Sizing Up Cody Allen

The Twins revenue is below the league average, so the expectation would be salaries would also be below average.  Based on a comparison of the league salary and league attendance, it looks like the Twins payroll has been right where you would expect it to be.

         Rank         Rank       Rank
Year Payroll Attendance Revenue
2018    21             20             21
2017    19             24
2016    23             25
2015    20             21
2014    24             22
2013    23             21
2012    12             14
2011    11               9

Average payroll in MLB over the past 5 years (via BP):

 

2014: $115M

2015: $125M

2016: $130M

2017: $136M

2018: $135M

 

The Twins are currently at $98 million. They have money to spend. Lots. 

Twins are a below average market.  Now that the new stadium lure has worn off, we continue to rank about 20th in attendance, even in competitive years.  I would guess that our payroll will continue to reflect our place in the market.

Not only was last year a record payroll for us, it was an absolute flop.  Might make them think twice about how much value there is in aging free agents.  Plus last season we were coming off a playoff run, it looked like it was the time to start pushing the chips to the center of the table.  I would not fault them for taking a season to re-evaluate where certain players are in the future plans.

That said I support a closer signing like Cody Allen but I don't expect anything more than one more bullpen piece from Free Agency this offseason. 

Twins are a below average market.  Now that the new stadium lure has worn off, we continue to rank about 20th in attendance, even in competitive years.  I would guess that our payroll will continue to reflect our place in the market.

 

Not only was last year a record payroll for us, it was an absolute flop.  Might make them think twice about how much value there is in aging free agents.  Plus last season we were coming off a playoff run, it looked like it was the time to start pushing the chips to the center of the table.  I would not fault them for taking a season to re-evaluate where certain players are in the future plans.

 

That said I support a closer signing like Cody Allen but I don't expect anything more than one more bullpen piece from Free Agency this offseason. 

in the competitive years, after other competitive years Twins should average around or over 2.5 million fans, that should be plenty of incentive to get it done.  Plus they should get a new TV contract in a few years.

The Twins have repeatedly said MLB payroll should be a little over 50 percent of revenue. $135m seems reasonable.

Yes, that's a perfectly reasonable expectation if you utilize an undefined soundbite as rationalization instead of extremely straight forward financial parameters.  The team produces $70M less than average in revenue. I would love to hear your logic as to why it is reasonable the spend the same amount as a team with an incremental $70M. Of course, the I would love to hear part was rhetorical because the only possible rational explanation would be they spend $70 less on other operating expenses which we know is not even close to accurate. This type of bury your head in the sand / ignore the hard facts position makes these discussions hard to take seriously.

Is there a point where you have too much variance? The Twins entered this offseason with a bunch of players coming off down seasons and added Schoop to that mix. Would it be better to try and get a low-floor guy for the bullpen? Or just keep doubling down on bounce back candidates?

 

I'm not sure what the right answers are to those questions, but those are some things the front office should be considering with any other potential additions.

I too am not sure of the right answer. I posted the WAR produced by top free agent relievers and the assumption that they are high floor or high probability is not something supported by history. As fans, we naturally gravitate to supporting the acquisition of guys that have been very successful. The problem, especially whit BP arms is that correlation is not very strong.

If the Twins don't want to spend money to be competitive, they won't bring back the fans and the revenue that comes with the fans. It's kind of a self-defeating prophecy to be cheap.

There are good studies that show that being competitive and making the playoffs will make the Twins much more profitable, not less profitable, this year and next year. This franchise needs some success and optimism. I hope they spend the money necessary to make this team competitive in 2019. It could lay the groundwork for this team being better in the years thereafter with more revenue and more ability to spend on acquiring and keeping good players.

in the competitive years, after other competitive years Twins should average around or over 2.5 million fans, that should be plenty of incentive to get it done.  Plus they should get a new TV contract in a few years.

I think I read (here on TD?) that because of Disney buying Fox, they were going to have to spin off the regional Fox sites (ie. FSN), The thought was that that the Twins ownership might buy FSN and use it as a platform for their various outlets. They tried with the Victory Network back in the Metrodome days and crashed and burned. Maybe this could generate significant revenue streams to aid the Twins in staying even with their competitors.

Ticket sales are no longer an overwhelming component of the revenue equation for baseball teams. Money is pouring in across the league from giant media deals. The notion being suggested above that last year's spending increase was driven by some isolated cash infusion is misguided. The game is flush with money. 

 

Also, declining to invest in your team because a lack of quality is deterring fan interest seems like a poor strategy to me.

Twins are receiving a competitive balance pick for 2019 which would indicate that we are currently in the bottom 10 for Revenue/market size.  Our payroll is likely to be in or near the bottom 10 teams for payroll, not at or above league average.

Nick,

I think you are spot on with Cody...what are we waiting for.

