The Hunt For An Ace Starter

This premise of “MLB owners should operate as a non-profit so we could improve our team keeps coming up.  This premise is a failure of economics 101.  If MLB owners operated as a non-profit we would still be in the same position in terms of competing for free agents.  We might even be worse off because some of the large market teams make about the same net percentage as the Twins but have higher revenue.  Therefore, even more incremental revenue would be available to those teams. The net effect would be player salaries would be even higher.  The only way this would benefit our team is if the Pohlads were willing to operate as a non-profit while the rest of league maintained business practices focused on maintaining profitability as they do now.

 

There also would not be MLB at least not even remotely close to form we enjoy now.  It takes a whole lot of capital to build and maintain an entire industry.  Given business valuations are based on sustainable profitability the only way MLB could exist in this form would be if it were government sponsored non-profit.

I've never seen that "premise" come up once here (or anywhere else for that matter) . . . other than your posts.

Even if we accept the figures in the handbook, why shouldn't they spend the money in 2018 that they didn't spend in 2017, and 2016?

They just get to bank that, without anyone questioning it?

They can spend whatever they chose to spend. And they could certainly add $30m in 18 and not lose money, particularly if you average over the past several years.

What money is this that they didn't spend in 2017?

I've seen this $140M figure thrown around for player salaries and maybe you're referring to that. But should the MLB roster consume all of it? Isn't that $140M for player salaries, which means international signings and the June draft, which the Twins spent significantly on this year due to the extra pick and picking first?

And we have no idea how much additional money the new FO has sunk into increasing the staff and probably the systems operated. If so, the Twins may be at the lower end of the percentage scale on spending for the current year.

I had a dream last night the Twins signed Yu Darvish for whatever that's worth.

What number did he wear?

31 seems like a number he would choose.

I think the logic is this:

 

• The Twins have a public goal of spending around 52% of revenue on payroll.
• No one knows exactly what the actual revenue is, but we typically use Forbes' estimate.
• At Forbes' number, the current Twins payroll for 2018 should be around 130M.
• Using Forbes' numbers, the Twins underspent the 52% over the last few years.

The question at hand is whether or not the Twins should bank that savings from the last years or spend it as an investment in the current product. A 140M payroll, for instance, wouldn't lead to them losing money on the team, but it could definitely cut into profits.  With expensive contracts such as Mauer coming off the books, and a team that really is a few pitchers short of being a legit WS contender, it might not just be smart, but a wise investment yielding higher revenues down the road.

 

That's the summary of the argument, though I'd note that not everyone agrees with it... hence the debate

Is the 52% number something that has been repeated often or was it used once or twice and somehow became the standard used here.  The reason I ask is because the net impact of 52% of revenue spent on player salaries is very different when revenue is up 20% vs down 20%.  Regardless, they made a mistake every portraying this as their standard and they are making a mistake if they are actually using it to set payroll. 

I do think it's fair for fans to expect some of the "elevated profits" to be invested back into the team.  However, I would add that the fans will generally think the timing of such investment is more immediate than a F/O looking to build a contender.  Point being ... An incremental 10 or even 20M is not going to make this team a contender.  Even adding Darvish, the starting rotation is not equal to the real contenders and the bullpen is a long way from that of a contender.  The prospects are there but it will take time to develop.  Even the core is not there yet.  None of them have yet to put together a full season. 

I had a dream last night the Twins signed Yu Darvish for whatever that's worth.

Maybe this wasn't just another California Dream?

MLBTR Chat from earlier today

Papa Chad

3:19 Twins trade one of their Young outfielders for starting pitching

Jeffrey Todd

3:20 It could be an ok time for a FA signing, actually. Have some guys on the come. Berrios and Ervin holding it down. None of the OFs that you'd be comfortable trading would really bring back what you'd want to get, so perhaps better to let those guys keep sorting things out and go spend a little money on the staff?

It's the right strategy this offseason. But I'm skeptical they go the years needed to land Darvish.

A guy can dream...well at least a SF Twins Fan can dream

There's room as I pointed out in the Rosario/Kepler topic and it's time to put up some $$$ for a change

Do Anything Realistic Via Incremental Salary Hikes!

To each his own.

But if part of your objection is thinking a $140m payroll in 2018 would mean the Pohlad family will lose money, I believe you're mistaken.

Just for starters, the value of their asset has gone from $44m to over $1B.

