Why the Twins Should Reconsider Cost Cutting

[chpettit19]

2 hours ago, Jocko87 said:

Quick, what was the payroll in 87?  Or 91?  Or 2019 for that matter?  I don't know, don't care and I'm not looking it up.  Why does it matter?

You keep saying the way they run the organization, I get it, but keep coming back to talk about only money.  And I'm going to be blunt here, talking about it completely incorrectly.  Revenue since 2002 is not a relevant measurement but if I take that number to mean something its approximately a Joey Gallo sized mistake per year.  That's a razor thin margin.  The making hundreds of millions comments are totally without merit, no rational accounting measure could get there.  Every comparison to Atlanta literally makes the Twins looks better, not worse.  If the 2022 (last full year, which does matter) numbers at Statista are to be believed, and its as good as we've got, Twins payroll was 56% of revenue.  The Braves?  43%.  Cheapos.

You are free to vote with your dollars and attention, the same as I do.  I'm telling you as plainly as I can that this is not the hill to die on.   

It matters because, as much as we don't want to admit it around here, the higher payrolls win more. They just do. The Rays are an outlier. I know everyone likes to point to them and say "see! You don't have to spend to win!" But how many rings do they have? How many do they have from that pitching factory over there in Cleveland? No, spending doesn't guarantee you success and championships, but looking at history, not spending sure gets you awfully close to guaranteeing you don't win championships. The payroll matters. Unless your goal isn't winning rings. And that's totally fine. Fan how you want to fan. But if the goal is a World Series title, you're gonna wanna start hoping the Twins spend more.

There's no way the Twins could've made hundreds of millions of dollars in 20 years? That's a 10 million a year average profit, right? Am I doing my math wrong or is 10 million a year over 20 years 200 million? No rational accounting measure could get there? Yeah, we're just not going to agree on that.

I keep coming back to money because everyone tells me it's a business and I shouldn't expect them to spend more than they make. So we talk about payroll. The Twins are a business. I'm not asking them to run themselves as anything other than a business. I'm just asking them to run their business better. Like plenty of other teams in the mid-market range have done, and won with. Run your team better. Run your business better. From the Pohlads on down. And you can make more, and spend more. And you win more.

[chpettit19]

40 minutes ago, Jocko87 said:

I thought the word "cheapos" would emphasize the sarcasm.  My bad.  I would bet good money that a similar run of success would still leave the Twins woefully short on revenue comparatively.

Why does that kind of run of success have to "leave the Twins woefully short on revenue comparatively?" Maybe you think the MLB CBA's market scores are just nonsense that shouldn't carry any weight, but I've added it below anyways. Look at the 4 teams right above the Twins. Houston, Texas, and Atlanta all have run out top 10 payrolls in the last few years, and all have rings from those teams. Look at the teams below the Twins. Colorado's terrible and they find ways to roll out sizable payrolls (roughly the same as the Twins this year). St Louis almost always finds a way to outspend the Twins. Why are we so convinced there's just no way to spend more in this market? Maybe I'm just completely unreasonable, but why do we have to just accept that there's simply no way a well run (business and baseball sides) Twins organization can't get significant revenue boosts from sustained success? Other teams find ways. Why can't the Twins?

[Jocko87]

1 minute ago, chpettit19 said:

Why does that kind of run of success have to "leave the Twins woefully short on revenue comparatively?" Maybe you think the MLB CBA's market scores are just nonsense that shouldn't carry any weight, but I've added it below anyways. Look at the 4 teams right above the Twins. Houston, Texas, and Atlanta all have run out top 10 payrolls in the last few years, and all have rings from those teams. Look at the teams below the Twins. Colorado's terrible and they find ways to roll out sizable payrolls (roughly the same as the Twins this year). St Louis almost always finds a way to outspend the Twins. Why are we so convinced there's just no way to spend more in this market? Maybe I'm just completely unreasonable, but why do we have to just accept that there's simply no way a well run (business and baseball sides) Twins organization can't get significant revenue boosts from sustained success? Other teams find ways. Why can't the Twins?

Again, you are comparing different things, incorrectly.  "Revenue sharing market score" is not revenue.  "Revenue sharing market score" is not an accounting metric. 

Do you have the formula for "Revenue sharing market score"?  "Revenue sharing market score" means nothing to me without knowing the details that go into it.  I can't hardly imagine that MLB would make it fair down the board, like everything else they do.

Quote

Any junior level financial analyst could make it look publicly like their company is making less than they actually are.

The difference is that other junior level financial analysts, and executive types, can understand the language because its regulated.  GAAP matters.  MLB made up "Revenue sharing market score" as a metric to manage their business.  It means nothing to us.

