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  • The Milwaukee Brewers' Harsh Hot-Stove Economic Reality


    Harold Hutchison

    Recent mega-deals for free agents like Carlos Correa, Trea Turner, Justin Verlander, Jacob deGrom, and Dansby Swanson have left Brewers fans upset – not all for the same reason. Still, some are looking and wondering why the Brewers aren’t either signing free agents or extending players.

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    The biggest and most obvious reason is the individual revenue streams of different baseball teams. The Brewers pulled in $269 million in revenue in 2021, according to Total Sportal. At first glance, it sounds like the Brewers could spend more than the $112 million and change Sportrac is projecting as the landing point of the 2023 payroll. But looks are a bit deceiving.

    Every ball club has large expenditures that aren't captured in a player payroll number. There’s paying the coaches, manager, trainers, front office staff, and the many people who make American Family Field (or Miller Park) work for 81 home games (plus, hopefully, post-season action). Scouts, the prospects in the minor leagues, the coaches and managers and trainers in the minors, the facility in Arizona for spring training… it all costs money. Suddenly, $269 million doesn’t seem like that much. The Los Angeles Dodgers' local television contract nets them roughly $250 million every season. 

    Now, could you look at the Mets, who have been spending a lot of money? Correa (although that deal may be off due to a medical issue), Brandon Nimmo, and Justin Verlander this year, Francisco Lindor not too long ago… not to mention a hair over $31 million for Robinson Cano and James McCann, who aren’t even on the Mets’ roster any longer. Those are some big-time deals.

    That’s being done on the annual revenue of $302 million – so their Sportrac projection of a $326 million payroll in 2023 possibly puts them at a loss – before you even account for all the non-MLB payroll expenses a team will have in the course of a season. No owner can sustain such massive losses – even without the massive luxury tax bill the Mets will pay due to their league-high payroll in 2023. Sooner or later, Mets owner Steve Cohen will see the bill for this massive spending spree come due beyond those massive luxury tax payments the Mets already face.

    The fact is, an MLB team – or any professional sports team – is, first and foremost, a business that has to make those who own it money or, at the very least, break even financially over an extended period of time. Now, that gets easier when a team is in playoff and title contention, but every team will have a bad season or two at one point or another – even the Yankees and Dodgers have had their struggles at times. Both also enjoy the benefits of huge media markets - and outrageously lucrative television contracts in place - to fall back on when they occasionally need to retool.

    The Brewers, on the other hand, don’t have that kind of safety net when they mis-step. They have done well to maximize their revenue with a competitive team, even in the wake of the COVID-19 pandemic (which cost them the revenues from in-person attendance at American Family Field). But the cold reality of the matter is that Brewers owner Mark Attanasio doesn’t have anywhere close to Steve Cohen's resources, either in market size or overall wealth.

    Given the developments in this off-season’s free-agent market, it may well be that even going full Bobby Bonilla will not be sufficient to keep Corbin Burnes in Milwaukee. Does this mean that the Brewers are doomed to be, for all intents and purposes, an AAAA team that develops stars for the Dodgers, Mets, Yankees, and Red Sox (among a few others)? No, it doesn’t, but for Milwaukee to overcome having one of the smallest markets in Major League Baseball, it will take a lot of planning and a long-term strategy to remain competitive.

    Are the Brewers and General Manager Mark Arnold up to the task placed upon them by baseball's self-imposed economic structure?

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    A lot of planning and long-term strategy? This will help overcome being a small market and not being a AAAA team? I have no idea what this means. Better to say the following….

    1 Brew have to identify Star core players early and sign them to team friendly deals. Developing and trading for great young players is more important to us than anyone. Getting a Contreras and good rookies to compete for starting positions should be a yearly thing.

    2. They also need to make great trades that will help replenish the system when not contending and timely trades when we are contending. Pretty much opposite of the morale killing Hader trade to players and fans.

    3. Team has to be willing to take a step back to move a couple ahead. Meaning, we cannot expect to compete yearly. Just getting harder and harder with crazy money out there for multiple NL teams. What the team has done over the last six years has truly been amazing, but sustaining this seems impossible.
     

     

     

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    22 minutes ago, brewmann04 said:

    Only way the really compete is with a salary cap. Going to be sad when they have to move One or both of their starters 

    The only real way to compete is to share television revenue. A salary cap won't matter if the Pirates still spend $80m a year or the Brewers spend $120m a year. The union will never, ever ever agree to a salary cap low enough to support the smallest market teams.

    That means MLB team will need to start sharing revenue in a much broader sense than they currently do.

