Dear Pohlads: Don't Do This

25 minutes ago, rationalfan said:

I've thought about this often.  There are different scenarios based on what (how much wealth do I have and is the team my own or shared with me being in charge of team operations), how (inherited or grew a business myself), when (young, middle-aged, or old), and did I get the team when the value was lower or did I just recently buy the team for >$1B?

If I'm being realistic, if I was making that much/worth that much $, I'd like to think that I would try to make the community better as well as larger national and even world impact.  But, let's have a little fun with it and say that here I am, middle aged and worth several billion and so I buy the Twins.  I would look to own this team the remainder of my life, running it in a sustainable fashion that allows the team to be competitive but allow me to also help the community and maintain wealth such that I can keep it going for decades.  Losing tens of millions a year puts the sustainability in jeopardy - a decade from now my worth has decreased significantly and if a recession hits it may lower to the point of cash flow issues.  Sure, the franchise is growing in value, but that doesn't mean much if I'm not selling.  Also, there's that balance with what else I could do with that money - losing $1B over 10-20 years to win means a lot less investment in the community (and to avoid making this political, that can mean a balance between running good businesses that offer good jobs and charitable contributions and foundations).  If I get in the Ilitch (old) or Seidler (illness) situation where it looks like I'm not going to live much longer, then I could see perhaps spending a lot more in my final days (heck, my family is gonna be ridiculously rich anyways and if they're gonna be sour later that they inherited less than they could have, I ain't gonna be around to hear it).  

This has been very interesting to delve into; thanks for the thoughts on this.

There must be a reason the Twins have only had 2 ownerships going back to the days in Washington.  The team may lose money some years, and make money in others, but it is an asset that can be borrowed against, and in the end, sold for a profit.  It is a business worth having, and worth passing on to future generations.  If it wasn't, this particular ownership wouldn't keep it through (now) 3 generations.  But I do get your point; it is a valid one. 

This may or may not be a dumb analogy, but pretend the team is a vintage classic car.  To purchase said car you must put down a cash investment for what the car is presently worth.  As the years go by, you must put money into the car to keep its value not only current, but increasing as the years go by.  Until the day you sell it, it is purely an expense; you will only see your money back or a profit if and when you sell it.  So why do people do it?  Because it is their hobby, maybe a passion, maybe a side business, or maybe something to pass on to their kids.  Regardless, it will cost money to buy and maintain, but still goes up in value as long as it is maintained.  Is it all that much different with a sports franchise?  It costs to buy, and costs to maintain; you will never recoup that money until it is sold.  But it is a passion, and a sound business investment for the majority of owners, or they wouldn't spend the money and time, and take the criticism that comes with the territory.  Individual year losses are not nearly as important as the long term, or ownership would change hands pretty often. 

Again, I do get your point, and if the losses get severe enough over a long enough period of time, things will eventually get ugly.  I just don't see that happening currently, and the cash losses haven't deterred this ownership from doing business as usual for over 40 years.  Problem is, to a lot of their fan base, business as usual is getting old; 33 years between WS is more than my 29 and 30 year old sons lifetime.  Probably why they really don't care about the Twins.  Their generation wants something in their lifetime to remember.  The ownership might be wise to go all in once in a while to keep multiple generations tuning in, temporary losses not withstanding. 

Thanks for making me think hard enough to write this much.  😉  

29 minutes ago, Nashvilletwin said:

Certainly tax laws are utilized to maximize objectives. However, let’s just say that, in fact, the Braves are losing cash on an annual basis and the Twins are as well.  Would that change anything in terms of how one views the way the team is run and the decisions made?

I just don't believe the Twins are actually losing money, so it's tough to change my mind.  As a few people have pointed out paper loses are one thing but that's not the true cash flow of a company. 

Additionally, what falls under the Twins company?  Do the owners have additional revenue from the stadium or other ventures related to the Twins that's not included under the Twins company?

Lastly, the Twins were purchased for $44 million and are now considered to be worth $1.46 Billion.  Have the owners used the Twins asset value as collateral for other business ventures that have made them money that aren't included under the Twins company?

8 minutes ago, chpettit19 said:

If they are actually losing tens of millions a year I'd be even more confused as to why Dave St Peter has held his position for 2 decades.

