How much money do the Brewers have left to spend?

[adambr2]

In the most recent Baseball America podcast on the Brewers prospects, Haudricourt said that on the day the Brewers acquired both Cain & Yelich, that when Stearns told Mark A about also signing Cain after trading for Yelich, Mark's response was "are you sure we need both of them?"

 

Maybe I'm reading to much into that, but to me, that says plenty about Mark.

 

Sorry, maybe I'm being dense but I'm missing what you're saying that says about Mark. Are you saying it tells you that he would prefer not to spend if he doesn't have to, or it tells you he can be flexible on his budget?

 

I also remember reading about this as well and Stearns' reply was something along the lines of if he gets one, it will make him want to get the other one that much more.

 

In any event I don't personally read much into Mark saying that either way, as I think that is pretty much exactly how many of us felt at the time, too.

[brewmann04]

I am of the belief that Mark will spend if he believes thjat a certain player will put this team over the top.

[SomewhereInTime]

Totally random, but as far as TV stations, I remember Brewers games occasionally being on channel 18 out of Milwaukee (Super 18, I think they went by).

 

I really think Mark Attanasio will allow the payroll to get significantly past where we are now, if it makes sense to. This team was one win away from a World Series this past season. Just knowing what we do about him as an owner, I can't imagine how badly he probably wants a ring.

 

When I started following it was MSC I think with like 100 games broadcast a year. I think it was the same channel as FSN is now.

[Roderick]

In 2014 the Brewers payroll was 15th in the league @$110 million. They are committed to $115 million so far this year. Given revenue increases they should be able to add more no problem. I would think they could start the year at $120 if they felt like it.

 

I could have sworn that with deferred payments such as Ramirez, the Grandal signing, and now settled arby cases they're already over 120.

 

$115 million includes Ramirez ($3million)

https://www.spotrac.com/mlb/milwaukee-brewers/payroll/

 

Although looking at that again, there are a lot of pre-arb blanks so you might be right. My mistake.

 

At the time of signing of ARam, they had the 2014 deferred salary payable in 2017 and 2018. So we should be done with him. They also don't have Garza's deferred $2M either.

 

Signing bonus for Yamamoto in 2019 of $330K? A 12th rounder in 2014.

 

So I wonder about the accuracy on some of this non-current info.

[Roderick]

The profits that Attanasio and the other owners have been getting each year is like crack to them... They are hooked and they aren't giving it up for anything... Where did the $30M for the sale of MLBAM go? Did any go into the salary pot? There is no reason the team can't have a $120-$140M payroll with current revenues/revenue sharing... All the Brewers owners need to do is kick part of their habit... I'm not holding my breath...

 

Yeah, they didn't spend any money acquiring the Mudcats or renovating Maryvale.......

[monty57]

Total revenue is all the money that is brought in, so it has to pay all the bills, not just player salaries. Bringing in $255M in revenue does not mean there is $255M available for players, and anything not spent is profit. There are a lot of bills they're paying outside of player salaries.

 

During the two "rebuild/retool" years where player payroll was down, they used excess revenues to purchase a AA team, rebuild their Arizona complex, and upgrade their concourses/concession areas at Miller Park. They didn't pocket the money, they invested it back into the franchise in a way that should help them in the future. That seems smart, as we will hopefully benefit from these investments for decades.

 

Payroll was only down because it didn't make sense to spend more... the money was better spent buying a AA team then paying more for MLB vets who wouldn't have won anything. As soon as the team looked to be close to ready, they surprised the pundits and spent a lot of money to acquire players that took them to the NLCS.

 

Now, they have increased payroll again. As they are reportedly still looking for upgrades, they still have some room to add if the right deal comes up. Businesses have to operate below expected revenues, because something may happen where you don't get all the revenue you expected. Attanasio seems to believe that adding "special" players will help them meet or exceed expected revenues, so he's willing to take the risk and spend when those deals arise. I think he'd find money if, for example, Bumgarner could be brought in, but if the special player isn't available, we go with the cheaper option (i.e. Spangenberg, Petricka) rather than spend on someone who may not significantly move the needle.

