Major League Ready

I can appreciate where you are coming from but I don't think you have to create a situation where you sell low on both Diamond and Worley. For example, Swarzak would bring a decent prospect. Let Diamond / Worley & others compete for that spot.

At the risk of stating the obvious, it is a lot riskier for the twins than a top 5 revenue team. The Yankees or the Dodgers can spend the Twins entire budget on position players and bullpen and still have enough left over to sign FAs at this price for their entire starting rotation.

You have to believe Seattle is going to go hard at him. Their new TV contract represents an additional $75M/yr plus the national TV contract so their rvenue just went up by $100M. The only variable cost associated with that revenue is payroll tax. The Yankees have a decision to make in terms of getting under $189M. They are the favorite if they decide to give up on that idea. Of course, the Dodgers are in the 2nd year of the biggest TV contract in history. Their TV revenue substantially surpassess the Twins total revenue. Did the rangers take themselves out of the running when they signed Choo? You have to believe Boston will be in on Tanaka too.

Fans often do a very different cost / benefit analysis as compared to any FO. Some fans simply ask will it make the team better next year and not much else seems to matter. The benefit here is a 2-3 win improvement on a sub 500 team. This would be an entirely different situation IF those wins had the potential to win the division or the players had the potential to make a difference in contention. However, there is no way this team contends and the two players in question are not difference makers. The cost in terms of future development is 2 prospects along the lines of Berrios, Eades, Turner, Gonsalves. Obviously, Berrios was taken a few spots ahead of the pick we would lose and Gonsalves was taken later. We also sell low on Florimon and give up two other roster spots, essentially selling low on them as well. So, we give up to high picks and give up on three players to pick up a couple wins in a sub 500 season. Add to this a price tag north of $20M/year and I really can’t imagine there is a GM anywhere that concludes the cost is worthy of the benefit. It seems more prudent to take a shot at Tanaka or one of the front of the rotation starters that should be available next year. They can also pursue Florimon with the benefit of the added clarity provided by another year of experience for Florimon. Things also change a bit if they take Turner or Sanatana/Polanco make big strides. Beside all of the above, the biggest unknown for the future is corner outfielders. Another year should clarify that part of our future as well. Perhaps the best use of FA dollars will be a corner outfielder, perhaps one of an international flavor that does not cost us prospects and is young enough to be part of the long-term future of this team.

I can't stand how slow he is but have no problem accepting all of the points made here. It would not surprise me if he significantly outperformed Hughes. They should have added a 3rd year team option. Having said this, I also would not be surprised if the change of scenery has a positive effect on Hughes.

Which specific upgrades are obvious / low cost? Impact player and low cost generally do not go together.

Seems reasonable to me to pick the guy you have the most faith in regardless od HS or college. It appears thats what they did with Stewart. If they are on "the fence" between two prospects, I could see taking the college guy from a risk perspective.

I have no real expertise in team chemistry. I have to admit to assuming I could offer some insight on chemistry based on corporate leadership and consulting experience. This is a phenomenally complex topic. It would require considerable expertise in both areas to be qualified to compare and contrast the two. Chemistry gets brought up a lot in interviews with managers. And, there are a lot of well respected managers, (MLB) and coaches (NBA) that seem to think team chemistry is a relevent issue. Somehow the measuring stick became the "primary measure". The internet is a poor medium and a contributing factor to a decision somehow becomes the only consideration. Of course, I am exaggerating a bit for effect. I have to admit to assuming based interviews with managers there were similarities to the impact of culture on corporate performance and team chemistry. Somewhere there must be a former MLB player who went to have corporate success that could provide an opinion. The rest of us are not really qualified. I know a former NFL player that fits this profile. I will ask his opinion but it seems that the NFL and MLB are sufficiently different that we should not draw that parallel.

In a business context, culture is the hardest thing to change. The largest turnaround I ever orchestrated started with the dismissal of two extremely talent individuals that simply refused to be team players. That company had a poor culture, a high turnover rate that was growing even higher, and was losing money. Three years later that had almost zero turnover, attracted the best talent in the region and had record profits. That company also went on to be recognized within that industry as the best organization of its kind in the US. So, yes, count me in the camp that believes chemistry is important.

How do you explain Boston's 2012/2013 and the mediocre results of the LAA?

My guess is that they are already convinced Deduno will be on the 60-day DL. Worley or Diamond is the #5. The other moves to the pen, is traded or DFAed. I am not sure why this is getting so much play orther than it is an interesting situation.

