A few thoughts regarding the future of the payroll

Dejan posted some of his angrier mail items in yesterday’s Q&A. Most of them look something like this:

Q: IT IS VERY APPARENT THAT THE PIRATE OWNERSHIP IS ONLY PROFIT MOTIVATED. WHEN WILL MAJOR LEAGUE BASEBALL STEP IN AND FORCE THE PIRATE OWNERSHIP TO SELL THE TEAM TO SOMEBODY THAT WILL ATTEMPT TO WIN?

Dejan does a solid job responding to several questions like this one. His general point is that the Pirates have no real need to spend more money right now, because they have mostly young players earning near the league minimum. However, once those players become more expensive, it will be every fan’s right to demand that more money be spent. This is pretty similar to my opinion on the matter, which is why I generally show little to no interest in the payroll. It is simply irrelevant at this point.

I do have to disagree with some of Dejan’s wording on the matter though, namely this viewpoint:

And nothing will be enough, as I write all the time, until the Pirates do the most transparent thing of all in spending up to the level of the Brewers and/or Reds.

I have never liked the notion that the Pirates must match the spending of other teams. For one, as Dejan points out in his next sentence, a team’s market is not nearly as relevant as its revenue.

Those teams have different revenue streams at the moment, notably the Brewers, because of better attendance. So, that should be weighed in any equation.

On cue, MarkInDallas shows up in the comments section to drop some knowledge:

It’s truly amazing that people don’t get the revenue part of the equation. How is that so difficult to understand? The Brewers drew 3,037,451 fans this year. The Pirates drew 1,577,853.

The Brewers make about $40 average from each fan that attends. I don’t know the Pirates’ average but let’s just say it’s the same even though it’s probably less.

(3,037,451 – 1,577,853) * $40 = $58,383,920.

Subtract the $10M more that the Pirates get in TV revenue, and the Brewers make $48.38M more than the Pirates do.

The Brewers payroll this year was $80M, and the Pirates’ was $48M.

$80M – $48M = $32M difference in payrolls.

$48M more in revenue, and $32M more in payroll.

That means the Brewers made about $16M more than the Pirates did.

And still people believe the Brewers have shown more “financial commitment” to winning than Nutting. Yeah, it’s pretty easy to spend $32M more when you are making $48M more!

And, I hate to tell those people this, but the Brewers also lowered payroll and waited for attendance to rise before raising payroll. And all throughout that process, they have been raking in the dough to the tune of tens of millions each year.

They offered Sabathia $20M to stay. Do you think that was just going to come out of the owner’s piggy bank? Sorry, they had that money because they have profited tens of millions of dollars in the last 5 years, and a portion of that is probably available for expenditures like a Sabathia or Fielder.

And as you can see, they can afford to raise payroll by probably $15M without dipping into that reserve pot.

So, it’s a very good thing that Nutting is following the same script financially to what the Brewers did 6 years ago. The hard part is you have to go through that initial process. You can’t just skip to the end winning part.

However, my larger point is that the Pirates do not necessarily have to match the spending of teams like the Brewers and Reds, even once the team (hopefully) begins bringing in more revenue. They simply have to be capable of spending that amount, and willing to do so if necessary. If there is an opportunity to improve the team with increased spending, that must be done. But if that increased spending does not provide any benefit, it does nothing for me.

Many people look at the total payroll as an indicator of the team’s effort to win. I prefer to look at individual expenditures and situations. For instance, I did not like letting Matt Capps go over a token amount of cash. But adding Ryan Church at $1.5 million is a far better move than signing Rick Ankiel for $3 million, because Church is cheaper and a marginally better player. Making several smart moves like that naturally keeps the payroll lower, which is not a bad thing.  If the Pirates have a solid offseason, adequately filling every hole on the team, and end up $10 million under budget, that’s great.

If the Pirates’ payroll is only 75% of the Brewers’ payroll in 2014, I will not be very upset.  But if it is at that 75% mark, and they are looking to trade Andrew McCutchen because he is getting too expensive in arbitration, then I will probably be emailing Dejan with a liberal use of the caps lock.

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