Brewers franchise value and ability to spend money

[KeithStone53151]

Thanks eye black for posting all that. I was going to add a few accounting tidbits but you seem to have mostly covered it. Tom may be certain the Brewers operated in the red, but I suspect they were still very financially successful when looking at EBITDA, which is probably a much more useful metric in this type of business.

 

The value of the franchise increasing definitively makes it easier to get loans if the Brewers happen to be short on cash, but loans have absolutely nothing to do with a companies profitablity. I guess mildly because it inevitably increases interest expense, but loans simply make cash available if the Brewers are short on cash. I would be shocked if there Brewers were having any sort of cash issues.

[RollieTime]

Wanna know what sounds like a Stearnsy move? Lead people to believe that the payroll is going to be lower and then all of a sudden, in a 2 hour span, they sign and trade for a combination of 3 guys that will be big time contributors, add $40-$50 million in payroll at the drop of a hat, and be like “we’re coming baby!”.

 

I love Stearns’ style in how people never really know what he’s doing. And if there’s ever anything public about what they are doing or who they are interested in, it tends to not happen or be untrue. It’s like they are just lying in the weeds waiting, pop out to do a move, and disappear off the map again.

 

Except this time, they might not just pop out. It could be a bombardment.

[MrTPlush]

I love Stearns’ style in how people never really know what he’s doing. And if there’s ever anything public about what they are doing or who they are interested in, it tends to not happen or be untrue. It’s like they are just lying in the weeds waiting, pop out to do a move, and disappear off the map again.

 

This was true during the Doug Melvin era too, this still being the case may be reflective of Melvin being an advisor to Stearns early on. Not sure if Doug Melvin still is around these days though.

[TigerUppercut]

OK, so we push the payroll up to $150 million for a few years. But the team doesn't win a World Series. Then what? Push it to $175 million? $200 million. The fans that believe that the payroll is too low will never be happy, because it will never be enough.

 

Not necessarily. I think what some of us fans are worried about is whether we are making decisions to improve the team or making decisions in order for Mark A. and the rest of the ownership group to hit their profit margins.

 

Obviously payroll is not everything as the Dodgers can attest to but I'd much rather the team sign good players that give us a 5% better chance to win the WS than try to get by on the cheap and hope whoever we find to fill spots can have a career year for us.

 

Look at what the Red Sox are doing with Mookie Betts. He undoubtedly is a top OF in baseball and would make the Red Sox better next year if he stays, but they are shopping him because they're worried paying him what he's worth will impact the "budget." This is an example of a team actively trying to make their team worse in order to save money. This is the stuff that is maddening as a fan.

 

Worse in the short term, likely better in the long term. Let's not omit the obvious that Mookie Betts' performance is likely to decline to the point where he'll be a liability at the salary he's likely to make, not an asset. See Albert Pujols.

[DuWayne Steurer]

 

Worse in the short term, likely better in the long term. Let's not omit the obvious that Mookie Betts' performance is likely to decline to the point where he'll be a liability at the salary he's likely to make, not an asset. See Albert Pujols.

 

Miguel Cabrera. Joey Votto. Ryan Braun.

 

20 of the top 40 highest paid players by aav in 2018 were less than two WAR. That is not bang for your buck.

 

Paying guys like rendon and stras is a net loss. It always looks good up front, but the last 3-4 years never work out.

[Warning Track Power]

There is something inherently wrong with a sport that only has a few teams that can bid on the biggest FAs in any given year. Cole and Strasburg are rumored to be going to the same teams that were in the mix for Machado and Harper last year. I don't care about Attanasio spending more money on payroll when the entire system is set up specifically to benefit New York, Los Angeles, Chicago, Boston and Philadelphia. MLB keeps tinkering with pitch clocks, robot umpires, three man minimums, limiting mound visits, etc... in an effort to generate buzz about the sport when they are only ignoring the real problem.

