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Sunday, December 4, 2022

First Pitch: The Narrative About the Pirates Payroll, and Facts About Small Markets

One of the most popular topics in Pittsburgh surrounding the Pirates is Bob Nutting and how much money he should be spending. It’s not a topic you find on this site often. And that isn’t to say that I take the opposite stance of most Pittsburgh media — that approach being that he should spend more and is cheap and only cares about profits. It’s just that I don’t talk about it at all.

I went on a bit of a rant last week on Twitter about this subject, and I’ll bring up the key point of that rant again: the Nutting/payroll topic brings about the worst discussions among Pirates fans. It’s almost like a political discussion. Everyone has their opinions, and no one changes their opinions, even with new data. If you are neutral, or take a nuanced view of the situation where there aren’t just two clear sides, then you are labeled by one side or the other as having an agenda, just because you don’t fully buy in to a specific side.

When you add in the fact that every single discussion about the Pirates inevitably turns to Nutting and payroll, it makes me want to talk about it less. I prefer talking about actual baseball topics. Last night I discussed the reality of MLB and how small market teams face really difficult decisions keeping franchise players. My favorite articles to write are the ones where I break down the changes a prospect made from the point when he entered pro ball to the point when he reached the majors. I’ll talk about the needs of the 2017 rotation, whether the Pirates can sacrifice offense at second base for Josh Harrison’s defense, or modern bullpen usage.

Every topic is going to have some sort of payroll tie-in, but the point when that discussion pivots to the Nutting/payroll discussion is the point when we stop debating baseball with each other, and start attacking each other. When someone disagrees about Gerrit Cole’s value in the rotation, you never hear that they’re an apologist for Gerrit Cole. The same goes for other baseball discussions. You can pick two sides, discuss each side, and avoid accusing the other side of some ulterior motive. That’s impossible with the Nutting/payroll talk. Those discussions immediately become about attacking the person making the argument, rather than debating both sides. That’s not good baseball talk, and it’s part of why I avoid it.

This weekend at PirateFest, however, Frank Coonelly said he was tired of the narrative that the Pirates are more interested in turning a profit than winning. He went as far as calling it offensive, which I’m sure isn’t going to go over well, but at the same time, I could understand how a group of people would be offended constantly being portrayed like an evil organization led by Scrooge McDuck.

Unfortunately, that narrative will live on, probably until the Pirates win a World Series, and maybe even after that. It’s not going to disappear until the Pirates open their books, and probably won’t disappear even if that did happen (it won’t, and that only makes the Pirates like every other organization). The reason the narrative lives on is because we have very few actual facts to go on.

There are some sites that try and figure out the finances of the game. Forbes posts projections each year, although I have never trusted those numbers. Sites will track payroll, including this one, but that’s only one part of an entire operation. But we’ll never really know how much a team makes, what percentage of that they spend on payroll, what they do with the rest, how much is left over in profit, and what happens with that profit. Even if we knew that for one team, we wouldn’t know how it compares to other teams for perspective.

That’s another big reason I don’t write about this. I prefer to discuss a topic when there are actual facts, rather than two sides playing a guessing game and arguing about what they think is probably accurate.

All of this said, there is one thing that drives me nuts about this entire debate, and that’s the idea that the Pirates being “small market” is an excuse. The Pirates are a small market team in baseball. This is designated by MLB’s Collective Bargaining Agreement. They get an extra draft pick each year, and the most spending money in the international market under the new CBA for this designation. If they sign a player with a qualified offer, the draft pick they lose is lower in the draft than the one the Yankees or Dodgers would lose. The Pirates being a small market team is an undeniable fact, and the moment that gets referred to as an excuse or a lie is the moment when one side has refused to accept any facts in this discussion.

Then there’s the issue of how the Pirates compare to other small market teams. The common argument about payroll is that the Pirates are always in the bottom third, even though that makes sense if they’re in the bottom third in market size. The argument is that they don’t even spend comparably to small market teams. So even though I don’t think these facts will help in the discussion, I wanted to compare payrolls across the league, in order to see what each team could spend.

I looked at the Opening Day payrolls according to Cot’s, and found the highest Opening Day total for each team. I also found the average of the five highest payrolls for each team, just in case there was one extreme outlier (Example: Kansas City’s highest payroll was $131.5 M, but their next four were $112.9 M, $92.2 M, $81.9 M, and $75 M). I used Opening Day payrolls because that’s usually the figure that reflects the budget. Teams save more for in-season moves, but the Opening Day payroll is the best way to view their plan for the season. I will note that almost every team had their highest payroll in the last five years, which makes sense due to the rising costs and the new money coming into the game.

Here is the chart featuring the highest Opening Day payrolls for each team.

Rank Team Payroll
1 LA Dodgers $271.6
2 NY Yankees $228.1
3 Detroit $198.6
4 Boston $197.9
5 Philadelphia $177.7
6 San Francisco $173.2
7 Chicago NL $171.6
8 LA Angels $164.7
9 Washington $162.0
10 Texas $159.0
11 NY Mets $149.4
12 Baltimore $147.7
13 St. Louis $145.6
14 Seattle $142.3
15 Toronto $137.2
16 Kansas City $131.5
17 Chicago AL $127.8
18 Cincinnati $115.4
19 Minnesota $113.2
20 Colorado $112.6
21 Arizona $112.3
22 Atlanta $112.0
23 San Diego $108.4
24 Milwaukee $104.2
25 Houston $103.0
26 Miami $101.6
27 Pittsburgh $99.9
28 Cleveland $96.3
29 Oakland $86.8
30 Tampa Bay $76.9

The figure for the Pirates was heading into the 2016 season. I had the figure at $103 M, although I go into extreme detail that I’m not sure Cot’s could do for all 30 teams. And since all 30 teams would have this disclaimer (and since the difference would only move the Pirates up 2-3 spots), we’ll ignore it.

The Pirates have maxed out so far in the bottom third at one of the final spots. Before adding analysis, let’s also look at the average of the top five payrolls for each team.

Rank Team Average
1 NY Yankees $219.0
2 LA Dodgers $217.5
3 Boston $177.9
4 Philadelphia $164.5
5 Detroit $164.3
6 San Francisco $152.5
7 LA Angels $151.7
8 Chicago NL $141.0
9 NY Mets $138.3
10 Texas $136.1
11 Washington $131.1
12 Toronto $123.4
13 St. Louis $121.5
14 Chicago AL $120.2
15 Seattle $117.7
16 Baltimore $112.1
17 Minnesota $105.0
18 Atlanta $102.9
19 Cincinnati $102.8
20 Kansas City $98.7
21 Arizona $97.6
22 Milwaukee $97.1
23 Houston $94.8
24 Colorado $94.0
25 Cleveland $88.9
26 San Diego $88.4
27 Oakland $79.9
28 Pittsburgh $77.3
29 Miami $72.6
30 Tampa Bay $71.2

One thing I noticed here is that almost every team had their top five payrolls scattered over the 17 year time period I looked at (2000-2016). The Pirates have had their highest payrolls from 2013-2016, which are the years they were contenders. Their fifth highest payroll was in 2001, which was slightly higher than 2012. That’s a side effect of 20 years of losing. If you only look at their last two years, it bumps them up to $95 M, putting them at 23rd. Still the bottom ten.