[Jocko87]

36 minutes ago, chpettit19 said:

There's no way the Twins could've made hundreds of millions of dollars in 20 years? That's a 10 million a year average profit, right? Am I doing my math wrong or is 10 million a year over 20 years 200 million? No rational accounting measure could get there? Yeah, we're just not going to agree on that.

In my employment career, I've been paid millions of dollars.  If its over a 25 year period does that make me a millionaire?  Shoot, now that I type it out, maybe I need to cut some payroll too.

Again, $10m a year in this context is one Joey Gallo or Christian Vazquez contract.  A 20-25m bad contract for a pitcher is absolutely crippling. You are illustrating my point, not yours. 

[old nurse]

20 hours ago, chpettit19 said:

Yeah, I don't care what Spotrac says the Twins revenue in 2022 was. You're more than welcome to believe the numbers from people who have no access to the Twins books. I haven't complained about the 2023 payroll either. I'm complaining about slashing the 2024 payroll. I haven't said they were a bad team either. At this point you're arguing against things I'm not even saying.

My argument is that if they maximize this market they still wouldn't make as much revenue as the Braves when they maximize the Atlanta market, but they'd make more money than they do now. My argument is that they're not maximizing the Minneapolis market. Again, you're arguing against things I'm not even saying. Ah, yes, the old "impatient Twins fans" argument. Yeah, we haven't been patient at all. You're right.

You can't simultaneously complain about me saying a division winning team is bad (which, again, I never said) and suggest the fans need "to be patient and wait for a core to develop." All I hear all over these boards is that the core is here. The time is now. They have Lewis, and Julien, and Wallner, and Kirilloff, and Jeffers, and Ryan, and Ober, and Lopez, and Correa, and Martin on the way, and Lee on the way, and ERod on the way. Every thread about a possible trade is full of people saying "you can't trade the young guys cuz they're the core and they're here!" They were just in the ALDS and you want more patience? When do we stop getting to be patient? If it's not after the first playoff wins in 20 freaking years when is the time? 

Hey, if you think Dave St Peter has held his job as president and CEO of the Twins organization for over 20 years while the team loses money regularly more power to you. I tend to think that people get fired from those positions if the organization they're running loses more money than it makes, but maybe I really don't understand how business works. Is it not more realistic to believe that he's held that job for as long as he has because the Twins make the Pohlads a lot of money? I think it is, but maybe I'm just way off base on what they expect from him. But, if I'm right, and the Twins are making the Pohlads money and that's why they keep the guy in charge of the organization's finances in place for over 2 decades, then I don't think it's unreasonable to ask them to invest in a team that just went to the ALDS instead of destroying their own momentum and slashing payroll. Or we can just be more patient and wait another 20 years for a playoff win and maybe then "a core" will have developed and then it'll be reasonable to ask the Pohlads to invest for a year.

The Pohlads built their fortune off corporate raiding with Irwin Jacob’s  I think they understand maximizing profit. I would think as bankers they understand debt. 

[Major League Ready]

8 hours ago, chpettit19 said:

It matters because, as much as we don't want to admit it around here, the higher payrolls win more. They just do. The Rays are an outlier. I know everyone likes to point to them and say "see! You don't have to spend to win!" But how many rings do they have? How many do they have from that pitching factory over there in Cleveland? No, spending doesn't guarantee you success and championships, but looking at history, not spending sure gets you awfully close to guaranteeing you don't win championships. The payroll matters. Unless your goal isn't winning rings. And that's totally fine. Fan how you want to fan. But if the goal is a World Series title, you're gonna wanna start hoping the Twins spend more.

There's no way the Twins could've made hundreds of millions of dollars in 20 years? That's a 10 million a year average profit, right? Am I doing my math wrong or is 10 million a year over 20 years 200 million? No rational accounting measure could get there? Yeah, we're just not going to agree on that.

I keep coming back to money because everyone tells me it's a business and I shouldn't expect them to spend more than they make. So we talk about payroll. The Twins are a business. I'm not asking them to run themselves as anything other than a business. I'm just asking them to run their business better. Like plenty of other teams in the mid-market range have done, and won with. Run your team better. Run your business better. From the Pohlads on down. And you can make more, and spend more. And you win more.

A single player is making $30M a year and your argument is that they are raking it in at $10M a year?  How many businesses do you know where the goal of the business is to make 1/3 of their highest paid employee?  If this is the expectation, shouldn't it be expected of all the teams?  Should all of the teams make $300M a year while the players make $4 billion?

