Back in February, there was a big stir in the Pittsburgh media started from an interview on this site. In our pre-season interview with Frank Coonelly, the Pirates’ President made the following comment:
Kevin: Would the Pirates be able to afford a $70M to $80M payroll, in present-day worth, if this current group of players were competitive enough to merit additional outside free agents?
Frank: Today, no but we will be able to support that payroll very soon if our fans believe that we now have a group of players in Pittsburgh and on its way here in the near future that is competitive. We need to take a meaningful step forward in terms of attendance to reach that payroll number while continuing to invest heavily in our future but I am convinced that the attendance will move quickly once we convince our fans that we are on the right track.
A big focus was paid on the first part, specifically the part about the fans showing up. If you read the full statement, you can see that the order was “improve the team, fans show up, payroll increases”. That’s brought home with the final comment about convincing fans that they are on the right track. However, the first part was left out, and people were outraged that the Pirates would act like any other team and increase payroll only after the attendance increased.
The Pirates just wrapped up their home schedule for the 2011 season yesterday, and thanks to a much improved season, which featured the team in first place in mid-July, the team saw an attendance increase. The Pirates ended up with 1,940,429 fans, which was 327,030 more than they saw in 2010. I don’t think the increase was the “meaningful step forward” that Coonelly was talking about when he referenced the $70-80 M figure that we brought up. However, it was an increase, which raises the question: how does this translate over to payroll?
Back in June, Kevin Creagh did some research on the incremental value of a fan. Kevin calculated that the Pirates receive $29.30 per fan, with the assumption that the average fan spends $17 on a ticket, $20 on food, $15 on a t-shirt, and $10 for parking (pro-rated based on what the Pirates receive in each category). For the full breakdown, check out the article, which is very informative on this subject. I think the $29.30 figure represents the best case scenario. The Pirates offered a lot of ticket deals (Tweet offers, You Score as the Bucs Score, etc), and I don’t think that every one of the added 327,030 fans purchased $20 in food and $15 in merchandise. But let’s use the $29.30 figure as that best case scenario for the added payroll.
If we multiply $29.30 by 327,030 we get an extra $9,581,979 for the Pirates. This figure is pretty raw. It doesn’t figure taxes, revenue sharing, expenses, or several other factors. So not only is this the best case scenario for a payroll increase, but the number is also high, as it doesn’t make those deductions. If you want to answer the question of how the attendance translates to payroll, a rough estimate in a best case scenario would be about $8 M.
When we get to the issue of investing that money in to the team, things get tricky. The obvious solution for fans would be an increase in the Opening Day payroll for the 2012 season. In March we projected the end of the year payroll to be $42,583,500. If we add $8 M to that number, we’re looking at a payroll of around $50.5 M to start the 2012 season. The current 2011 40-man roster/payroll projection is just over $52 M, which means the Pirates spent about $9.5 M this year throughout the season.
The $9.5 M that the Pirates spent this year isn’t a complete correlation to the attendance increase. Teams naturally spend throughout the year, and they don’t spend up to the budget on opening day because of this. The Pirates added about $6-7 M throughout the 2010 season, even though the attendance barely rose from 2009 to 2010.
In reality, any added spending won’t be as obvious as “the Pirates spent X one year, and spent X+Y the next year”. The reality is that we’ll see spending increases in many ways.
We saw two of those methods take place this season. The Pirates added Derrek Lee and Ryan Ludwick at the trade deadline, at a time when they were still considered possible contenders. The Pirates added $4.2 M in payroll over the remainder of the season with the two moves. What’s not clear is how much of that was part of the 2011 budget, and how much was due to the added attendance?
The Pirates also extended outfielder Jose Tabata, which gave him a slight bump in his 2011 salary, along with a $1 M signing bonus. Like Lee and Ludwick, it’s not clear whether this amount was due to the 2011 budget having room, or due to the attendance increase.
Going forward, the best thing for the Pirates, regardless of how much money they have, is to spend it wisely. We will hear a lot of shouting along the lines of “the attendance went up, spend!”, with fans wanting an immediate payroll increase. Some of the better moves might result in more of a long term payroll increase. Those moves include locking up Neil Walker and Andrew McCutchen to long term deals, the latter of which might cost around $50 M.
In the short term, the Pirates probably won’t be players for the top free agents on the market, and they’re probably better off going with internal options, rather than some of the potential free agents. The exception would be at first base, especially if they could get Derrek Lee to return on a one year deal. With no obvious upgrade in the upper levels of the minors, Lee might be the best case scenario for the Pirates, at least for the 2012 season. Although spending like that might not equal the obvious payroll increase that fans want to see, since it would be off-set by contracts that are coming off the books, such as Paul Maholm, Ryan Doumit, and Chris Snyder, who combined for almost $17 M this year.
Overall the Pirates should have some added money to spend, although I don’t think it’s a significant amount. I think that in order to get the payroll up in the long term, two things need to happen. First, the team needs to continue to improve, to get a team that warrants a higher payroll. Second, the fans need to continue to show up, to the point where the Pirates are seeing 2.5 M or more fans a year. That’s the same situation the Pirates were in at the start of the year. We’re just one rotation through the cycle that could result in that $70-80 M payroll one day. It won’t happen overnight, and the figure is meaningless if the Pirates don’t invest the money wisely.
The Pirates need to continue the same approach that every other team in the majors takes. They need to try and put the best team possible on the field while staying within their financial means. If that happens, the on-field performance should continue to improve, such as the improvement we saw from 2010 to 2011. That should continue to lead to more added attendance, similar to the increase we just saw. That added attendance will lead to increased financial resources, which will only make step one of this process (putting the best team possible while staying within their financial means) that much easier.