The reason I wanted to look at these numbers is because I wanted to see what teams in similar markets spend. That’s one of the most exaggerated points right now, with claims that the Indians went well over $100 M to make the World Series (their highest started at $96 M), or that small market teams are now spending $120 M, or other exaggerations.

The first thing I noticed about these numbers is that 13 teams in the league have maxed out at $115 M or less, and half the league has an average of less than $115 M. That’s a huge divide, especially when you have those two teams at the top averaging close to $220 M (the 1% of the baseball world).

The Pirates are low in these, and without having details of their finances, I think they could and should be higher (OMG! Nutting apologist!). I think part of the reason they are lower for their average is because they just recently became contenders. If they continue spending around $100 M, then I think that puts them in a respectable place, ranking near the top of the bottom half in baseball. It’s hard to say that they should be averaging much more than $100 M per year when most teams in similar markets are averaging that or less in their five biggest years.

My takeaway from the numbers is that if the Pirates are trying to contend, and not in a rebuild, then they should be around $100 M in payroll. It’s hard to argue that they can’t afford that much when they’ve spent nearly that much in the two previous years, and are projected to be around that again this year. If they do that consistently, they’ll end up at the top of the bottom third, or the bottom of the middle third, which is respectable when considering their market size.

The bigger takeaway is that the small market designation is very real. It’s hard to look at payroll stats that show teams in Cincinnati, Kansas City, Cleveland, Milwaukee, and Oakland averaging around $100 M or less in their best years, and then expect the Pirates to be spending significantly higher than that amount. Maybe the Pirates could spend a bit more in an individual year ($105 M? $110 M? $115 M?), but they’re still going to end up in the bottom half of the league, and as the numbers from other teams show, they’re probably not going to be able to do this for more than one or two years.

That might be the biggest reason I don’t discuss the Nutting/payroll topic, and why I’m constantly discussing the small market topic. It just seems like payroll is a topic that is blaming the Pirates for being small market, rather than placing the blame on MLB for creating a system that sees such a big divide between the top ten teams and the bottom ten teams. Or even the top five teams ($164 M to $219 M average) and the bottom 15 teams ($112 M or less average). The Pirates are small market, and that’s an MLB problem shared by a lot of other organizations, and it’s much more important than arguing about payroll numbers. The Pirates should be spending comparably to those teams (AKA, they should be expected for at least a $100 M budget in contending years), but expecting them to do more just feels like placing the blame on them for being victims to the system MLB has created.

In summary, I think the Pirates are lower on the above charts because they haven’t been contenders as often as other teams. If they continue contending, they should be able to spend around $100 M, based on what other teams in similar markets have spent. That would put them near the top of the small market teams. But expecting that they should spend more than that on average is blaming the Pirates for an MLB issue, which I think is misguided.

Tomorrow, we go back to the same old actual baseball topics, like how Nick Kingham is following Jameson Taillon’s path returning from Tommy John, and a look at the Triple-A pitching options for the MLB staff.

**Jameson Taillon Ready for the Challenge of Being a Top of the Rotation Starter. Sean McCool talked with Taillon last week about his upcoming role as one of the top starters in the Pirates’ rotation, and his goals for his second full year returning from Tommy John.

**Pirates Hire Gary Varsho and Andrew Lorraine as Pro Scouts. Just so you know the difference, pro scouts are the guys who scout the minor leagues for potential trade additions, or guys who could be good additions in the future, or any other scouting purposes. That’s different from amateur scouts, who look at future draft picks.

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Tim started Pirates Prospects in 2009 from his home in Virginia, which was 40 minutes from where Pedro Alvarez made his pro debut in Lynchburg. That year, the Lynchburg Hillcats won the Carolina League championship, and Pirates Prospects was born from Tim's reporting along the way. The site has grown over the years to include many more writers, and Tim has gone on to become a credentialed MLB reporter, producing Pirates Prospects each year, and will publish his 11th Prospect Guide this offseason. He has also served as the Pittsburgh Pirates correspondent for Baseball America since 2019. Behind the scenes, Tim is an avid music lover, and most of the money he gets paid to run this site goes to vinyl records.

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Micbg77

This is a great article, and one that sadly most fans outside of this site don’t have any interest in reading. I think the benefit of being a Pirates fan that doesn’t live in Pittsburgh is that I don’t have to constantly be bombarded with all the “Nutting is cheap” nonsense.

I’ve always believed this is an MLB issue like you said. Unfortnately we won’t ever see a salary cap/floor like there is in the NFL, NHL and NBA.

rphbuc

Heard KC’s GM on MLBNetwork Radio during the winter meetings. They stretched a lot last year to try and go for another World Series and he said they “lost a lot of money.” He also said their was no room to add payroll this year. Hence, they tried to unload salary (Ian Kennedy) tied to a stud (Davis) to create some flexibility. Kinda shows their $131 should’ve been much closer to $100 in order to maintain future success.

Thomas H

I don’t know. Maybe they enjoyed winning the World Series instead.

Harry S

I tried once to find where the Pirates rank in available revenue just based on attendance and ticket sales. PNC Park is one of the 5 smallest capacity parks. Even with record attendance in 2015 they were still only middle of the pack. Where I got stuck was trying average ticket prices per team but I have read the Pirates are near the bottom. So the available revenue is among the lowest without factoring the contract with Root. They can’t spend money they don’t have. And MLB owners are like Trump’s cabinet, they are all multimillionaires.

Robert Reznik

I stopped moaning about payroll when I realized it was much more enjoyable being a pirate fan if you accepted and even embrace the constraints they have to work with. I realized when Bonds left that there would be no more lifelong pirate hof types. However the plus was realizing we would have much more young players to watch and that this must be a continual process.

Chris M

At the end of the day it is very true that small market teams have their restrictions and are behind the 8 ball. Knowing this when you have an opportunity to have a real chance at a title what is wrong with spending 10 to 20 million more for one year to go for it. Players and fans don’t say on opening day that their goal is to see the playoffs they say a championship. As a smaller market team we need to take advantage of our rare opportunities.
The whole baseball is like any other business is false as well. We do not fund companies to build plants or offices (without ownership stake/stock), but we do stadiums with no ownership. As a result, they should have to make their books public, because we have a vested interest. So it would be a problem IMO if they are not competively spending on payroll as they could be when we paid for pnc park!!!!

BuccoFan21

I agree completely that the Pirates will realistically always be in the bottom of the literature but I do think that they should spend between 105 and 110 million if not 115

Douglas Byrd

The one element I agree with is winning teams make money. And you have to spend to win. Losing becomes a self-fulfilling prophecy. Salary dump leads to more losses which demand lower payroll etc. 2003 the Penguins are last in the league in attendance 2016 they are 8th out of 30 and selling out every game. Winning matters. It makes money.

