Interesting read: Why small-market excuses for not spending don't hold up...

[TURBO]

https://www.cbssports.com/mlb/news/why-small-market-excuses-for-not-spending-from-teams-like-the-indians-and-brewers-dont-hold-up/?fbclid=IwAR1FoS3VpkT5I2q2rZxXIJjBAGny1rONHbfasE2jiBnlnFGGQ6sw77LiZYA

[3and2Fastball]

This article started out as my dream come true article, better articulating what I’ve been trying to say here for years...however it didn’t really go much further than referencing a Forbes article and going on to basically say “because we said so...”

[JohnBriggs12]

Count me in the group that's not been buying the Brewers crying poor after falling just short of 3 million in attendance, presumably getting more from naming rights etc. Brewers could likely afford a payroll approaching $150 million. Make no mistake, as the article says, they are choosing not to.

[MKEguy]

https://blogs.fangraphs.com/estimated-tv-revenues-for-all-30-mlb-teams/

 

This is from 2016, but an extra $160M in tv revenue would be relatively helpful.

 

Our great attendance numbers only help so much to make up for the other things we lack.

 

Well see what our new TV deal brings, but I bet it won’t get us even to half way up the list.

[Patrick425]

A few things about this:

 

- He states that while payroll has gone up from 2018, so has attendance. The attendance went up by about 70,000. Let's say that equals $75 per fan (that's being generous). That would be an extra $5M. Their opening day payroll was up $32M from 2018 to 2019. He also dismisses the Spring training upgrades and assumes they were financed. I believe they totaled $50M (not sure if that's accurate, but I believe it's close).Even if they financed it, they now have additional financing payments on their books. He also does not talk about additional investments made in international scouting. We will see what the Forbes figures state for 2019, but I would not be surprised if the Brewers dropped considerably.

 

- Lets assume that the Brewers can actually afford to pay for the likes of Rendon, Cole, or even Moustakas. Seems to me that is like saying someone with $10M and someone with $35M can both afford a $5M house. Sure, that may be true, but there is a lot less risk and pain for the person with $35M if the house turns out to be a big money pit. You are never going to convince me that the Brewers and other small market teams are on the same financial footing as the Dodgers, Yankees, Cubs, etc. Even taking into account the luxury tax, it does not make any sense considering the size of the fan base and TV contracts for such teams compared to the Brewers, Twins, Royals, etc.

 

- He talks about how much San Diego has spent. How has that turned out for them so far? How has that been working for the Cubs?

 

He choosing not to put any weight into what teams say they make or lose, but complete faith in Forbes. The people at Forbes are intelligent, but they are still just making estimates based on assumptions. There is a margin of error there.

[homer]

Saying the Brewers are "top 1/3 in operating revenue" or the Indians are "19th in revenue" is meaningless when you have 5 teams with double and triple the revenue.

[KeithStone53151]

Saying the Brewers are "top 1/3 in operating revenue" or the Indians are "19th in revenue" is meaningless when you have 5 teams with double and triple the revenue.

 

They said operating income, not revenue...big difference. I would make an extremely hefty bet that the Brewers were absolutely not in the top 1/3 of teams in operating income, more likely the bottom 1/3. We'll never know for sure of course. It's very realistically possible for us to be ahead of certain high payroll teams in operating income...notably the Red Sox that had a top payroll but missed the playoffs. With our record payroll, not hosting a playoff game, and under 3 million fans without drastic ticket price increases...I'm not buying a top 1/3 operating income.

[KeithStone53151]

https://blogs.fangraphs.com/estimated-tv-revenues-for-all-30-mlb-teams/

 

This is from 2016, but an extra $160M in tv revenue would be relatively helpful.

 

Our great attendance numbers only help so much to make up for the other things we lack.

 

Well see what our new TV deal brings, but I bet it won’t get us even to half way up the list.

 

If you're curious, take a look at what the Rays, Royals, and Reds are getting in their TV deals. We probably will be closest to the Royals, which average around $50-60 million per year I believe. The Rays I believe are averaging $80 million. The added tv revenue will certainly be a nice boost, but a $20 million increase doesn't mean an extra $20 million all to payroll. For starters, it might(probably) gradually increase and not immediately jump from $30 to $50 overnight. Second off, plenty of that will probably get allocated to other things...a $10 million increase in tv revenue might allow for an extra $5-6 million for payroll. I think I read that players get something like 55% of baseball revenue, so that would be a logical chunk to allocate to payroll. Also with payroll dollars comes taxes and benefits.

