Brewers Payroll 2020 and beyond

[sveumrules]

Since Stearns & company arrived there are 25 teams that have spent more money on payroll than the Brewers, but only 8 of those teams have won more games than the Brewers.

 

Of the 17 teams that spent more to win less, 13 made zero or one postseason appearance compared to the Brewers three.

 

Spending money does not necessarily equal winning games.

[SeaBass]

In this world nothing can be said to be certain except for death, taxes, and Brewers fans vigorously defending the bank account of a venture capitalist billionaire for some reason.

Mark A is not a billionaire. He's worth around $700 million. Tied for 25th out of the 30 MLB owners.

 

Source

[PeaveyFury]

In this world nothing can be said to be certain except for death, taxes, and Brewers fans vigorously defending the bank account of a venture capitalist billionaire for some reason.

 

The value of his house isn't held within his bank account, based on my knowledge of how bank accounts work.

[Brewers Numbers]

With the amounts of money involved all teams are now run to be wholly self-sufficient and not need constant influxes of cash from the owners. Even Cohen will stop short of the CBT threshold on a regular basis.

[Jopal78]

In this world nothing can be said to be certain except for death, taxes, and Brewers fans vigorously defending the bank account of a venture capitalist billionaire for some reason.

 

 

There isn't an owner in the league who's pouring buckets of their own cash into a team to be used as player costs. Think about it, on the surface it doesn't seem like a big deal for some billionaire to pump 25 million dollars of their own cash into a team to be used on player contract costs beyond what a team's revenue sources will support. However, those contracts are rarely one year deals. Meaning, it's really a commitment to pump in in 50 million or 75 million or 100 million dollars depending on the circumstances. As we all know, baseball contracts are guaranteed, so an owner can't simply can't decide to cut all those costs and release all those players to avoid paying them.

 

Now imagine an owner annually infusing their own money into a team for future payroll costs beyond what the team revenue would support. In a few years time they could be personally committed for hundreds of millions of dollars in future payroll obligations. In today's baseball a significant portion of owners are Wall Street Hedge Fund investors. They buy these teams for the equity when they ultimately sell them. They're not going to wreck their (and their investors) equity by committing a pile of their own money to player contracts.

[MrTPlush]

In this world nothing can be said to be certain except for death, taxes, and Brewers fans vigorously defending the bank account of a venture capitalist billionaire for some reason.

Mark A is not a billionaire. He's worth around $700 million. Tied for 25th out of the 30 MLB owners.

 

Source

 

And almost all of that isn't in the form of cold hard cash I would bet.

[Axman59]

In this world nothing can be said to be certain except for death, taxes, and Brewers fans vigorously defending the bank account of a venture capitalist billionaire for some reason.

 

 

There isn't an owner in the league who's pouring buckets of their own cash into a team to be used as player costs.

 

You don't know that. Every team has closed books. And there are reports that Steve Cohen intends to do exactly that with the Mets.

 

I'm truly astonished that this fan message board sounds more like a group of accountants who assiduously defend Mark A's money.

[MrTPlush]

Well you let us know when you find a guy worth $15bil wanting to buy the Brewers and move to Milwaukee, WI to blow his money on a baseball team in the Midwest that has zero history.

 

I don't get how people can complain about the payroll and when someone gives a logical explanation of why their complaint isn't really warranted it is, "Well, you don't see the books, how do you know?" Neither do you...so how are you complaining about how much money Attanasio throws into the payroll or not.

 

The Brewers own a MiLB affiliate and paid for their massive spring training complex renovations. How many teams have done that?

[Ron Robinsons Beard]

In this world nothing can be said to be certain except for death, taxes, and Brewers fans vigorously defending the bank account of a venture capitalist billionaire for some reason.

 

 

There isn't an owner in the league who's pouring buckets of their own cash into a team to be used as player costs.

 

You don't know that. Every team has closed books. And there are reports that Steve Cohen intends to do exactly that with the Mets.

 

I'm truly astonished that this fan message board sounds more like a group of accountants who assiduously defend Mark A's money.

 

Again, no one is doing that. You are not being realistic.