Bruce Humbert

Tim,
First of all SF and Oakland ARE the same market – not basically the same market.

The Giants have a great stadium – have won 3 WS since 2010 and spent a ton to stay competitive with their arch enemies the Dodgers.

The As have done NOTHING to get a new stadium built – waiting for Oakland taxpayers to present them with a Billion $ gift.

MLB has enabled this for years – the revenue sharing the get is a direct insult to the players – and fans…

Tampa Bay is not far behind.

I proposed a couple of years ago that the best thing that could happen would be for the players and large market owners to join forces and require all 30 teams to spend a minimum on player payroll – or be shut down – contracted.
I would guess that the Players have modeled what a 28 team league with a $100M floor looks like in terms of player comp versus the current 30 team league – and have decided the current setup is better – or at least not a whole lot worse…

But I don’t think the leadership of MLB is doing a good job maximizing revenue for the league…

Their are a lot of options out there for expansion..
1. The NY market could easily add a team – it had three in the 50’s
2. Havana is going to happen and will be great – Trump will make it
part of his new deal with the commies.
3. Move Tampa to Disney world – this should have happened ten years ago…
4, Indianapolis, San Antonio, Portland, Montreal, Vancouver, Charlotte are all possibles.

Darkstone42

It seems pretty reductive to argue that small market teams should just spend more money as an outright dismissal to the effect market size has on revenue streams. It also ignores the role of demand, both in volume of sales and the setting of prices.

A large market team has more people in a denser area around their home ballpark, who, on average, have more money to spend. They can sell more tickets *and* sell them at higher prices. There’s an obvious revenue stream advantage in that. Large market teams also reach more people with their potential television packages, and can demand more money from television stations for the rights to broadcast their games. The internet doesn’t stop either of these things from being realities. For crying out loud, the Yankees have *their own television station.*

You can very easily make the argument that small market teams should spend more. You can also very fairly make the argument that the Athletics are pretending to be a small market team when they aren’t. But to say that Pittsburgh, for example, should have enough money to spend to remain competitive in the free agent market with New York or Los Angeles, even though Pittsburgh has a much smaller metro area with generally poorer people (especially as you move away from the city, there’s a lot of extreme poverty in western Pennsylvania) is largely absurd.

Someone provided a number for the Pirates’ profits being $20 million. If that’s true, the most the team could spend without running a deficit (which, why would they?) is about $120 million, 18th in baseball. And that’s spending everything they could.

The Yankees, meanwhile, have a payroll in excess of $200 million and still turn a massive profit. In order to make this argument, you would have to ignore that reality.

Darkstone42

Worth noting:

Holy balls, Dodgers.

And that’s really expensive total suckage you’re engaging in, there, Phillies and Angels.

bucsws2014

Tim, with all due respect, I don’t find Opening Day payroll to be the be-all-and-end-all point for analysis.

I’m one of the people who claimed that the Indians spent well north of $100 mill last year, using info from Spotrac.

The main reason I think end of season payroll is just as valid as beginning of the season is, to put it bluntly, as a measure of a team’s commitment to winning should things go awry.

In the Pirates’ case, I think we’ve all come to the conclusion that NH (or as the case may be, BN) went cheap with Vogey and Niese figuring that Taillon, Glasnow and Kuhl would be ready mid-season. One of those kids was good, one average and one a no-show. However, waiting to find out had already put the Bucs in a hole where they needed all three to step up.

Of interest, the Indians ended with a 25-man payroll of $61.3 mill vs the Bucs’ $57.3, which doesn’t seem like a big difference. This was partly (mostly) due to Carrasco and Brantley being on the DL at end of the year. The Bucs, meanwhile, had Marte, Cole and others on the DL. Total DL figures were $11.9 for Cleveland, $10.6 for Pittsburgh.

Cleveland also had $1 mill on the books for Byrd’s suspension and $39.5 million in retained contracts vs the Pirates’ $37.6 mill (Cleveland basically ate $15 million in Bourn and Swisher’s salaries vs a Liriano-ish salary dump). The minor leaguers making MLB minimums was about a wash.

End of the day, Cleveland spent $114.7 mill to the Bucs’ $105.9 mill. Cleveland added about $6 mill in salary (more than half that to Miller) during the season, plus another half million in minor league promotions. I believe you’d be in agreement over the Bucs final payroll number, so not sure why you’d object to Cleveland’s.

Point being, having dead money in Carrasco and Brantley (not to mention releasing Bourn and Swisher) didn’t stop them from investing in the right pieces to continue to drive to a pennant. They didn’t spend much in $$$ for mid-season acquisitions, but did use prospects to acquire Miller. Thus, they not only spent more than $100 mill, but they aggressively made improvements despite losing two of the better players.

If you really put aside any bias, can you legitimately say that the Bucs wouldn’t fold the tent in the same situation instead of going for it? I have little confidence the Bucs would handle things the same way Cleveland did.

Darkstone42

On the other hand, the Pirates weren’t in a great position to compete in 2016 come the trade deadline, and they weren’t going to compete with the version of Liriano they had pitching every fifth day anyway (because he was bad), so subtracting rather than adding payroll to better set them up for 2017, a year in which they might compete, was probably the best decision they could have made.

I think the 2015 Bucs team would be a better comparison, when I’m pretty sure they added a decent chunk of salary to try to improve their team.

John W

My name isn’t Tim, but I endorse your post and NO, I don’t think the Pirates would have operated the same way as Cleveland under similar circumstances. I suspect Tim will say we don’t know because they haven’t been in that exact position.

John W

I thought it was around 8M but why split hairs. I would not assume they would have added the same amount in 2016 even if they were doing better on the field.

Keep in mind NH explicity stated the March 2016 Freese signing put them over budget and came out of funds usually set aside for midseason acquisitions.

They started from a much lower base in 2013, 2014 and 2015 than they did in 2016. I think in 2016 they were basically hitting near their ceiling.

“Starting for a lower point” is a very key consideration in this discussion.

They are no longer starting from such a lower point- which is a primary reason I expect payroll growth to me much much lower going forward than it was the past 3-5 years.

John W

I would also add that I strongly disagree with this statement:

“If they continue spending around $100 M, then I think that puts them in a respectable place”

Unless average payrolls fall around MLB spending around 100M will keep them well under 80% of average MLB playrolls and will make it exceedingly difficult to compete as many of our core players get more expensive, Cole, Marte, Polanco etc. It will be extremely difficult to compete at 100M unless they are doing a rebuild.

A lot of the teams spending less than the Pirates in 2016(Reds, Brewers, Braves) were in rebuild mode and will be spending considerably more soon.