Piece together your entire argument and it's ludicrous.  You don't expect them to spend more than they make which by your account has averaged $10M.  Therefore, we are talking about spending another $10M which on average has produced 1.2 WAR a season.  To go on and on about stretching the spending makes zero sense.  It's simply not all that impactful.  Drafting Cavaco instead of Carroll or Stot is impactful. 

If the Twins spent every dollar of profit we would still be at a significant disadvantage and here is where we differ.  You point to team spending as the driving force to winning.  I point to revenue which is the actual driving force here.  The argument about spending to market potential is absolutely ridiculous.  My god, if an executive in any 9 figure business suggested this approach they would be laughed out of the room.  Baseball has a giant revenue disparity and that is the source of the problem.   It's not changing so to get this bent out of shape is a waste of time.  Keep in mind during the last CBA it was the owners tried to keep the disparity in check and the players stood firm on widening the gap.

[Linus]

As to the title of the thread I’m sure the Twins gave plenty of consideration when they decided to cut payroll. Not a decision anyone would take lightly especially knowing it would not be popular. So no they will not be reconsidering cutting payroll. As to the rest of the discussion the Pohlads own the team. We don’t get a vote. If I was deciding I wouldn’t cut payroll right now but I don’t control that so I’m not going to worry about it. 

[Major League Ready]

10 hours ago, chpettit19 said:

Why does that kind of run of success have to "leave the Twins woefully short on revenue comparatively?" Maybe you think the MLB CBA's market scores are just nonsense that shouldn't carry any weight, but I've added it below anyways. Look at the 4 teams right above the Twins. Houston, Texas, and Atlanta all have run out top 10 payrolls in the last few years, and all have rings from those teams. Look at the teams below the Twins. Colorado's terrible and they find ways to roll out sizable payrolls (roughly the same as the Twins this year). St Louis almost always finds a way to outspend the Twins. Why are we so convinced there's just no way to spend more in this market? Maybe I'm just completely unreasonable, but why do we have to just accept that there's simply no way a well run (business and baseball sides) Twins organization can't get significant revenue boosts from sustained success? Other teams find ways. Why can't the Twins?

The only relevant metric in measuring spending capacity is revenue.  If you want to measure the Twins relative willingness to spend, compare their payroll with the teams closest in revenue or use percentage of revenue.  When the twins can start paying for player salaries with a "market score", it will be relevant and as Jocko has pointed out this is a relatively meaningless metric.  Do you understand that if an executive responsible for the bottom line based their budget on a market metric as opposed to revenue they would be fired in a New York second?

You are also only seeing what you want to see in this metric.  Do you really think Oakland should be spending more than Boston?  Does Philly generate more revenue than Boston?  Should the White Sox be spending the same as the Cubs.  Why aren't the White Sox spending far more than the Twins.  It's absolutely meaningless in terms of current spending.  You are using it because it suits your narrative.  

If you are actually interested in a meaningful comparison, show us how the Twins payroll percentage of revenue compares to other teams.  Of course, it's been done here before and the Twins are in line with the rest of the league.

[chpettit19]

10 hours ago, Jocko87 said:

Again, you are comparing different things, incorrectly.  "Revenue sharing market score" is not revenue.  "Revenue sharing market score" is not an accounting metric. 

Do you have the formula for "Revenue sharing market score"?  "Revenue sharing market score" means nothing to me without knowing the details that go into it.  I can't hardly imagine that MLB would make it fair down the board, like everything else they do.

The difference is that other junior level financial analysts, and executive types, can understand the language because its regulated.  GAAP matters.  MLB made up "Revenue sharing market score" as a metric to manage their business.  It means nothing to us.

I understand what the market score is. It's a representation of the likely potential for revenue in a certain market based on a variety of variables that is signed off on by both the owners and players that has direct impact on teams both financially (revenue sharing) and in team building (draft pick compensation). I never claimed it was revenue. The point is that this constant "we're a small market so there's just no way we can spend" doesn't need to be blindly accepted. Plenty of teams in similarly sized, or smaller, markets out spend the Twins because they do better at maximizing their markets. Why can't the Twins be one of those teams?

Your claim was that the Twins would still be significantly lower in revenue than the Braves even with a sustained run of success like the Braves. My counter is that that doesn't just have to be an accepted truth like there's no possible way the Twins can out produce teams in larger markets. It happens all the time.

[chpettit19]

10 hours ago, Jocko87 said:

In my employment career, I've been paid millions of dollars.  If its over a 25 year period does that make me a millionaire?  Shoot, now that I type it out, maybe I need to cut some payroll too.

Again, $10m a year in this context is one Joey Gallo or Christian Vazquez contract.  A 20-25m bad contract for a pitcher is absolutely crippling. You are illustrating my point, not yours. 

