Offseason Blueprint: Hey Big Spenders!

I went back and forth on whether the Iglesias trade concept was realistic. In a way it does feel light because Raisel is a beast, and I'm sure no one's entirely sold on Gonsalves or Cave.

 

But then again, with supply levels rising, the expected return for even established high-quality closers has clearly dropped. Look at what the Rays got for Alex Colome from Seattle in May, with almost 3 years of team control remaining. 

 

In any case, the concept is more important than the specifics here. Bottom line is that I think the Twins would be very wise to trade away some of their redundant, cheap young talent in exchange for semi-pricey veterans on rebuilding teams.

Agreed completely on the concept. But not sure if I want to trade too much/too high quality of the redundant talent for relief pitching.

On what do you base the statement "There is not much reason they couldn't push payroll to $150? In the real world any report of this nature that did not validate such an assumption would have zero credibility. You also have a key assumption of that the Twins outbid the Yankees for Corbin who is from NY and the Yankees have $300M in revenue more than the Twins. It's fantasy baseball at best.

 

The revenue reports for 2018 are not out yet. In 2017 the Twins ranked 21st in revenue with $261M. Whre would you expect a team 21st in revenue to rank. 16th looks quite reasonable

 

https://www.statista.com/statistics/193645/revenue-of-major-league-baseball-teams-in-2010/

 

If you look on that list, several of the top teams made 80-100M. The Twins made $23M with a payroll of roughly $20M less than 2018 payroll. It would appear they were willing to push payroll to a level that would assure meager profits in 2018. To say there is no reason they could not push to $150M is uninformed or assumes they should operate as a non-profit.

There have been a number of years past in which the organization underspent significantly, thereby padding its retained earnings column. And even when the profit margin has been less than ideal, they reaped a return on investment in the form of "unrecognized" capital gains, i.e. an increase in franchise value. So I think it's fair for fans to hope the organization takes a longer view backwards and forwards when these investment decisions are made, and I very much believe they do.

They have aggressively spent over the past two years, but on infrastructure and non-player talent. OMO, this has been both prudent and foresighted. But now it's time to invest in specific (MLB) player talent. I don't know the details, but have observed enough of the Pohlad Companies operating philosophies and strategies in their other businesses to believe that they continue to adhere to certain disciplines and business guidelines, and given the publicly-disclosed revenue numbers, it doesn't seem like a $150M number is unrealistic, ESPECIALLY because it's not merely an expense but an investment that can be expected to generate immediate revenues.

And therefore, I'm birdwatcher, and I approve this message.

Yes, this is how businesses are run. The board or ownership asks what is the impact on the bottom line or what will profits be as a result of this plan and the person in a position similar to a MLB GM says "oh is that a concern" I did not see a problem with operating as a non-profit or losing money."

 

Last day on the job. This line of thinking is bury you head in the sand logic / fanaticism because most people with no management experience understand $150M budgets need to be validated. I would hope any of us working for an organization that managed profitability in this fashion would be looking for a new job because any such company has a very short life expectancy.

I'd remind you that many of us have in fact worked for or currently work for companies that "manage profitability" and lots of us have probably been involved, maybe even been responsible for those decisions. So while I see where you're coming from and agree that a call for spending can be, um, fanatical, my experience on TD is that a ton of thought goes behind all of this stuff. 

If someone has a good argument that it would be imprudent to invest that much, great.

I can see the logic in calling for restraint in going from one extreme of payroll flexibility to the other extreme. Or for cautioning against specific contracts. For me, I guess the more cringeworthy risks are those involving desperation trades that set the baseball operation back a season or two. Say howdy to Wilson Ramos and Aaron Hicks for example.

Did you miss the entire setup for this piece? The idea here is to show what kind of moves might be possible IF the Twins were to push payroll to the maximum level within reason. They probably won't spend as little as $80M either but we looked at that scenario last week.

