Wednesday, December 09, 2009

Finite Resources

Even without external additions, the Twins were in line for a healthy bump in payroll next season, with newly arbitration-eligible players and those already under contract due salary increases. The acquisition of J.J. Hardy and the retainment of Carl Pavano only add to this escalating figure. As Joe Christensen noted on his blog yesterday, the Twins' 2010 payroll is already approaching $90 million, and we're not even halfway through December yet.

With these recent additions (not to mention some in-season trades that brought on extra salary), and with the Twins demonstrating an increased willingness to spend on the international market in the draft, fans might be falling into a false sense of security. The club's move to Target Field certainly jolts their ability to spend -- and that's been made clear by the aforementioned aggression in various avenues -- but it doesn't suddenly turn the Twins into a large-market team. A $90 million payroll in 2010 would already represent an increase of roughly $25 million (nearly 40 percent) over the payroll they sported on Opening Day 2009. That's pretty impressive in its own right, and I'm not sure I'd expect much more in terms of added salary.

In fact, we might already be seeing the Twins making some moves to trim salary in the face of these major increases. Yesterday, in order to make room for Pavano on the 40-man roster, the Twins elected to designate Boof Bonser for assignment. That the Twins decided on the arbitration-eligible Bonser rather than, say, the less expensive and less useful Bobby Keppel, would seem to speak volumes. Bonser, who missed the '09 season after undergoing shoulder surgery but was apparently recovered and ready to pitch in September, has been a frustrating pitcher whose results have never matched the quality of his stuff, but he'd shown promising flashes after moving to the bullpen late in 2008 and it's tough to view this move as anything other than money-driven.

I suspect that the Twins are finished addressing the rotation. There's almost certainly not enough money left to sign an established, reliable starter, and I'm guessing there will be enough suitors for the low-risk/high-reward/injury-prone breed (Rich Harden, Ben Sheets, Erik Bedard, etc.) that none of them will come particularly cheap. (Although, if any of them do, the Twins have enough depth that they'd in excellent position to take a flier on one.)

Meanwhile, although at least one hole remains in the Twins' infield and several attractive options remain on the market, I'm beginning to lose faith in the notion that the Twins will actively pursue any of these options as I look over the team's financial particulars. The prices for which players like Marco Scutaro and Chone Figgins have signed thus far suggest that quality infielders like Orlando Hudson and Adrian Beltre might be had for relative bargains, but these players are still likely to cost upwards of $5 million annually and I'm just not sure the Twins have that much left to commit, particularly considering that the Joe Mauer situation still needs to be worked out.

At this point, it seems likely that the Twins will either end up snatching a bargain player like Joe Crede later in the offseason, or trading for a relatively inexpensive solution from another club (a package deal for the Padres' Kevin Kouzmanoff built around Glen Perkins would seem to make a lot of sense, for instance). But if you're expecting any big splashes in the high-profile free agent market, you may be setting yourself up for disappointment.

12 comments:

Bryz said...

Good point about how expensive Bonser would be for the team. Does this mean that Crain is more or less likely to be non-tendered now?

Nick N. said...

Does this mean that Crain is more or less likely to be non-tendered now?

I think Crain was headed for a non-tender or trade either way. He's likely to make around $3M this year and that's just too much for him.

Jesse said...

I think your baseline payroll being $65 million in 2009 is a bad starting point because it ignores the payroll slashing that went on after the 2007 season. If we start back in 2007 when the Twins were actually using all of their payroll alloocation this is what I find:

2007 Payroll - $71.5 Million (Source: http://mlbcontracts.blogspot.com/2005/01/minnesota-twins_17.html )

Avg Payroll Increase between 2007-2008 - %7.1 (Source http://baseball.about.com/od/newsrumors/a/08teamsalaries.htm )

2008 Payroll Capacity - $76.6 Million ($71.5 * 1.071)

Avg Payroll Increase between 2008-2009 - %4 (Source http://baseball.about.com/od/newsrumors/a/09teamsalaries.htm )

2009 Payroll Capacity - $79.6 Million ($76.6 * 1.04)

New Stadium Revenue - $20-25 Million (Source: Dave St. Peter Quote http://www.startribune.com/local/18217239.html $40-50 million new revenues, %50-52 towards payroll)

2010 Payroll Capacity - $99.6-104.6 Million

According to my calculations we have between $100-105 million in available payroll this year an only $88 million in commitments:

Role Player Status Salary ($M)
C Mauer Contract $12.500
1B Morneau Contract $14.000
2B Punto Contrct $4.000
3B Valencia Serfdom $0.400
SS Hardy Arbitration $6.000
RF Cuddyer Contract $8.500
CF Span Serfdom $0.450
LF Young Arbitration $2.000
DH Kubel Contract $4.100

BKUP IF Harris Arbitration $1.000
BKUP IF Casilla Serfdom $0.440
BKUP IF Tolbert Serfdom $0.410
4TH OF Pirdie Serfdom $0.400
BKUP C Morales Serfdom $0.410

STARTER 1 Baker Contract $3.000
STARTER 2 Blackburn Serfdom $0.450
STARTER 3 Pavano Arbitration $7.000
STARTER 4 Slowey Serfdom $0.450
STARTER 5 Liriano Arbitration $1.000

Closer Nathan Contract $11.25
RH SETUP Neshek Arbitration $0.800
LH SETUP Mijares Serfdom $0.420
MR Crain Arbitration $3.000
MR Rauch Contract $2.900
LONG MR Guerrier Arbitration $3.000

TOTAL SALARY
$87.88
PROJECTED 100
AVAILABLE $12.12

Nathan said...

