How Excited Should Fans Be About Pohlad Family Plans to Sell Minnesota Twins?

[Matthew Lenz]

On Thursday, the Twins released a statement indicating they’re exploring selling the organization. While most everyone’s initial reaction will be to jump for joy, let’s pump the brakes on celebrating too much before knowing the facts.

Image courtesy of © Brad Rempel-Imagn Images

For the second time in 2024, a Major League Baseball organization is up for sale. You might remember that the Baltimore Orioles sold earlier this year, in what was just the “fifth time since 2013 that a control ownership stake in an MLB team was sold”, according to Sportico. The previous four sales were the New York Mets in 2020, the Kansas City Royals in 2019, the Florida Marlins in 2017, and the Seattle Mariners in 2016. All that said, there were also recent instances of organizations exploring selling that never actually came to fruition.

In April of 2022, the Washington Nationals were the 12th-most valuable team in baseball, at $2 billion, and the organization was put up for sale by the Lerner family. According to Chelsea Janes of the Washington Post, the Lerners were unable to find an offer at the price they wanted, and they pointed to the uncertainty surrounding the “most important revenue stream”: television. Sound familiar? Just a couple months earlier in 2022, Arte Moreno announced he was exploring selling the Angels ($2.2-billion valuation, 9th in MLB) before pulling them off the market less than a year later and even more recently reiterating his intention to keep the team. Similarly to the Lerners, his comments at the end-of-season media scrum seem to indicate that he hadn’t received an offer that met his asking price. That’s all to say, just because the Twins are for sale, doesn’t mean they’ll find someone willing to pay the Pohlads' asking price. Forbes valued the Twins at "only" (relatively speaking) $1.46 billion back in March, good for 21st in all of baseball, but they also have uncertainty surrounding the long-term solution of their revenue from TV.

But, what if they successfully sell the team? That automatically means a bigger payroll in 2026 and beyond, and World Series rings, right? Right?! Well, to the second part of that question, have you seen the Orioles, Mets, Royals, Marlins, or Mariners win a World Series since their respective sales? In fact, the Mets are the only team to make any semblance of a postseason run, and that’s happening as I write this, four years later. Now, have those sales led to a bigger payroll and more wins?

Before diving in, let’s talk about the Orioles. Their sale was too recent to make any definitive statements on the question above. What I will point out is, they were one of the best teams in baseball with a very, very promising homegrown and young (read: cheap) core, and did attempt to bolster their roster by completing seven trades ahead of the trade deadline. While the moves didn’t pan out, new ownership allowed the front office to be aggressive at the deadline and add payroll, which didn’t really happen in 2023. Okay, let's dig in.

The data above shows the wins and payroll from the year prior to the organization’s sale through two years after the organization’s sale. Due to the Mets and Royals being impacted by the 2020 COVID year, I extrapolated their wins over 162 games using their 60-game winning percentage. I also added where each team's payroll ranked for that particular season.

The Mets are a bit of an outlier, here because their owner, Steve Cohen, invests in his team like almost any fan would, with a staggering payroll increase in a short timeframe. That said, it took until this season for the investment to pay off in the form of a playoff run. The Royals are a decent comparison to the Twins in terms of the size of the market and, to a lesser extent, their payroll. You’ll notice that things got worse shortly after the sale, before they got better--as the Royals are now in the midst of their first postseason since new ownership took over. Kansas City wasn't in quite the same situation as the Twins are, though, in that they were less competitive before the sale than the Twins have been recently and in that they knew they would be pursuing a new ballpark. The Twins, on the other hand, come with Target Field, a young, state-of-the-art facility.

The Marlins and Mariners are good comparisons to the Twins in terms of the size of the market and the competitiveness of the teams at the time of the sale. Similarly to the Royals, neither team's win total or payroll ranking changed dramatically in the years following the sale. Moreover, both team have just a single postseason series victory since the sale of their teams.

I’m not making any definitive statements here; that’s kind of the point. While you may be excited with the Pohlad’s intentions, there is no guarantee a sale will be finalized and, if it does, there is no guarantee more payroll, wins, and World Series rings will follow. In fact, recent history suggests you should expect more of the same--unless, a cohort of Twins Daily content creators scrape up enough cash to buy the team, that is.

View full article

[bean5302]

The likely biggest bonus for the organization and fans is a new owner not being tied to Dave St. Peter and the front office's failed marketing strategy. Butts in the seats = revenue. Revenue = payroll capacity. Dave St. Peter has failed in his goals for 5 straight years and he's still running the show.

If a new owner puts a better marketer in place, the Twins are going to draw much better.