If that salary was your personal "profit" and put into your savings account not to be spent, then, yes, you would be a millionaire now. The Twins publicly reported profit (not revenue, profit) over the last 20 years is nearly $260 million. As in they already paid all their bills and still had 260 million left over. Your analogy doesn't work the way you thought it did. You're the one comparing things wrong. Profit is what comes after they paid all their bills, not their total revenue which is what your take home pay is.

[Jocko87]

2 hours ago, chpettit19 said:

If that salary was your personal "profit" and put into your savings account not to be spent, then, yes, you would be a millionaire now. The Twins publicly reported profit (not revenue, profit) over the last 20 years is nearly $260 million. As in they already paid all their bills and still had 260 million left over. Your analogy doesn't work the way you thought it did. You're the one comparing things wrong. Profit is what comes after they paid all their bills, not their total revenue which is what your take home pay is.

You are getting there.  I know its not the perfect analogy in the way you are thinking but hear me out.  If I held back a little bit every year, say 6-8%, I would have a little bit of money left to fund my operation during Covid.  I would have a little bit of money to splurge on a vacation, fix the transmission in my car, pay for a medical emergency.  You see where this is going?

To keep it in a real life example, say all of a sudden inflation and high interest rates hit and I relocate, increasing my housing costs 40%.  The first year wasn't that bad, I was still able to hold back about 2.5% but things aren't looking great.  The second year was rough.  Debt increased and I've now not been able to hold money back and instead I'm dipping into my held back money to cover a 10% loss.  Not only did I have to dip in to the reserves, I was unable to put any into it which compounds the problems.  The relocation didn't bring quite the increased revenue I was expecting (attendance) so now I need to adjust.

You know what I'm not getting this year?  A new truck.  (Seriously, have you checked those prices lately?  Sheesh!  Almost like starting pitching.)

Bringing it back to the Twins, using your numbers, they spent 10% of all the money they have made over a 21 year period in one year. 

If your normal year of living caused you to take 10% out of your retirement funds just to do your basic day to day living or even pulled that 10% to sail around the world you'd make some adjustments the next year too.  And yes, I'm aware they aren't dipping into the retirement accounts but people don't invest in businesses without some return.  The numbers we are talking are completely reasonable returns.  They are operating on the margin of one failed transmission, ie one Joey Gallo sized contract. 

This will be my last comment on this thread.  If you chose to vote with your dollars and attention over this, that's your choice.  I'm telling you though, this is not the hill to die on.  If we circle back on opening day and we are both disappointed over the results of the offseason, I'll be right there with you, playing more golf than watching baseball.

[Woof Bronzer]

On 11/23/2023 at 10:00 AM, Jocko87 said:

 Focus on the product, not the payroll.

The oddest thing about this whole thread is you seeming to think there is no correlation between product and payroll.  If you go to Best Buy to buy the best tv possible - focus on the product, after all - but you set a firm limit of $200, are you going to get the best product?

Asked another way:  do you think how much a player makes is related to their performance?  If so, do you agree that good players are more expensive than bad players?   

[Jocko87]

35 minutes ago, Woof Bronzer said:

The oddest thing about this whole thread is you seeming to think there is no correlation between product and payroll.  If you go to Best Buy to buy the best tv possible - focus on the product, after all - but you set a firm limit of $200, are you going to get the best product?

Asked another way:  do you think how much a player makes is related to their performance?  If so, do you agree that good players are more expensive than bad players?   

Wait, do you mean to tell me there is a store where I can buy young TVs, just learning how to pixilate, and at a significant discount? And so long as I have some patience and a solid TV development program I can have a full grown television that plays all the hits for a fraction of the price?  I’ve been doing it all wrong!

The TV analogy is actually pretty solid for free agent starting pitching, since you mention it.  Along with several other products that we purchase at peak value it’s the best it will ever be the day we bring it home.  It does nothing but decrease in value from that day forward.  Doesn’t mean we don’t buy these things from time to time but understand the value proposition.  Oddly, I’ve got a plasma display that is an exception to the rule but it’s taken several years.  Don’t bother throwing random pitcher names at me.

We all know damn well baseball pay is not equated with performance, never has, never will be.  The system is designed specifically for getting the best of young players cheaply and washing most of them out before they get paid in free agency.  Fair? Probably on the whole as there are no shortage of applicants but that's another thread.  It’s the system we have.  In that system, spending less and still performing well is quite literally peak front office performance.  

Are the good players paid more because they are good or good because they are paid more?  

By the time these players get to that pay level they have been filtered so many times your sample size is impossible to correlate with anything meaningful.  Of course good players seem to get paid more, they had to be good to get paid in the first place.