 

The reality is when you pander to only the largest markets and small market teams only act as feeder clubs to them, you are turning a blind eye to the main issue in the sport. MLB thinks they need the Yankees, Dodgers, Red Sox, Cubs, etc...to keep interest in the sport. They continue to lose support to the NFL and can't figure out why. Perhaps it's because of the equal playing field where the Green Bays, Kansas Citys, and Pittsburghs of the world who have been historically well run are on a level playing field financially with those that are in New York, Los Angeles and Chicago.

 

Good luck to the players and the owners when the strike or lockout comes. Instead of folding MiLB franchises, why don't you fold all small markets? This way fans like us don't have to hold tight to 2-3 year windows of competing before having to spend 4-5 years rebuilding. All the while watching the annual Dodgers, Yankees, Red Sox playoff series.

 

This is the only sport with legit free agency. Nothing inherently wrong with it

Legit free agency sure. Anyone can go anywhere for whatever amount they want. I agree with you there.

 

However, if you want to continue to struggle with your product and continue to lose fans, keep the system the way it is where certain teams can simply spend their way out of poor management. This, more than anything else, is the reason MLB continues to fall in popularity to the other major sport leagues.

[xisxisxis]

I made my point about the lack of liquidity and practicality of transferring one's personal wealth in the other thread...

Except that you're wrong. I have been a consultant for several private companies/partnerships and for every one of them there is little separation of personal and company finances. One competitor to a client had a perfect separation where all debt was in the company and all assets were in their private accounts. In a publicly traded company there are rules. In private ownership it's the wild west where almost anything goes.

 

What's really interesting/funny about this discussion is that the one thing at Brewerfan that would command a clear consencus is that David Stearns is a very smart, good GM, who has been very successful creating winning teams with limited resources. Yet most people against spending money quote statistics based on your average GM and their success with more money. If there ever was a GM who could use that extra budget successfully it would be David Stearns. Not every decision he makes works perfectly, but he is the one of the few GMs in baseball who would be successful with maximizing that extra money. But let's just ignore that and quote statistics loaded with decisions by a huge excess of not so bright GMs.

[MrTPlush]

There is this myth that some small market GMs are geniuses and would conquer the world if they had a big market budget. I feel like it probably isn't that simple. I think the owners who spend lots of money are probably part of the problem (making decision on who they need to get) or the fact most FA deals end up bad so that added payroll doesn't actually help most of the time.I doubt if Stearns went and ran a big market he would make a perennial 100 game winner.

[wntrtxn21]

OK, so we push the payroll up to $150 million for a few years. But the team doesn't win a World Series. Then what? Push it to $175 million? $200 million. The fans that believe that the payroll is too low will never be happy, because it will never be enough.

 

Not necessarily. I think what some of us fans are worried about is whether we are making decisions to improve the team or making decisions in order for Mark A. and the rest of the ownership group to hit their profit margins.

 

Obviously payroll is not everything as the Dodgers can attest to but I'd much rather the team sign good players that give us a 5% better chance to win the WS than try to get by on the cheap and hope whoever we find to fill spots can have a career year for us.

 

Look at what the Red Sox are doing with Mookie Betts. He undoubtedly is a top OF in baseball and would make the Red Sox better next year if he stays, but they are shopping him because they're worried paying him what he's worth will impact the "budget." This is an example of a team actively trying to make their team worse in order to save money. This is the stuff that is maddening as a fan.

 

The Dodgers have won how many Div. championships in a row? Their spending keeps them on top every year. Remember when a big spending team plays another big spender, someone has to lose. The Nats are also huge spenders, as are the Yankees and Astros the two finalists in the AL. Big money wins W.S. titles. Even the Royals in 2015 had to up their payroll by around $64M to win the W.S. Then they knew they couldn't sustain that level of finances so they came back to reality. Now they are one of the worst teams in all MLB. Every study done on MLB since 1995 comes to the exact same conclusion. The biggest problem in baseball is the monsterous disparity in money.