John W

Following up my post with the Cot’s data I also want to add this quote is misleading: It’’s hard to look at payroll stats that show teams in Cincinnati, Kansas City, Cleveland, Milwaukee, and Oakland averaging around $100 M or less in their best years, and then expect the Pirates to be spending significantly higher than that amount”

Very misleading. 100M a few years ago is much, much different than 100M in 2016.

The Reds spending 106M in 2013 would be like the Pirates spending 130M in 2016

The Brewers spending 104M in 2014 would be like Pirates spending 118M in 2016

The list goes on.

The reality is if a team such as the Pirates will never even be able to spend 80% of what the average payroll is in their best years… it’s going to be hard to compete and years like 2015 will be anomalies.

John W

Tim,

Reran the numbers with Cot’s data as far as Pirates payroll as a percentage of League Average. Did not change much at all from Spotrac(even though average payroll number was different)

2012 Pirates were at 51.8% of league average (52 vs 100.3M)
2013 Pirates were at 63.1% of league average (67M vs 106M)
2014 Pirates were at 63% of league average (72M vs 114M)
2015 PIrates were at 72% of league average (90M vs 125M)
2016 Pirates were at 77% of league average(100M vs 129.6M)

So by this measure they actually slightly worse than Spotrac. Their payroll never represented more than 77% of league average in last 5 years. In addition, NH stated they were overbudget going into last year. I expect payroll to fall modestly this year while league average goes up to a modest degree.

Other small market teams like the Reds, Brewers have clearly had years where they have been well over 90% of league average.

John W

It was increased from a pitifully low base. And it is STILL 23% below league average.

So you think opening day payroll will be as higher or higher in 2017 as it was in 2016?

The important point here is I don’t think the Pirates will even come close to growing their payroll 38% over the next 2 years.

I would be surprised if they can even grow it 10-12% in aggregate over next 2 years.

You don’t really think the Pirates will be growing their payroll at the same rate going forward do you?

Douglas Byrd

There are multiple elements of this discussion.
1) Tim is 100% right that MLB has created this problem. And oddly the small market owners seem to have no desire to change. A real salary cap and salary floor is necessary to a competitive league and we don’t have that in MLB like we do in all of the other major American sports.
2) But I am not going to worry about Bob Nutting or the other ultra rich owners of the Pirates. They are making money, we just don’t know how much. Nutting’s family are billionaires. I’d love the Bucs to have a $200 million dollar payroll, but realistically is average too much to ask? How about $150 million? Imagine how much better we’d be with an Ace starter (making 20 million) and if we’d extended Melancon etc. You make assumptions about that money. But my point is while normal people get bilked out of their money (willingly) for concessions and tickets it appears that Nutting is going cheap and not allowing the moves that might win a championship.

I’m not asking for altruism or sainthood from the owners but instead a reasonable expectation of fairness. I’m not seeing that.

leefoo

And oddly the small market owners seem to have no desire to change.

And that is because, despite Frank’s frustration, even the small market owners are making lots of money.

That is the bottom line. FC, NH and Hurdle want to win. Bob? The jury’s still out on that one. I’m sure he doesn’t MIND winning, but he didn’t lose much sleep I bet after our 2016 season.

brilemon

There isn’t a big time money guy in this country that wants to “lose”… winning is first and foremost. to assume someone has no heart and soul and ok with losing just because they are well off is just ignorant to the fact that they are humans that are ultra- competitive… that’s why they and their families were able to amass wealth.

There are way better investments that throw off cash than a baseball franchise. Nuttings bought this team out from Mcclatchy at a low, smartly, developed a plan, executed and continues to execute… and they ARE a winning team.

Give his intentions another look.

Darkstone42

Small market owners are also likely largely at the mercy of big market owners no matter what they want. The big markets produce the bulk of baseball’s revenue. I would be shocked if they didn’t also carry the majority of the discussion and had just about all the power in negotiations. That’s how money and power work, after all.

Hank

Multiple sources have put the Pirates profit at around $20m. Don’t ask me who, as my job is not to remember these sources, only that the analysis looked sound. But lets look at this from another angle. Nutting and team are heavily criticized over their spending…..heavily. So if the team was operating at a break even level, you don’t think they would say that to blunt the criticism??? Of course they would. They won’t talk about profits, because there are significant profits. Frankly I think that everyone who goes to the games, or buys a TV package, or spends money on Pirates gear deserves to be treated more like a shareholder. I haven’t even mentioned the fact that they are working in a public financed stadium. Nutting owes the fans a little more forthrightness on the finances, without going into actual specific dollars, as we are the lifeblood of this franchise. If the team is basically setting a player budget at a level that looks to break even on the bottom line, that works. If they are budgeting to make a $20m profit, that doesn’t work for the fans. What are Nutting’s goals?

Darkstone42

A $20 million profit isn’t that big, really, on the scale of the money involved here. And since the goal of a business is to make money, and we’re talking about a profit margin of well under 20% after you consider the various other costs associated with running a baseball team. They’re probably spending close to $115 million annually, all told, to turn that $20 million profit.

If the number is actually just $20 million, I can’t even be upset by the low payroll. At most, they could reasonably increase it by about $10-15 million without risking running a deficit, and I publicly financed stadium or no (and, full disclosure, I’m completely opposed to publicly funded stadiums on principle), they don’t “owe” it to the fans to run the team on a deficit.

Now, if the Pirates get a new TV deal which skyrockets their annual income, and the payroll still doesn’t increase, then there’s a clear problem.

Douglas Byrd

I agree 100%. We need publicly owned teams. The Pirates benefit from millions of dollars of public money and are very important to the local community and economy. Green Bay seems to be the model. Again, breaking even for Nutting is fine since his family are billionaires! People are acting like he needs the money.

AW17

No. If hypothetically the Pirates were operating at a break even level they wouldn’t state this to blunt criticism. Why? Because people who have chosen to believe that they really can afford a 120-150 mil payroll would just continue to believe that they were lying. I don’t think releasing their books would even blunt the criticism because people would just choose to believe they were fake.

Hank

So Pirate management will not be open and honest because people will think they are lieing? Personally, I think the Russians are behind MLBs problems. 🙂

AW17

Who’s to say they aren’t already being open and honest. You basically just proved my point. It doesn’t matter if they are 100% honest or 100% deceitful because when it comes to the Pirates payroll people will choose to believe what they want to believe. Because you know, they have “multiple sources”.

Hank

Open? They have not discussed profit in any way.

AW17

Maybe they have, maybe they haven’t. I don’t know and I frankly don’t care. My point was that it doesn’t matter. You claim they are striving to make 20 million profit each year. If Nutting was at PirateFest and stated the goal was to break even each year, would you believe him?

Mark N

I don’t agree that if they stay around 100 mil in payroll, that they will be at the top of the bottom half. As last year indicated, almost all teams are now paying a minimum of 100 mil. Therefore, as the years go on, the rolling average of the older, lower payrolls will drop off, and replaced with the higher figures. If the pirates stay around 100 mil, they will remain near the bottom.