People should not be saying that the Pohlads are adverse to losing money for the reason you state.  They really should be saying that the Pohlads are adverse to a negative cash flow.   That is really what most people are saying when they say Pohlads do not want to lose money.

I think the logic is this:

 

• The Twins have a public goal of spending around 52% of revenue on payroll.
• No one knows exactly what the actual revenue is, but we typically use Forbes' estimate.
• At Forbes' number, the current Twins payroll for 2018 should be around 130M.
• Using Forbes' numbers, the Twins underspent the 52% over the last few years.

Payroll does not equal salary..  Payroll = Salary + Payroll Taxes + Health Insurance + Retirement Contribution + any other benefits..  This is why I asked if the 52% was from an interview or two or if this was ever explained..  It's possible this was said in the context of salary only but I have worked with hundreds of large companies and payroll cost is always expressed in terms of salary + benefits.

Benefits run around 30% for most companies.  This group of employees is quite different because of the average salary..  However, the number is still probably 10% or more so we can't calculate the actual number with validate if they are including payroll taxes and benefits.

The Twins have an ACE coming, they just have to wait until Lewis Thorpe gets here!

Payroll does not equal salary.. Payroll = Salary + Payroll Taxes + Health Insurance + Retirement Contribution + any other benefits.. This is why I asked if the 52% was from an interview or two or if this was ever explained.. It's possible this was said in the context of salary only but I have worked with hundreds of large companies and payroll cost is always expressed in terms of salary + benefits.

 

Benefits run around 30% for most companies. This group of employees is quite different because of the average salary.. However, the number is still probably 10% or more so we can't calculate the actual number with validate if they are including payroll taxes and benefits.

They are independent contractors, so the team wouldn't pay payroll taxes.

Health and pension comes from MLB, not the team. Payroll and salary are going to be near identical in the case of mlb players.

My preference is to trade for a SP and find a FA RP. Cole over Archer. Why? Archer probably isn't available and he'd cost a lot more than Cole. Stroman would be a viable option to Cole. Sign Morrow or McGee.

Here's a more aggressive strategy that addresses cost:

Sign Darvish. Overpay him and give him an opt-out. Five years, $130M. $25/$30 with opt-out, three more years at $25M.

Sign McGee. 3 yr/$30M.

Trade Escobar for a high-floor AA catcher or SP. He has real value with a predicted salary of $5M next year.

Trade Castro. He's worth his remaining 2 yr/$16, but not much more. Could end up eating a part of his contract but still save money. Resign Gimenez to share C with Garver. 

Trade or Release Grossman. Vargas, Palka vie for DH.

Consider trading Gibson. I think they need him next year but if cost savings is king, he has to go.

Total savings from trades: Esco ($5M), Castro ($4-8M), Grossman ($2.5M) maybe Gibson ($6M) = $11-$21.5M (will cost $2-3M to fill their positions)

Total 2018 FA Cost: $35M

Total fWAR change:

C   -  0 WAR (Gimenez was better per PA than Castro)

DH - 0 WAR (Vargas and Grossman are a wash. Switching HR/K for BB.)

SP - 3.5 WAR (Darvish - I'm keeping Gibson. Otherwise, 2.4 WAR)

RP - 1.5 WAR (McGee)

Twins gain 5 wins for a net cost of $20-24M in 2018. Probably can't sign Dozier or Mauer beyond next year.

Have at it. I'm not sold on the Darvish scenario but I thought it might generate some conversation.

I have been thinking about how can the Twins acquire an Ace starting pitcher and still be able to keep most of their core intact.  

One idea that is WAY out this super high annual value and shorter years.  Take Yu Darvish for example.  His starting point for negotiations is probably at 5yrs / $120-125M.  What if the Twins did something different and gave him less years but bigger dollars.   3yrs / $100M.  That's $33M a year - A LOT per year.  It brings Darvish through his 34 year old season.  So assuming he pitches ace like he can most likely get one more contract with a high annual salary maybe a 2 year deal for $25M a year.  So the value for him is he would possibly get $150M over 5 years.  The risk to him is he doesn't pitch as well in the 2nd or 3rd year and might lose out on those additional 2 years at the high value he might get today. That is also the risk to the Twins who would be paying someone $33M who is not pitching well.  But the benefit is they will be done with the contract sooner if that happens.  Which is also part of the benefit for when Buxton, Sano, Berrios contracts come up in 2021.  