 

Attansio is a smart guy. He got into a bit of a mess in the past by adding aging vets when they weren't going to win. I think he learned a lot and it seems they're being pretty smart about things. We should be getting more money, great. That doesn't mean we should immediately spend it to sign guys who aren't a big upgrade over what we currently have.

 

We had two MLB catchers. The only reason to add would be if we could get someone like Grandal or Realmuto, which we did. We have a bunch of MLB starting pitchers. The only reason to add will be if we can get a guy at the top of the rotation. Same with second base.

 

So, to the question of the thread, I think we could have money to pay for Bumgarner, but not for a #3-5 starter. We have money if it is for a player that is a significant marginal improvement over our current guys, but not if it is just to throw a name on the field.

[KeithStone53151]

The high A team that was purchased is probably expected to make at least some money or at worst break even. I don't think Mark A would buy it if the business was bleeding money. Also the training complex and concessions/concourse upgrades are depreciable assets, so the impact on that operating income number reported by Forbes is a fraction of the cash paid. I personally doubt cash flow is a significant concern for the Brewers for so many reasons.

 

I've seen numbers that player salaries are generally around 40-42% of revenue. You could of course push it higher, but then obviously the team is making less money. The Brewers are very likely to make significantly more than the $255M in 2017 for many reasons, but do revenues go all the way up to $300M? That seems like a stretch to project revenue up there. $280M is probably a reasonable number for 2019. A $140M payroll would be players getting 50% of the revenue. Hard to imagine going much past that without losing money. And the higher payroll goes, the higher payroll taxes and benefits for players go as well.

[FVBrewerFan]

Keep in mind the profits just don't go into Mark A's wallet. At some point Miller Park is going to need repairs, refurbishing, etc. They need to fund for that appropriately. For example, at what point are they going to need to replace the roof, or at least make major repairs? That's not going to be cheap.

 

As others have said, Mark A wants to win. And I think it would be hard for him to say no if Stearns brought him a deal he feels strongly about.

[Roderick]

The high A team that was purchased is probably expected to make at least some money or at worst break even. I don't think Mark A would buy it if the business was bleeding money. Also the training complex and concessions/concourse upgrades are depreciable assets, so the impact on that operating income number reported by Forbes is a fraction of the cash paid. I personally doubt cash flow is a significant concern for the Brewers for so many reasons.

 

Nobody was questioning cash flow. Though I would not assume anything unless you know how the debt is structured.

 

Someone was questioning the owners spending any money. So some examples were given.

[brewers4eric]

As a Brewers fan since 1978, I theorize that between 1984 and 2007 I was conditioned into believing that payroll restraints have always kept the team from competing. After 40 years of Brewer fandom, however; I finally realized that I don't care how much the team owners make. I just want the team to win the World Series while I'm alive.

 

Go Brewers.

[KeithStone53151]

The high A team that was purchased is probably expected to make at least some money or at worst break even. I don't think Mark A would buy it if the business was bleeding money. Also the training complex and concessions/concourse upgrades are depreciable assets, so the impact on that operating income number reported by Forbes is a fraction of the cash paid. I personally doubt cash flow is a significant concern for the Brewers for so many reasons.

 

Nobody was questioning cash flow. Though I would not assume anything unless you know how the debt is structured.

 

Someone was questioning the owners spending any money. So some examples were given.

 

The biggest reason I seriously doubt cash flow is an issue is the value of the Brewers. I know it doesn't exist on their books yet, but if they ever needed cash...banks would be lining up to borrow the team money. If they didn't have $50 million or whatever amount laying around to renovate Maryvale, they would have no issue borrowing for the project. I of course am speculating and could be wrong, I'm simply doubting cash is an issue for that among many other reasons.