[weitz41]

I liked the stability of having the Pohlad's running the show. This last off season and season will probably make most feel like "good riddance". I'm not so certain it is a good thing. Buck, Correa and Lopez contracts are all due to the Pohlad's. Will the next owner pay for stars? Will the next owners prioritize profits? So, I'm probably 50/50 on the outcome.

Unless some billionaire wants something, their buddies doesn't have. Then I would be thrilled.

[Coach]

Right-size the business? We should have seen the writing on the wall.

[Sjoski]

True, there are no guarantees news owners will spend more.

The only guarantee we have is that the Pohlad's are never going to spend any more than they have to on this team. 

I hope they find their buyer.

[bean5302]

8 minutes ago, weitz41 said:

I liked the stability of having the Pohlad's running the show. This last off season and season will probably make most feel like "good riddance". I'm not so certain it is a good thing. Buck, Correa and Lopez contracts are all due to the Pohlad's. Will the next owner pay for stars? Will the next owners prioritize profits? So, I'm probably 50/50 on the outcome.

Unless some billionaire wants something, their buddies doesn't have. Then I would be thrilled.

Acquiring the Twins will probably cost in the neighborhood of $1.5B. They typically run an operating income (profit) of about $10-20MM, which is a terrible investment, and a big chunk of revenue is about to disappear. The overall profitability of the Twins, even when considering market value, is under the S&P 500 Index fund so owning the Twins hasn't been a great investment for the Pohlad family for the last 30 years or so.

In fact, most baseball teams aren't great investments. In order to provide a the return which would outperform the general stock market, you have to grow the market value, which is honestly accomplished through attendance (fan experience) or national exposure (winning World Series' or employing big name players).

So there has to be another motivation behind the acquisitions.

[CRF]

Didn't think I'd live to see even the possibility of this happening...and I still might not, but I LOVE the idea of different ownership. Sure, we could get someone/some group the same or worse, but we could get someone much better and who actually cares about winning, as well as the profits. Put a better product on the field and that will put fans in the seats. Change can be very good!

[Mike Sixel]

As excited as they want? I'm not going to tell anyone how to feel....I might suggest not living in fear and waiting...

[tarheeltwinsfan]

Don Beaver lives in North Carolina. 

[Pat]

It all depends on what the goal is for the new own owners/group?  It's pretty clear that the real value or return on the investment in owning a team is when the team is sold.  Witness how much the Pohlads are going to make.  However, there are other reasons for owning a team other than making money. Ego? Glory? etc. 

[Riverbrian]

10 minutes ago, Mike Sixel said:

As excited as they want? I'm not going to tell anyone how to feel....I might suggest not living in fear and waiting...

I promise you that I'm not going to live in fear. Not going to celebrate... not going to cry. 

"Meet the new Boss... Same as the old boss". 

I'm going to pick up my guitar and play just like yesterday and I'll get on my knees and pray... We don't get fooled again.  

 

[farmerguychris]

Come on Mark Cuban - how about a house up north?

[Hrbeks Divot]

Anyone have a number for Zygi?

[nicksaviking]

27 minutes ago, Pat said:

It all depends on what the goal is for the new own owners/group?  It's pretty clear that the real value or return on the investment in owning a team is when the team is sold.  Witness how much the Pohlads are going to make.  However, there are other reasons for owning a team other than making money. Ego? Glory? etc. 

Yeah, but without cable TV rights, are all MLB teams going to continue to appreciate like they have the last four decades? 

If half the league ends up on MLB.TV while other teams have significantly more profitable TV deals, I'd be concerned that the have-nots are going to start decreasing in value. As more and more of the better talent flocks to the big markets where the money is, won't the MLB.TV markets lose more and more viewers?

[Cap'n Piranha]

A quick google search shows there are only 4 resident billionaires in MN.  Of those 4, only one has a net worth greater than the (assumed) $1.5B price tag--Glen Taylor.  As such, we should all prepare for the very real possibility that the next owner will not be from MN.  As such, while a relocation will be tricky, it is not a complete impossibility.  It should also be noted that a new owner, unless they have Steve Cohen levels of wealth (and only 45 entities in the US do), will need to recoup profit starting day 1 to make up for the 10 figure drain from their assets.  Should this sale go through, it seems fairly likely the impact on spending levels will be minimal, absent incremental and sizable revenue.