If they don't add anyone else the Twins should be willing to put Romero, Thorpe or Gonsalves in the pen. If people recall that is where they put Johan for the first 2+ seasons before he became a #1 starter. Let them get accustomed to getting out Major League Hitters.

While reading through this thread, I was determined to write something about how Allen scares the daylights out of me every time I see him pitch and that we should stay away and look for other options.

...then I looked at the other options:

Kimbrel: no way we sign him

Ottavino: great set up guy, but can he close? Someone is going to overpay

?

?

Gets pretty thin after these two. I agree with those of you who would want to sign him to an "opportunist contract." He still has nasty stuff and closer experience. He might be our best option out there, bang for buck.

I'm in on a 2/20. 

There is no payroll "cap." All of these restrictions are self-imposed. The Twins can easily afford to spend plenty more than these baselines have established and stay within the ~50% of revenue range. I am confident in that. You and MLR are going to need to produce some actual data and evidence to convince me otherwise.

 

You cite this BAMtech windfall as the reason the Twins boosted their spending last year, which is completely unsubstantiated. Every owner received the same infusion, and the average overall spending hardly budged, which is why I shared those annual league-wide averages.

I just posted several years of data. Are you asking me to believe that Ryan had 25 million more available to spend every year, and chose not to utilize that? Even as poor records (that could presumably be improved by spending more money) threatened, and ultimately cost him his job?

That makes no sense.

The simplest, and most direct answer is usually the right one.

The simplest answer that follows the data we have is this:

The team has continually been capped, by ownership, and have spent what they were budgeted. Last year, the ownership threw them a one time bonus, half of the money from BamTec.

Here are the facts that fit that theory:

1) Several years of historical data that I posted before, showing payroll being very consistently about 25 million below league average, only exception being last year.

2) The team has said that payroll is roughly 50% of revenue. Last year they received $50 million from BamTec. Half of that is $25 million. Are you suggesting it's purely a coincidence that payroll just happened to increase by exactly half of the BamTec payment? It's possible, but that is quite the coincidence.

3) Most of our increased spending last year were one year deals. Again, pure coincidence? Possible, but any good detective is skeptical of multiple coincidences being needed to fit an explanation.

If we start the season in the $106-$109 million range, as I've said we will for a year, what will your response be? Will you acknowledge I might be right, or will you say they just chose not to spend the remaining $25 million? Just like a year ago, when I responded to an article you posted, by opining that it was nonsense for both you and the team to suggest that Ervin Santana would be ready by May 1st. You ripped me a new one saying the team wouldn't be dishonest. You then refused to answer later when I tried to revisit it.

EDIT: This post originated while I was under the impression you were suggesting they'd spend to league average. Please see future post regarding that point along with this.

The "50 plus percent" did not come from me. It came from ownership. I'd love to hear why I should accept your numbers over theirs.

There is no payroll "cap." All of these restrictions are self-imposed. The Twins can easily afford to spend plenty more than these baselines have established and stay within the ~50% of revenue range. I am confident in that. You and MLR are going to need to produce some actual data and evidence to convince me otherwise. 

 

You cite this BAMtech windfall as the reason the Twins boosted their spending last year, which is completely unsubstantiated. Every owner received the same infusion, and the average overall spending hardly budged, which is why I shared those annual league-wide averages.

Is there a listing of team revenues by year?  (Sorry, I'm too lazy to look.)  Do they have 2018 yet?  I'm wondering if it reflects the $50 million per team for the Bam Tech sale.  And would projections for 2019 drop by ~$50 million per......  

I'm not sure what you think is "undefined", but here is a specific link, and it mentions a specific percentage (52).

 

https://www.twincities.com/2008/03/01/in-the-family-carl-pohlads-son-says-there-are-no-plans-to-sell/

 

It dates to 10 years ago, but I've never seen it recanted.

Words are often hollow.

What has actual spending looked like in the 10 years since that quote?

Maybe they were being deceptive, maybe they changed their mind, maybe they begged the FO to spend more money and the FO refused (bizarre and unlikely, but maybe), maybe Forbes revenue estimates are way off. I don't know the reason that the actual data is not consistent with their statement, I just know that it's not.

I'm not asking them to spend at an average or above-average level, I'm asking them to spend at a reasonable level. We're talking about signing Cody Allen, not Bryce Harper. A $115M payroll will be near the bottom 10, if not among it.

 

Again: the average MLB payroll has increased by almost $40M during the Target Field era. Minnesota's spending has remained mostly stagnant. Context is important here.

I think confusion might have come from your posting of the league average payrolls along with your statement that they have plenty of money to spend.

That led me (and I think at least one other poster) to believe you were theorizing that they'd continue to spend league average, as they did last year.

Is there a listing of team revenues by year? (Sorry, I'm too lazy to look.) Do they have 2018 yet? I'm wondering if it reflects the $50 million per team for the Bam Tech sale. And would projections for 2019 drop by ~$50 million per......