I was getting a little concerned aswell about our ability to add an infielder now, but I've been reading some stuff that is hinting that the Twins might not be considering Mauer when they set their payroll and that he is just a special case, so they migh be planning on going from $90-$95
million without Mauer and then just adding his new payroll on top of that.

Nick N. said...

Jesse, I think the major fallacy in your argument is your assertion that the Twins are certain to spend up to their "Payroll Capacity." In both 2008 and 2009, they were roughly $14M below the capacity you've laid out. A payroll of around $90M this year would close the gap between the actual and capacity figures; I don't know why you're so certain they're determined to erase that gap completely in one year.

My overall point is that if the Twins were done adding salary right now, fans would have a tough time crying foul. They've already increased the payroll by almost 40 percent from last year while also stepping up spending on the international market and in the draft. They're doing the things you'd hope for them to as they move into a new stadium. Expecting payroll to rocket past $100M just might not be realistic, even if your calculations suggest that they have the capacity to do so.

Jesse said...

I guess my main point is that I do not give the team credit for undoing the payroll dump they did after 2007. By my calculations the Metrodome could have supported an $80 million payroll this year, which is essentially the team we have minus Pavano. When I supported a new stadium for the team I did not envision the outcome being able to afford 1 more mediocre pitcher.

While the Twins are not required to spend to their capacity I would note that since the Twins Stadium was approved in 2007 the Twins have been dramtically under payroll capacity and if the season started today they would be $12-17 million under.

CA said...

Jesse, starting with the 2007 payroll--the highest the payroll had ever been up to this point--and expecting MLB-average increases every year isn't realistic for a variety of reasons. While individual team payrolls increase in the long term, they can and will fluctuate quite a bit year-to-year even under perfect management.

Not even the Yankees (or any other team) can be expected to increase payroll every single year; using the average increase across all MLB teams isn't indicative of what a single franchise should do, or what it can support. Using your logic, the A's "should" have had an $88 million payroll in 2009 based on their 2007 payroll, but that just wasn't going to happen.

Furthermore, in the specific case of the Twins there's even less reason to expect an annual payroll increase equal to the MLB average, given that their revenue opportunities in the Metrodome were probably significantly below average.

That said, you may be right that the Twins are under-spending, but even if they are I doubt that there is a huge payroll-to-revenue discrepancy.

Jesse said...

Since baseball does not open its books I have to go off what is out there and forbes http://www.forbes.com/lists/2009/33/baseball-values-09_Minnesota-Twins_330400.html shows that team revenue has increased $27 million since 2007 ($131 to $158 million). If you halve that per standard baseball logic (%50 revenue spent on payroll) you get $14 million. Sure looks like it matches up with the previous calculations I provided.

In regards to additional revenue streams I would point you towards the good article that Jason Stark did for ESPN that detailed how well the central fund and revenue sharing are doing for basebal http://sports.espn.go.com/mlb/columns/story?columnist=stark_jayson&page=rumblings091119 (probablly $90 million for the twin in 09).

Beth H said...

I know that Bonser is expensive, but I have to wonder if he would be worth the investment?? I guess I have some hopes/faith (?) he would be...

Nick N. said...

I know that Bonser is expensive, but I have to wonder if he would be worth the investment?? I guess I have some hopes/faith (?) he would be...

I'd have held onto Bonser. But reports indicate that the Twins offered him a $550K contract, which is fair, and he turned it down. I doubt he'll get more than that elsewhere, but he probably wants to latch on with an organization where he'll have a better shot at starting.

Adam Peterson said...

Jesse,

You have a good point regarding "payroll capacity", but it's no better to go back to before the 2007 payroll slashing than to use the 2008-2009 payrolls. Looking at payroll as a percentage of overall player expenses, as well as player expenses as an overall percentage of revenue from the Forbes link you cited, it appears that the Twins 2007 payroll of $71.5M may have been a bit overextended itself. This is evidenced by all the belt tightening elsewhere in player expenses, for example drafting Ben Revere and signing him well below slot.

In truth, I think the true payroll capacity was somewhere below 2007 payroll, but above 2008 payroll. Back of the envelope, I'm guessing the sweet spot this year would be around $90-95M in the new stadium. Going up to $105M would overextend us similar to 2007, IMO, especially with Mauer's re-signing on the horizon.

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