 

And my point is none of that outgoing cash mentioned above has a significant impact on the team's profitability in a given year. Not like player salaries, which I assume are generally expensed in the year paid aside from signing bonuses/deferred money and impact profitability right away. Those are long term investments that will provide value for a long time.

[long ball]

This is an open-ended question. If the Brewers identify a player that provides value at a position of need, the money will be there. I have no doubt in that.

 

I sorta feel like this is the most accurate/fair post in this thread. This is what we've heard from Stearns and Attanasio a few times.

[OnTheBlack]

As a Brewers fan since 1978, I theorize that between 1984 and 2007 I was conditioned into believing that payroll restraints have always kept the team from competing. After 40 years of Brewer fandom, however; I finally realized that I don't care how much the team owners make. I just want the team to win the World Series while I'm alive.

 

Go Brewers.

 

 

I can certainly see that in the Brewers in the 90's on, but in the 80's the Brewers payroll's were competitive with almost every team in baseball. I know they had the highest payroll at one point and I believe Yount signed a record setting contract when he was a FA after the '89 season outbidding some of the big spenders. They also spent a lot of money on guys like Higura, Stubbs and others.

 

I tend to view Molitor leaving as the period when the Brewers started losing players because of money. I don't remember the details, but I think they actually offered him a pretty big pay cut as a free agent coming off a monster season. This was also when Bando came in and Selig was an absentee owner while serving as acting commish.

 

 

https://shepherdexpress.com/sports/brew-crew-confidential/messy-divorce-brewers-paul-molitor/

 

I found this article while trying to remember the circumstances. It looks even worse than I remembered with Molitor...and it really shows how lucky we are to have a real GM and not Sal Bando.

[OnTheBlack]

Interesting how some seem to have some pretty specific numbers regarding baseball revenues. Would you mind posting those financials that you somehow obtained, I'd be curious to see them. Also, [sarcasm]how horrible that an owner would want to make a profit on an investment. What's this world coming too![/sarcasm]

 

 

Where was it ever even inferred that it was awful that someone would want to make a profit on their investment?

 

The owner has already seen his investment increase by 800 million.

[Cirilloing]

Interesting how some seem to have some pretty specific numbers regarding baseball revenues. Would you mind posting those financials that you somehow obtained, I'd be curious to see them. Also, [sarcasm]how horrible that an owner would want to make a profit on an investment. What's this world coming too![/sarcasm]

 

Profit is fine, but zero owners made their living owning a sports team. That came first. While an owner is entitled to do what they want with their team, if the owner of my team was valuing profit over being competitive I would cease to support that team. Fans don't fill the stands to look around and say, "Oh gosh, my team's owner is doing such a great job at making money!" We want to win, that's why we are there. If they aren't on board with that they won't get my money.

[wntrtxn21]

To hopefully put some of this payroll debate to rest...

 

Brewers 2017 Numbers

 

Payroll $69 million

Attendance was 2.6 million

Profits $67 million

Payroll + Profits= Break Even at $136 million

 

Brewers 2018 Numbers

 

Payroll $121 million

Attendance was 2.8 million. Let’s say an average ticket is $30 for the 200,000 additional tickets sold. That’s another $6 million before taxes. So let’s say that’s $4 million more in profits.

Break even was $136 million + $4 million in additional ticket sales= $140 million.

 

Looking at this, their profits in 2018 was probably around $19 million. That’s before the profits from the playoffs. The revenue is between $20-$30 million, but that’s not straight profits. It’s probably fair to say you could tack on another $10 million in profits.

 

$140 million to break even + $10 million in playoffs= $150 million for break even during 2018 season.

 

$150 million-$121 million payroll= $29 million in profits for 2018.

 

I have never thought that Mark was in it just to make profits. I think this shows that he isn’t just padding his pocket book. It’s expected that a business owner would want some type of profit at the end of the year. The Brewers payroll was at $121 million even before Mark knew we would be in the playoffs to get the additional profits. He’s putting as much money into the Brewers that he can and I hope this exercise could maybe give people a better look into what the Brewers could reasonably do this season. I could see them pushing it a little more toward the break even point and stretching the payroll to around $130-$135 million by season’s end, but going beyond that wouldn’t make much sense financially. Of course, he could spill over some profits from this past season and push it to about $145 million tops, but that would be putting them very close to going in the red.