[KeithStone53151]

There is this myth that some small market GMs are geniuses and would conquer the world if they had a big market budget. I feel like it probably isn't that simple. I think the owners who spend lots of money are probably part of the problem (making decision on who they need to get) or the fact most FA deals end up bad so that added payroll doesn't actually help most of the time.I doubt if Stearns went and ran a big market he would make a perennial 100 game winner.

 

Normally I would agree with this, but then I see what the Dodgers have been doing over the last handful of years. They don't make bad FA signings, they are hands down the best MLB team at developing talent and it isn't even close, and they are legit WS contenders every year with no sign of that changing over the next 5 years at least. I feel like the Dodgers guy is more or less operating like a small market team, using his virtually unlimited resources to set up the very best talent development system and is simply churning out blue chippers left and right...supplementing where needed.

[xisxisxis]

The Dodgers have won how many Div. championships in a row? Their spending keeps them on top every year.

You may have missed the McCourt ownership years, but spending did not keep the Dodgers on top every year. Sure it helps. I don't know where it doesn't at least help, but when you have bad/stupid people at the top even money can't overcome that handicap.

[homer]

There is this myth that some small market GMs are geniuses and would conquer the world if they had a big market budget. I feel like it probably isn't that simple. I think the owners who spend lots of money are probably part of the problem (making decision on who they need to get) or the fact most FA deals end up bad so that added payroll doesn't actually help most of the time.I doubt if Stearns went and ran a big market he would make a perennial 100 game winner.

 

Normally I would agree with this, but then I see what the Dodgers have been doing over the last handful of years. They don't make bad FA signings, they are hands down the best MLB team at developing talent and it isn't even close, and they are legit WS contenders every year with no sign of that changing over the next 5 years at least. I feel like the Dodgers guy is more or less operating like a small market team, using his virtually unlimited resources to set up the very best talent development system and is simply churning out blue chippers left and right...supplementing where needed.

 

Well we will see...they've got a declining Kershaw and Jansen on the books for like $50 million a year combined for two more years.

 

But that's the advantage a big money club has. They can make signings like that and still spend $150 million on other guys.

[jonescm128]

The Fox Sports contract is up next year so they should see a bump in TV revenue after signing a new deal. Currently, Brewers are bringing in $21 million per year from FSW. Yes, they do get revenue sharing but compare this to LA and NY of almost $200 million per year and you can see the vast differences in how much payroll teams can afford.

 

What can the Brewers expect with the new deal? Well, the Royals are close to signing their new deal that would bring in around $50m per year for 10-15 years. This is probably the closest comparison in terms of market size that the Brewers can expect next year. A nice bump for sure.

[True Blue Brew Crew]

I made my point about the lack of liquidity and practicality of transferring one's personal wealth in the other thread...

Except that you're wrong. I have been a consultant for several private companies/partnerships and for every one of them there is little separation of personal and company finances. One competitor to a client had a perfect separation where all debt was in the company and all assets were in their private accounts. In a publicly traded company there are rules. In private ownership it's the wild west where almost anything goes.

 

What's really interesting/funny about this discussion is that the one thing at Brewerfan that would command a clear consencus is that David Stearns is a very smart, good GM, who has been very successful creating winning teams with limited resources. Yet most people against spending money quote statistics based on your average GM and their success with more money. If there ever was a GM who could use that extra budget successfully it would be David Stearns. Not every decision he makes works perfectly, but he is the one of the few GMs in baseball who would be successful with maximizing that extra money. But let's just ignore that and quote statistics loaded with decisions by a huge excess of not so bright GMs.

 

Two points...

 

- Never said co-mingling of personal and team funds doesn't happen, just said it's not as simple as people want to make it out to be. I even gave examples of when and why it does happen. It is still a personal choice that no one should expect of someone else ever. So, no I'm not wrong, fellow poster who never posts without condescension.