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    1 hour ago, rickh150 said:

    3. Team has to be willing to take a step back to move a couple ahead. Meaning, we cannot expect to compete yearly. Just getting harder and harder with crazy money out there for multiple NL teams. What the team has done over the last six years has truly been amazing, but sustaining this seems impossible.

     

     

     


    This isn’t directed at you, but unless it’s a specific situation such as an “out of it at the deadline” season, I’m sick and tired of hearing why the Brewers should accept the idea of taking steps back to maybe go forward later. The point of the Brewers existence is to win baseball games. We just got ahold of what I presume they feel is our starting catcher for the foreseeable future. He should be locked up IMMEDIATELY. Don’t wait around, get the ink on the paper. We didn’t do it with Adames and now the FO is sitting around going gosh gee golly the market is too high look at these deals, now I guess we pray he doesn’t break out more this season. We aren’t going to get every one resigned and some will bomb, but I think Adames was a pretty obvious one to take a shot on. Great clubhouse guy with all the tools.

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    11 hours ago, superfly said:


    This isn’t directed at you, but unless it’s a specific situation such as an “out of it at the deadline” season, I’m sick and tired of hearing why the Brewers should accept the idea of taking steps back to maybe go forward later. The point of the Brewers existence is to win baseball games. We just got ahold of what I presume they feel is our starting catcher for the foreseeable future. He should be locked up IMMEDIATELY. Don’t wait around, get the ink on the paper. We didn’t do it with Adames and now the FO is sitting around going gosh gee golly the market is too high look at these deals, now I guess we pray he doesn’t break out more this season. We aren’t going to get every one resigned and some will bomb, but I think Adames was a pretty obvious one to take a shot on. Great clubhouse guy with all the tools.

    Since they extended Peralta and Ashby, I would assume they made similar offers to other players as well. The further along a player's pre-arby/arby schedule a player gets, the less "team friendly" the deal gets, so I fully expect them to make offers to most, if not all, of their talented young, pre-arby guys soon. Contreras would be included in this.

    Some of them will see the value in guaranteeing life-altering money, while others will choose to take some risk and go year-to-year in an attempt to maximize their earnings. The Brewers will have to act accordingly. In our current case, that means they get some extra time with Peralta (who accepted the offer), while trading away Burnes and Woodruff who went year-to-year.

    2023 should be a fun year watching the loaded rotation, along with what will hopefully be an improved lineup. It will also be a year where some guys who will be "core" players for the next half-decade get some much needed experience, as they'll be heavily relied upon after Burnes, Woodruff, Adames, Lauer, etc are traded away prior to 2024.

    I'm excited to watch this year, and I'm also excited to see what we'll receive in trade after the year is done that will hopefully build our future playoff rosters. In his short tenure, I think that Arnold has shown the willingness to trade, and some aptitude in getting a good deal. We'll need that moving forward.

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    3 hours ago, Grabkoj said:

    I believe the Brewers can keep two out of three. Burnes will be dealt for prospects and players and they can still remain competitive 

    Man I wish... Dont see any way we can extend Woodruff and Adames... Trust me, I would love it if we did but I just dont see it.

    I really think the only one we have a shot at keeping is Woody.

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    2 hours ago, DR28 said:

    Man I wish... Dont see any way we can extend Woodruff and Adames... Trust me, I would love it if we did but I just dont see it.

    I really think the only one we have a shot at keeping is Woody.

    I think they could extend one or the other. I struggle seeing them extend both.

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    In the end, it won't surprise me in the least if we are unable to extend any of the 3.  If that is the case, and the organization knows this now, maybe it's time to trade Burnes and Adames now, and Woody after next season.  Burnes value may never be higher, he is the one I would look to trade immediately to maximize value.

    Once Correa is all straightened out, and we know where he is going, I'd be making calls to the teams that were not able to get their high priced SS this off season.

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    1 hour ago, TURBO said:

    In the end, it won't surprise me in the least if we are unable to extend any of the 3.  If that is the case, and the organization knows this now, maybe it's time to trade Burnes and Adames now, and Woody after next season.  Burnes value may never be higher, he is the one I would look to trade immediately to maximize value.

    Once Correa is all straightened out, and we know where he is going, I'd be making calls to the teams that were not able to get their high priced SS this off season.

    As much as it pains me to say, I would not be entirely against this if the market is there to haul back 5-6 really nice prospects in A+/AA/AAA, which should be a reasonable haul for three players of that calibre.

    This process isn't my first choice but it's a reasonable choice given the economics of baseball.

