners.  He is correct that revenue sharing helps.  He also cites national TV contracts.  Of course, this raises revenue but provides nothing in terms of closing the revenue gap given the revenues are distributed to all teams.  Their still exists a considerable gap in revenue available to fund player's salaries.  IMO Goldstein's analysis is parochial.  I really am not sure about his claim owners can write off losses against other businesses but offers no documentation or support for that claim.  It is possible there is some special provision that resulted from the large losses sustained in the early 2000s.  However, I can’t find anything that supports that statement.  I know that my lawyer has assured me that I can’t write off losses from one business against profits from my other business.

 

None of this changes the macro view.  If all teams went to a non-profit model, the Twins would gain no economic advantage.  Therefore, your suggestion requires that the Twins are the only organization or one of very few to practice a non-profit model.  So, how well reasoned this non-profit suggestion is depends on if you think it is reasonable to expect the Twins to operate without a profit while all others maintain their profitability.

[Don Walcott]

 

In 2002 MLB in aggregate lost $239M.  Arizona won the WS that year and despite their success on the field had an operating loss of 32.2M   Using the 56% number from 2002 is disingenuous or very inept from a financial perspective.  Does that percentage have something to do with profitability.  Of course.  Is this a reasonable assertion given the entire league was in severe financial stress?  No.  The MLB owners went overboard and paid out a percentage that was simply not sustainable and that practice was modified.

 

The LA Times story is referencing tax breaks specific to new franchise owners ability to write off a portion of the salaries paid to players.  It has nothing to do with the scenario of the Minnesota Twins.  The Vice Sports article is a rant about the wealth of franchise owners as evidenced by outlining the tremendous wealth of numerous owners.  He is correct that revenue sharing helps.  He also cites national TV contracts.  Of course, this raises revenue but provides nothing in terms of closing the revenue gap given the revenues are distributed to all teams.  Their still exists a considerable gap in revenue available to fund player's salaries.  IMO Goldstein's analysis is parochial.  I really am not sure about his claim owners can write off losses against other businesses but offers no documentation or support for that claim.  It is possible there is some special provision that resulted from the large losses sustained in the early 2000s.  However, I can’t find anything that supports that statement.  I know that my lawyer has assured me that I can’t write off losses from one business against profits from my other business.

 

None of this changes the macro view.  If all teams went to a non-profit model, the Twins would gain no economic advantage.  Therefore, your suggestion requires that the Twins are the only organization or one of very few to practice a non-profit model.  So, how well reasoned this non-profit suggestion is depends on if you think it is reasonable to expect the Twins to operate without a profit while all others maintain their profitability.

I did not, at any point in any post, suggest the Twins operate in a "non-profit model."  Those are entirely your words, and your argument.  This is what is called a "straw man" argument, where you attribute an argument to an adversary and conveniently destroy the argument that was not made.

 

Let me put this in my own words, as I have above: the Twins are in a good position, based on development of home-grown talent, to actually win something this year, next year and for a few years.  This would be a good time to spend some of the money we would otherwise bank, to ensure that we actually win something.  Making the playoffs generally results in 20% increase in revenues.  And aside from the business reason for doing it, I want to see the Twins win again!

 

There is no question that the money is there to do it.  If our owners don't want to do it for money reasons, I will be very disappointed in them. 

 

I'll continue to support this team, my favorite of any sports franchise, as I have for more than 40 years.  However, as much as I believe I'm a die-hard fan of the Twins, without '87 and '91, would I still be so supportive?  Not sure.  But I am sure that this franchise needs a good run.  If for no other reason, the Twins need to earn the loyalty of a new generation of fans.

[DaveW]

But I am sure that this franchise needs a good run. If for no other reason, the Twins need to earn the loyalty of a new generation of fans.