I read somewhere that most teams were accounting the BamTec money as capital, not revenue (a sneaky good try by them, though I doubt that'll get past the players come CBA time), so it won't have affected listed revenues.

"In 2018, at age 29, he took a sizable step back"\

Would this be the fifth free agent who took a step back last year?

Look. after the
justifications last August of "we freed up payroll money to pay for the improvement of the team

Last August we got rid of a bunch of 2 month rentals and beefed up our farm system. It was a no-brainer. Look for them to do the same thing this year.

The Twins have repeatedly said MLB payroll should be a little over 50 percent of revenue. $135m seems reasonable.

Any way you can show us where this has been repeatedly said?

The "50 plus percent" did not come from me. It came from ownership. I'd love to hear why I should accept your numbers over theirs.

For starters, you are clinging to a soundbite because it supports your preferred narrative. I would bet you would not cling to this soundbite if you did not like the number they cited. Had they said 40%, I bet you would have utilized the same hard facts I did to substantiate they could spend more. In other words, you are electing to ignore very obvious and straight forward facts. There is relatively complete data and the analysis is as simple as it gets. So, when I ask you would expect a team to spend equivalent to a team with an incremental $70M in revenue, it is an exceptionally uniformed position to respond because they said so, IMO. This is mind numbingly simple with a minimal degree of objectivity applied.

Secondly, you don’t even understand that payroll costs does NOT equal salary. Payroll costs consist of Salary + benefits. Players get lifetime health care and retirement benefits. According to the article below they are also employees as opposed to independent contractors which means the team also pays payroll taxes. If someone can provide evidence the teams don’t contribute to payroll taxes that would mitigate the impact but they are employees according to this article.

https://thecomeback.com/nfl/professional-athletes-employees-lawmakers-not-want-treat-way.html

I posted the average payrolls to show there is no validity to your claim that last year's increase was driven solely by the BAMtech infusion. If that was the case it would've been reflected elsewhere around the league. If you think that was some unique situation I suggest you research further; there have been several instances in recent years where MLB teams/owners received large sums of money as part of enormous MLBAM/TV contracts, and in those cases payroll was not affected.

 

What happened last year wasn't a "coincidence." The front office saw short-term opportunities late in the offseason and ownership signed off. There's no reason to think that couldn't/shouldn't happen in this case.

 

I honestly don't know why you and MLR have decided to grind this axe once again. The article suggests the Twins have money to spend and theorizes a $14M deal which would put them around $112M in payroll. I'm not the one confusing the issue at hand.

You are correct (IMO) that there is no way we can know if the BAMtech money was the sole driver the Twins increasing payroll.  It would appear based on other team's payroll's not going up incrementally that many teams did not spend it just because they had a windfall last year. However, the fact that among there major signings, one was a 1 year term and two had 2nd year options, it would be reasonable to suggest the one-time infusion influenced their approach. Concluding it was the sole reason would be a stretch.

Twins are receiving a competitive balance pick for 2019 which would indicate that we are currently in the bottom 10 for Revenue/market size.  Our payroll is likely to be in or near the bottom 10 teams for payroll, not at or above league average.

Last I saw we are the thirteenth market area in the United  States.  This seems  more midmarket than low end. Maybe on revenue we are in the bottom 10, this would be more due to the Twins TV contract than any other factor.  However putting 500,000 more fans in the seats will certainly raise the revenue to at least add on decent contract (assuming $40 a seat, not counting concession sales, etc). 

For starters, you are clinging to a soundbite because it supports your preferred narrative. I would bet you would not cling to this soundbite if you did not like the number they cited. Had they said 40%, I bet you would have utilized the same hard facts I did to substantiate they could spend more. In other words, you are electing to ignore very obvious and straight forward facts. There is relatively complete data and the analysis is as simple as it gets. So, when I ask you would expect a team to spend equivalent to a team with an incremental $70M in revenue, it is an exceptionally uniformed position to respond because they said so, IMO. This is mind numbingly simple with a minimal degree of objectivity applied.

 

Secondly, you don’t even understand that payroll costs does NOT equal salary. Payroll costs consist of Salary + benefits. Players get lifetime health care and retirement benefits. According to the article below they are also employees as opposed to independent contractors which means the team also pays payroll taxes. If someone can provide evidence the teams don’t contribute to payroll taxes that would mitigate the impact but they are employees according to this article.

 

https://thecomeback.com/nfl/professional-athletes-employees-lawmakers-not-want-treat-way.html

According to Forbes, for luxury tax purpose the benefit expense was $14,044,700 per team.  For what I can see, revenue is around $260 million, which would put payroll around $135 million if they spent 52%, which is right around what they spent in 2018

Given the teams struggles and ticket sales, I would expect they are budgeting less revenue in 2019.

https://www.forbes.com/sites/maurybrown/2018/12/17/final-mlb-payrolls-for-all-30-teams-show-second-largest-decline-since-2004/#381115fe474a