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    18 hours ago, superfly said:


    This isn’t directed at you, but unless it’s a specific situation such as an “out of it at the deadline” season, I’m sick and tired of hearing why the Brewers should accept the idea of taking steps back to maybe go forward later. The point of the Brewers existence is to win baseball games. We just got ahold of what I presume they feel is our starting catcher for the foreseeable future. He should be locked up IMMEDIATELY. Don’t wait around, get the ink on the paper. We didn’t do it with Adames and now the FO is sitting around going gosh gee golly the market is too high look at these deals, now I guess we pray he doesn’t break out more this season. We aren’t going to get every one resigned and some will bomb, but I think Adames was a pretty obvious one to take a shot on. Great clubhouse guy with all the tools.

    Okay, a hypothetical from the 1988-1989 offseason... do you agree to a proposal from Atlanta to send LHP Tom Glavine and RHP John Smoltz to the Brewers for LHP Ted Higuera?

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    7 hours ago, monty57 said:

    Since they extended Peralta and Ashby, I would assume they made similar offers to other players as well. The further along a player's pre-arby/arby schedule a player gets, the less "team friendly" the deal gets, so I fully expect them to make offers to most, if not all, of their talented young, pre-arby guys soon. Contreras would be included in this.

    Some of them will see the value in guaranteeing life-altering money, while others will choose to take some risk and go year-to-year in an attempt to maximize their earnings. The Brewers will have to act accordingly. In our current case, that means they get some extra time with Peralta (who accepted the offer), while trading away Burnes and Woodruff who went year-to-year.

    2023 should be a fun year watching the loaded rotation, along with what will hopefully be an improved lineup. It will also be a year where some guys who will be "core" players for the next half-decade get some much needed experience, as they'll be heavily relied upon after Burnes, Woodruff, Adames, Lauer, etc are traded away prior to 2024.

    I'm excited to watch this year, and I'm also excited to see what we'll receive in trade after the year is done that will hopefully build our future playoff rosters. In his short tenure, I think that Arnold has shown the willingness to trade, and some aptitude in getting a good deal. We'll need that moving forward.

    If this team makes the playoffs this season, how can they trade Burnes, Woodruff, Adames and Lauer, all in the same offseason, without being destroyed by the fan base?

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    1 hour ago, SF70 said:

    If this team makes the playoffs this season, how can they trade Burnes, Woodruff, Adames and Lauer, all in the same offseason, without being destroyed by the fan base?

    Yep. Mid season could be interesting.

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    22 hours ago, Brock Beauchamp said:

    The only real way to compete is to share television revenue. A salary cap won't matter if the Pirates still spend $80m a year or the Brewers spend $120m a year. The union will never, ever ever agree to a salary cap low enough to support the smallest market teams.

    That means MLB team will need to start sharing revenue in a much broader sense than they currently do.

    And the bigger market teams will NEVER agree to share all their revenue. It's why the NFL has blown past MLB.

    Wellington Mara, owner of the Giants...sacrificed for the wellness of the league and now they're signing 110B dollar TV deals, they're getting 3B more a year for the Red Zone Package...

    MLB has a team that's going to spend around 450M while there will be other teams spending 45.

    It's kinda like CFB in resource allocations. 

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    23 hours ago, clancyphile said:

    Given the developments in this off-season’s free-agent market, it may well be that even going full Bobby Bonilla will not be sufficient to keep Corbin Burnes in Milwaukee.

    This has literally never made sense. They didn't give Bonilla deferred money to keep him, they literally did it to get rid of him without having to pay him. 

    So...in this case, going fully Bobby Bonilla would be giving Burnes away and then paying his ~11M over from about 2030-2060.

    Maybe they'd go Max Scherzer who got 110M in deferred money or Strasburg who was getting 70M.

     

    The first step in extending Burnes. Offering Burnes an extension. 

    The second step...seeing what his counter is.

    The first two lead to the 3rd. Negotiate or determine it's not likely. 

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    3 hours ago, clancyphile said:

    Okay, a hypothetical from the 1988-1989 offseason... do you agree to a proposal from Atlanta to send LHP Tom Glavine and RHP John Smoltz to the Brewers for LHP Ted Higuera?

    I was born in the 1988-1989 offseason. ?

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    1 hour ago, UpandIn said:

    And the bigger market teams will NEVER agree to share all their revenue. It's why the NFL has blown past MLB.

    Wellington Mara, owner of the Giants...sacrificed for the wellness of the league and now they're signing 110B dollar TV deals, they're getting 3B more a year for the Red Zone Package...

    MLB has a team that's going to spend around 450M while there will be other teams spending 45.

    It's kinda like CFB in resource allocations. 