 

As it sits right now, their payroll is around $120 million. They need to leave a little room to make trades during the season to make a push for the playoffs and have payroll space for all the guys shuffling up and down as well. All those guys need to get paid too.

 

 

You forget that all teams have net operating costs too. Coaches salaries are not included in payroll. Cost of running Miller Park, travel costs, hotel costs, insurance costs, doctors, trainers, club house personal, etc.... All these and many more add up quickly and all come off the bottom line and affect net profits.

[wntrtxn21]

We are in unchartered territory with payroll. I see us somewhere between $115 and $120 million payroll depending how you count the min salaries, with at least a few million possible in incentives. With how low payroll was the prior couple years, the imminent new tv deal, extra revenue coming from increased ticket prices and likely increased attendance due to the team being good, and baseball generally having much more revenue than past years...I personally could see us around $150 million without losing money, assuming the Brewers contend. We certainly won't open that high and might not even push payroll that high with mid-season acquisitions. That's my opinion on absolute max payroll. I think it would be unlikely we add more than $10 million in payroll at this point to open the season.

 

 

There is no way in the world the Brewers could add 67% to their payroll! Nobody knows what the tv deal will be, except it will be less than 1/4 of the Cubs or Dodgers deal. Increased attendance won't bring much, and costs are increasing. Their MAX will be around $117-120M for this year. Right now I too think they are at that sum, so unless a trade of Anderson and/or Thames comes to pass, Stearns is done.

 

Im not sure where you are getting 67%. Brewers ending payroll last year was 120m. A 67% increase would bump it to around 200m. You must be comparing opening day payroll of 90m, which is a meaningless comparison.

 

I also said i think they could go 150m without losing money. Not that they'd go that high. Their opening day payroll might be around the number you suggested, but i would be surprised if we are both a contender and end the season with under 130m payroll.

 

As for the tv deal, i would look at the rays recent tv deal for what we likely can get. I don't have the numbers offhand, but you can certainly find it on google and it would be a game changing number.

 

The Brewers TV deal was estimated between $20-23M. At 20 they would be the lowest in the league.

[adambr2]

Interesting how some seem to have some pretty specific numbers regarding baseball revenues. Would you mind posting those financials that you somehow obtained, I'd be curious to see them. Also, [sarcasm]how horrible that an owner would want to make a profit on an investment. What's this world coming too![/sarcasm]

 

Profit is fine, but zero owners made their living owning a sports team. That came first. While an owner is entitled to do what they want with their team, if the owner of my team was valuing profit over being competitive I would cease to support that team. Fans don't fill the stands to look around and say, "Oh gosh, my team's owner is doing such a great job at making money!" We want to win, that's why we are there. If they aren't on board with that they won't get my money.

 

It's a balance of both. While I think Mark A. has certainly shown a competitive nature and a willingness to spend to win, he still bought this franchise as an investment and certainly doesn't intend to operate it in a non profitable fashion, at least not in the long-term.

 

The two of course go hand in hand in theory, the more you win the more profitable you'll be, and the more you invest in the team the more you'll win. They were fortunate to still do quite well at keeping fan interest during the mini rebuild of late 2015 to early 2017.

[KeithStone53151]

The Brewers TV deal was estimated between $20-23M. At 20 they would be the lowest in the league.

 

Right, according to multiple sources that have been posted in the thread...that tv deal expires after this year. I would expect it to be highly likely the Brewers make a much better TV deal this time around.

[KeithStone53151]

You forget that all teams have net operating costs too. Coaches salaries are not included in payroll. Cost of running Miller Park, travel costs, hotel costs, insurance costs, doctors, trainers, club house personal, etc.... All these and many more add up quickly and all come off the bottom line and affect net profits.

