Thank You Nick Nelson

[mlhouse]

 

Nothing you are stating is economics.  I'm not sure how you think that's the case.

 

What we're discussing is how the organization operates and that is at their discretion.  And, I know  you haven't accepted this, but they've also made their methods clear publicly on this issue.

 

My guess is that you got an F in micro economics, but that is just based on what you are saying here.

 

Every organization operates this way.  It has pure "wealth" effects and previous experience modifies your risk expectations.  

 

[Mike Sixel]

 

My guess is that you got an F in micro economics, but that is just based on what you are saying here.

 

Every organization operates this way.  It has pure "wealth" effects and previous experience modifies your risk expectations.  

 

The team has literally stated it does not carry profits or losses over, it operates on a year to year basis. I don't know why we have to argue this point, since they've said they set salaries at around 48-52%. Not more or less based on what happened the previous year. 

[mlhouse]

 

The team has literally stated it does not carry profits or losses over, it operates on a year to year basis. I don't know why we have to argue this point, since they've said they set salaries at around 48-52%. Not more or less based on what happened the previous year. 

 

Again.

 

1.  It doesnt matter what they say.

 

2.  It isn't a matter of "carrying over" profits or losses.  

 

It is a micro-economic fact of life that your future economic decisions will be based on your previous ones.  If you lose a lot of money from lets say 2012-2019, you will be less apt to increase your level of investment in subsequent years.

 

I don't know why people are arguing about this obvious fact.  If the Twins dumped $20 million more in salary, remained uncompetitive, it is LESS likley they will spend $20 million more in the future.  

 

[Mike Sixel]

 

Again.

 

1.  It doesnt matter what they say.

 

2.  It isn't a matter of "carrying over" profits or losses.  

 

It is a micro-economic fact of life that your future economic decisions will be based on your previous ones.  If you lose a lot of money from lets say 2012-2019, you will be less apt to increase your level of investment in subsequent years.

 

I don't know why people are arguing about this obvious fact.  If the Twins dumped $20 million more in salary, remained uncompetitive, it is LESS likley they will spend $20 million more in the future.  

 

Is it about profit, or competitiveness? Because those are two different things. If they lose money every year, they should a: cut spending; b: find a buyer, because no one is losing money in sports. No one.

 

If it is about competitiveness, then they need different scouts, etc. 

[TheLeviathan]

 

Again.

 

1.  It doesnt matter what they say.

 

2.  It isn't a matter of "carrying over" profits or losses.  

 

It is a micro-economic fact of life that your future economic decisions will be based on your previous ones.  If you lose a lot of money from lets say 2012-2019, you will be less apt to increase your level of investment in subsequent years.

 

I don't know why people are arguing about this obvious fact.  If the Twins dumped $20 million more in salary, remained uncompetitive, it is LESS likley they will spend $20 million more in the future.  

 

Sure, I bet if they lost a ton of money (something they have never done) that it would make them gun shy.  That would fit a Pohlad mindset.  

 

But we're not talking about that, we're talking about re-investing profits in future years to exceed normal payrolls.  They have stated they do not do this.  You can quote theory until you're blue in the face, but the Pohlads have never operated that way and stated that they do not operate that way.  

 

You have zero evidence they will re-invest profits (they've literally never done it) and your suggestion runs directly counter to their stated business practice.  You can mock my understanding of economics, but my position is grounded in a ton of evidence.  And it's the simplest explanation of their behavior to boot.

[mlhouse]

 

Is it about profit, or competitiveness? Because those are two different things. If they lose money every year, they should a: cut spending; b: find a buyer, because no one is losing money in sports. No one.

 

If it is about competitiveness, then they need different scouts, etc. 

 

For the Pohlads it is about ROI.   

[mlhouse]

 

Sure, I bet if they lost a ton of money (something they have never done) that it would make them gun shy.  That would fit a Pohlad mindset.  

 

But we're not talking about that, we're talking about re-investing profits in future years to exceed normal payrolls.  They have stated they do not do this.  You can quote theory until you're blue in the face, but the Pohlads have never operated that way and stated that they do not operate that way.  

 

You have zero evidence they will re-invest profits (they've literally never done it) and your suggestion runs directly counter to their stated business practice.  You can mock my understanding of economics, but my position is grounded in a ton of evidence.  And it's the simplest explanation of their behavior to boot.

