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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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    20 minutes ago, monty57 said:

    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.

    Brent Suter in a Brewers uniform would look really good about now...

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    26 minutes ago, clancyphile said:

    Brent Suter in a Brewers uniform would look really good about now...

    Suter is out of options and not good enough to be used in high leverage spots.

    If they weren’t willing to pick up their dependable 7th inning guy two years running at $3M (Box’s 2023 option), they were never paying that same $3M for a long reliever.

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    Andrew Chafin and Matt Moore are the names I really have interest in for relief pitchers. Either could slot into the later innings, and I'd feel good about the bullpen.

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    4 minutes ago, Brewcrew82 said:

    Andrew Chafin and Matt Moore are the names I really have interest in for relief pitchers. Either could slot into the later innings, and I'd feel good about the bullpen.

    Was really surprised by Matt Moore’s season (& that he was even still pitching at all really).

    Looks like there might have been some luck involved though, especially his HR/FB rate with his splits at 50 ERA- | 74 FIP- | 98 xFIP-.

    That the drunken sailor Rangers didn’t resign him straight away gives me some pause too.

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    1 hour ago, monty57 said:

    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.

    I want to add to this that successful early extensions greatly improve trade value. Woodruff is undoubtedly a better pitcher than Peralta, but according to Baseball Trade Values, Woodruff's value is 50.5. while Peralta is 63.8.

    Woodruff will be 30 next year, has 4.161 years of service time, is a free agent in '25, and is expected to get $13.25M in '23. 

    Peralta turns 27 next June, has 4.09 years of service time, will not be a free agent until '27 (per Fangraphs, Cots has him a FA in '26, but I think Fangraphs is right), and will make $3.735M in '23.

    Both of these guys have nearly the same service time, but we could field of guys on Peralta's contract for around $97M, while Woodruff's final arby year will be close to $20M, and Peralta will still be under "team control" for two years after Woodruff hits free agency.

    How are these deals bad for the Brewers, and why shouldn't we be offering them to Contreras, Frelick, Mitchell, Turang, and every other good prospect shortly after they hit the majors?

    Even if half of the prospects flamed out, we would still "win" if all of them accepted. Of course they all won't accept, at which point we will know who will be long-term pieces, and who are "year-to-year" guys who won't be extended.

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    1 minute ago, sveumrules said:

    Was really surprised by Matt Moore’s season (& that he was even still pitching at all really).

    Looks like there might have been some luck involved though, especially his HR/FB rate with his splits at 50 ERA- | 74 FIP- | 98 xFIP-.

    That the drunken sailor Rangers didn’t resign him straight away gives me some pause too.

    Yeah. But this was also his first full season as a reliever. I'm thinking he's Drew Pomeranz 2.0. His Baseball Savant page is also really nice. If he threw his changeup even more (45.7% Whiff rate, 16.8% Usage), he could even improve/maintain his numbers.  image.png.69467e68293d63f7619528fb9a24e48e.png

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    On 12/28/2022 at 10:29 PM, 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.

     

    I know signing young players early is the new mantra around here but it isn't without risks of it's own. We tried to sign Jonathan Villar after his breakout season in 2016. Luckily he refused. Can you imagine if the Brewers upped the anti enough to get that deal done? Similarly, can you imagine what would have happened if they signed Huira to a long term contract after his rookie year? I'm fine with doing it to some extent but lets not pretend every young player who had a year or two of success is worth the price. IT isn't like we totally lose out if Adames, Burnes or Woodruff don't sign extensions. We can still trade them and get some nice controllable players in return. After all a year and a half of Hader turned into an all star catcher with five years of control and a decent pitching prospect with six years of control. I don't see how it's that much worse than the risk of having signed those three to affordable deals that buy an extra year or two of team control only to have them turn into Villar or Huira.

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    48 minutes ago, Thurston Fluff said:

     

    I know signing young players early is the new mantra around here but it isn't without risks of it's own. We tried to sign Jonathan Villar after his breakout season in 2016. Luckily he refused. Can you imagine if the Brewers upped the anti enough to get that deal done? Similarly, can you imagine what would have happened if they signed Huira to a long term contract after his rookie year? I'm fine with doing it to some extent but lets not pretend every young player who had a year or two of success is worth the price. IT isn't like we totally lose out if Adames, Burnes or Woodruff don't sign extensions. We can still trade them and get some nice controllable players in return. After all a year and a half of Hader turned into an all star catcher with five years of control and a decent pitching prospect with six years of control. I don't see how it's that much worse than the risk of having signed those three to affordable deals that buy an extra year or two of team control only to have them turn into Villar or Huira.