I think most of us can understand why the Twins cut payroll from a 2024 revenue stance. I think it's pretty universally accepted that they lost a good chunk of change in 2020. But I find it hard to believe that they've been losing tens of millions of dollars for numerous years and continue to employ the same person to run their business. Most of the public projections have the Twins making money annually. Paired with the fact that they've let the same person run their business for as long as they have I find it hard to believe they've been losing tens of millions a year. If they have, then that's clearly acceptable to them and they must be set to lose even more this year to get to a place where it isn't acceptable.

If you let the same person run your business for 2 decades while losing 10s of millions you're either ok with that number or you've done something that allows that person to blackmail you for 10s of millions a year. It simply doesn't make sense to me that they'd continue to employ DSP in his role if they were losing that much money year after year. I don't find that to be a very plausible scenario. 

I do not know if the time frame you are describing is correct.  It very well could be.  However, my reference was only specfically to the last handful of years.

Certainly the Pohlads understand the financial results of their business entities, including the Twins.  Management is changed out when they do not perform to the owners’ expectations.   I’m pretty sure the Pohlads have been monitoring the performance of their managers.  

10 minutes ago, SF Twins Fan said:

I just don't believe the Twins are actually losing money, so it's tough to change my mind.  As a few people have pointed out paper loses are one thing but that's not the true cash flow of a company. 

Additionally, what falls under the Twins company?  Do the owners have additional revenue from the stadium or other ventures related to the Twins that's not included under the Twins company?

Lastly, the Twins were purchased for $44 million and are now considered to be worth $1.46 Billion.  Have the owners used the Twins asset value as collateral for other business ventures that have made them money that aren't included under the Twins company?

Yes, it is very possible that the Minnesota Twins - inclusive of all revenues and expenses of every entity under that umbrella - are losing money on a cash basis. Who knows what the financial structure of the Twins or the other Pohlad entities is - i.e. what is collateralised, how much debt there is, etc.

My only point, which you basically ignored, was: IF, in fact, the Twins are actually losing (substantial) cash on an annual basis, would that possibly give you a better understanding of the decisions they are making?
 

Cash is cash - if you don’t have enough to fund operations, you have to find it somewhere. You can borrow, you can sell ancillary business, you can sell equity, you can improve operations, OR you can cut costs.

All I’m suggesting is that if we assume the Pohlads aren’t stupid (which they are not), then why are they taking the actions they are taking?  It’s not greed - as much as many on this sight might suggest.  Maybe, it’s actually a response to how the business is actually performing.  

3 minutes ago, CCHOF5yearstoolate said:

I've got a billion dollar bridge to sell anyone who truly believes the Twins have been losing $10M a year. That should help my fund to take over the team!

Yawn…..

5 minutes ago, chpettit19 said:

Dave St Peter was named the president of the Twins November 26, 2002.

I think we all believe the Pohlads understand the financial results of their business entities. That's actually my point. To believe they've been losing 10s of millions a year, even for just a handful of years, you have to believe that's acceptable because they haven't changed the guy in charge. Or it just isn't true.

How many years are they willing to lose 10s of millions? 2? 3? 4? 5? I find it hard to believe they've kept DSP if they've been losing 10s of millions each year since 2020. 

Who knows - I certainly do not.  I’m just offering a possible explanation as to the reasons behind the Twins more recent decisions and public strategy.  What else could explain it?  It’s either they are dumb (they are not), greedy  (most certainly are, but not in a way that would sacrifice the future for the near term), or they are just making the most cogent business decisions they can to maximise their  objectives given current business conditions and their outlook on the future.

8 minutes ago, Nashvilletwin said:

Yes, it is very possible that the Minnesota Twins - inclusive of all revenues and expenses of every entity under that umbrella - are losing money on a cash basis. Who knows what the financial structure of the Twins or the other Pohlad entities is - i.e. what is collateralised, how much debt there is, etc.

My only point, which you basically ignored, was: IF, in fact, the Twins are actually losing (substantial) cash on an annual basis, would that possibly give you a better understanding of the decisions they are making?
 

Cash is cash - if you don’t have enough to fund operations, you have to find it somewhere. You can borrow, you can sell ancillary business, you can sell equity, you can improve operations, OR you can cut costs.

All I’m suggesting is that if we assume the Pohlads aren’t stupid (which they are not), then why are they taking the actions they are taking?  It’s not greed - as much as many on this sight might suggest.  Maybe, it’s actually a response to how the business is actually performing.  

How do you know it's not greed?  They've never been very transparent as owners, and it was hinted that Joe Pohlad was supposed to be much more active in running the team.  Where has he been since the end of last season?  I can't say I've seen any comments from him regarding the offseason or how the season has gone.  

