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jjgott

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A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

 

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.

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A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

 

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.

 

That's not really true. That's not realized profit. Mark A and the other owners do not realize any of that $700M (assuming Forbe's valuation is accurate) unless they decide to sell the team. If they want to leverage that increase in value by taking on debt to pay players, maybe. However, I doubt any team does that.

User in-game thread post in 1st inning of 3rd game of the 2022 season: "This team stinks"

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A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

 

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.

 

That $700 million is imaginary though. It doesn't exist unless you sell the team.

 

What are profits and expenses? That is what matters.

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According to this article the Brewers were 8th in MLB with a 66M operating income last season.

 

Someone smarter than me please explain the differences between operating income and profit.

 

Even assuming "operating income = profit", doesn't really tell anyone much about that assumed 66 million.

 

Each team received a one time payment of 50 million dollars from the sale of MLBAM in 2018 & the Brewers also made a postseason run which will increase profits.

 

The 50 million is definitely not getting paid out again this year & making the postseason is yet to be determined.

 

Short of winning the WS, I would imagine the Brewers profits decrease this year compared to last year.

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They could borrow money against that increased value for any reason, including player contracts. It's probably true that other teams don't do that, but the Brewers are an asset, and that increase in value belongs to the ownership group to invest if they want to.
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They could borrow money against that increased value for any reason, including player contracts. It's probably true that other teams don't do that, but the Brewers are an asset, and that increase in value belongs to the ownership group to invest if they want to.

 

Ok, but the reason no team does that is because it would be bad business practice. Using interest burdened debt that is borrowed against an unknown and unrealized future value to pay millions of dollars in guaranteed contracts would be pretty foolish. I guarantee that revenue-wise the Brewers are not nearly in the same ball park (pardon the pun) as teams like the Dodgers, Yankees, or Giants. Those teams have TV contracts that are many times larger than the Brewers (and other small market teams). That is real money that can be spent now.

User in-game thread post in 1st inning of 3rd game of the 2022 season: "This team stinks"

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I understand their desire to earn a profit. Other teams want to earn a profit. I want to earn a profit.

 

But they have >$700 million in gains. They don't need to be profitable every single year. It's not required to keep the lights on.

 

I look at it like a person who has lots of equity in their home, or in their investment portfolio. If that person wanted to quit their job and start out on their own, they could afford to do so. They could borrow on that equity for awhile. They wouldn't absolutely need to be profitable the first year, or even for several years.

 

Maybe it's not realistic, but when an owner announces he's All In, that could come with the expectation that he operates at a loss to achieve his goal.

 

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?

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But they have >$700 million in gains.

 

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?

 

No, they have zero gains of $700mil. That is like any other investment...imaginary until you cash out. That $700mil means nothing to Attanasio. He will either die at the helm or hand it off to his kids. It isn't ever going to be sold by him.

 

Do you really think it is worth it to lose millions to have a better chance at the WS? I am not really convinced just blowing the payroll out of the water is worth it...MAYBE if we win the WS, but if not the "investment" of added payroll probably isn't really worth it. It would have been most financial business savy to not get Grandal or Moustakas....in all honesty. I would agree if adding all that payroll actually almost assured us a WS, but it is a giant crapshoot. Be a 100 game winning team and the odds are actually historically against you.

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I understand their desire to earn a profit. Other teams want to earn a profit. I want to earn a profit.

 

But they have >$700 million in gains. They don't need to be profitable every single year. It's not required to keep the lights on.

 

I look at it like a person who has lots of equity in their home, or in their investment portfolio. If that person wanted to quit their job and start out on their own, they could afford to do so. They could borrow on that equity for awhile. They wouldn't absolutely need to be profitable the first year, or even for several years.

 

Maybe it's not realistic, but when an owner announces he's All In, that could come with the expectation that he operates at a loss to achieve his goal.

 

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?

 

Can’t wait to hear the rationalizations in trying to disput this absolutely fantastic take.

 

Attanasio said “all in”. He needs to put his $ where his mouth is.

 

144 million increase in the value of the team in ONE year.

 

Take 14% of that 144 mil and invest it in Kuechel.

 

49 years is long enough!!!!

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I understand their desire to earn a profit. Other teams want to earn a profit. I want to earn a profit.

 

But they have >$700 million in gains. They don't need to be profitable every single year. It's not required to keep the lights on.

 

I look at it like a person who has lots of equity in their home, or in their investment portfolio. If that person wanted to quit their job and start out on their own, they could afford to do so. They could borrow on that equity for awhile. They wouldn't absolutely need to be profitable the first year, or even for several years.

 

Maybe it's not realistic, but when an owner announces he's All In, that could come with the expectation that he operates at a loss to achieve his goal.