    If Hiura had signed the Peralta deal, he’d be making $2.25M this year, which is probably what the Brewers will owe him after agreeing to arby, and would be guaranteed about $10.5M over the next three years. Even if the players don’t work out, the deal still isn’t going to hurt too much. 
     

    There’s risk in anything they do. If they stick to the math, and only sign the guys who will agree to their deal, they can control the risk. 
     

    That Hiura, Villar, and Hall didn’t sign means that the Brewers do stick to their guns. If they player demands more, then no extension is done. We have not regretted any of the early extensions we’ve done. We have regretted most of the late extensions we’ve done. 

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    40 minutes ago, monty57 said:

    If Hiura had signed the Peralta deal, he’d be making $2.25M this year, which is probably what the Brewers will owe him after agreeing to arby, and would be guaranteed about $10.5M over the next three years. Even if the players don’t work out, the deal still isn’t going to hurt too much. 
     

    There’s risk in anything they do. If they stick to the math, and only sign the guys who will agree to their deal, they can control the risk. 
     

    That Hiura, Villar, and Hall didn’t sign means that the Brewers do stick to their guns. If they player demands more, then no extension is done. We have not regretted any of the early extensions we’ve done. We have regretted most of the late extensions we’ve done. 

    If the deal is about the same as they get in arbitration what's the financial advantage? It seems like getting an extra year or so of control is offset by not being able to decline arbitration if they're going to be more costly than they're worth. Like I said I'm not against doing it but I also think people are starting to get carried away with how beneficial it is.

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    1 hour ago, Thurston Fluff said:

    If the deal is about the same as they get in arbitration what's the financial advantage? It seems like getting an extra year or so of control is offset by not being able to decline arbitration if they're going to be more costly than they're worth. Like I said I'm not against doing it but I also think people are starting to get carried away with how beneficial it is.

    Because if he had continued to hit as he did in his rookie year, he would be getting much more in arbitration.

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    18 hours ago, UpandIn said:

    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). 

     

    If you have $20+M tied up in 2+ players you don't really want, and can't trade, it's about as bad as carrying Yelich. If you extended Hiura after his rookie year, you'd make it longer than 6 years, because you have that long without signing a long-term contract.. 
    IMO, you should ONLY do it when the player is willing to sacrifice significant potential long-term $ for security. If they want what you expect their going rate to be each year, you should pass.

     

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    12 hours ago, monty57 said:
    12 hours ago, monty57 said:

    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.

     

    He would be overpaid as a veteran middle reliever by 2026; relative to the Brewers, he would be overpaid by 2025. The good thing about his contract is the last two years  (2028, 2029) are club options.
    And "middle reliever" isn't his floor; injuries happen. BTW, I'm not against Ashby's contract, but that's only because of the potential upside he has.

     

     

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    11 hours ago, clancyphile said:

    Brent Suter in a Brewers uniform would look really good about now...

    Don't worry. We can probably pick him up for the minimum after he gets waived later this season.

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    7 hours ago, Robocaller said:

    Don't worry. We can probably pick him up for the minimum after he gets waived later this season.

    I agree. He had his role here and pitched well at times, but he was 11th or 12th best pitcher on the team continually.

    More craziness….
    Lamet is now making 5 million in 2023.  He was not wanted by Crew during stretch drive in 2022. Suter was taken over him not only in 2022 but also really an opportunity to sign Lamet thru arby in 2023. In essence, would have rather had Suter for August and September of 2022 than have a, I think widely assumed, better pitcher in 2022 for the stretch run and have him on a reasonable contract in 2023 (if we wanted him). 

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    16 hours ago, Sweaty said:

    Because if he had continued to hit as he did in his rookie year, he would be getting much more in arbitration.

    Yes he would. But if he signed a long term contract after his rookie year he'd also have cost more than Peralta did. Now we'd be on the hook for that throughout the contract. As it is we can let him go anytime without further cost.

    Monty57 used Peralta's contract and said if Huria had that contract he'd be affordable now which is true. But he was not going to sign that contract. Peralta signed that before he became an all star. Ditto for Ashby. Signing young players who've already been successful is not the same as signing young players who's potential has yet to be realized. Which is why I'm saying lets pump the brakes on extending guys who've yet to play a single game for us and are going to cost more than players who we knew was a fit here and were cheap to extend.

     

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    58 minutes ago, Thurston Fluff said:

    Yes he would. But if he signed a long term contract after his rookie year he'd also have cost more than Peralta did. Now we'd be on the hook for that throughout the contract. As it is we can let him go anytime without further cost.