Thomas H

I don’t think so. They were 25th at the end of last year according to Spotrac:

http://www.spotrac.com/mlb/payroll/2016/

Spotrac updates monthly as trades are made.

I have never seen any source that indicated that the Pirates have ever ranked higher than 22 since Nutting has been owner.

John W

The Pirates are going to be in big trouble if they think the can contend the next couple years at 100M. Unless your idea of “contending” is what you are seeing from the Rays from 2014-16.

piraddict

Balanced discussion Tim, thanks.

TheBoomer

Aside for attendance $$, huge nat’l tv $$, local tv $$, #Pirates received at least $34M in revenue sharing last yr. $34M! 1/3 of payroll!
-from a renowned source who may or may not have made regular contributions to this site lol (for all to see on the bleacher report)

William R. Maloni Sr

I applaud your efforts, but come back to the question I asked you the other evening, “How do you know what revenue the franchise makes to establish your premise?”

Yes, I understand what MLB declares is a “small market” and there are systemic sanctions for spending above those rates, but nothing bars an owner from doing that.

Also, can you tell me if the Milwaukee Brewers do or have opened their books so their fans can see revenue figures?

Lastly, faced with with all of the fan anger and skepticism, which you rightly acknowledge, why does BN avoid the fans, who produce that revenue, and send out famous dissemblers like Coonelly and NH??

rjgrinde

What role does increasing payroll have on producing a contender? I would argue that there is quite a strong relationship. I think that is more the issue that people have. How is a team suppose to get better if they refuse to spend money on the requisite talent to do so? I personally believe the Pirates like their lower tier payroll niche and, it seems like it has become part of the business plan to stay there on an artificial basis. Yes the Pirates are a “small market team” but, I think the Pirates are all too comfortable using that label and have been for quite some time.

John W

And then you have the 2016 Pirates who coming off a 98 win season decided to trade guys like Morton for Whitehead swap salaries of their 3 WAR 2b for Jon Niese and go into the season with a rotation of Niese, Nicasio, Locke with the remains of Vogelsong waiting in the wings.

leowalter

Yeah, that Morton trade was a killer. He threw 17 valued innings for the Phillies.

John W

My man Leo! Where ya been? So you liked the reallocation of the Morton dollars eh? Who am I to argue with the 2016 plan, it worked out well.

leefoo

But most teams actually build up to being a contender, then spend to add to that team or keep that team together.

Except for us, of course. 🙂

RobForsyth

I live right in the middle of solid Cardinals nation. I agree that they do a fantastic job with organizational efficiency. They draft and develop talent as well as anyone. It’s a model to look at closely.
Additionally, however, one of their big advantages is that they pack their stadium for virtually every game. Harry Caray helped make them what they are with his broadcasts going back 70 years or more. He created a fan base as far away as Arkansas. I’m convinced Dexter Fowler will play well for them because every player going to the Cardinals gets a shot of adrenaline when he goes out on to the field at Busch and hears 40,000 screaming fans.
Unfortunately the gross disparity in revenue is something that probably won’t be addressed in my lifetime. I’ll be 70 in April and with baseball now being a $10 billion game there’s not enough momentum among the fat cats out there to make the changes necessary to allow the Pirates and other small market teams to compete more successfully. Thanks for starting this discussion Tim. Regardless, many fans with good intentions will continue to bitch about Nutting.

leowalter

I would also point out that the Cardinals regional success goes back much further than Harry Caray. My Dad was listening to them on the radio wile living here in Pa. when the atmosphere was right !

BuccosFanStuckinMD

I know this site is often the apologist for the Pirates ownership and FO, and this article falls in line with that ongoing strategy. With that being said, I do agree that the Pirates payroll has steadily increased in recent seasons, but so has the rest of MLB. If the bottom line did not trump winning, the Pirates wouldn’t have traded away two of its best prospects in order to get Toronto to take Liriano off their hands – they would have just cut him and eaten the contract or kept him and hoped that he could turn things around. To have to trade away two of their best prospects – and then try to convince the public that they really did want Hutchinson and that this was a baseball trade – just opened them up to ridicule, and deservedly so. If the bottom line did not trump winning, they would be more competitive in the International market and wouldn’t completely ignore the influx of Cuban players in particular. The Neil Walker trade debacle was another move motivated by the bottom line. The latest absurdity was the Pirates actively exploring trading their face of the franchise, and when they were not able to secure proper value for him, try to convince us all that they never REALLY intended to trade Cutch. Damage control mode.

The Pirates, and other small market teams, cannot compete and win consistently with the current economics of the game, and neither can other small market teams. They may pop up and win here and there (Indians this past season, KC a couple of years ago, etc.) and have a short lived run, but overall MLB is tilted heavily towards bigger market teams. Any appearance of parity is an illusion. Until MLB adopts a hard salary cap, like the NFL, and includes the International players into its draft (like every other major professional sport does), teams like the Pirates will continue to be forced to pinch pennies, largely sit out free agency each year, and look to reclamation projects to be miracle workers. It is not sustaining long term….

The NFL is great (although they are arrogantly going to destroy their own league with their insistence of going International, while sticking it to their fan base) because its a level playing field – any franchise can win and win consistently if properly managed – Packers, Steelers, Chiefs, Colts, Ravens are all smaller market teams in the NFL, yet compete year after year and have won their share of division titles, conference titles, Super Bowls, etc. It can be done, but MLB and its players union would need to make significant changes….

leowalter

Having seen both play numerous times in AA, you will neve, convince me McGuire and Ramirez are outstanding MLB prospects. One, while a good defensive catcher, couldn’t hit and the other had problems staying on the field. At best Ramirez looked like Jose Tabata with injury problems.

Scott K

Anyone else find it amusing he sited the Chiefs as a model franchise for small market success in the NFL?

The Chefs aren’t the Browns by any stretch, but their record over the last 50 years more closely resembles the Browns than the Steelers.

The NFL salary cap has created 32 teams with mediocre rosters where the teams with the best QB’s win almost always.

BuccosFanStuckinMD

Tim, only someone overly sensitive would consider that statement a personal attack – its based on observations of your site over multiple years. I’m not being critical – I understand your need to keep a good relationship going with the Pirates franchise and their management – I get that. But, don’t turn around and cry foul when someone points out the obvious….I like your site a lot (or I wouldn’t pay for it), for the information you provide about players, the farm system, etc. – its great and I have complimented you for it numerous times over the years. But, I don’t expect to come to this site and get objective journalistic analysis and commentary on the team and its management….

Ryan C

Overly sensitive? You’re essentially calling him a hack with no integrity. Maybe that’s not your intention, but that’s the implication here when you suggest that he’s not being honest or straightforward in his coverage of the team.

I don’t always agree with everything Tim writes, but I find his approach on most topics to be incredibly solid and fairly scientific. I think he goes out of his way (sometimes more than necessary, although you can see why) to appear the exact opposite of what you’re accusing him of, because of people like yourself who constantly suggest that he’s some kind of apologist. There are always facts included to support his arguments, he’s not just throwing random junk at the wall to see what sticks.