This is a fair take. The 52% number was something that one of the Pohlads came out publicly and stated. I don't remember exactly when, but that's why you see the number.. so you may be right that it has definitely become a standard here. And I would note that during the lean years of the last few seasons, spending that 52% made little sense. It would just be money wasted.

 

The real issue, at least in my opinion, is that no one knows the actual revenue numbers, nor do they know the number that represents the organization's operating costs and salaries. That is all conjecture.

 

I think where we differ is that this team really is a couple pieces a way from being fringe to deep. The offense is very young and will likely continue to improve. There are 3 decent options in the rotation in Berrios, Santana, and Mejia (though he's a bit of a question mark). A guy like Darvish means a lot less pen usage not to mention someone we can be comfortable starting game 1 of a series, and spending some cash on a couple shut down relievers gives Molitor a ton of options in the pen to go with Hildy, Busenitz, and Duffey so he isn't wearing those guys down. It also let's us use our minor league depth more wisely.

 

This team could easily win 90+ with the right pitching moves.

It would be nice if we could validate the numbers because its hard to take too of a stance on anything without all of the facts.   I think you really got to the heart of the matter which is what would it really take to be a real contender and perhaps most importantly, is the team ready.  It's quite similar to Kansas City's situation in 2013.  I don't want to follow their blueprint to a small window of contention.

They were not ready in 2013.  2014 worked out well but they were not that great but got really hot at the end of the season.  Still, they were within a couple innings of getting absolutely nothing out of the considerable assets they gave up.  A wildcard game is just a really poor result IMO.   Had they kept Odorizzi and traded Myers for pitching that would contribute 2-3 years after that trade.  It's pure conjecture but I believe they likely would have extended their window.  They might have even been able to keep enough of this core together now had they had pre-arb guys to bring in the last couple years.

I would not go all-in yet.  They lose a lot of salary next year and it's feasible they could land one of the very top free agent SPs, especially if the core does get established and the bullpen gets shored up.  We still have the core for 3-4 years.  We would look better to FAs and it will likely be the best FA crop since free agency started.  There is a limit to the amount of dollars available so we would be better positioned.  We also can afford to extend a couple of the core players if we keep prospects to supplement the roster over the next 2-3 years.

It would be nice if we could validate the numbers because its hard to take too of a stance on anything without all of the facts.   I think you really got to the heart of the matter which is what would it really take to be a real contender and perhaps most importantly, is the team ready.  It's quite similar to Kansas City's situation in 2013.  I don't want to follow their blueprint to a small window of contention.

 

They were not ready in 2013.  2014 worked out well but they were not that great but got really hot at the end of the season.  Still, they were within a couple innings of getting absolutely nothing out of the considerable assets they gave up.  A wildcard game is just a really poor result IMO.   Had they kept Odorizzi and traded Myers for pitching that would contribute 2-3 years after that trade.  It's pure conjecture but I believe they likely would have extended their window.  They might have even been able to keep enough of this core together now had they had pre-arb guys to bring in the last couple years.

 

I would not go all-in yet.  They lose a lot of salary next year and it's feasible they could land one of the very top free agent SPs, especially if the core does get established and the bullpen gets shored up.  We still have the core for 3-4 years.  We would look better to FAs and it will likely be the best FA crop since free agency started.  There is a limit to the amount of dollars available so we would be better positioned.  We also can afford to extend a couple of the core players if we keep prospects to supplement the roster over the next 2-3 years.

A question to piggy-back off of your comment that next year could be the best FA crop ever.  Do you think that will actually dilute the pool in terms of $ being spent because of basic supply and demand?  Or will each player get what they deem to be market value and inflate payrolls due to so many guys being at peak earning potential at one time?

A question to piggy-back off of your comment that next year could be the best FA crop ever.  Do you think that will actually dilute the pool in terms of $ being spent because of basic supply and demand?  Or will each player get what they deem to be market value and inflate payrolls due to so many guys being at peak earning potential at one time?

My guess is that the very top guys are going to command ridiculous money.   That is going to absorb an unusual portion of the available payroll dollars.  My hope is that it will present an opportunity for us to get what in most years would be a top 2-3 ranked FA that might be 6th or 7th in terms of contract next year.  I would certainly not make plans based on this coming together but theoretically we are going to be well-positioned next year with big $ coming off the books and extraordinary supply.

I don't think this prevents signing a Lynn/Cobb type this year.  The dollars allocated to Mauer and Gibson (as an example) could be used to land an elite FA.  It would sure help if a couple more of our BP prospects step up next year.