[KeithStone53151]

My biggest problem with this article is this guy criticizing the Brewers specifically for not going nuts on upgrades. There were maybe 4-5 game changing free agents, and another 12-15 very good free agents available...and 30 teams looking to improve. There's a pretty significant dropoff after that. He's also ignoring that we gave 2 very lucrative 1 year deals last year, which were parlayed into about $140 million combined for the 2 players...and the signing of Cain for $80 million(the 5th largest contract that offseason) and trade for Yelich $45 million in payroll. Over the last 2 offseasons, we were pretty much the only team not operating by the same playbook as everyone else of cutting back on spending. I find the Brewers to be an incredibly weird(stupid) choice of team to criticize in an article like this. You have the Pirates and Marlins that are just always bad and spend next to nothing in much bigger markets...much better targets.

[MrTPlush]

I’m not sure how accurate the Padres comparison is, but that would be interesting if it actually was.

 

This is typical fluff that doesn’t really provide any good reliable information though. It just makes assumptions and uses one number for that part to make an argument. It’s way more complicated than these article make it seem to be.

[owbc]

Just because you can afford a contract doesn't mean you should sign it. This guy hasn't spent a second thinking about what these contracts would mean for the Brewers in 2022 or 2023.

 

I mean seriously, how many times to we have to watch the 'big spending' middle market teams crash and burn after getting "A" offseason grades by the pundits?

[KeithStone53151]

Just because you can afford a contract doesn't mean you should sign it. This guy hasn't spent a second thinking about what these contracts would mean for the Brewers in 2022 or 2023.

 

I mean seriously, how many times to we have to watch the 'big spending' middle market teams crash and burn after getting "A" offseason grades by the pundits?

 

Shhhhh, stop making sense. He's still busy commending the Padres for signing Hosmer 2 years ago.

[sveumrules]

Count me in the group that's not been buying the Brewers crying poor after falling just short of 3 million in attendance, presumably getting more from naming rights etc. Brewers could likely afford a payroll approaching $150 million. Make no mistake, as the article says, they are choosing not to.

 

Miller paid 2 million a year for naming rights.

 

AmFam is paying 4 million, so there's an extra 2 million.

 

That money has been spent 20 times over already just on our paltry free agent signings.

[jerichoholicninja]

I wonder what kind of crazy contracts we would see if the Yankees spent all the money they could. I mean I can't believe the difference in payroll between the Yankees and the lowest payrolls is exactly proportionate to their respective profits. I would bet the Yankees could probably sustain a $400M or more payroll.

 

As for the Brewers and other small market teams, just be smart. Don't dish out long term, big money contracts to middling free agents like Eric Hosmer. Anyone who complains about not spending money on guys like that can suck an egg.

[KeithStone53151]

I wonder what kind of crazy contracts we would see if the Yankees spent all the money they could. I mean I can't believe the difference in payroll between the Yankees and the lowest payrolls is exactly proportionate to their respective profits. I would bet the Yankees could probably sustain a $400M or more payroll.

 

I don't mean to be that guy, but I think the Dodgers get significantly more than anyone else. I think last I saw they were getting almost double the tv revenue that the Yankees get. I agree with your general point completely, even for the Yankees...but I think it's compounded that much more for the Dodgers. I've always found it a bit ridiculous scrolling through Cubs forums and listening to them being upset that they aren't signing every FA as if they can afford a half a billion dollar payroll(spoiler, the Cubs are already resigning Bryant in FA after trading him for a massive prospect haul AND signing Betts)...but maybe they are on to something to a degree. I think the next set of labor negotiations is going to be extremely nasty. It's always tough in that it's a 3 sided duel. Small markets vs Large markets vs Players.

[bill hAll Star]

If this stuff keeps getting louder and louder maybe they owners will care enough to just do with the NBA and NFL do and shield themselves behind a salary cap.

 

I'm sure the Cowboys could afford a $400 million payroll but they only need to have a $150 million payroll and they can throw up their hands and say, "sorry, salary cap." NBA is basically that although technically teams are allowed to pay insane amounts of luxury tax over the top.