I don't know how you can evaluate his negotiating skils. I have negotiated hundreds of multi mullion dollar contracts I could not possibly assess his negotiating skills without being present on several occassions. In 20 years of management consulting I have worked with many truly talented people. However, I have never seen someone with the requsitite skills set to make such an assessment assume to understand someone's ability with so little information. I am pretty sure it would violate TD policy if I were to assess your competency. You have to love the irony.

It takes alot more than articles and interviews to assess relative ability and specific skills sets.

That's not the only thing that is wrong with this scenario. How does Luke Bard help if the Padres are looking for LH pitching?

As many have said here, Doumit should not be taking ABs away from prospects that can potentially be part of the future. He was pretty good in 2012 but it was time for him to go. It looks like they got a player with a floor of a LOOGY and a back of the rotation ceiling. I would consider it a win if he was a good LOOGY. Anymore than that is a bonus.

I am sorry but we don't agree at all on the relative degree of speculation. The speculation was removed by assuming these players maintined their performance level over the entire 5-6 years. Obviously, this is highly unlikely but there is nothing unusual about testing the best case scenario. It provides the potential upside once you determine the most likely case scenarion. If you add a worst case scenario, you know have the entire range of potential impact and can gauge the relative risk/benefit associated with the transaction. The rest of the calculations are very basic financial analysis that is common in virtually every business. If done by a consulting firm, the supporting documentation would be 6-8 pages and very easy to validate. I just finished one for a $184M budget that required 88 pages to document and validate the findings. We would have more than adequate data to predict the financial impact of these acqusitions (assuming best case scenario for health and performance) if we were doing this on a consultative basis for the Twins. Yes, it would assume performance but as I stated earlier it perfectly reasonable to assume performance and health as a best case scenario. From there it is subjective as to how much risk the team is willing to take. I am sure Jack Goin has data that would provide an accurate risk metric to calculate the most likely case scenario by adding the risk component. That calculation provides what should be expected. Very common stuff! Plus, any trade or prospect discussion is based on a speculative level of performance. We won't have much to discuss around here if we are to stop discussions that assume a given level of performance.

Jack, We all know there is a substantial corellation between wins and attendance. Can you give us an indication of how closely attendance can be predicted based on win record. Please note: I am not asking if the team uses this calculation. My question is how closely could you predict attendance based on win record if you were so inclined.

The debate is not about pride in product, if Grienke would perform at a high level for 6 years or anything else. A position was taken that this should have been a no brainer because these players would have paid for themselves. That was all I was debating and others offered good input on some of the variables. What is wrong with making an effort to fully understand the positions we take. Personally, I prefer to formulate my positions based on the type of exercise we did here. Anyone can cherry pick information to find information that supports their theory. That’s easy. This might seem ridiculous to you or to others not accustomed to this type of analysis but this is a relatively simple exercise. The Twins FO has all of the information necessary to calculate the exact value of each additional fan. We have made assumptions for the contribution margin on concessions and products. They no doubt have that exact figure. We also assumed an average price for unsold tickets. The FO could produce the value of all unsold tickets. Actually, I am sure they have already calculated that value. In other words, this part of the calculation for them involves very little in terms of assumptions. They have all of the data for this portion of the analysis. There are three values that are the productive of estimates. The first is how many wins these pitchers would supply. Personally, this being a key variable, I would handle this using a most likely case scenario and then provide a profit calculation with best and worst case scenarios while keeping all other variable constant. This would provide a range as well as a solid estimate. The second is impact of wins on attendance. This is easy to predict using win/loss and attendance date from previous seasons across the league and specifically for the Twins. Yes, it is an estimate but it would be likely. Actually, this would be an interesting question for Jack Goin. I would bet they can predict the impact on attendance with reasonable accuracy. The third is a risk metric for under performance and injury. There is plenty of data based on previous FAs to provide a risk metric. That risk metric would need to be part of the most likely case scenario.

You are comparing milestones and accepted practices. They are two very different things. This has absolutely nothing to do with the premise you suggest. In this case, the opprtunity for clubs in the Twins position to sign the top FA SP has been present every year. Are you really suggesting the fact teams have not made such a transaction is NOT an indication that it is a bad practice.