[Karbo]

1 hour ago, bean5302 said:

Acquiring the Twins will probably cost in the neighborhood of $1.5B. They typically run an operating income (profit) of about $10-20MM, which is a terrible investment, and a big chunk of revenue is about to disappear. The overall profitability of the Twins, even when considering market value, is under the S&P 500 Index fund so owning the Twins hasn't been a great investment for the Pohlad family for the last 30 years or so.

In fact, most baseball teams aren't great investments. In order to provide a the return which would outperform the general stock market, you have to grow the market value, which is honestly accomplished through attendance (fan experience) or national exposure (winning World Series' or employing big name players).

So there has to be another motivation behind the acquisitions.

True, but another owner would probably try and get a better marketing team in place ASAP. This has been the Pohlads weakness for decades. A shrewd business man or woman would certainly see that and make adjustments. I don't think the payroll would jump much, but even some sort of cost of doing business increase would help. I'm hoping for the best, but as an old man I remember the days of Calvin, and I sure don't want to go back there.

[Vanimal46]

I thought we were in for another 30 years of the Pohlads so I am thrilled at the possibility of someone else owning the team. We know who the Pohlads are. 

The vast majority of fans aren’t demanding the Twins to be a $200+ million payroll team. We’ve begged for them to take a shot during seasons where the stars align like 2019, 2009, etc. Maybe the new owners will actually care and go for it when the team looks like they could advance in the playoffs. 

[Riverbrian]

10 minutes ago, Cap'n Piranha said:

A quick google search shows there are only 4 resident billionaires in MN.  Of those 4, only one has a net worth greater than the (assumed) $1.5B price tag--Glen Taylor.  As such, we should all prepare for the very real possibility that the next owner will not be from MN.  As such, while a relocation will be tricky, it is not a complete impossibility.  It should also be noted that a new owner, unless they have Steve Cohen levels of wealth (and only 45 entities in the US do), will need to recoup profit starting day 1 to make up for the 10 figure drain from their assets.  Should this sale go through, it seems fairly likely the impact on spending levels will be minimal, absent incremental and sizable revenue.

Great Post

The Orioles were purchased by a group of 9 people. Rubenstein is the principle owner but there are at least 8 others involved in the purchase... including a very wealthy Michael Bloomberg along with Cal Ripken and Grant Hill. 

The Orioles obviously had a plan to tear it down and build it back up... however... with many young talented pieces in place... they are currently 20 million behind the Twins in payroll for 2024. 

The only reason I bring this up. Those expecting a major change... might be in for a surprise.

The surprise would actually be major change.

Just a new principle owner that the fans will be upset with in the future.  

[adjacent]

1 hour ago, bean5302 said:

Acquiring the Twins will probably cost in the neighborhood of $1.5B. They typically run an operating income (profit) of about $10-20MM, which is a terrible investment, and a big chunk of revenue is about to disappear. The overall profitability of the Twins, even when considering market value, is under the S&P 500 Index fund so owning the Twins hasn't been a great investment for the Pohlad family for the last 30 years or so.

In fact, most baseball teams aren't great investments. In order to provide a the return which would outperform the general stock market, you have to grow the market value, which is honestly accomplished through attendance (fan experience) or national exposure (winning World Series' or employing big name players).

So there has to be another motivation behind the acquisitions.

I did some simple math: 44 million, corrected for inflation (assuming 3% a year, some years it was more, but many years was less, so that would not be that off) would be approximately 143 million in today's dollars. If they sell in $1.5 B that sounds not too bad as an investment, does it?

[Steve Lein]

1 hour ago, bean5302 said:

 owning the Twins hasn't been a great investment for the Pohlad family for the last 30 years or so.

If they sell the team for $1.4 BIL dollars, they will have averaged a profit of $34 MIL dollars each year they have owned them...

[Cap'n Piranha]

13 minutes ago, adjacent said:

I did some simple math: 44 million, corrected for inflation (assuming 3% a year, some years it was more, but many years was less, so that would not be that off) would be approximately 143 million in today's dollars. If they sell in $1.5 B that sounds not too bad as an investment, does it?

Until you realize that $44M put in a DJIA index fund in 1984 is worth $1.6B today.  I'm also skeptical they get $1.5B, when an Orioles team with more history and a more attractive location "only" got $1.765.  Even the Mets were sold for $2.4B--do we really think a team in the largest media market, by far, in the country is not worth even 2x the Twins?

[farmerguychris]

Knowing how important the almighty dollars is to this ownership group, as excited as we are today that they are open to selling, I would not be shocked if they take it off the market if they're not getting the price they feel they deserve.  That could mean really time to lower payroll?