 

- As for Stearns, I believe the entire objective with hiring him was to use his creativity to achieve more with less. And Mark A has taken the reigns off when justified. That doesn't mean it's a sound practice budget-wise to do it year after year.

[Ennder]

 

Legit free agency sure. Anyone can go anywhere for whatever amount they want. I agree with you there.

 

However, if you want to continue to struggle with your product and continue to lose fans, keep the system the way it is where certain teams can simply spend their way out of poor management. This, more than anything else, is the reason MLB continues to fall in popularity to the other major sport leagues.

 

I don't think this is even in the top 10 reasons baseball has lost popularity. All of the major sports have long periods of the same teams dominating, regardless of how they handle free agency and caps. I think the Patriots have more of an edge in the NFL than the Dodgers do in MLB because players are willing to play for less to go to the patriots whereis the Dodgers have to outbid people paying reasonable prices in order to get a free agent.

[LouisEly]

Except that you're wrong. I have been a consultant for several private companies/partnerships and for every one of them there is little separation of personal and company finances. One competitor to a client had a perfect separation where all debt was in the company and all assets were in their private accounts. In a publicly traded company there are rules. In private ownership it's the wild west where almost anything goes.

How big are/were those companies, and how many owners?

 

If they aren't >$200M/year in revenue, and if they don't have an ownership group (i.e. have one owner or a simple 2-3 person partnership), then they aren't really comparable.

 

I'd also say that little separation of personal and company finances isn't the smartest thing to do, particularly if liability issues should happen to arise. Just my opinion.

[xisxisxis]

How big are/were those companies, and how many owners?

 

If they aren't >$200M/year in revenue, and if they don't have an ownership group (i.e. have one owner or a simple 2-3 person partnership), then they aren't really comparable.

 

I'd also say that little separation of personal and company finances isn't the smartest thing to do, particularly if liability issues should happen to arise. Just my opinion.

Size wasn't a factor in any as even the largest (close to 50% of Brewers revenues) had very fluid financial management. The biggest factor is how the "partnership" was created initially and the "power" that the managing partner has and how the partners can change/influence the managing partner. I don't know the Brewers structure, but I would be shocked if Attanasio didn't set up everything where he pretty much has free reign to do what he wants. If the structure is in place and clearly detailed in the partnership agreement you can easily neuter the secondary partners and have legal backup for the neutering.

 

With respect to spending, there's quite a difference in viewpoint even among those who advocate the Brewers can and should spend more. I wouldn't advocate that the Brewers go after top tier free agents as it just isn't a winning formula for a small market team and it really is an overpay for the return. I really think they made a mistake last year not going after Miley and Gio prior to them signing with other teams. Going into the season with 3 rookies and no plan B was a recipe for disaster. For about $12M they could have signed both and they would have been watching the Cardinals face the Nationals in the Play-in-game preparing to face the Braves in the playoffs. The Brewers got lucky that the Yankees cut Gio otherwise last year they wouldn't have even seen the play-in-game. That $12M investment would have been recouped easily by the playoff payouts/revenues. I think that's worth the risk of maybe only breaking even instead of pulling in $15M in profit. Even if it risks they would lose money, they have made plenty in previous years when payroll was low.

 

And while the market size is important to overall revenues the Brewers were #2 in 2018 in dollars of revenue per fan. Only the SF Giants made more revenue per fan. The Brewers were #2 in all of baseball with $111 per fan (data from wtmj.com article that used Forbes data), beating out every other larger market except 1. The fans of the Brewers have already shown they will support the team as if it's won multiple world series in the last decade, it would be nice if the owners took a hit in their pocketbooks for a few seasons to get ONE...

[KeithStone53151]

The Fox Sports contract is up next year so they should see a bump in TV revenue after signing a new deal. Currently, Brewers are bringing in $21 million per year from FSW. Yes, they do get revenue sharing but compare this to LA and NY of almost $200 million per year and you can see the vast differences in how much payroll teams can afford.