    And that's why owners need to be smart (something they haven't done well in the past) and, for the good of the sport, get 24 owners in line to agree to better revenue sharing. They don't need 30 teams, they need 24... and given how some of those drift between 20-26, I suspect it'll take 21-22 owners to agree.

    If they do that, I suspect the MLBPA will come around to a salary cap and floor.

    The game, as it as always been, is in the owners' hands. If they want to fix it, they have the power. Don't blame the guys on the field.

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    Extending a player who is currently in his pre-arb or arb years is a RISKY proposition. We could have extended Hiura after 2019 for 8 years. We could have extended Jimmy Nelson (or Orlando Arcia) after 2017. and so on.

    you miss at least as often as you hit.

    I wouldn't try to extend Contreras until after 2023. It's highly unlikely to work out something with Burnes, Woodruff, or Adames. 

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    5 hours ago, Brock Beauchamp said:

    And that's why owners need to be smart (something they haven't done well in the past) and, for the good of the sport, get 24 owners in line to agree to better revenue sharing. They don't need 30 teams, they need 24... and given how some of those drift between 20-26, I suspect it'll take 21-22 owners to agree.

    If they do that, I suspect the MLBPA will come around to a salary cap and floor.

    The game, as it as always been, is in the owners' hands. If they want to fix it, they have the power. Don't blame the guys on the field.

    No, it's not the players on the field. 

    I just have trouble seeing those owners agreeing to that. The logistics would be difficult just for starters. You'd have to have two  broadcasting partners(one primary one anyway). Or even 3 like the NFL with Fox, CBS and ESPN(lesser degree Amazon Prime). 

    I think expecting that of MLB owners is too much. I think what Mara and Rooney did was incredible and IIRC, Al Davis fought him on it(though they now benefit from it). 

    They sacrificed for the league...otherwise the Giants, Jets, Cowboys, the...Commanders, pretty much just the MLB big markets with a few places where Football is bigger, they'd have the same competitive advantage. 

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    1 hour ago, Robocaller said:

    Extending a player who is currently in his pre-arb or arb years is a RISKY proposition. We could have extended Hiura after 2019 for 8 years. We could have extended Jimmy Nelson (or Orlando Arcia) after 2017. and so on.

    you miss at least as often as you hit.

    I wouldn't try to extend Contreras until after 2023. It's highly unlikely to work out something with Burnes, Woodruff, or Adames. 

    Ok, so now we have Burnes, Woodruff, Arcia, Hiura, Ashby, Peralta, and Nelson(who'd be probably on his option years). 

    Tell me where the downside would be? And it's never(almost never) 8 years. It's almost always 6 MAYBE 7 years and then a couple of team options. 

    You extend those players, you're coming out SOOO far ahead, it's not even funny. 

    Rarely when you extend players at that point is it a big risk. If it doesn't work out, it's a pittance compared to what a normal FA contract is. You sign Contreras now, you're probably looking at a 5 year 35M deal with a couple of option years in the ~15M range. 

    Maybe he says no. But you try. And that's what I take issue with...we haven't even tried with Burnes according to him. Initially said they didn't approach him after his Cy Young season, then said they haven't offered any extensions. 


    You have to have faith in your ability to self scout and then SOME risk tolerance as players can get hurt. And sometimes they don't work out, but again, almost never are they backbreaking contracts unless you're talking about a potential Wander/Julio type extension...which is what we'd potentially be looking at with Chourio. 

     

    I get what you're saying...I remember people were using Segura(and Villar) back when he was in Milwaukee as a guy we shouldn't extend because he had struggled and Villar as someone we tried and it didn't work out. But even Hiura. We're 3 years into the deal. We might have 3 years left and option years? That's not gonna kill you. Especially if you'd...as I suggested gotten Burnes, Woodruff or Adames(not sure if the later two were ever offered, but Adames came here at a point when you'd have needed to give him a bigger deal). 

     

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    The Brewers recently haven't been in the mix with FA until later in the off season.  The last big sign the Brewers had was Grandal and that wasn't until Mid January and the other big sign for the Brewers being Cain that didn't happen until the end of January. 

    Expecting the Brewers to sign someone early is foolish at best.  The Brewers front office seems to have a plan and that is to wait it out and wait for a player to drop to them at their price range or what they are comfortable in offering them.

    I believe the reliever market is coming up really good for the Brewers and there are still some decent options left on the board in Britton, Smith, Chapman, and others.  Britton is probably the best out of the bunch and he is only looking for a one year deal.  I could see the Brewers adding Britton, Rosenthal and one of Longoria, Harrison, Anderson or Profar.  I don't believe any of these players will get more than a one year contract. 

