OK, But Really: Why Did the Twins Openly Leak Their Payroll Drop?

[Nick Nelson]

It was a decision that seemed weird at the time, and now seems even weirder as the self-inflicted negative PR takes its toll in early offseason discourse.

Why did the Twins reveal their intentions to decrease their payroll? What did they stand to gain?

Image courtesy of John Bonnes, Twins Daily

The Twins didn't exactly hold a press conference to announce it, but they might as well have. In early November, shortly after the conclusion of the World Series, team leadership left little ambiguity about the spending outlook for 2024.

“We’ve pushed our payroll to heights that we had never pushed it before with the support, certainly, of ownership,” Derek Falvey said. “We know there is some natural ebb and flow to that. Will it be where it was last year? I don’t expect that. I expect it [to be] less than that. Some of that may come more organically.”

Some follow-up reporting from Dan Hayes for The Athletic brought even more detail to light: the team foresees "significant payroll cuts" of up to $30 million. This journalistic revelation was less overt than Falvey's open on-the-record admission, but still, you don't get the sense it was some tightly-held secret. Clearly Twins leadership–or at least certain elements of it–didn't mind having this narrative out there in the public sphere.

WHY?
Coming off a division-winning campaign and a long-awaited postseason breakthrough, the Twins were riding high. They had a prime opportunity to parlay the excitement surrounding this team into a robust winter of season ticket sales and sponsorships. Even if reduced spending was an inevitable reality (and arguably a reasonable one), why come out and say it right away? What is to be gained?

Falvey and this front office are too strategic, too intentional to just let something like this slip accidentally. There was a rationale behind getting the word out there. Maybe that's what is most annoying about it for those of us trying to analyze from the outside; it's really hard to find an obvious answer. The effects of setting this vibe for the offseason have been fairly predictable. The widespread reaction to nearly every piece of Twins-related news is colored by resentment toward dropping payroll in a moment of great opportunity. 

Parting with longtime scouts from the previous regime? Cheap. Failing to re-sign Sonny Gray and Kenta Maeda? Classic Pohlads. Never mind that these decisions adhere to the same general philosophies this front office has pretty much always followed. The Twins are willingly inviting this narrative.

So again, I ask: why? There's got to be some sort of motivation behind this course of action. In trying to land on an explanation that seems viable, a few potential objectives come to mind.

They're trying to create awareness of the TV situation and its implications.
This strikes me as most probable. While many Twins Daily regulars are likely aware of the team's collapsed broadcasting deal with Diamond Sports Group and what it means for the overall revenue picture, a majority of casual fans are not clued in.

Not everyone's going to be empathetic to a mega-rich operation making fractionally less profit, but at least it gets an associated (and arguably valid) causal factor out there. Hayes's article makes this framing clear: "Following the expiration of a Bally TV deal that netted them $54.8 million last season, Falvey acknowledged the team’s payroll wouldn’t be nearly as high," he wrote. If a public perception is formed that "better TV deal = higher payroll", it could help the team curry support in its quest to find a new solution.

They're trying to influence market expectations. 
The Twins love to find a competitive advantage wherever they can get it. If players, agents, and other front offices believe the Twins are intent on reducing their payroll, it could influence perceptions in interesting ways. Perhaps another team discounts the stealthy Twins in negotiations for a key player. 

A stretch? Perhaps. But it'll be a feel-good story for everyone if the Twins end up shooting higher than expected and can talk about how they went past their comfort zone to get the guy they wanted.

They're lowering expectations so they can exceed them.
Under-promise, over-deliver? The optics of even coming close to repeating their record-setting payroll of 2023 would now be pretty good, given that the team has proactively dampened expectations. I know most of us are zeroing in on the lower end of that $125-140 million range Hayes laid out, to the extent that going beyond that would now feel like a pleasant surprise.