There are plenty of places on the web to read the “hot takes” about how we should just spend more money and stop being so cheap. Tim seems to go out of his way to avoid those types of pandering pieces and instead will play the contrarian to see if there is another angle out there that the more simple-minded fans and journalists are missing, and I really appreciate that approach even when I don’t always agree with his conclusions. He is always framing these discussions in a different light than anybody else covering the team, that’s the value here.

I think if everyone was sitting around praising how wonderful the team is being ran, he’d be out there writing pieces that try to uncover if maybe things aren’t as great as they seem. That’s his M.O., it just so happens that right now it’s much more popular to trash the front office so I think his work tends to try to uncover what people might be getting wrong in their trashing. I can see how that rubs people the wrong way sometimes, but then I’d say that maybe those people are the ones who are being “overly sensitive”.

terrygordon30

Let’s just say for the sake of argument that Tim Williams is often an apologist for the ownership and front office of the Pittsburgh Pirates.

I do not care. If you stated the same thing about Tim and the Dave Littlefield administration, that would be highly insulting, and I would care.

The two of you have opposing points of view. Fine. But you seem to be ascribing motives, at least implying that Tim writes nice things about the Pirates in order to maintain a good relationship with the Pirates.

How are you privy to Tim’s motives? Do you also know what Tim had for breakfast and his favorite color? You say that you are not being critical. Up to that point, perhaps. But when immediately afterward you seem to be ascribing motives, you lost me completely.

One more thing, when I defend actions by the PPBC, what are my motives?

Eric Marshall

Tim – I would disagree a bit here. To say that your credentials are 100% based on the people you have registered or reading this site isn’t necessarily true. It may be mostly true but any organization is going to lean in further for media that covers them positively providing the narative of “apologist”. Most beat writers for the Steelers are deemed in the “bag” with management, no different than apologist by the way. Most credentialed White House reporters get and keep their access based on the soft ball questions they ask rather than being critical or pressing difficult questions. There is a reason you don’t see Dem’s on Fox anywhere near as much as you see them on CNN, NBC, ABC and likewise the other way around.

Attacking one another is never the right path to meaningful conversation but not acknowledging the elephant in the room that is universal across media doesn’t help either. Just fact that you are media and open to more constructive criticism than we are that pay for your fine reporting/coverage.

Do i read this article to fit the ongoing “Nutting isn’t cheap” narrative that the Bucco brass wants trotted out there… yes i do. Others obviously read it differently. It is nicely written with facts to back up that argument but much isn’t known and their handling of the past year’s transactions have only fed into the inability to stretch a bit to go for a title.

AW17

So….what you’re really saying is Nutting was too cheap to form his own guidelines for independent media so he had you do it for him! Haha.

leowalter

Off topic a bit, but the Curve management since 2009 has not been very pro active, or even really fan friendly.That may change with this coming season as the new GM, Derek Martin was always a great guy when employed under the previous management. And that is not to put all the blame the previous GM, Rob Egan,

John W

You addressed one part about Eric’s post as far as what it takes to get credentials. But you didn’t address the main theme imo, is that most credentialed outlets that cover teams tend to be viewed as being sympathetic to the team more often than not. I’m not even saying it’s true, I am agreeing with Eric that I hear this same thing about many credentialed media outlets that cover the Steelers.

John W

I don’t really have any skin in this game. I would add that I’d be careful about your 2nd point. It comes real close to insinuating that people who are are critical are clouded by emotion which interferes with their ability to be rational. This comes quite close to being elitist.

Take someone like Wilbur for example. I don’t think his perspective is influenced by emotions taking over. I think even when sharply critical his points are grounded in reason and logic. But I can’t see many people who interact with Pirates brass on a regular basis expressing the same opinions as he does. Maybe some will in the future and some have in the past.

DK was/is always critical but that is taking it to an extreme.

As a “fan” I always try to see both sides of an issue and don’t fly off the handle. For example something like the liriano trade, I can guarantee you I’ve analyzed it from as many angles as you have dispassionately… and the end result every time is I come away believing it was a shit move. Not because of emotion, but because of objective data.

leefoo

And BFSMd stays true to form.

leefoo

Bottom line on all of this: The Dodgers just signed Kenley Janson and Turner to go with Kershaw and their other high $$$ players.

We have, nor will we ever have any chance of swimming in those waters. The Dodgers and others of their ilk, can keep their windows open for years with smart management.

Our windows, like those of T Bay’s, KC, etc, will be short and are usually followed by years of losing until we can (hopefully) get our farm system up to gear. And, if one of these small market teams go “all in” (see Oakland or Milwaukee), they can REALLY screw up their futures if they fall short.

Teams like us have to sell off stars or very good players as they approach free agency.

Teams like us can’t even afford middling starters like Ivan Nova any more.

It is extremely frustrating to be a Pirate fan in this era.

leefoo

What about Tampa Bay?

John W

LOL. If you are suggesting the window for the rays is still “open” then yeah, windows don’t exist.

John W

Right. And I now understand why you vehemently disagreed when I suggested in the summer that the Pirates window was most likely closing.

The definition certainly does change from person to person because I’d say it’s closed for the Rays. Maybe just maybe they can get a lot of things right and time it perfectly before that payroll starts approaching 100M and Longoria gets too expensive etc. But yeah, I’d say that window is closed.

SSGJD9595

Its personal vs professional, Nutting does not care about the fans, he only cares about money. He will not spend enough money on the team. If he wasn’t smart he would sell. If they lose Cutch and lose, the fans will turn on him and his profits will shrink. Cutch is the only player they have to keep, to keep the fans happy. It would be a different story if Nutting said hey we traded Cutch for A-Z. But we extend Cole for 6 years, & signed Nova to the deal he is asking for. I think most fans could live with that. But not the trade talk after a salary dump. There lots of ways to do things, IMO Nutting right now is doing them wrong.

John W

Well I never said that and was quite specific about what I meant. What I mean is this team is most likely headed in a similar direction as the Rays where they will struggle to do much better than 500 and very well may have some losing seasons. If a lot of things go right they could compete for a 2nd WC spot.

No, they aren’t going back to being the worst team in perhaps the history of all professional sports. Call me crazy, but surpassing that bar doesn’t lead me declare the window being open.

BuccosFanStuckinMD

Tim – and where have all of the A’s best players over those years gone? Almost all were lost to free agency or trades motivated by economics. That would never happen in NY, LA< Boston, or Chicago.

MLB's current non-salary cap system cannot be defended as an equitable system – it is not. yes, some small market teams have done well for short spurts, when they were able to develop a significant number of good young players in a short span, but they can never keep those teams together long-term.

leefoo

Tim W…that is what I mean by them going all in (Jeff) AND then having to pay for a star.

It is a double whammy.

leefoo

For, I think the first time, I agree with you BFSMd.