An increase of 700,000 would get us back to 2010 levels. Are you suggesting that a 500 team would get attendance back to the level they were Target Field opened? Of course, I was just taking this is an acedemic discussion to see if your hypothesis was reasonable. I think it would be a huge stretch to think it would make a 300K difference in attendance which equates to $15M. Of course, even this estimate requires to others assumptions that are very unlikely. One, the remaining tickets are of average prices. I tend to believe Kwak's suggestion that the remaining tickets have a value significantly below average. The even bigger assumption is that these guys remain healthy and perform at an elite level for the durationof thier contract. In reality, unless I miss my guess, Grienke would not have been considered even if could have been persuaded to come here because it makes absolutely no sense for a rebuilding team, especially with the Twins revenue. The risk and performance/cost ratio simply do not make sense for the Twins. Here is the test. Name a team in the Twins position (revenue & rebuilding) has ever signed the top FA starting pitcher. I have asked this question before. If this is a viable idea, where are examples. When fans are mad that the FO is not willing to make a move that other GMs have clearly demonstrated they would not make, the problem is the fan with a fanatical perspective. Show me an example of a team in the Twins position, just one, and I will believe there is merit in signing the top FA starting pitcher where we were developmentally in 2012 or for that matter 2013.

How is “this line of arguing off”. Johnny made a very specific argument that they should have signed Grienke and Sanchez because they would have paid for themselves. We evaluated that premise listing all of the variables and assumptions. Granted, we would have had a more accurate profit contribution per fan number if we knew the gross margin for concessions and other products but the math does not fly even at 100% gross margin. We were able to basically boil this debate down to one assumption. That being the gain in attendance from signing these two players. The one other assumption that was debatable was the use of an average ticket price to determine incremental revenue from ticket sales. As Kwak pointed out the addition attendance was more likely to be from “cheap seats”. I am sure the Twins FO has exact figures on the lost revenue opportunity and could calculate this rather precisely. This specific argument is not if they have payroll capacity. Clearly, they do. However, using salary capacity is an very simplistic rationalization IMO. Capacity to act has little to do with the wisdom of an action.

Nice catch, Kwak! I assumed this was probably the case but I did not want to be accused of any bias that might disprove financial viability. The 10,000 incremental seats sold probably does not fly either because of two factors. One, many people by tickets well in advance and don't know who is pitching. Two, even if they did come to specifically see Grienke, they likely chose his game instead of another game. This is a somewhat crude analysis but I think we can say with confidence that the incremental revenue would not have come even remotely close to covering the cost of these players even assuming they remain healthy, make every planned start and perform to expectations for the entire duration of the contract which of course is HIGHLY unlikely.

Thanks Jokin. That really helps understand the revenue implications. Incremental attendance has almost no variable cost. The $22.50/person for merchandise and parking obviously has some cost. So, we are talking roughly $50 profit for every ticket sold. Now, we just have to estimate the impact on wins and then the impact on attendance from fielding a better team. Would it be fair to say Grienke would have taken us from 66 to 76-78 wins? What would that have done for attendance?

What are you assuming is the increased attendance? How did you come up with a figure of $50 profit for every man/woman & child in attendance?

No to all of the above. You are changing Johnny’s hypothesis which suggested the addition of Grienke/Sanchez might have generated enough profit to fund their salaries. The national TV contract has absolutely nothing to do with that equation. Revenue gained from increased attendance was calculated using (average ticket price * 300,000) The 300,00 was a guess and I rounded up to $10M I thought was generous. If you look back, I discussed the fact that we don’t have adequate information to determine the addition profits from concessions and merchandise. However, I suggested it was likely less than attendance. So, a reasonable guess is probably less than $20M of the $39M You can’t add the assumption that the sign a bunch of other players too. Not only is it unrealistic, their costs would have to be included in the cost/benefit analysis. Some of you remind us that Grienke and Sanchez probably did not want to come here. One of the assumptions was every man has his price. I used $2M/yr each. That might not be an accurate assumption but that was my estimate. It probably would have taken more but I wanted to be conservative. The hole I was referring to is a risk metric. As history shows so clearly, Free Agents are often injured or underperform for at least part of the contract. (Pujlos, Hamilton, Howard, Teixiera, A-Rod, etc) We experienced this with Morneau. Santana is a good example as well. His contribution to the Mets was diminished because of injury and we could list many others. I don’t know what the risk metric should be but let’s just say for the sake of argument that FAs underperform or are injured for 30% of these contracts. ($39M/.7=$55.7M) In other words, in order to have even odds of breaking even on this investment, the annual profit would need to be $55M plus payroll takes on $39M. So, somewhere in the neighborhood of $60M