 

Businesses take short term losses all the time to invest in reorganization, stock buybacks, acquisitions, etc. Isn't this the same as that?

 

This link in the article is more relevant in my opinion:

 

https://www.forbes.com/mlb-valuations/list/#tab:overall

 

The Brewers operating income is $66M with revenue of $288M. The Astros are also at $66M but have an overall revenue of $368M. That extra revenue ($80M) lets the Astros spend more on players, player development, front office, etc in order to achieve the same operating revenue. There is no way you can say that teams in smaller markets and/or with smaller TV contracts don't have limitations and that they are on the same footing as teams in larger markets with bigger TV contracts. In many cases it's not even close (look at the revenues for the Yankees and Dodgers, it's more than double the Brewers (not to mention their value is is 3-4 times that of the Brewers). Debt has to be paid back with interest, revenues can be used and spent without that burden. You really expect the ownership group to leverage their equity to pay players? That's not realistic at all.

 

 

Having said all that, it does appear in that link that most teams do have some debt, but it's probably not directly payroll related. I know you are thinking what's the difference? Notice the Yankees have no debt while the two bottom value and revenue teams (Rays and Marlins) have some of the highest debt/value ratios. Where is that getting them? It's not translating to higher payrolls. Again, no way they are on the same footing and have the same ability to pay high contracts as the teams at the top.

User in-game thread post in 1st inning of 3rd game of the 2022 season: "This team stinks"

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I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.

 

Their asset is worth over $1 Billion. And there shouldn't be any shortage of lenders willing to loan them money on that asset.

 

The other thing to remember is that the Brewers are a business, but the value of the franchise isn't only determined by the success of the business. It is determined by how much someone is willing to pay for it.

 

The fact that sports franchises are rare, popular, and exclusive makes ownership attractive. The super wealthy want to be in the club. That's why fine art will sometimes (not always) command huge prices. Not because the asset is a profitable business, but because it is rare and other rich people want to buy it.

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I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.

 

It's self imposed because they are not stupid!

User in-game thread post in 1st inning of 3rd game of the 2022 season: "This team stinks"

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I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.

 

It's self imposed because they are not stupid!

 

Steve Ballmer paid $2 Billion for the Clippers. Was it a good deal? Probably not, but it was his one chance to buy an NBA team in Los Angeles.

 

Sometimes the super wealthy will spend their money in was that are pleasing to them, without regard to whether or not they turn an annual profit.

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I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.

 

It's self imposed because they are not stupid!

 

It’s only stupid if the only thing that matters is profit

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Our payroll is already higher (or will end up higher) than any other person who could own the Brewers would spend. I don't think people realize that sometimes. We should be thankful for having Attanasio...not just demand him to be greater than he already is.
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A reminder that the team has increased in value by more than $700 million since Mark A bought the team.

 

They can afford to sign or retain any player. Being a small market team should not limit their roster construction.

 

That $700 million is imaginary though. It doesn't exist unless you sell the team.

 

What are profits and expenses? That is what matters.

 

 

It's not imaginary. If they sold the team now, they'd make several times what they purchased it for. That's not just created in someone's imagination.

 

And when you talk about billionaires, about 90 pct of the time their value is "imaginary" in the way you're using it. Hell, Trump includes his names value in how much he's worth. How much he values the number put on his name. That's imaginary. The value of Trump towers vs the actual cash he has is not imaginary.

 

 

PS-Just using the famous rich President as an example. NOT trying to argue about him in any way at all.

Icbj86c-"I'm not that enamored with Aaron Donald either."
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I'm not saying they should spend it on payroll, only that they can. And that whatever limits they have on payroll are self imposed.

 

It's self imposed because they are not stupid!

 

Steve Ballmer paid $2 Billion for the Clippers. Was it a good deal? Probably not, but it was his one chance to buy an NBA team in Los Angeles.

 

Sometimes the super wealthy will spend their money in was that are pleasing to them, without regard to whether or not they turn an annual profit.

 

Sometimes...but should we really expect that from every small market owner? You stated this: Being a small market team should not limit their roster construction. Perhaps if you want to take on debt that is true. However, I hope you would agree that a small market team has to take on more debt and more risk than a large market teams and/or a team with a larger TV contract in order to compete for the same high contract players when constructing their roster.

User in-game thread post in 1st inning of 3rd game of the 2022 season: "This team stinks"

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The franchise valuations and discussion about a team's ability to increase payroll should be kept entirely separate, because they are actually independent from one another. Rich owners like the Ballmer example will spend silly money to acquire an asset like a pro sports franchise, but not to fund said franchise's operations.

Player payroll limits are driven by the operating revenues of all sports teams. Sometimes there are restrictions put into place by the league they are in (salary caps/floors, etc).