BuccosFanStuckinMD

You need to wise up then Foo….I’m not always right, but I occasionally am – even though people are put off by the non-PC approach….:)

leefoo

I just want to know why Mr Nutting didn’t show his frugal face at Pirate Fest.

🙂

Jeff

He has….

leefoo

I have a picture somewhere of him on stage at PF with Hurdle, NH and FC.

Zack Nagel

I appreciate your boldness in writing this and opening the floodgates of comments, Tim.

I think reading moneyball would help give most a refresher of perspective into small market team finances. The necessity of finding a competitive edge to overcome financial restraints is very evident with the Pirates, and they need to keep finding a new edge every year.

michael t

We can all agree that by MLB definition the Pirates are a small market team.
We can also probably agree that the ownership can model their business to make a profit, even when ownership enjoys the benefits of a publically funded destination class ballpark.
The fact is that the overall trend of ticket price revenue for the Pirates since 2012 is up significantly while the percentage of revenue allocated to player salaries is down.
The “small market Pirates ” can afford to spend more on payroll and STILL be profitable. As others have pointed out a $10-15M increase in payroll should make a difference in the quality of the team.
Lost in all the discussion so far is the fact that the Nutting family investment in the Pirates has been an enormously successful since they assumed control.
Estimations of the value of the franchise average $950M. I believe the cost to the Nuttings was in the $90M range. The Nuttings have achieved a spectacular ROI(return on investment) with public assistance by way of the beautiful ballpark. They also enjoy a positive cash flow in a business where future earnings and valuations are certain to rise.
Count me as one fan convinced the payroll can and should be $10-15M higher.

michael t

I did not suggest that the Nuttings borrow against their asset to pay increased salaries…..but it cannot be questioned that they have made an enormously successful investment that can be monetized in whole or in part at their choosing.
All available data supports the argument that the Nuttings are making a conscious choice to spend a lower percentage of revenues on salaries than average.
Give me a break….the test for whether the Pirates can and should spend more on salaries is not “when the MLBPA and MLB get mad” and call out a team for not spending enough. Using the single extreme example of the Marlins is unconvincing and not comparable.
I simply disagree with your conclusion “that all signs point to the idea that they’re spending the right amount for their market and revenues.” What signs?
.
.

John W

A better way to look at this instead of averaging 5 year spending is to to look at team spending as a percentage of average spending in MLB per year. For example looking at how much a team spent in 2013 vs 2016 to comprise an average is silly. Average spending since 2013 has gone up 30%(111M to 145M)

Going back 5 years the here is how Pirates payroll compares to the average MLB spending that year per Spotrac(Tim has a problem with Spotrac, I use it because it makes for easy comparisions)

2012 58% (61M vs 105M average)
2013 64% (71M vs 111M average)
2014 63% (77M vs 121M average)
2015 78% (105M vs 135M average)
2016 72% (105M vs 145M average)

If anything this makes the Pirates payrolls look more competitive than they are because Spotrac gives teams credit for money they are spending on draftees)

Other small market teams have reached much closer to the average payroll in a given year. For example Cleveland was at 83% of MLB average payroll in 2013 and the Reds were at 94%. Teams like the Brewers have been much higher than 78% in the past as well.

Even though the Pirates spent as much in absolute terms in 2016 as 2015 they went down relative to the average 78 vs 72%.

Now this doesn’t tell us how much they are taking in, it does tell us they are very low relative to average spending in MLB and lower than many other small market teams relative to the average.

This was average not median. Even if you changed it to median the Pirates would still be spending less as a percentage vs other small market teams in many years.

John W

See new post I made using Cot’s data. The main point still stands. Many small market teams have come much closer to matching league average payroll over the years than the Pirates.

John W

USA Today is a good place to start. So wait… Spotrac is bad but USA Today is good? USA Today shows the Pirates spending 30M more in payroll than the Indians in 2016- you think that is an accurate depiction? I couldn’t account for this but just realized USA Today isn’t accounting for any of the dead money that is still on payroll for guys like Swisher and Michael Bourn, etc.

So this is the data(USA Today) you are using to come up with conclusion Pirates are increasing their payroll relative to the median in MLB?

John W

Moving on to a more broad definition of spending beyond payroll… would you agree Spotrac more accurately reflects overall team spending in aggregate? Beyond just payroll?

John W

I’m talking about the comment you made about Pirates increasing payroll 39% vs 23% as Median. Was that taken from Cots or usa today?

Also does Cots break down the AVERAGE spending each year or do I have to do that math myself?

I’m interested in comparing Pirates spending per year on Cots as an average as I did with the Spotrac data.

My suspicion is it will still show them spending less as a percentage than other small market teams.

John W

OK. But I am throwing that 39 vs 23% statement out as meaningless. Opening day payrolls don’t give an accurate depiction of payroll spending especially when they aren’t even accounting for dead money on the books.

Is there anything else USA today payroll is missing?

John W

It would probably be much more constructive to compare Pirates spending using Cots than USA Today then correct? (where you came up with the 39 vs 23% which I have seen repeated elsewhere)

John W

I’m having a difficult time using USA today for some reason. Does USA today make adjustments beyond opening day? I see a huge disparity between the Pirates and Indians on USA today. They have the Pirates at nearly 30M more than the Indians for 2016(103M vs 74M)

But the Indians added salary throughout the season and NH was quoted as saying the Freese signing in March put them over budget and they shed salary through out the season.

John W

Please post a link where USA today has the annual total payroll for each team in MLB. I’m only seeing individual players.

John W

Spotrac is pretty good. These aren’t distorting things nearly as much as you suggest or envision. It gives a pretty good idea year to year of average spending in MLB and the Pirates spend in terms of a percentage of average.

SSGJD9595

Where to start? It is nice to see numbers but it only points out how little the Pirates spend. I still can’t understand how ppl don’t understand that Nutting is cheap! And that fact that Frank C. said its offensive, well it is offensive to fans who sat through 20 years of losing. To finally see their buccos win again, get good and then not keep any of the FA from those teams. yes they locked up Cutch, Marte, Polanco and Jay Hay to team friendly deals. But overall if you look at that chart, and the links below can someone explain to me how the Pirates can’t operate on a 130-140 mil budget?! Even 120 would mean S Rod, Joyce and Nova would all be under contract right now and there would be no trade rumors about Cutch until maybe next year.

I had no expectations about them signing Mark M, glad they got something for him I don’t think any reliever is worth that much over 4 years. I will make one comparison for the Bucco brass to follow the hated St. Louis Cardinals. Right around 140 mil every year, which allows you to keep a core group of players for their career. And yes I know they lost Albert P. but that was crazy money and its going to happen. But they kept Monillina, Carpenter, Wano, and others and added on in FA.