4 hours ago, Trov said:

I was listening to sports talk show the other day, national show, forget which one off top of head.  They talked about that in sports, most owners actually lose money in the day to day operation of a team, but make it up on the sale of the team.  I get annoyed with all these post and articles about how the Twins can, and need to spend more.  It has been going on for years, since the 90's.  Then even when we spend the fans still complain because team comes out and says sorry we are spending too much now and some of our long term revenue is shrinking.  

I would read article about how much money the Padres spent, but yet they did nothing and they had to take out a loan to pay their payroll and had to sell Soto for pennies on the dollar because they could not afford him. If fans are upset at payroll, then stop watching and stop supporting team.  Supporting team and complaining about how it is ran will not affect anything. 

So you'd like the fan base to continue blindly supporting the team and settling for mediocrity year after year. Got it.

This is the kind of attitude that proves to sports owners that they don't actually need to deliver titles to be beloved in this (or virtually any) town - simply do the bare minimum, make the playoffs, win a game here or there, hoist a division or wild card banner, cash checks, repeat.

The teams are asking for more every day - increased ticket, food, merch, parking costs, etc. It's time for the fans to ask for more and hold the owners/teams accountable by not filling the stadiums and buying the merch. 

Memories around here are getting shorter and shorter by the day.  This is also not the year to be making trades due to so many teams being in contention unless you're taking on a ton of salary for a rental from a losing team looking to get a minimal return. 

https://twinsdaily.com/news-rumors/minnesota-twins/did-twins-lose-money-2022-revenues-losses/

4 hours ago, Panthers FTW said:

such a successful run from this franchise.  

Where are the trophies from this "successful run"?

43 minutes ago, LA VIkes Fan said:

Isn't the worst case scenario that Snell gets hurt and opts in for $31m next year? I think that's the risk the Twins won't take. He does have a checkered injury history and frankly a checkered performance history in terms of innings an starts. Otherwise, I'd be right there with you. It's just hard for me to see the Twins taking that level of risk. 

BTW, Tyler Anderson has a 2.96 ERA, albeit with a 4.15 FIP. He's a 2/3 starter in front of a team with good IF defense. The Twins have that. I think he would slot at least even with Ryan behind Lopez and Ober.  

About Snell, I'd also add we don't know how he fits in the clubhouse (I have my doubts) or how he fits with our catchers

1 hour ago, Nashvilletwin said:

Thank you for asking.  As I mentioned, it’s not something I can prove via publicly available documentation. I do have a bit of insight, though, and I can only leave it at that.

This could be wrong, of course.  But let’s assume that it isn’t for a moment.  Would that change anyone’s thinking on how the Twins as a “business” are operated?

I understand my views on this topic are not popular.  However, if the Twins are in fact losing tens of millions on a cash basis annually, at least one could conjure up a modicum of understanding as to why the Twins’ owners/managers make some of the decisions they do.  

Well Forbes reported that the Twins made $19 million last year. I think I’m going to trust that more than your “insight”. 
On a broader scale the value of a business is determined by how much income it generates. The fact that the value of the Twins has gone from $44 million to $1.5 billion tells you they are making money. Lastly the Pohlads aren’t stupid. They have hundreds of millions dollars invested in this franchise. They aren’t going to stand for not making a competitive rate of return on all that money. Hell they could have it in the stock market and make an historical rate of return of 15%. 

6 hours ago, TL said:

Don’t sacrifice the future. Any starter better than Ober, Lopez or Ryan will likely cost a lot (even for a rental). I am not in favor of giving up 6 years of Keaschall or Festa (or both!) for 3 months of a #4 starter or even 1 year and 3 months. This team will get expensive quickly and at some point we may want to restock the farm by trading a player or two getting close to free agency to keep this thing going for a decade. 

What exactly is the future they would be sacrificing? 

2 hours ago, Nashvilletwin said:

Thank you for asking.  As I mentioned, it’s not something I can prove via publicly available documentation. I do have a bit of insight, though, and I can only leave it at that.

This could be wrong, of course.  But let’s assume that it isn’t for a moment.  Would that change anyone’s thinking on how the Twins as a “business” are operated?

I understand my views on this topic are not popular.  However, if the Twins are in fact losing tens of millions on a cash basis annually, at least one could conjure up a modicum of understanding as to why the Twins’ owners/managers make some of the decisions they do.  

Pohlad's buying price was $44M in 1984; current value estimate is $1.46B. Using those numbers, the value of the team has increased about $35M per year, for each and every year the Pohlads have owned it.