 

What can the Brewers expect with the new deal? Well, the Royals are close to signing their new deal that would bring in around $50m per year for 10-15 years. This is probably the closest comparison in terms of market size that the Brewers can expect next year. A nice bump for sure.

 

I would like to think the Brewers can do better than the Royals. The last few years, the Brewers have been in the top 5 in tv ratings among MLB teams. I would like to think despite similar market size, number of people actually watching matters. I think the Rays got a deal somewhere in the $80 million per year range. Despite our ratings being better, that market is significantly bigger than ours to the point that it's probably hard for us to get a similar deal. My guess is for sure between those 2 numbers, probably on the lower side of the midpoint.

 

I'll add, $30 million of additional tv revenue does not necessarily mean an extra $30 million in payroll. It definitely is not that simple.

[markedman5]

Brewers operated in the red last season according to TH

 

Check out this article from Milwaukee Journal Sentinel:

 

With eight openings on the Brewers' 40-man roster, Stearns expects busy week at the winter meetings

 

https://www.jsonline.com/story/sports/mlb/brewers/2019/12/06/brewers-david-stearns-has-roster-holes-fill-winter-meetings/4352163002/

[DHonks]

Given the 26th man and our current outfield depth, I could see is taking 2 players in the Rule 5 draft—a 5th OF and possibly a utility IF or defensive catcher with upside. I figure that given Gamel’s role, we can get by for large stretches with a raw outfielder

[HiAndTight]

 

Legit free agency sure. Anyone can go anywhere for whatever amount they want. I agree with you there.

 

However, if you want to continue to struggle with your product and continue to lose fans, keep the system the way it is where certain teams can simply spend their way out of poor management. This, more than anything else, is the reason MLB continues to fall in popularity to the other major sport leagues.

 

I don't think this is even in the top 10 reasons baseball has lost popularity. All of the major sports have long periods of the same teams dominating, regardless of how they handle free agency and caps. I think the Patriots have more of an edge in the NFL than the Dodgers do in MLB because players are willing to play for less to go to the patriots whereis the Dodgers have to outbid people paying reasonable prices in order to get a free agent.

 

 

I don't agree with this at all. The Pats aren't signing guys to discount deals. They're just run better than almost every other team and that's because of Belichick. They get former 1st round picks who have talent, but aren't well rounded players and carve out a niche role in which they can excel. They bring in veterans who don't have much less and again, put them in situations they can have success. So many of the moves they make don't work out, but they're not afraid to try.

[HiAndTight]

Brewers operated in the red last season according to TH

 

Check out this article from Milwaukee Journal Sentinel:

 

With eight openings on the Brewers' 40-man roster, Stearns expects busy week at the winter meetings

 

https://www.jsonline.com/story/sports/mlb/brewers/2019/12/06/brewers-david-stearns-has-roster-holes-fill-winter-meetings/4352163002/

 

 

I'm skeptical of any reports about the Brewers finishing in the red. That's basically asking us to just blindly believe the Brewers finances from a reporter who was told by who? Not an objective 3rd party most likely. And as so many have said, there are a lot of creative accounting measures that can help them show a loss when in reality they made money.

But of course nobody on here knows what's going on. I am a bit surprised how many people are concerned about a billionaire losing a few million dollars in a particular year in one of their investments...one that most billionaires get involved in because they enjoy it and less because of the potential financial windfall. But then I also think the idea that the Brewers should take out loans in order to be able to meet the payroll obligations.

 

I think what most fans want is pretty simple. A team that's competitive, that's trying to win and that occasionally will reach a bit further when they're close to winning to add a couple of pieces. I think it's pretty hard to argue that the Brewers HAVEN'T been doing that during Mark Attanasio's tenure.

 

I just want to see the Brewers make smart decisions and every once in a while...sure, I'd like to see them really stretch their financial resources. But it seems like too many want them to do this annually. Strausburg for example. Great pitcher, but he averaged ~145 innings from 26-29. Is that really the type of guy the Brewers should be betting their financial future on? Wheeler was even riskier.