It matters, because the difference between those two figures would have a sizable impact on what the front office is realistically able to do this offseason when it comes to upgrading the team, or even making up for the losses they've already experienced in free agency. Unfortunately, this is probably wishful thinking. What I keep coming back to is, why come out with it now? If the Twins ended up spending marginally less next year than they did this year, I don't think too many people would notice or care. The up-front framing of these cuts as significant is glaring to me, and makes me expect the worst.

They're trying to soften a big blow.
Maybe we are all right to be zeroing in on the low-end $125 million target. Maybe that's the whole point. I don't have any specific insight beyond what's out there, but it wouldn't shock me if the Twins feel overextended after going big last offseason and then losing the RSN honeypot.

If Falvey is merely leveling with us and being transparent about the steep drop-off to come, I find it hard to begrudge him. I still just don't get it from a business standpoint. Even if the front office leader's corresponding point about payroll–that the Twins can succeed with a lower one because they've built the infrastructure to do so–is accurate, he had to know how the comment and insinuation would be perceived. 

The reignited payroll narrative is now casting an additional pall over a series of Twins-related headlines that have not been received well: Dick Bremer being ushered out of the broadcast booth, tenured scouts being dismissed, several key free agents signing elsewhere. Hopefully, somewhere on the other side of this, there is a vision to turn the tides and revitalize morale. Right now, all I'm seeing is an avalanche of bad press and buzz-killing vibes. It makes me wonder what exactly the Twins are trying to do from a business and brand standpoint, as much as a baseball one.

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[DJL44]

The Twins have to be careful if they want to make sure they're a revenue sharing recipient. Being a recipient means they get extra draft picks and an increased budget for international free agent signings. They don't want to lose that advantage.

[tony&rodney]

Nick, you covered it all. It just doesn't make any sense.

I would not have expected the Twins to entertain resigning either Gray or Pagan even if the payroll was going to remain around $150M. The Twins might have brought Maeda back with more financial wiggle room. The dropping of scouts seems weird. Is there something else there? The timing was strange. I cannot see a single benefit from Falvey making his comments. It wasn't necessary.

 

[Brian Kingfield]

Embarrassing admission - this feeling didn’t quite sink in for me until Pagan left. I get the hate, but he is a solid and inexpensive arm.

I get that some of these paydays are maybe a bit higher than the player’s value, but to pass on them means we feel we can find better value elsewhere. Can we? I’m a little nervous that we’re going to keep waiting for the perfect, cost-effective deal only to watch all good options pass us by. This makes me think some pretty big trades are in the works. Hopefully there is a plan that we’re just not seeing yet.

[Reptevia]

They were trying to reduce expectations to soften the blow when it ends up being $120M. I think that may be the ceiling. I know I’m in the minority on here, but we’ll see…

[Mike Sixel]

Lowering expectations lowers ticket sales. This whole thing can't help sales, making it a self fulfilling prophecy they have to cut spending. I'm really baffled here. 

[Matthew Trueblood]

I made the case at Baseball Prospectus about a week and a half ago that the Twins just plain erred by deciding to decrease payroll at all. Given the cycle of sales and partnerships, it's especially dumb to let everyone know this is happening, but the smart move was simple to invest and realize the big gains over the next several years, anyway. Well-put here, Nick.

https://www.baseballprospectus.com/news/article/86831/flyover-country-winning-and-losing-the-winter/

[DJL44]

Another idea - this is the opening of negotiations for the TV contract. If they spend the estimated money in advance then the media company has leverage knowing the Twins need the money to make payroll. This incentivizes the TV company  to wait until the day before the first payroll check is due and force the Twins to settle. The Twins are saying "we can play this whole season without a TV contract at all and we aren't going to cave in."

[Matthew Trueblood]

2 minutes ago, DJL44 said:

Another idea - this is the opening of negotiations for the TV contract. If they spend the estimated money in advance then the media company has leverage knowing the Twins need the money to make payroll. This incentivizes the TV company  to wait until the day before the first payroll check is due and force the Twins to settle. The Twins are saying "we can play this whole season without a TV contract at all and we aren't going to cave in."