 

I'm not sure why you're acting like a ~$140M payroll is some absurd notion; it'd be 53% of the 2017 revenue total you listed, and MN supposedly aims to invest 51% of revenue back into player spending. 

 

What you're calling "assumptions" are really just hypothetical scenarios. It was stated repeatedly in the article that one shouldn't realistically expect quite this high of a total. 

I specifically used $150M. $140M might be viable but who knows because there is no attempt to validate the financial viability. The financial part of these discussion do not come remotely close to how these things are actually done in practice. It's fanatical rambling. Go ahead and dream but to put it into a plan in this manner suggests it's reality. If not, it's a bunch of adult spending a lot of time on fantasy.

Why is Cleveland pulling back on spending when they are not at the $150M level?

Doe sit not make much more sense for Tampa to employ this plan? There payroll is under $100M. These teams are businesses. Nobody blinks when Kershaw is not satisfied with his $300M contract and asks for  ore but the teams should operate as a non-profit. ! would be fine with dreaming but it always turns into the problem is the Twins ownership is cheap and what really bugs me is there are many well presented ideas with of statistical support for player performance. When it comes to financial discussion most fall back to to "cheap ownership" with making no effort to actually inform themselves. What we get is "there is no good reason" when the fact is the reason is either not understood or worse yet no attempt has been made to understand.

But aren't the Pohlad's renowned for their charity???

Just a guess but I think they probably feel homeless shelters or medical research or battered women's shelters are a better use of their charitable donations as compared to another $20M to get 3 more wins in a season.

But aren't the Pohlad's renowned for their charity???

Certainly not in these parts.

I'd remind you that many of us have in fact worked for or currently work for companies that "manage profitability" and lots of us have probably been involved, maybe even been responsible for those decisions. So while I see where you're coming from and agree that a call for spending can be, um, fanatical, my experience on TD is that a ton of thought goes behind all of this stuff. 

 

If someone has a good argument that it would be imprudent to invest that much, great.

 

I can see the logic in calling for restraint in going from one extreme of payroll flexibility to the other extreme. Or for cautioning against specific contracts. For me, I guess the more cringeworthy risks are those involving desperation trades that set the baseball operation back a season or two. Say howdy to Wilson Ramos and Aaron Hicks for example.

There was documentation of financial viability. NONE. The validations was a quote there is no good reason the Twins could not spend $150. If you have had experience, and especially if you have actually been responsible for a $250M P&L you know this would not come close to flying. I have only had 4 positions with full P&L responsibility of $250M or more so that's a small sample but I believe had I presented to the board in this manner, I would have been relieved of my duties within a few days.  

Fun!  I absolutely love this!  Sure would return some fan(nies) in the seats!  . . .  and NOT out of the realm of doable!

As an unwritten rule I'd stay away from NL starting pitchers.

I'm not sure why you're acting like a ~$140M payroll is some absurd notion; it'd be 53% of the 2017 revenue total you listed, and MN supposedly aims to invest 51% of revenue back into player spending.

I feel like the 51% thing was said ten years ago and when Big Pohlad was still running the team. Has this been said since then?

I don't know what the operational costs for the team are, but the Twins organization has a LOT of employees. Only the Twins could say if 51% is sustainable for them.

But ... employee wages are 100% tax deductible ... what is the tax burden for professional sports teams? I'm sure the Twins are smart enough to pay at least what their tax burden is in wages. If not...ugh.

The younger Pohlad complained a bit about being harassed by the IRS after his father's death. One thing to note is that if you pay very low wages, the IRS will harass you! I worked at a company where the owner was taking in 88% profit (insane!) and we kept getting letters from the IRS wanting to prove we were paying such low wages to our workers. The wage audits came in every quarter, the IRS was never satisfied. They were clearly wanting to change the owner's behavior (he sold the company instead). The audits weren't a burden on him anyway, it was other people who had to do them....

There have been a number of years past in which the organization underspent significantly, thereby padding its retained earnings column. And even when the profit margin has been less than ideal, they reaped a return on investment in the form of "unrecognized" capital gains, i.e. an increase in franchise value. So I think it's fair for fans to hope the organization takes a longer view backwards and forwards when these investment decisions are made, and I very much believe they do.