[jmlease1]

1 hour ago, bean5302 said:

Acquiring the Twins will probably cost in the neighborhood of $1.5B. They typically run an operating income (profit) of about $10-20MM, which is a terrible investment, and a big chunk of revenue is about to disappear. The overall profitability of the Twins, even when considering market value, is under the S&P 500 Index fund so owning the Twins hasn't been a great investment for the Pohlad family for the last 30 years or so.

In fact, most baseball teams aren't great investments. In order to provide a the return which would outperform the general stock market, you have to grow the market value, which is honestly accomplished through attendance (fan experience) or national exposure (winning World Series' or employing big name players).

So there has to be another motivation behind the acquisitions.

Despite the twins TV contract issues, not hitting their attendance targets, missing the playoffs, etc the team increased in value by $73M in a year according to Forbes. That's in a BAD year where the economics of baseball outside the largest markets has gotten wobblier. (And I expect that because of ownership's maneuvers they probably still made their annual profit, not that anyone will ever know for sure; hell will freeze over before a Pohlad or any other non-Atlanta ownership will open their books! But YMMV)

Pro sports might not be a great year over year profit center in every market, but it is an incredible place to park large sums of cash. That $44M investment the Pohlads made 40 years ago would be worth $255M at an annual rate of 12% (historically, achievable in the stock market over time). That's actually a fine return that most of us would be happy with for our 401(k). If the Pohlad's get $1.5B, then they're talking about what, 84% interest per annum?

Who cares about having a few years with an operating loss if the value is increasing at that kind of rate? (No, it wasn't linear, and yes you have to actually sell at some point to realize it...but it's still there)

This is why hedge funds are interested in becoming stakeholders in franchises. Historically, it's a spectacular place to hold money.

[nicksaviking]

12 minutes ago, Steve Lein said:

If they sell the team for $1.4 BIL dollars, they will have averaged a profit of $34 MIL dollars each year they have owned them...

Yeah, I mean I'd take that, but that's also what they're paying Carlos Correa.

[Riverbrian]

17 hours ago, Cap'n Piranha said:

Until you realize that $44M put in a DJIA index fund in 1984 is worth $1.6B today.  I'm also skeptical they get $1.5B, when an Orioles team with more history and a more attractive location "only" got $1.765.  Even the Mets were sold for $2.4B--do we really think a team in the largest media market, by far, in the country is not worth even 2x the Twins?

I'm with ya. 

Lots of people point out the valuation change over decades. They may be missing a few considerations. 

Lesson #1: Money tends to make Money. They could have dropped 44 Million into Home Depot in 1984 and done much better. They could have taken that 44 Million and built a company that produces rabbits out of hats and be valued at much more. 

Lesson #2: Money tends to make more money.    

[nicksaviking]

3 minutes ago, Riverbrian said:

I'm with ya. 

Lots of people point out the valuation change over decades. They may be missing a few considerations. 

Lesson #1: Money tends to make Money. They could have dropped 44 Million into Home Depot in 1984 and done much better. They could have taken that 44 Million and built a company that produces rabbits out of a hats and be valued at much more. 

Lesson #2: Money tends to make more money.    

Yeah long term. And someone dropping 1.5B is probably going to want decent yearly dividends short term. Those yearly dividends seem to be shrinking without the cable deals.

[Mike Sixel]

27 minutes ago, Steve Lein said:

If they sell the team for $1.4 BIL dollars, they will have averaged a profit of $34 MIL dollars each year they have owned them...

Plus cash flow

[Mike Sixel]

8 minutes ago, Riverbrian said:

I'm with ya. 

Lots of people point out the valuation change over decades. They may be missing a few considerations. 

Lesson #1: Money tends to make Money. They could have dropped 44 Million into Home Depot in 1984 and done much better. They could have taken that 44 Million and built a company that produces rabbits out of a hats and be valued at much more. 

Lesson #2: Money tends to make more money.    

Risk free, since no sports team sells for a loss....

[Brandon27]

One dont get to excited cause I am not excited and two it's 50/50 look at angels owner try for two years to sell the team and nothing until we see headlines saying polhads officially sold the team I will jump for joy but overall they are still owners they can still pull a glen taylor and not sell the team.

[Whitey333]

One thing I liked about the Pohlad ownership is the stability.  Yes we know they once offered the team up for contraction but they quickly pulled that back.  I agree that fans shouldn't expect a sudden influx of payroll dollars with new owners.  But perhaps an owner with some enthusiasm and baseball knowledge could hire better people to run the team.  And develop a new philosophy about players and player development.  A complete audit of all the organization should weed out areas where too many employees like the analytics department.  Anyway who knows what may or may not happen.