Ahhh, interesting! I like that spin on Nick's first proposed reason. It's probably not enough to explain the choice on its own, but I could see that being a factor.

[nicksaviking]

My take at the outset, was that the way the roster is constructed, and with more players in the upper minors than they can protect, this was likely to be a lower payroll year regardless of the TV deal. This team won't give the required years to get top end starting pitching, and they don't need more back of the rotation arms, to improve the staff, they'll have to trade for it like always, which doesn't tend to add to the immediate payroll.

And offensively, the 26-man roster is already full. They can basically just sign one offensive free agent at the expense of Gordon/Larnach. But signing anyone beyond that likely means picking off the more pricey vets already on the team. Obviously signing only one or two free agents as opposed to a half dozen is going to keep the payroll lower.

So I'll throw out another possibility. The payroll was always going to be lower organically, and mentioning the TV deal provided a bit of shade for both the front office and ownership.

[DJL44]

2 minutes ago, Matthew Trueblood said:

Ahhh, interesting! I like that spin on Nick's first proposed reason. It's probably not enough to explain the choice on its own, but I could see that being a factor.

Unfortunately, if true, it also means they're willing to risk a 2024 pennant for a better TV contract.

[gunnarthor]

One potential answer is that they didn't see bad press coming from this. This org has been a bit clueless at times on how its words are received. Anyone remember Dave St. Peter blaming fans for not coming to games last year? And when you think you're the smartest guys in the room, you expect everyone just to accept your decisions without question. 

[Mike Sixel]

2 minutes ago, gunnarthor said:

One potential answer is that they didn't see bad press coming from this. This org has been a bit clueless at times on how its words are received. Anyone remember Dave St. Peter blaming fans for not coming to games last year? And when you think you're the smartest guys in the room, you expect everyone just to accept your decisions without question. 

This wouldn't shock me. The team is well protected by the press, so it isn't just hubris 

[MABB1959]

They won the Central (not a huge feat) but they had a decent series against Houston. It seems losing Gray alone is huge.  If the ownership was satisfied with this season they will never be true contenders.

As always we are on the outside looking in,

[tony&rodney]

34 minutes ago, Reptevia said:

They were trying to reduce expectations to soften the blow when it ends up being $120M. I think that may be the ceiling. I know I’m in the minority on here, but we’ll see…

I built my first roster in October at $120M, shifted when the TD Payroll Blueprint Tool came out to fit that budget of $150M, but have shifted back to a strict limit at $125M. We just don't know though.

[Hawkeye Bean Counter]

42 minutes ago, Brian Kingfield said:

Embarrassing admission - this feeling didn’t quite sink in for me until Pagan left. I get the hate, but he is a solid and inexpensive arm.

I get that some of these paydays are maybe a bit higher than the player’s value, but to pass on them means we feel we can find better value elsewhere. Can we? I’m a little nervous that we’re going to keep waiting for the perfect, cost-effective deal only to watch all good options pass us by. This makes me think some pretty big trades are in the works. Hopefully there is a plan that we’re just not seeing yet.

Pagan is a player many were wanting to just drop in June.  Yes he had a nice end of the season, but the Twins finally figured out to only put him in the lowest of low leverage situations often at the bottom of the line-up,  and he could do ok.  Still shaky but ok.  He is going to the Reds where with a $16 million contract he is going to be expected to not only be in high leverage situations at the top of the line-up,  but also in a band box of stadium.   There is no way he was worth $16 million.  Maybe a 1 year 5 million or a 2 for $8.  This has nothing to do with budget constraints.  

[Hawkeye Bean Counter]

Honestly I take the salary discussion as a red herring.   I think Falvey wanted it very clear that the decision to decrease payroll was coming from Ownership due to TV deal, even though I don't think that is entirely true.  There have been a couple reports being very optimistic not only on a TV deal but also the money they expect to get.   So do the previous salary constraints go completely away . . .  No and yes.  It solves the revenue issue but not necessarily a reduction in costs.   I think the Twins had already spent money last year before Correa came available again.  In signing him,  they went over budget and were given a 1 time ok for doing that.   In my mind they were over by $10 mil over where they should have been.   So a little pullback was natural, add in the TV deal and yes I think the Twins should be in the $130 to $150 range for the near future for a budget once the TV money is fixed.  The Twins had a $134 budget in 2022.   We will see what happens but this isn't something that I am going to ruffle my feathers about.  I know the Twins are a smaller market team, and unless more fans are going to come out to the games or subscribed this is the type of payrolls we can expect going forward, around 16-20.   