 

The Pohlads HAVE ALWAYS OPERATED THAT WAY.  It is sad they can convince you otherwise.  When the team was on the cutting edge of competitiveness, the Mauer-Mourneau years they could have made that team truly competitive, i.e. have the ability to actually win playoff series and even advance to World Series with an investment of $10-20 million.

 

But, they wouldn't even keep all of that core together.  They preferred to have a team just competitive enough to win a weak division and make the playoffs, getting swept almost every time.   So, whan Johan Santana was due a new contract he was traded off and no other veteran players added to fill the holes the Twins needed to be really compeititive.

[TheLeviathan]

 

The Pohlads HAVE ALWAYS OPERATED THAT WAY.  It is sad they can convince you otherwise.  When the team was on the cutting edge of competitiveness, the Mauer-Mourneau years they could have made that team truly competitive, i.e. have the ability to actually win playoff series and even advance to World Series with an investment of $10-20 million.

 

But, they wouldn't even keep all of that core together.  They preferred to have a team just competitive enough to win a weak division and make the playoffs, getting swept almost every time.   So, whan Johan Santana was due a new contract he was traded off and no other veteran players added to fill the holes the Twins needed to be really compeititive.

 

Yes, they have always acted that way.  So what little room I have to demand action of them (holding to their own 50% mark), I'm going to do it.

 

Not to mention, if what you say is true about putting unused money towards the future....it would've been true in your very examples here.  But it wasn't.  It never has been.  It likely never will be.  That's my entire point and you've disagreed with.  Perhaps you see the error in that now?

[mlhouse]

 

Yes, they have always acted that way.  So what little room I have to demand action of them (holding to their own 50% mark), I'm going to do it.

 

Not to mention, if what you say is true about putting unused money towards the future....it would've been true in your very examples here.  But it wasn't.  It never has been.  It likely never will be.  That's my entire point and you've disagreed with.  Perhaps you see the error in that now?

 

The problem with your understanding of the idea is centered on this concept of "unused" money.  That doesn't exist.   There is no such thing as unused money.  Instead, there are many micro-economic factors were future economic behavior is impacted by previous economic behavior.

 

Your concept is centered on this 50% margin idea.   The Pohlads will not "save" the money for the future if they spend less than 50% and then spend that later.  

 

Think about it this way.  Lets say you invested in real estate and bough some investment rental property or a house flip.   Lets say you made money on those investments.  

 

All things the same would you be a:  more likely to invest in future real estate investments  b:  less likely to invest in future real estate investments.

 

The answer is obvious, the answer is the same for every rational person, and the answer is the opposite if you change the "gain" to a "loss".

 

So, lets put the example in the Twins context.  Do you think "investing" in free agent contracts like Phil Hughes and Ricky Nolansco increased or decreased the Twins ownership's interest in investing in future contracts?   The answer is obvious.  

 

Now, in the club of major sports franchise ownership there certainly exists owners whose economic decisions are not truly economic rational.  Winning within that club of billionaires is their maximization function.  Losing $50 million is nothing to them. But, not all owners have this "irrationality".  That is why  every major sport has a salary cap structure or some other mechanism for controlling payrolls.

 

In Minnesota, we have never had anything close to such an owner, and based on the sports economics of the area, probably never will.

[Battle ur tail off]

 

 

I get that some want to argue that spending Pohlad's money now is unimportant, but you are totally off base.  Financial flexibility cannot be gained by adding long term contracts, and money "saved" now increases the possibility of spending money later.  In other words, if the Twins lose $20 million a season over hte next several years they will surely be less likely to invest in payroll later on than if they break even or even turn profits over that time. 

 

When have the Twins shown that a savings one year, equals big spending when needed later on?

I'll give you the answer - NEVER. When have they went for it when they've had a chance? - NEVER

I mean does anyone truly believe here that when this team needs a couple real pieces in a few years should this core gel together that the Twins will go out and get real high end talent?, sign it? trade for it? You are fooling yourselves. Just look back in time., 2006 and 2010 were the Twins best chances recently to take things to another level.

 

2006 they had Jason freaking Tyner manning the DH spot. 2010, Carl Pavano was their #1 starter. Now mind you, most of the roster on both of these teams was great, young, producing. They missed big time during those years when a trade or signing could have taken them over the top, and have only shown more of the same BS through to now. It's been the same song and dance and it is so surprising to me that so many are able to excuse them for it time and again. I flat out don't believe they will ever take the jump. Even "IF" the stars align perfectly.