 

They have aggressively spent over the past two years, but on infrastructure and non-player talent. OMO, this has been both prudent and foresighted. But now it's time to invest in specific (MLB) player talent. I don't know the details, but have observed enough of the Pohlad Companies operating philosophies and strategies in their other businesses to believe that they continue to adhere to certain disciplines and business guidelines, and given the publicly-disclosed revenue numbers, it doesn't seem like a $150M number is unrealistic, ESPECIALLY because it's not merely an expense but an investment that can be expected to generate immediate revenues.

 

And therefore, I'm birdwatcher, and I approve this message.

You have provided absolutely no evidence of what level of profit would be produced with $150M payroll for the 25 man roster yet you offer an opinion on viability. All of the data is readily available but you have produced no facts, instead uninformed speculation. Don't try this in the real world. Also, try going into your CEOs office and telling them they should give everybody raises this year to the point of the company being at B/E because they had good profits last year.

Let's look at a different way. If a large portion of your income was bonus based would you work for free the year following a great year? 

Having said this ... if you actually take the time to look through MLB revenue and profit estimates, it does appear teams spend all the way to B/E levels when they truly have a good shot at going deep in the playoffs but within reason. Houston, was the most team in the league when they absolutely sucked. As I recall, their total payroll was under $40M one year. According the report I listed previously, several teams made between 80-100M. Yet, you don't see these teams increasing their payroll by $75M, do we?

Houston Payroll
2018 - $160.04M
2017 - $124,343,900
2016 - $69,064,200
2015 - $70,910,100
2014 - $44,544,174
2013 - $22,062,600

Houston Payroll
2018 - $160.04M
2017 - $124,343,900
2016 - $69,064,200
2015 - $70,910,100
2014 - $44,544,174
2013 - $22,062,600

And although Houston is a big city ... baseball actually considers Houston to be a "small market" team!

And although Houston is a big city ... baseball actually considers Houston to be a "small market" team!

I was just pointing out Houston's payroll the last 6 years, nothing more, nothing less.

If the FO were to make a trade, it’s more likely that they’d be trading for a 1st or 3rd basemen as insurance for Sano/Austin. One lefty bat that could pair well with Austin is Cleveland 1B Yonder Alonso, although I’m unsure if either team would even think about crossing division lines.

I was just pointing out Houston's payroll the last 6 years, nothing more, nothing less.

I know.

MAN, it is fun to spend someone else's money isn't it?!?!  I actually like this!  I'm a homegrown, hometown fan and as such I like following the prospects as they come up....so, hate to see Gonsalves go, but he's no guaranteed thing by any means.  How good would that little side trade for Cave look if they could turn it into a stud reliever Iglesias.  I'm on record as saying I love the idea of pairing Jose Iglesias with Polanco up the middle.  I only have two things that give me pause....first, I know we're afraid of Aaron Hicks 2.0, but are we sure we want to commit that kind of money to Buxton??  And second, I'm ALWAYS leery of bringing pitchers from the NL to the AL and expecting similar production.

Regardless of who they sign/extend etc. there is NO reason they can't hit $150 million in payroll.  That is not asking to much of ownership!

Sure, that's fair.

 

BUT, I think a few folks are overstating the importance of historical trends and existing evidence in this discussion, while ignoring some pretty obviously relevant factors. Namely, this:

 

Before last offseason, what reason was there to think we were gonna see an all-time high payroll in franchise history in 2018? Falvey and Levine have essentially had one full offseason at the helm, and it resulted in more spending than we've ever seen before from the organization.

 

And while $150 million might seem like a huge number through the lens of Twins fans, it's really not that outrageous in the scope of today's MLB. It just isn't.

They received a $50 million check for their share of the sale of BamTech. 50% of that extra revenue is $25 million, which is where the extra payroll in 2018 came from.