 

I am just wired to live with the fact that owners will all collude to pocket $50 million and all be "capped out" a certain % short of their actual real budget. But say for a second that every owner was benign and they all spent most of their fortunes to try to win the World Series. Cole might've gotten $800 million instead...and eventually teams would be too poor anyways. So I don't care.

 

It is annoying that teams like the Rays and Marlins are just sitting on revenue sharing. Attanasio at least pretends to try to spend more than they have. The annoying thing to me is Cubs fans complaining about their situation. 95% of them don't understand that the Cubs are fading with a giant collection of players crossing the age of 30 with only 2 years left on their contracts. They have no farm system or pitching depth. Short of signing Cole and Ryu, the Cubs will drive themselves into the garbage if they re-signed Rizzo/Bryant and spent on Kyle Gibson or something. If they went in an another offseason and keep some of their current stars as their fanbase wants, they are going to end up with a payroll that costs ownership $500 million with all of the luxury tax they'd have to pay in 3-4 years and it still might suck.

[rickh150]

I'm all for even more revenue sharing, along with a salary floor. The payroll differences for teams would be less, which is needed, and the players union might actually like it.... more revenue being actually used on veteran MLB players...

 

Convince me that the gap between the bigs and the smalls is getting closer, and The betterment of the game will follow in other areas too...

[Point Beer Is Best]

I seem to recall that when Selig was Commissioner, they made a determination that revenue would be split evenly among all teams for online streaming (essentially mlb.tv). That's really the only way you can level the playing field. MLB teams negotiate with regional sports networks and take in what that market bears, which creates this inequity. NFL negotiates on behalf of all teams with national networks for an evenly distributed share of that revenue.

 

This won't be fixed until such a time where they stop allowing negotiations with regional sports networks and they negotiate with a streaming service (or create their own) that would broadcast all MLB games. Almost all baseball games are viewable on paid-programming platforms already. It's just a dream at this point and a huge uphill battle, but that's got to be the eventual outcome.

[KeithStone53151]

I'm all for even more revenue sharing, along with a salary floor. The payroll differences for teams would be less, which is needed, and the players union might actually like it.... more revenue being actually used on veteran MLB players...

 

Convince me that the gap between the bigs and the smalls is getting closer, and The betterment of the game will follow in other areas too...

 

I've never understood the arguments against a salary cap and floor with massive revenue sharing...at least on the players side. I can see why big markets wouldn't like it, but why would players dislike it? If the cap and floor were set in a way that would guarantee players a similar revenue percentage to what they are getting now...what's the problem? A cap and floor would prevent stupid offseasons like 2017 and 2018 where teams didn't spend and everyone cried collusion.

[Point Beer Is Best]

I'm all for even more revenue sharing, along with a salary floor. The payroll differences for teams would be less, which is needed, and the players union might actually like it.... more revenue being actually used on veteran MLB players...

 

Convince me that the gap between the bigs and the smalls is getting closer, and The betterment of the game will follow in other areas too...

 

I've never understood the arguments against a salary cap and floor with massive revenue sharing...at least on the players side. I can see why big markets wouldn't like it, but why would players dislike it? If the cap and floor were set in a way that would guarantee players a similar revenue percentage to what they are getting now...what's the problem? A cap and floor would prevent stupid offseasons like 2017 and 2018 where teams didn't spend and everyone cried collusion.

 

Exactly. Nobody on the players side cries about the salary cap in the NFL. The collectively care about what % of the revenue in total is going to player salaries. We only hear about the complaining in MLB about the Luxury tax because the teams that actually CAN spend more and not lose money are the ones hiding behind the Luxury tax, and those owners have to absolutely love the narrative that it's actually these small-to-mid market clubs that are to blame for the lack of spending. It's insanity.

[KeithStone53151]

I've never understood the arguments against a salary cap and floor with massive revenue sharing...at least on the players side. I can see why big markets wouldn't like it, but why would players dislike it? If the cap and floor were set in a way that would guarantee players a similar revenue percentage to what they are getting now...what's the problem? A cap and floor would prevent stupid offseasons like 2017 and 2018 where teams didn't spend and everyone cried collusion.

 

Exactly. Nobody on the players side cries about the salary cap in the NFL. The collectively care about what % of the revenue in total is going to player salaries. We only hear about the complaining in MLB about the Luxury tax because the teams that actually CAN spend more and not lose money are the ones hiding behind the Luxury tax, and those owners have to absolutely love the narrative that it's actually these small-to-mid market clubs that are to blame for the lack of spending. It's insanity.