[KGB]

I know bashing the Pohlad's for being cheap is a fan favorite, but this whole 50% of payroll argument isn't really adding up.  Below is the numbers from Forbes based on April 2018, so the numbers must be from 2017 season.  The Twins had a payroll of around $110m, with revenue of $261.  So to get to have payroll at 50% of revenue, they would spend $130m, or $20m more.  They had a profit of $23 million, so it seem unlikely that when they made the comment, they were not planning on basically breaking even.

 

So, I think it logical to conclude that these number being used are not matching what they were saying.  Maybe when they were talking payroll, they were including the $10-$15m in benefits costs.

 

 

https://www.forbes.com/teams/minnesota-twins/

 

Team Value calculated April 2018

 

At a Glance
Owner: James Pohlad
Championships: 3
Price Paid: $44 M
Year Purchased: 1984
Revenue2:  $261 M 
Operating Income3:  $23 M

 

As for this years spending it is down, but that seems more like a front office plan than ownership telling them not to spend. 

 

https://www.skornorth.com/twins-2/2019/01/twins-prez-were-in-a-much-better-spot-than-maybe-some-of-our-fan-base-might-view-it/

[Mike Sixel]

Fifty percent isn't break even..... Not even close. They are making lots of money at fifty percent. Lots.

[Mr. Brooks]

I know bashing the Pohlad's for being cheap is a fan favorite, but this whole 50% of payroll argument isn't really adding up. Below is the numbers from Forbes based on April 2018, so the numbers must be from 2017 season. The Twins had a payroll of around $110m, with revenue of $261. So to get to have payroll at 50% of revenue, they would spend $130m, or $20m more. They had a profit of $23 million, so it seem unlikely that when they made the comment, they were not planning on basically breaking even.

 

So, I think it logical to conclude that these number being used are not matching what they were saying. Maybe when they were talking payroll, they were including the $10-$15m in benefits costs.

 

 

https://www.forbes.com/teams/minnesota-twins/

 

Team Value calculated April 2018

 

At a Glance

Owner: James Pohlad

Championships: 3

Price Paid: $44 M

Year Purchased: 1984

Revenue2: $261 M

Operating Income3: $23 M

 

As for this years spending it is down, but that seems more like a front office plan than ownership telling them not to spend.

 

https://www.skornorth.com/twins-2/2019/01/twins-prez-were-in-a-much-better-spot-than-maybe-some-of-our-fan-base-might-view-it/

Some of the money MLB teams make from outside revenue sources (national TV/merchandise, etc.) are accounted as capital, not revenue. This could skew the accuracy of Forbes estimates.

[terrydactyls]

Some of the money MLB teams make from outside revenue sources (national TV/merchandise, etc.) are accounted as capital, not revenue. This could skew the accuracy of Forbes estimates.

I don't think accountants would agree with this definition of "capital."

[Mr. Brooks]

I don't think accountants would agree with this definition of "capital."

"For the 16th consecutive year, MLB saw record gross revenues. For 2018, baseball-related revenues were $10.3 billion, according to industry sources who spoke on the condition of anonymity. The revenues do not include the $2.58 billion sale of BAMTech to Disney that is reported as capital."

 

https://www.google.com/amp/s/www.forbes.com/sites/maurybrown/2019/01/07/mlb-sees-record-revenues-of-10-3-billion-for-2018/amp/

[Richie the Rally Goat]

They ain't going to spend on a losing.

they ain’t gonna spend on a winner either. 2002-2010 were playoff years and always came up short due to unwillingness to buy those last couple pieces to get over the hump.

[Richie the Rally Goat]

I know bashing the Pohlad's for being cheap is a fan favorite, but this whole 50% of payroll argument isn't really adding up. Below is the numbers from Forbes based on April 2018, so the numbers must be from 2017 season. The Twins had a payroll of around $110m, with revenue of $261. So to get to have payroll at 50% of revenue, they would spend $130m, or $20m more. They had a profit of $23 million, so it seem unlikely that when they made the comment, they were not planning on basically breaking even.

 

So, I think it logical to conclude that these number being used are not matching what they were saying. Maybe when they were talking payroll, they were including the $10-$15m in benefits costs.