 

Attempting to compare the Brewers to the Mets, who are in the biggest market in the country, and were just purchased by someone looking to make a splash, is an absolutely terrible comparison. I'm truly astonished that this fan message board has a poster realistically trying to make that comparison.

[Jopal78]

In this world nothing can be said to be certain except for death, taxes, and Brewers fans vigorously defending the bank account of a venture capitalist billionaire for some reason.

 

 

There isn't an owner in the league who's pouring buckets of their own cash into a team to be used as player costs.

 

You don't know that. Every team has closed books. And there are reports that Steve Cohen intends to do exactly that with the Mets.

 

I'm truly astonished that this fan message board sounds more like a group of accountants who assiduously defend Mark A's money.

 

You’re right, I don’t know that. However, I do know the Brewers are owned by a venture capitalist. I do know that MLB teams now sell for close to 1 Billion dollars give or take. I also know that no team has been sold for less than it was bought for. Finally, I know the Brewers were purchased for $220 million.

 

Ask yourself is a venture capitalist going to potentially impair the excellent return on the initial investment by dumping a large pile of personal cash into the Milwaukee Brewers? Will pumping his own fortune into the team make it more valuable? No. Would it permanently improve their revenue streams? No. Would it improve their media market? No.

[Brewers Numbers]

Cohen has indicated that he will spend more money than the Wilpons but he's not going to dump crazy money. This was reported by Jon Morosi at Cohen's intro as new owner news conference

#Mets owner Steve Cohen: “You build champions. You don’t buy them. We have a great core on this team ... I plan to make the investments we need to succeed. We want to win now, but we’re also building for the long term.”

@MLBNetwork @MLB

 

Cohen made his money by having his company try to find a sure thing and investing in that. Most times they came by this knowledge legally. He didn't do it by dumping money and hoping for a ROI.

 

I think I made this statement on this board and I stand by it: Cohen won't cross the CBT threshold unless he's absolutely sure he can win that year and even then it will only be for that year.

[Axman59]

Again, no one is doing that. You are not being realistic.

[/color]

 

How do you now that? If you want to tell me I have no proof that owners are plowing their own money into their teams I will confess to that. But the accountants on this board, like you, make the opposite argument with no proof.

 

I have a good friend who owns two companies (with two other partners), both national. I'm certain you've heard of one of these companies. The one you would know is doing well despite COVID. The other is not. Rather than pare back production for the company that is losing money, or lay people off until things turn around, the partners have capitalized the second company from their profits and cash reserves of the first. This is hardly a novel idea. It happens all the time.

 

If you all want to act as Mark A.'s public relations flack, have at it. But this offseason of stepping back (and you all know it's coming) is tiresome. I'm mad as hell and I'm not going to take it anymore.

 

/rant

[Ron Robinsons Beard]

Again, no one is doing that. You are not being realistic.

[/color]

 

How do you now that? If you want to tell me I have no proof that owners are plowing their own money into their teams I will confess to that. But the accountants on this board, like you, make the opposite argument with no proof.

 

I have a good friend who owns two companies (with two other partners), both national. I'm certain you've heard of one of these companies. The one you would know is doing well despite COVID. The other is not. Rather than pare back production for the company that is losing money, or lay people off until things turn around, the partners have capitalized the second company from their profits and cash reserves of the first. This is hardly a novel idea. It happens all the time.

 

If you all want to act as Mark A.'s public relations flack, have at it. But this offseason of stepping back (and you all know it's coming) is tiresome. I'm mad as hell and I'm not going to take it anymore.

 

/rant

 

I understand that not everyone is going to agree, but your condescension is certainly not appreciated, and likely is not a constructive way to get your point across. No one here is "acting as Mark A.'s public relations flack. Instead, we are simply looking at this situation through a realistic lens.

[JosephC]

 

Cohen made his money by having his company try to find a sure thing and investing in that. Most times they came by this knowledge legally.

 

LOL, these two sentences are hilarious.

[TigerUppercut]

Again, no one is doing that. You are not being realistic.