 

In the case of MLB, the luxury tax threshold and increasing penalties for consecutive years payroll exceeds it have curtailed persistent huge market team spending on player payroll, while their built-in revenue stream advantages would have normally allowed for ever increasing budgets. For a team like the Brewers, their valuation means absolutely zero in terms of what their operating revenue streams are and what portion of that revenue can be dedicated to MLB player payroll. Saying that because their franchise is valued over $1B means they can always take out a loan to increase spending on contracts is a terrible way to run a business - which is why that just doesn't happen. From time to time owners will allow an organization to operate at a short term loss to add payroll, but they're not taking on debt to add players. They take on debt to partially fund stadiums or other capital/infrastructure improvements that ultimately improve the organization's valuation.

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Yes, Patrick. That is 100 percent true. All things being equal, a large market, large revenue team has more capacity to take on additional payroll than a small market team.

 

What I'm saying is that the Brewers are worth more than 4 times as much as the current ownership group spent for the team, and that they could use some of that increase in franchise value on player contracts, even to the point of operating at a loss. Should they? I don't know. But they could.

 

And also the financial performance of the business isn't the only thing driving the value of the franchise. Team ownership is an exclusive club that is desired by others.

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Our payroll is already higher (or will end up higher) than any other person who could own the Brewers would spend. I don't think people realize that sometimes. We should be thankful for having Attanasio...not just demand him to be greater than he already is.

 

 

This is just another dumbfounding comment that has absolutely NOTHING in the world to back it up. Literally nothing.

 

 

So it's just utterly implausible to you that some Russian Oligarch could have bought the Brewers like the guy who bought the Nets and then just spend 200 million a year because...losing 10 or 15 million a year is of little consequence to him?

 

Or lets not even go that far. You REALLY think Attanasio is so special that Cuban for example wouldn't be spending similarly after trying to get into baseball for years?

 

 

Jesus....even Attasio has shown that he's willing to spend more to sign Kimbrel(we have zero clue exactly how much more, but the very fact that they were talking shows that he's "willing" to spend more money). But you think he's the ONLY wealthy person in the entire world that would spend like that?

 

Wasn't Mike Ilitch spending ridiculous sums of money because he wanted to see the Tigers win another WS before he died?

 

 

I also want to be clear, I think Mark A has been a great owner, I don't think he "owes" us anything else, he's in this for personal pleasure first and foremost and he's earned that right by becoming successful enough to purchase a Major League Baseball team. But some of these statements about finances and how the value of the Brewers going up means "absolutely nothing" to Mark A or how he's the only person with the financial means to purchase a team who'd be spending as much as we are now....they're.....nonsense. Trying to find a nicer way to put it, but you're just making things up, things that you may believe and then posting them as fact when we know that other people would spend more, at least for stretches. And I don't know this, but I'm just gonna go waaaaaay out on my limb here and guess that the fact that the Brewers are worth 700 to A Billion more than he spent on them MEANS something to him.

Icbj86c-"I'm not that enamored with Aaron Donald either."
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According to this article the Brewers were 8th in MLB with a 66M operating income last season.

 

Someone smarter than me please explain the differences between operating income and profit.

 

Operating income is income before non operating expenses (marketing, depreciation, interest, etc.) and taxes. It's not Net Income. Typically Net Income includes those additional expenses.

 

Profit can mean mean many things. Need more information to determine what profit is in this case. They may mean net income but I doubt that would be made public.

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Yes, Patrick. That is 100 percent true. All things being equal, a large market, large revenue team has more capacity to take on additional payroll than a small market team.

 

What I'm saying is that the Brewers are worth more than 4 times as much as the current ownership group spent for the team, and that they could use some of that increase in franchise value on player contracts, even to the point of operating at a loss. Should they? I don't know. But they could.

 

And also the financial performance of the business isn't the only thing driving the value of the franchise. Team ownership an exclusive club that is desired by others.

 

 

I don't think we're in agreement on how the valuation of the Brewers should impact the payroll. I don't really think it should change anything, I think their year to year performance should dictate what and how they spend their money. They had a good year last year and they are projecting a much better year this year financially, so they decided to add payroll. That's all I would do.

 

 

But it's comical how people are guessing and making assumptions about what these billionaires could or would do with their money. Buffett lives in an almost laughably modest home for a guy worth 90 billion(excuse me if I'm a few billion off one way or the other). Meanwhile Jerry Jones buys a Yacht that's like 3 football fields long and has MULTIPLE landing spots for his helicopters.

 

Ted Turner was asked why he was still trying so hard to earn money...why it meant so much to him when he was already a billionaire....the answer was sickening to me personally but telling in general. "It's how we keep score." So for at least SOME the money doesn't actually matter. It's just a way to keep score, to be part of a club, for validation. Your example with art I thought was a great one.

Icbj86c-"I'm not that enamored with Aaron Donald either."
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