 

I mentioned this idea a year or two ago when that agent guy came on here and lectured us on baseball economics and how we know nothing...and he was super dismissive. Maybe it was just that guy though, maybe Boras and others would be more open. I'm pretty sure that guy wouldn't be happy if players got 150% of baseball revenue.

 

Anyways, I thought of the NFL as an example. Players bargained for X% of the revenue, that was the primary goal. A cap and floor were instituted to ensure that, and they also have significantly more revenue sharing than MLB. If you want competitive balance, that's the way to do it. If you want the same 6-8 teams to make the playoffs every year...keep the current format.

[owbc]

The Brewers' current TV contract is a disaster. They should be getting $60+ million per year from TV and instead they are getting ~$20-25 million. The Reds didn't just decide to spend more money out of nowhere, they signed a new TV deal that gave them $25-30 million more per year of spending money.

 

Maximizing revenue for the sport depends upon the most popular teams being good. There is absolutely no incentive to change that. If the Yankees and Dodgers were perennial last place teams it would be disastrous for MLB's bottom line. The Dodgers' bad ownership situation lasted about 3 seconds when the fans got angry. Nobody cares if a few thousand people in Pittsburgh stop watching baseball. The issue is unique to MLB due to the importance of local TV, hard to compare to other sports.

[DHonks]

Why is it that writers want MLB owners to open their books, but not NFL or NBA?

 

So Haudricourt discloses the Brewers lost money in 2019, Forbes says they made $60 million...that's a big difference. One reality is that most people have no clue how expensive it is to run an entire organization. And why does it matter whether the Brewers are paying for Maryvale renovations in cash or financing? Either way, it's an expense and a multi-year drain on their finances.

 

Additionally, it's a fallacy to say that just because Rendon was available AND the Brewers have a need at 3b, that they would be the highest bidder for him. Sorry, we will never be the highest bidder. We can pay fair market value (see Braun, Grandal, etc). We cannot be the top bidder willing to go beyond typical marginal compensation. It takes two to tango, and the Brewers will not be an option for any elite free agent on a record breaking deal

[monty57]

I seem to recall that when Selig was Commissioner, they made a determination that revenue would be split evenly among all teams for online streaming (essentially mlb.tv). That's really the only way you can level the playing field. MLB teams negotiate with regional sports networks and take in what that market bears, which creates this inequity. NFL negotiates on behalf of all teams with national networks for an evenly distributed share of that revenue.

 

This won't be fixed until such a time where they stop allowing negotiations with regional sports networks and they negotiate with a streaming service (or create their own) that would broadcast all MLB games. Almost all baseball games are viewable on paid-programming platforms already. It's just a dream at this point and a huge uphill battle, but that's got to be the eventual outcome.

 

I think you're right on the online streaming thing. Also, when Disney bought Fox, they were forced by the anti-trust gods of government to sell the regional Fox Sports channels. I believe that MLB at least considered buying them, but they ended up being sold to Sinclair Broadcast Group in May 2019 for $10.6 billion. I don't have any idea how this will affect negotiations/prices for the Brewers, but they will be negotiating with a different group than the one who signed the last deal.

[KeithStone53151]

Why is it that writers want MLB owners to open their books, but not NFL or NBA?

 

So Haudricourt discloses the Brewers lost money in 2019, Forbes says they made $60 million...that's a big difference. One reality is that most people have no clue how expensive it is to run an entire organization. And why does it matter whether the Brewers are paying for Maryvale renovations in cash or financing? Either way, it's an expense and a multi-year drain on their finances.

 

When NFL negotiations were happening, the players union was calling for teams to open their books. The Packers books are available but no other team made theirs available.

 

If those numbers above were closer, it would technically be possible for both to be accurate. Operating income is different from net income, the latter number factors in non-operating expenses/income...which for the Brewers is probably mostly related to debt(interest, fees, etc). I would buy there being a chance that both could be accurate if they were more like $10-15 million apart...but in this case one or none are clearly right. My guess would be that Haudricourt is correct and Forbes is wrong...but at the same time I would find it wildly unlikely that the Brewers suffered an operating loss in 2019.