 

I don't think there is a number that anyone can throw out there and say the Brewers should be spending this much per season. We're all just too ignorant about their financials. But just as I'm surprised to see how worried so many are about a billionaires finances, I'm equally surprised in the lack of faith in Attanasio. The idea that he's equally or more invested in making money from the franchise than he is in winning. A lot of these guys buy teams because they've had tremendous success and they want own a franchise so they can win. Again, I really haven't seen evidence that Attanasio is not living up to that.

[Ennder]

 

 

I don't agree with this at all. The Pats aren't signing guys to discount deals. They're just run better than almost every other team and that's because of Belichick. They get former 1st round picks who have talent, but aren't well rounded players and carve out a niche role in which they can excel. They bring in veterans who don't have much less and again, put them in situations they can have success. So many of the moves they make don't work out, but they're not afraid to try.

 

Many NFL players give discounts to win rings, especially the older ones. I don't think that is really up for debate if you have watched contract values over the years. Younger players want the big payday and won't do it but the 30 year old+ players who are still good definitely do. Hightower definitely gave them a discount, Brady definitely did, White definitely has, Edelman definitely has. Patriots get to sign their best players at about 80-90% of value because they know it is in their best interest. A team like the Browns has to pay 120%+. It is a huge advantage in the NFL.

[Ron Robinsons Beard]

Brewers operated in the red last season according to TH

 

Check out this article from Milwaukee Journal Sentinel:

 

With eight openings on the Brewers' 40-man roster, Stearns expects busy week at the winter meetings

 

https://www.jsonline.com/story/sports/mlb/brewers/2019/12/06/brewers-david-stearns-has-roster-holes-fill-winter-meetings/4352163002/

 

 

I'm skeptical of any reports about the Brewers finishing in the red. That's basically asking us to just blindly believe the Brewers finances from a reporter who was told by who? Not an objective 3rd party most likely. And as so many have said, there are a lot of creative accounting measures that can help them show a loss when in reality they made money.

But of course nobody on here knows what's going on. I am a bit surprised how many people are concerned about a billionaire losing a few million dollars in a particular year in one of their investments...one that most billionaires get involved in because they enjoy it and less because of the potential financial windfall. But then I also think the idea that the Brewers should take out loans in order to be able to meet the payroll obligations.

 

I think what most fans want is pretty simple. A team that's competitive, that's trying to win and that occasionally will reach a bit further when they're close to winning to add a couple of pieces. I think it's pretty hard to argue that the Brewers HAVEN'T been doing that during Mark Attanasio's tenure.

 

I just want to see the Brewers make smart decisions and every once in a while...sure, I'd like to see them really stretch their financial resources. But it seems like too many want them to do this annually. Strausburg for example. Great pitcher, but he averaged ~145 innings from 26-29. Is that really the type of guy the Brewers should be betting their financial future on? Wheeler was even riskier.

 

I don't think there is a number that anyone can throw out there and say the Brewers should be spending this much per season. We're all just too ignorant about their financials. But just as I'm surprised to see how worried so many are about a billionaires finances, I'm equally surprised in the lack of faith in Attanasio. The idea that he's equally or more invested in making money from the franchise than he is in winning. A lot of these guys buy teams because they've had tremendous success and they want own a franchise so they can win. Again, I really haven't seen evidence that Attanasio is not living up to that.

 

I’m not personally concerned that Attanasio might be losing a few million every year. But if you are looking for a logical, legit reason why payroll isn’t higher, that’s it. Whether you like it or not, it is what it is.

[adambr2]

Nor should he be expected to operate the franchise at a loss. As good of an owner as Mark A is, he bought the Brewers as an investment. Not for his own personal enjoyment. And that's ok. It wouldn't be ok if he was operating the franchise with a bare bones payroll that clearly served no purpose but to maximize profit margins, but that's not happening here.