Couldn't have said it better myself. Vikes have an exciting team these days and a new stadium, the Wild are competitive every year and the wolves are actually threatening to be a respectable team in a year or two. The Twins would be wise not to fall behind. Baseball already has an issue attracting younger fans, having a team that won't "go for it" isn't going to help matters at all, especially when the Wild sign guys like Parise/Suter, the Vikings go out and make a bold coaching hire in Zimmer (and build a damn awesome team around him) and the Wolves more or less luck into some great talent, and are just an inevitable Fred Hoiberg coaching hire away from being great to watch.

 

It's sad, with Sano, Dozier, Buxton and company we should be looking fwd to a great year due to some nice signings, but alas, we look like a 75 win ball club as of now.

 

Not. Good.

[The Wise One]

Hockey has a cap that teams spend up to. No hockey team is "going for it" by spending money on large contracts. It is just a different method asset allocation. I thought hockey spending with their hard cap was pretty straightforward.   Baseball going for it is giving up assets for a rental player. The Mets rented Cespedes. It almost worked. When Oakland rented players yet failed, Attendance the next year plummeted when the rentals leave. Now they are further away than ever from the Series .

[Major League Ready]

 

I did not, at any point in any post, suggest the Twins operate in a "non-profit model."  Those are entirely your words, and your argument.  This is what is called a "straw man" argument, where you attribute an argument to an adversary and conveniently destroy the argument that was not made.

 

Let me put this in my own words, as I have above: the Twins are in a good position, based on development of home-grown talent, to actually win something this year, next year and for a few years.  This would be a good time to spend some of the money we would otherwise bank, to ensure that we actually win something.  Making the playoffs generally results in 20% increase in revenues.  And aside from the business reason for doing it, I want to see the Twins win again!

 

There is no question that the money is there to do it.  If our owners don't want to do it for money reasons, I will be very disappointed in them. 

 

I'll continue to support this team, my favorite of any sports franchise, as I have for more than 40 years.  However, as much as I believe I'm a die-hard fan of the Twins, without '87 and '91, would I still be so supportive?  Not sure.  But I am sure that this franchise needs a good run.  If for no other reason, the Twins need to earn the loyalty of a new generation of fans.

Your exact quote is below. 

 

“It's interesting the different perspectives different fans have regarding their owners, how much their owners should spend on players, and how much their owners should expect to profit from their ownership.In England, fans of soccer teams consider the teams to be part of the community, not a for-profit corporation.The teams would NEVER move from their location.They expect their owners to spend as much as they make, or as much as it takes to get results.American ownership of certain teams, like Manchester United, Liverpool and Aston Villa has been severely criticized for practices that are generally accepted here, such as making a profit for the owners and leveraging the value of the team by taking on debt.Fans have been more approving of wealthy owners who are willing to lose money to win, such as Manchester City and Chelsea.However, even though these teams may lose money on a year-to-year basis, the value of the teams appreciates incredibly.”

 

You may not have used the words “non-profit but it certainly was the gist of your argument.  You even suggested in another passage they should be willing to lose money so to characterize the rebuttal as a strawman is disingenuous at best.  Take a look at the facts instead of just looking for articles written by baseball people like Craig Goldstein who does not have the financial acumen to figure out that teams with more revenue have a greater ability to spend.

 

The whole point of your post was to rehash for the hundredth time that the Twins are cheap and won’t sign an ace.  A couple weeks ago I put up a list of the 5-6 year contract signed this century.  Exactly one 6 year deal has been done by a team with relatively similar or less revenue than the Twins.  Of course, Arizona signed Grienke so if we ignore they just signed a billion dollar TV contract, we can say two such contract have been signed this century.  This is hard fact.  Some of you just absolutely refuse to take an objective look at the situation and accept no team with the Twins revenue signs these sort of deals.  If you want to complain that no teams with the Twins revenue sign ace SPs to six year deals, great, but the constant complaining that the Twins don’t do this because they are unusually conservative is an argument of the uniformed.

The more valid complaint is that they have not been good at developing SPs.