[roger]

Interesting topic, Nick.

All here are avid fans who are involved in what is happening on a daily basis.  But isn't the average fan hardly aware of what's going on?  The corporate execs who buy the boxes and spend the big bucks aren't thinking about what their payroll will be.  Expect they have been told the team believes they can be just as competitive with a smaller payroll in '24.  Those guys are all businesspeople and understand what is necessary due to the tv problem.  

Expect there is a large percentage of fans who attended games in '23 that aren't thinking about what everyone here talks about daily.  Still don't know why they did what they did, and doubt we will ever know.  I just hope that a lot of guys are healthier in '24, the Twins compete and most of all, I can watch the bloody games on tv.

[LastOnePicked]

One of your best articles, Nick. Honestly. Even the potential reasons/rationales are well-considered.

I'm still kind of hoping for the "under-promise" scenario myself. I seem to recall that they made similar comments at the start of last offseason, and then later Correa was signed. New postseason addict Joe Pohlad could certainly be talked into boosting payroll a bit come February, if a few good deals avail themselves, couldn't he?

But we'll see. Maybe this is a new reality. But I think this market is potentially lucrative, and a healthy Royce Lewis could make this a very desirable team to stream.

[notoriousgod71]

This organization needs some serious public relations training.

[Doctor Gast]

Thanks Nick we all know that this is some sort of play. Part of it is not having fan yell at them when they didn't go out & signed Gray or Maeda. We'll see how the rest of it plays out.

[Oldgoat_MN]

Didn't a couple of teams get stiffed when payments were due in late summer?

The Twins got paid.

That suggests that someone was making at least a little money on the broadcasting of those Twins games. Therefore I would expect that this year's revenue, from some business, shouldn't be all that much less than last year.

Please feel free to correct me if my recollection is amiss.

[Dman]

To be honest I was shocked they kept the payroll at 156M last year.  I thought they would dump Kepler after the Gallo signing for sure and others noted they probably didn't think they would get Correa in the end but they went with the larger than normal budget anyway.

They didn't have to say anything and I agree with Nick that that in itself is curious.  The FO generally isn't that forth coming with much of anything.  Maybe they wanted to get a head of the TV revenue conjecture and\or maybe they wanted time to lower expectations to exceed them. Hard to say but I think they land in the 130M range in the end but we will see.

Some of their decisions seem to have more to do with what happens in future years than just this year.  Starting in 2025 they are going to have to pay Lopez 20M per year so three players are going to take up 72.5M of salary. There are going to be more players that become Arb eligible in 2025 and beyond and no way out of Buxton and Correa for the next 5 years. They have to plan very carefully from here on out.  I think that is why we were hearing that if they did anything in FA they were looking for one year deals and why even though Maeda's price tag wasn't all that high that they didn't go two years.

While I assume Kepler, Polanco, Farmer and Vasquez all come off at some point this year or next saving 36M they are going to be relying on younger players with very little space to add in free agency IMO.

I think there are many things at play and they just decided to level set expectations early mainly because of the TV deal expiring.  Cleveland appears to be doing the same thing.  We'll see how Texas ends up operating but 100M is a lot of revenue to lose.

[CRF]

It's all a big smoke-screen. They're gonna spend money like a drunken sailor on FA's and make a slug of trades. WS here we come! If you believe that, I've got some ocean front property in Arizona that I want to talk to you about. 

[Schmoeman5]

Let the paying public know that you're lowering payroll, but don't tell them about extending the manager and giving a sizeable raise until well after the fact. 