    Monty57 used Peralta's contract and said if Huria had that contract he'd be affordable now which is true. But he was not going to sign that contract. Peralta signed that before he became an all star. Ditto for Ashby. Signing young players who've already been successful is not the same as signing young players who's potential has yet to be realized. Which is why I'm saying lets pump the brakes on extending guys who've yet to play a single game for us and are going to cost more than players who we knew was a fit here and were cheap to extend.

     

    Right, which is why he did not sign the contract. The Brewers need to be disciplined, and it appears they have been. As @Robocaller said, these deals should only be done if the player takes a significant discount. 
     

    I said that the Brewers should offer these deals to all of our good pre-arby guys. I understand that many of these guys will not sign them. Some players will see the benefit of signing a guaranteed extension for a discount, others will want to maximize their earnings by going year-to-year. 
     

    Early extensions are just one tool for the Brewers to use. They aren’t a panacea. But, they are an important tool for small revenue teams to try to keep players for an extra year or two and control their cost in a world where they can’t compete with the big markets in free agency. 

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    6 hours ago, Thurston Fluff said:

    Yes he would. But if he signed a long term contract after his rookie year he'd also have cost more than Peralta did. Now we'd be on the hook for that throughout the contract. As it is we can let him go anytime without further cost.

    Monty57 used Peralta's contract and said if Huria had that contract he'd be affordable now which is true. But he was not going to sign that contract. Peralta signed that before he became an all star. Ditto for Ashby. Signing young players who've already been successful is not the same as signing young players who's potential has yet to be realized. Which is why I'm saying lets pump the brakes on extending guys who've yet to play a single game for us and are going to cost more than players who we knew was a fit here and were cheap to extend.

     

    And that's the risk a team takes when signing a young player to an extension that buys out their arbitration years before they get there.  The team risks the player recessing and not being worth what they are getting paid and the player risks being paid far less than they would be getting otherwise.  Once a player establishes themselves, there's little chance of them signing a "below market" deal.

    It seems you want extensions only given to players after they establish themselves and for far less than they would get through arbitration.  Sorry, but you can't have your cake and eat it too.

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    1 hour ago, Sweaty said:

    And that's the risk a team takes when signing a young player to an extension that buys out their arbitration years before they get there.  The team risks the player recessing and not being worth what they are getting paid and the player risks being paid far less than they would be getting otherwise.  Once a player establishes themselves, there's little chance of them signing a "below market" deal.

    It seems you want extensions only given to players after they establish themselves and for far less than they would get through arbitration.  Sorry, but you can't have your cake and eat it too.

    Welcome to Brewer Fanatic!

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    On 12/31/2022 at 6:19 PM, Sweaty said:

    And that's the risk a team takes when signing a young player to an extension that buys out their arbitration years before they get there.  The team risks the player recessing and not being worth what they are getting paid and the player risks being paid far less than they would be getting otherwise.  Once a player establishes themselves, there's little chance of them signing a "below market" deal.

    It seems you want extensions only given to players after they establish themselves and for far less than they would get through arbitration.  Sorry, but you can't have your cake and eat it too.

    And at this point right now, thanks to Steve Cohen, if the Brewers are to have any hope of keeping Woodruff/Adames/Burnes, they need to probably defer a lot of money to the out year. Burnes may not be keepable, but Adames and Woodruff might be,

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    I wonder how many people realize that the Mets are in line to spend about $80 M more on their payroll and luxury tax payments than they make in revenue.  That doesn't include any other expenses.  With those, the Mets are almost assured of losing over $100 M on the year.

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    5 hours ago, Sweaty said:

    I wonder how many people realize that the Mets are in line to spend about $80 M more on their payroll and luxury tax payments than they make in revenue.  That doesn't include any other expenses.  With those, the Mets are almost assured of losing over $100 M on the year.

    Which Cohen would gladly write off for his taxes.

    Then again, if he gets the Mets a World Series championship...

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    On 1/1/2023 at 8:35 PM, clancyphile said:

    And at this point right now, thanks to Steve Cohen, if the Brewers are to have any hope of keeping Woodruff/Adames/Burnes, they need to probably defer a lot of money to the out year. Burnes may not be keepable, but Adames and Woodruff might be,

    You really need to get off the deferred payments bandwagon. As it is, you're the only guy on it.

     

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    If we really dont spend a single dollar this winter, I hope Mark is booed so loudly whenever he's around.

    So disappointing to keep wasting this elite rotation we have!

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    12 hours ago, DR28 said:

    If we really dont spend a single dollar this winter, I hope Mark is booed so loudly whenever he's around.

    So disappointing to keep wasting this elite rotation we have!

    Because buying free agents is the only way to build a competitive baseball team? Sure, I guess.

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