[/color]

 

How do you now that? If you want to tell me I have no proof that owners are plowing their own money into their teams I will confess to that. But the accountants on this board, like you, make the opposite argument with no proof.

 

I have a good friend who owns two companies (with two other partners), both national. I'm certain you've heard of one of these companies. The one you would know is doing well despite COVID. The other is not. Rather than pare back production for the company that is losing money, or lay people off until things turn around, the partners have capitalized the second company from their profits and cash reserves of the first. This is hardly a novel idea. It happens all the time.

 

If you all want to act as Mark A.'s public relations flack, have at it. But this offseason of stepping back (and you all know it's coming) is tiresome. I'm mad as hell and I'm not going to take it anymore.

 

/rant

 

If you feel this strongly I'd suggest you go to a Mets board and pick up some Mets gear while you're at it if you're tired of things here after a dozen posts. Trust me, nobody will miss you.

[JimH5]

Sports franchises are assets that may or may not need to be profitable for them to increase in value. The world is full of assets (precious metals, real estate, fine art, collectibles) whose value is not tied to being a profitable business.

 

Admittedly, turning a profit is better than operating at a loss--and team owners have the right to operate any way they would like. But they never, ever open their books to scrutiny, so whatever their claims of profit or loss should be understood as public relations and not accounting.

[SeaBass]

Again, no one is doing that. You are not being realistic.

[/color]

 

How do you now that? If you want to tell me I have no proof that owners are plowing their own money into their teams I will confess to that. But the accountants on this board, like you, make the opposite argument with no proof.

 

I have a good friend who owns two companies (with two other partners), both national. I'm certain you've heard of one of these companies. The one you would know is doing well despite COVID. The other is not. Rather than pare back production for the company that is losing money, or lay people off until things turn around, the partners have capitalized the second company from their profits and cash reserves of the first. This is hardly a novel idea. It happens all the time.

 

If you all want to act as Mark A.'s public relations flack, have at it. But this offseason of stepping back (and you all know it's coming) is tiresome. I'm mad as hell and I'm not going to take it anymore.

 

/rant

I'm not typically pro owner in any argument for any of the major sports. But I don't think you're even making an attempt to see things through an owner's point of view. Your argument is "He rich. Got lots money. Him spend. Make team strong."

 

Make an effort. Please. I really have no idea what Mark A's situation is like but I can at least try to imagine a simplified scenario of what might happen if he started spending out of his own pockets.

 

Mark A. has a reported net worth of $700 million. Start there. That's his life's earnings, he's not earning $100 million every year, if he was he'd be much more rich than he is now. I'm going to assume he's making modest gains by being selective with his money and investments. His current net worth is also not liquid, whatever actual cash he has is probably nowhere near that, probably not even by half. If he spent an extra $20 million in cash per year out of his own pocket on player salaries he'd have to start selling off his assets in 10 to 15 years and honestly probably a lot sooner than that.

 

He'd also probably being going through a divorce by then because his wife would be pissed that he's unnecessarily mortgaging their future recklessly running a stupid baseball team. So there goes half of whatever he has left, including his ownership stake in the Brewers which he'd have to sell.

 

Now what's that $20 million per year going to get him? It seems like their sweet spot as things are now is a player payroll around $115 to $125 million per season. So now they've bumped up to $145 million. It'll get the Brewers a little closer to the upper middle class of the MLB in player payroll but still probably right smack in the middle.

 

Gee, that just doesn't seem worth it, just a tiny drop in a huge bucket. $20 million might let you clone Christian Yelich, while that would be nice it doesn't guarantee any more success than they're having right now. Meanwhile he's ruining himself financially so the average fan feels like the owner is doing everything possible to win. That's probably not working either, those fans would still be complaining he's not contributing even more.

 

I don't know how realistic this scenario is but I'd like to think it's not terribly off the mark. It kinda sucks, I suspect I'm not the only person on this board that's fantasized about owning a team and building a champion, those fantasies never really dealt much with reality either. Now that I've put myself there I can see how frustrating it must be to actually have to sit there and be responsible and restrain yourself to what expenditures the team can handle. That's not the fun part. But if you do all that, be responsible and still build a winner? That'd be a pretty awesome feeling.