Why would you insist on paying more for this muffler?

[Woof Bronzer]

15 hours ago, Jocko87 said:

We all know damn well baseball pay is not equated with performance, never has, never will be.

What is it equated with then?  Just random numbers?  Pull a salary from a hat?  Why do you think, say, Carlos Correa makes more than JP Crawford?  

Are you saying that, say, the Rangers being better than the A's this year had nothing to do with payroll? 

Fascinating takes.  Tell me more!  

 

[Jocko87]

27 minutes ago, Woof Bronzer said:

What is it equated with then?  Just random numbers?  Pull a salary from a hat?  Why do you think, say, Carlos Correa makes more than JP Crawford?  

Are you saying that, say, the Rangers being better than the A's this year had nothing to do with payroll? 

Fascinating takes.  Tell me more!  

 

Past performance with hope of retained value, what sport are you watching? Straw man arguments aren’t going to work out well for you. Either engage the point or disengage the topic. It is a complicated discussion that doesn’t deserve this level of distraction.  You can do all of that on twitter. 

Gunnar Henderson or Carlos Correa? How much money did Mike Trout make in 2011 and 2012 for 20+ WAR?  Under $1m for two seasons.  You know darn well that if he got hurt he never gets paid for that. I can do meaningless individual names and random teams all day.  They mean nothing to this conversation. 

[Woof Bronzer]

22 hours ago, Jocko87 said:

Past performance with hope of retained value, what sport are you watching? Straw man arguments aren’t going to work out well for you. Either engage the point or disengage the topic. It is a complicated discussion that doesn’t deserve this level of distraction.  You can do all of that on twitter. 

Gunnar Henderson or Carlos Correa? How much money did Mike Trout make in 2011 and 2012 for 20+ WAR?  Under $1m for two seasons.  You know darn well that if he got hurt he never gets paid for that. I can do meaningless individual names and random teams all day.  They mean nothing to this conversation. 

Ok, we'll agree to disagree, I think payroll has a direct correlation on the quality of the product on the field, using the evidence that only 1 team in the bottom 1/3 of payroll has won a World Series in the past 3 decades. 

You think payroll has no correlation with the product on the field, using ???? as evidence.  

I think better players cost more.  You think that because Mike Trout, perhaps the best player ever to lace up the cleats, played out of his mind as a young player (before getting a massive contract that you somehow neglected to mention), that there is zero correlation between salary and skill across all of MLB.  

Let's leave it at that!  Good chat.  

[Jocko87]

1 hour ago, Woof Bronzer said:

Ok, we'll agree to disagree, I think payroll has a direct correlation on the quality of the product on the field, using the evidence that only 1 team in the bottom 1/3 of payroll has won a World Series in the past 3 decades. 

You think payroll has no correlation with the product on the field, using ???? as evidence.  

I think better players cost more.  You think that because Mike Trout, perhaps the best player ever to lace up the cleats, played out of his mind as a young player (before getting a massive contract that you somehow neglected to mention), that there is zero correlation between salary and skill across all of MLB.  

Let's leave it at that!  Good chat.  

We absolutely do not agree to disagree.  That would require me to accept your insane framing of my statements. You are intentionally ignoring my words to shout at clouds. I specifically addressed Trout’s future money, read again.

Your evidence of correlation is anecdotal. That’s like bringing a banana to a nuclear conflict.  The bottom 1/3 of any sample is statistically irrelevant.

There is significant correlation between winning games and payroll.  There is less significant correlation between playoff appearances and payroll but still fairly strong.  The correlation between payroll and championships drops off significantly. These can all be and have been accurately measured with actual statistical analysis.  None of the factors rise anywhere close to causation which is why this continues to be a discussion. Thank you New York Mets. 

Speaking of the Mets, they gave us a great example to learn from last year.  One of the main reasons the correlation decreases for championships is how much a roster can change with very little payroll input at the trading deadline and beyond.  The Mets placed two $40m pitchers on playoff teams but sent very few payroll requirements with them.  It’s an extreme example, to be sure, but even a normal trade skews the ratio. The Rangers paid Sherzer middle reliever money for an ace. That they didn’t get the full ace performance is another factor for a different time.

I wonder what the correlation is between getting it right at the trade deadline vs championships? I don’t think it’s been studied but my hypothesis would be that it’s stronger than payroll. The tough part of that analysis would be what is the definition of getting it right.  

If you want to engage my points and have a good faith discussion I can do it all day.  If not, I apologize in advance.  I’ll respond but only for the future curious mind that is trying to grasp a complex topic.