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    16 hours ago, SF70 said:

    If this team makes the playoffs this season, how can they trade Burnes, Woodruff, Adames and Lauer, all in the same offseason, without being destroyed by the fan base?

    I get what you're saying, and making sure fans continue to buy tickets is always a consideration. That said, any team that makes it's decisions based on appeasing the "casual fan" is not going to be a successful organization.

    With the guys they have, they are still long-shots to win it all. Keeping them to "go for it" one more year doesn't assure them anything... they might not even make the playoffs. We don't have the resources to quickly rebuild the major league team through free agency. Losing the potential guys we could get in trade would lead to a long downturn, and would be a fatal error by Brewer management.

    The fan base will be fine as they see the newly acquired players putting up all-star seasons for half a decade while Burnes is playing out a $40M+/year contract. At the end of the day, it is "the name on the front of the shirt" that fans cheer for. Shortsighted fans will be upset by the trades, but the good thing about shortsighted fans is that they will remain shortsighted, and will be happy when the new guys start playing well.

    Trading Lucroy and Gomez allowed the Brewers to turn things around much more quickly than most thought possible. No one is bemoaning the fact that we didn't extend Lucroy and Gomez. Trading Burnes, Woodruff and Adames will be what allows us to continue on as a playoff team for years to come instead of taking one long-shot chance and then suffering through a rebuild.

    Then the following year we'll trade Peralta, and so on. Extending players early in their career and trading them before they hit free agency is the way for a team like the Brewers to remain "continually competitive." Fans will get used to it, or they'll migrate to a big market team that doesn't have to operate under the constraints put on the Brewers.

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    7 hours ago, Robocaller said:

    Extending a player who is currently in his pre-arb or arb years is a RISKY proposition. We could have extended Hiura after 2019 for 8 years. We could have extended Jimmy Nelson (or Orlando Arcia) after 2017. and so on.

    you miss at least as often as you hit.

    I wouldn't try to extend Contreras until after 2023. It's highly unlikely to work out something with Burnes, Woodruff, or Adames. 

    I look at it as transferring risk, much like the insurance industry. The team is assuming the injury/bad play risk, so the player has to accept less money than they may get if they maintained the risk and went year-to-year. Risk transfer has been calculated by insurance companies since the days of Columbus and Magellan, and they do pretty well with it. Well run baseball organizations can as well, as long as they stick to their math.

    To me, there is no reason for a team to sign an extension in the arby/pre-arby years unless the player agrees to a substantial discount. The farther out from free agency, the deeper the discount. This is essentially the player "paying his premiums" for the transferring of risk to the team. 

    Once a player gets into their arby years (where Burnes, Woodruff and Adames currently sit), the team is basically signing a free agent deal with very limited discount. The Brewers can't live in this arena, at least for their star players.

    They should try to extend every good pre-arby player they can to a discounted deal that gives them 1-2 extra years of service time. These are the Asnby/Peralta/Lucroy/Braun (first deal) type of deals. There is risk that the player doesn't pan out. But, let's say Ashby is never better than a middle reliever. With his contract, he won't be that overpaid as a veteran middle reliever, and he certainly won't be the main reason the Brewers can't make other moves. Even if he completely flames out, the team won't be that bad off.

    If a player opts to go year-to-year rather than accepting the early (discounted) extension, that's fine. It's their right to do so, and they are maintaining most of the risk. The Brewers need to accept that they are year-to-year players, and they shouldn't grow too attached. Trade them when it makes the most sense, which will normally be around 1-2 years prior to their hitting free agency.

    It's a business. "Math nerds" are taking over the front offices, and from their standpoint early extensions should be very appealing.

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    47 minutes ago, nate82 said:

    Expecting the Brewers to sign someone early is foolish at best.  The Brewers front office seems to have a plan and that is to wait it out and wait for a player to drop to them at their price range or what they are comfortable in offering them.

    Trouble is that this year free agency moved a lot quicker than previous years and there is little to nothing left, outside of some bullpen arms as you noted.  

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    18 minutes ago, wibadgers23 said:

    Trouble is that this year free agency moved a lot quicker than previous years and there is little to nothing left, outside of some bullpen arms as you noted.  

    Not only did it move quickly, the Mets blew the expected price range for free agents through the roof, then the other teams with extra money to spend followed suit, pushing prices up on everyone.

    All the other rich owners have to be trying to decide what they're going to do if Cohen and the Mets do this again next year. If they decide to compete with the Mets if they do it again, the Brewers' days of signing free agents will be history.

    I thought we'd make a push for a "setup guy," but at this point, I'm not sure. I'm glad we have young depth for the 'pen, but would like another "proven" arm or two for the back-end of the 'pen.

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