 

The initial numbers Rollie used were from Forbes estimates. They estimated the Brewers operating income at $67 million, and that number includes player salaries, coach salaries, hotels, doctors, trainers etc...pretty much everything aside from depreciation, taxes, other below the line costs. Beyond that, he's making quite a few assumptions...but he seems to be trying to take into account other costs than salaries. I'll add that $150 million is probably the number that makes sense to me as well as roughly a break-even point...assuming the team makes the playoffs.

[Fear The Chorizo]

You forget that all teams have net operating costs too. Coaches salaries are not included in payroll. Cost of running Miller Park, travel costs, hotel costs, insurance costs, doctors, trainers, club house personal, etc.... All these and many more add up quickly and all come off the bottom line and affect net profits.

 

From what I know, the Green Bay Packers are among the only teams to report their actual profits among major sports franchises because they are technically publicly owned. In 2017, they saw a record revenue stream of $454M, but to make that kind of $ their expenses also set a record for themselves at $421M. That's roughly an 8% net profit - pretty blah in the business world, particularly when that's after year of record revenue. So "Wisconsin's team", who is among the most popular sports franchises in the country and gets the benefit of NFL league-wide revenue sharing (including monster TV money), managed to make just $33 million dollars in 2017.

 

I have no doubt the Brewers are operated in a profitable way - but I think their margin for going from profitable to break/even - losing money is much smaller than what many assume. Surely their franchise value appreciated, but you can't draw from that to add a stud starting pitcher. If you look at any business, people get worried when their profit margins are too low - well before a company starts losing money year over year. If the Brewers can carry a bloated payroll beyond their historical norms the next few years, it's because they've had very low payrolls in 2016-2017 and earmarked some of those profits to use on player salaries for what they hoped was going to be their window to contend.

[brewmann04]

As a Brewers fan since 1978, I theorize that between 1984 and 2007 I was conditioned into believing that payroll restraints have always kept the team from competing. After 40 years of Brewer fandom, however; I finally realized that I don't care how much the team owners make. I just want the team to win the World Series while I'm alive.

 

Go Brewers.

AMEN

[KeithStone53151]

As a Brewers fan since 1978, I theorize that between 1984 and 2007 I was conditioned into believing that payroll restraints have always kept the team from competing. After 40 years of Brewer fandom, however; I finally realized that I don't care how much the team owners make. I just want the team to win the World Series while I'm alive.

 

Go Brewers.

AMEN

 

A majority of us understand there are limitations to how much the Brewers can and will spend, and in this thread we are making our best guesses as to how much higher they'll go with payroll this year and discussing further.

 

Your comment is incredibly off base and doesn't at all relate to the discussion.

[MrTPlush]

The Brewers TV deal was estimated between $20-23M. At 20 they would be the lowest in the league.

 

Right, according to multiple sources that have been posted in the thread...that tv deal expires after this year. I would expect it to be highly likely the Brewers make a much better TV deal this time around.

 

Yup and then inflation. Inflation alone has added $12mil since 2011. Plus a TV deal and I see $130milish to be a pretty solid guess. Considering we are competing and we are adding a lot of revenue $140mil (including short term money like Grandal that won't be around 4 years from now) is probably easily attainable if we wanted.

 

Brewers On Deck selling out is a pretty good sign this is going to be a massive year. The team is going to compete and people will be filling the stadium from Day 1.

[istanbultaye]

I don't have exact numbers or anything, but I remember the discussion about the TV deal back when they signed the current one was much in the same vein as the current discussion: "Our current deal is so bad, but when we get a new one it will be great!". While true to an extent, even if the Brewers see a nice increase which might bump them up in the rankings in the short term, in the long term, we know other teams will be renewing their TV deals and getting higher amounts as well. So, in relative terms, just because they see an increase in the new TV deal does not necessarily mean that they will make a big gain from it relative to the rest of the league.