[JimH5]

It's not a binary choice to spend from his own pocket or not. He has more options than that-- though I understand fully if he chooses to not exercise any of those options.

 

He's the principal owner of an asset that has gained $1B in value. That gain isn't liquid--it's built into the value of the Brewers franchise. The ownership group could choose to borrow on that, the same way I borrowed on the equity in my house instead of selling other assets to fund a car purchase.

 

The option is there. Is it preferred? I don't know. Is it common? Also don't know. The Tigers were running huge payrolls back when Mike Ilitch was in the last years of his life. Were they operating in the red? Perhaps. If so, does it matter where he got the money to pay his bills?

 

Mark A has been a great team owner, and I don't harbor any ill will towards him. If he wanted to tear it all down and start over, I'd still support the team. But if he wanted to go for it, and operate the Brewers at a loss for awhile, he has the ability to do so, too.

[PeaveyFury]

It's not a binary choice to spend from his own pocket or not. He has more options than that-- though I understand fully if he chooses to not exercise any of those options.

 

He's the principal owner of an asset that has gained $1B in value. That gain isn't liquid--it's built into the value of the Brewers franchise. The ownership group could choose to borrow on that, the same way I borrowed on the equity in my house instead of selling other assets to fund a car purchase.

 

This point has been suggested here before, perhaps by you, and I’ll again note that this doesn’t work this way.

[JimH5]

Businesses operate with debt all the time. Why do you think a baseball team is forbidden from taking on debt.

[Brewers Numbers]

That $700M net worth should include the valuation of his portion of the Brewers if it truly is his net worth. My understanding that he is not the majority owner but just the largest single shareholder and collectively the others own more than him. That means the others could be the influence and also would limit his ability to add money directly as that would change the ownership stake. They could only infuse cash if all owners agree to do so and per their share.

 

Of course loans are different.

[Eye Black]

My understanding that he is not the majority owner but just the largest single shareholder and collectively the others own more than him.

This is the biggest thing that I think is getting overlooked. Mark owns the controlling interest, but may not have a majority stake in the club according to some speculation. If that’s the case you have a large group of investors expecting continued profitable returns and the team is seemingly more likely to operate as risk averse and on tightly orchestrated budgets.

[SeaBass]

I'm fairly certain I've heard of professional sports teams that have taken out loans in the past, I don't know that they are borrowing against the value of the franchise itself however. I think it's more likely that they borrow against projected income from ticket sales, merchandise, tv contracts, etc.

[Brewers Numbers]

My understanding that he is not the majority owner but just the largest single shareholder and collectively the others own more than him.

This is the biggest thing that I think is getting overlooked. Mark owns the controlling interest, but may not have a majority stake in the club according to some speculation. If that’s the case you have a large group of investors expecting continued profitable returns and the team is seemingly more likely to operate as risk averse and on tightly orchestrated budgets.

Or conversely, a group of investors who don't want to keep putting money in.

[Fear The Chorizo]

Mark A has been a great team owner, and I don't harbor any ill will towards him. If he wanted to tear it all down and start over, I'd still support the team. But if he wanted to go for it, and operate the Brewers at a loss for awhile, he has the ability to do so, too.

 

Define awhile - because they've been operating at a loss for the last 2 seasons already.

 

The Brewers were a home game 7 in the NLCS from going to the world series 3 seasons ago. They've been in the postseason mix or in the postseason the last 4 seasons - although I'm hardpressed to call 2020 a solid team albeit the whole season was wacky due to COVID. For a market like Milwaukee, like it or not this has been going for it.

 

The CBA is set to expire at the end of next year, and players/owners are having to negotiate in the midst of a pandemic that has destroyed their typical business model of bringing in ticket and gameday revenue - which for the Brewers is likely over 50% of the money they bring in each year. For a small market team like the Brewers who don't have the benefit of funding their roster's payroll only off a TV contract and are reliant on revenue sharing and gameday revenue, there is too much uncertainty with this offseason and what the 2021 season will actually look like for Mark A to cash in a bunch of equities and tell MS to go out and sign a few free agents.