[Jocko87]

I go back and forth on the communication of this. I’m very confident they are always playing a long game so I could see some messaging here but let’s be honest, how many casuals care enough to have even heard about it? Not many casuals that do hear will artfully pick up the nuanced points about the TV anyway so why bother trying to communicate something?

As @gunnarthor points out, they haven’t always been very good at the perception game so I’m kinda on the Occams Razor side of this.  In fact, I don’t see them even trying to play the perception game that much.  The most simple explanation is that Falvey was asked a question and answered it truthfully without much consideration for how butt hurt a few fans might get.  

It’s a very simple comment that’s easily understood except when fanatics get involved.  He expects it to be lower.  Well, duh.  18 contributing roster spots will make the minimum, 25 of the current 40 man.  Replacing salary from last year with younger guys is completely reasonable in most areas except starting pitching.  Gallo, Solano, Pagan and Taylor is $20m that we have easy vision to an in house replacement.  That’s most of the delta right there.

I think it’s more important to understand the things he did not say.

He did not say they are cutting costs.  Payroll is expected to be lower.  Big difference.

He did not say they are not looking for ways to improve the team.

He did not say they are out on a good deal for a free agent. 

He did not say ownership made a mandate. 

He did not say anything about the fabled baseball “rebuild”. 

He did not say any prospects are off limits when it comes to improving the team.

This feels like much ado about nothing. There are very real factors that would point to this as the obvious outcome. The TV deal and two years previous overspending absolutely matter but they deserve a ton of credit for being positioned perfectly to weather this period.  It was suggested that this was some opening salvo in the TV negotiations. No chance, they have been working that issue for years and lower revenue has probably been projected for quite some time.  

When I factor in a terrible free agent market, outside a couple guys they would never be in on, there is nothing here.  Let’s check back in Ft Myers and see what kind of sausage they make.  
 

[Beast]

I don’t think it’s a mystery.  They’re not playing 3D chess, here.  They’re trying to get out ahead of it now, hoping the bad taste it leaves fans and season ticket holder wears off by spring training.  Same reason why major negative news always gets dumped on Friday.  People have the attention span of a vegetable these days, and they know it.

They also need to align it as closely as possible with their “historic playoff run.”  Look at all the cover that’s run for them on this website alone.  “They’re not cheap and only concerned about the bottom line, it’s a genius organizational long game philosophy that’s won them absolutely nothing….but wait for it.  You wouldn’t understand unless you’re a true MN ball guy that faults ownership for nothing.”

[mikelink45]

They were being honest - how refreshing.  Now lets see what they do .

[Nine of twelve]

The 2024 team is in the catbird seat regarding the AL Central. Cleveland is closer to rebuilding than contending and KC and the White Sox have a loooong way to go to be competitive. That leaves Detroit, and I doubt many people expect them to surpass the Twins. This means that the Twins have a good shot to be in good shape come mid-July even with a lower payroll. If that comes to pass they will have some space to absorb higher salaries as the trading deadline approaches. I realize this involves optimism on my part but a guy can hope. The thing is that this still doesn't answer the question about why this was leaked in the first place.

[Jocko87]

6 minutes ago, Bigfork Twins Guy said:

I'm with Jocko that it was just an honest statement that Falvey made without thinking there were any ramifications.  I can go along with it given the loss of TV revenue.  I think releasing the scouts was coincidental.

They'll make a few trades and maybe even get younger thereby helping lower the payroll and pick up a few heaps of the scrap pile that they feel they can finish into workable products and hope maybe another kid like Martin or Lee can help this year.  Take all that and the weak ALC and they probably hope to be doing just enough to win the division and squeak into the playoffs again next year.

If they end up doing well in the TV deal, they can always spend by acquiring higher-priced vets for prospects at the trade deadline also.

 

I think the trade deadline is a big part of this as well.  When you are relying on so many  youngsters they can’t assume they will all incrementally improve, someone will inevitably Miranda.  Holding the spend until then might make sense so it can be targeted.