 

 

https://www.forbes.com/teams/minnesota-twins/

 

Team Value calculated April 2018

 

At a Glance

Owner: James Pohlad

Championships: 3

Price Paid: $44 M

Year Purchased: 1984

Revenue2: $261 M

Operating Income3: $23 M

 

As for this years spending it is down, but that seems more like a front office plan than ownership telling them not to spend.

 

https://www.skornorth.com/twins-2/2019/01/twins-prez-were-in-a-much-better-spot-than-maybe-some-of-our-fan-base-might-view-it/

Pohlads also get ownership stake in FSN in lieu of a greater share of revenue. The Twins make far more than is reported in these types of scenarios.

[KGB]

 

Pohlads also get ownership stake in FSN in lieu of a greater share of revenue. The Twins make far more than is reported in these types of scenarios.

So what we are saying is, we don't know what the revenue is or what they were considering revenue counting toward the 50% of payroll.  So complaining that they are not hitting a target that we can't define is a waste of time?

 

We just know they are billionaires, so they should be spending more on payroll.

[Richie the Rally Goat]

 

So what we are saying is, we don't know what the revenue is or what they were considering revenue counting toward the 50% of payroll.  So complaining that they are not hitting a target that we can't define is a waste of time?

 

We just know they are billionaires, so they should be spending more on payroll.

Bingo! "number" doesn't matter but "More" is really fair 

[Otto von Ballpark]

At a Glance

Owner: James Pohlad

Championships: 3

 

Did I miss a championship? Or did we get one for dollars per WAR along the way?

[Vanimal46]

Did I miss a championship? Or did we get one for dollars per WAR along the way?

I also didn't know Jim could take credit for the championships won while his dad was running the team.

[Mr. Brooks]

I also didn't know Jim could take credit for the championships won while his dad was running the team.

It's not crediting James Pohlad as having 3 championships (I assume the 3rd is from Senators days), it's separate informational bylines about the franchise.

One byline notes who currently owns the franchise. The next, separate byline, happens to note the number of championships.

[KGB]

 

Did I miss a championship? Or did we get one for dollars per WAR along the way?

May just a prediction for this year

[terrydactyls]

"For the 16th consecutive year, MLB saw record gross revenues. For 2018, baseball-related revenues were $10.3 billion, according to industry sources who spoke on the condition of anonymity. The revenues do not include the $2.58 billion sale of BAMTech to Disney that is reported as capital."https://www.google.com/amp/s/www.forbes.com/sites/maurybrown/2019/01/07/mlb-sees-record-revenues-of-10-3-billion-for-2018/amp/

Because you found that on the internet doesn't mean accountants would agree.

[Mr. Brooks]

Because you found that on the internet doesn't mean accountants would agree.

Yeah, what does Forbes know about accounting. I guess they just made it up. But why?

[mlhouse]

 

they ain’t gonna spend on a winner either. 2002-2010 were playoff years and always came up short due to unwillingness to buy those last couple pieces to get over the hump.

 

I have made this point.

[Richie the Rally Goat]

I have made this point.

should and will are two different things. I think they should spend and won’t. I would characterize your stance as they won’t spend and you agree with the FO. No?

[terrydactyls]

Yeah, what does Forbes know about accounting. I guess they just made it up. But why?

The actual article you cited was written by a sports writer, not Forbes, and he quoted "anonymous" sources. The word "Forbes" is not used in the article. And the words "capital" and "Forbes" are not mentioned in the link to the article about the BamTech sale (also written by the same BBWAA member).

[Mr. Brooks]

The actual article you cited was written by a sports writer, not Forbes, and he quoted "anonymous" sources. The word "Forbes" is not used in the article. And the words "capital" and "Forbes" are not mentioned in the link to the article about the BamTech sale (also written by the same BBWAA member).

And do you have an opinion why he'd risk his career making something like that up? How does that serve him?

This is a 20 year + sports business reporter whose credentials are thought of highly enough for Forbes to carry him as a contributor.

[bird]

 

they ain’t gonna spend on a winner either. 2002-2010 were playoff years and always came up short due to unwillingness to buy those last couple pieces to get over the hump.

 

 

Ancient history, really. I don't think we can assume a continuation of Ryanesque risk aversion and frugality. Why not take this FO (and the owner) at their word? They say they'll spend if and when they think it makes sense.