My over all point is, Nutting knows fans are happy w $30 tickets and some prospects and the team will never be real contenders unless they catch lighting in a bottle. Me personally I would rather pay $40-50 even $60 for box seats and have a better product on the field. And not have to worry about players like Cutch being traded, and have hopes of winning or going to the WS. In the end it still comes down to evaluating and developing talent. But it also falls on ownership to keep the talent here.

http://www.forbes.com/sites/maurybrown/2015/07/17/prime-time-tv-ratings-for-all-29-u-s-mlb-teams-shows-baseball-ruling-summer-programming/#5d9b1b5925a4

http://www.fangraphs.com/library/business/revenue-sharing/

http://www.investopedia.com/financial-edge/1012/the-economics-of-postseason-baseball.aspx

leowalter

Yawn……

SSGJD9595

The TV is up after this year, they built the stadium that only holds 38k. Which is by the way the best stadium in all of baseball! 120 is pennies, fans will show up and pick the park just like they did 2013-15. Maybe 140 is high, but I think everyone agrees 100 is low and ending a year w 77 is a joke. Now they dumped FL and some other big contracts, which was smart. But now how will they spend that saved money. I have said before there is difference between being competitive and competing for the division. Only spending 100 mil limits the team to at best being competitive.

Just bc you spend 200 mil doesn’t mean you will win the WS. But 100 mil prevents from really being the conversation. It would just be nice for an opening day when there was no trade rumors, we signed a medium FA and had the prospects coming up. Under Nutting and his crew I don’t see that ever happening.

He could sell the team for huge profit, and do so to a new owner that is willing to spend more money!

leowalter

Wow ! Brand new arguments ? Double yawn….

Zack Nagel

ESPN has the Pirates ranked 19 in total attendance for 2016. I cannot find good data but I do remember reading their average ticket price is near the bottom of the league. I don’t understand why it is hard to believe they are constrained. We’ve watched the team payroll skyrocket in recent years and I bet it ends higher in 17′ than it was in 16′.

jsdspud

My biggest problem with the management team is when they say they need attendance to increase so they can raise payroll. It is their job to invest in and then market the product so that people buy it. Imagine Chevy saying that they know this version of the Malibu is inferior to the Camry, but if you buy a Malibu today we will make the next model better. People have supported them when they have put a competitive team on the field.

The other issue that bothers me is the marketing of Jung Ho Kung to Korea. To date, I have only notice one Korean company advertising at PNC Park (Nexen Tire). It seems like they missed an opportunity after the 2015 season, as Kung’s current issues have to be impacting his marketability.

leowalter

Even if that was a correct quote, which as Tim has pointed out, it isn’t, you are comparing apples to oranges.

jsdspud

Leo, since I wasn’t in attendance at the news conference, I have to depend on what the local media is telling me. This is why I subscribe to this site where I get a reasoned explanation of things.

Would you like to clarify how I am comparing apples to oranges? They might be different types of businesses (entertainment vs. consumer goods) but at their core all businesses need to invest up front with the hope of product acceptance and thus profits.

David_Orlando

One of my biggest issues was that a couple years ago, after being asked why he was so cheap, Nutting said, basically, if you put more butts in seats, we will raise payroll. Then, Pirates became contenders, ticket sales went way up. In response, the payroll went up, but so did incoming baseball money and relative to everyone else, we are still in about the same position. Raising ticket sales have not increase placement in payroll. I get that teams like the Pirates NEED to invest huge amounts of money into their infrastructure in order to compete, but to say they are offended that we would ask them to spend more when we spend more is very insulting. I get that the staff outside ownership might be concerned with winning, but that doesn’t mean Nutting is. Thank you for the great article.

TonyV

2 seasons is not sufficient to increase long term spending. During an off season in 2016, attendance fell. That doesn’t happen elsewhere after 3 playoff years.

cskomsky

A better is way to look at it is estimated percentage of revenue. Now revenue numbers are not public, however an estimates have been done . The last year was 2014. The pirates were at an estimated 38%.which put them 28th in the league. The cubs were only 2 spots ahead in 2014. The cubs invested in players/payroll the last year and that percentage was a lot higher, the pirates did not. Which team went in the better direction. The point is when you build a good nucelous you need to add to take the next step add to payroll not maintain

ctalboo

>>>next step add to payroll not maintain<<<

You can not spend money you don't have and will never get.
This is not a government.

TonyV

You have to look at the ability to sustain that if you make long term deals and extend your youth.

andrew.oneill88

Great article Tim! I think another reason people blame the front office for cheap spending is that they look across the North Shore parking lot or across the Allegheny River and see the Steelers and Penguins signing guys for life who have won championships. Its hard to compare the Pirates to those scenarios considering 20 years of losing was only 4 years ago. I think because of the success the other two francises have had recently, it makes it hard for some people to accept that the third francise is a small market team. If you want to follow the Pirates, you have to get to know their farm system, because the young players are so vital for their success and it makes trade talks about franchise players a bit easier to take because you understand the plan should that player be traded. This site helps me to do just that!

Scott K

I’d argue the St. Louis Cardinals are the model MLB franchise. They are the most consistently successful franchise in recent times for me.

Is it because of the money they spend on payroll? Sure, to a certain degree. They are 13th on both lists in the article. But the primary reason isn’t cash or market size, it’s management proficiency. Quite simply, they draft and develop players better than other teams. That is truly their secret sauce.

brilemon

And the pirates are on their way to modeling the same proficiency.

Scott Kliesen

I would agree. The Angels are a perfect example of a mismanaged large market team who has tried and failed to buy a WS title. Now they find themselves in the situation of having neither an adequate ML roster or farm system.

They demonstrate why having good decision makers is more important than having financial flexibility.

emjayinTN

The success of the Cardinals is historical, and that is one of the reasons for their TV Rights deal that goes into effect in 2018. They were already getting $13 mil/yr more than the Pirates and that will jump to over a $30 mil difference in 2018. The Reds were getting $10 mil/yr more than the Pirates in 2016, and their new TV Deal will jump that difference up to between $15-$20 mil/yr in 2017. The Cubs have always had the Revenue and TV Market. And both the Cards and Reds have equity in the contract.

If I was BN, FC, and NH, I would be trying to find a broadcast partner willing to talk to the Pirates early, so that they can do a better job at projecting future revenue. The Cards got their deal done in 2015, which was 2.5 years before the present TV Contract would expire.

Scott Kliesen

There’s no doubt the importance of the upcoming local TV deal can’t be overstated. I expect FC to earn his pay check when this deal is done.

To compare the Cardinals and Cubs is an interesting study. Chicago has always had the financial upper hand, but it isn’t until they finally hired the right management team that they were able to compete with Cardinals. Yet there are many who will claim it was Cubs ability to outspend the Cardinals for the reason. It’s really quite comical.

emjayinTN

The Cubs Management Team has been outstanding in every aspect of the game – amateur draft, trades, free agent signings, International draft, development, and LUCK.

They had early 1st Round draft picks in about 5 straight years. I look up at my autographed Kris Bryant Official Minor League Baseball from when he played AA for the Tennessee Smokies. The Cubs got him only because the Astro’s selected Mark Appel with the first pick in 2013. The Pirates got Meadows as comp for being unable to sign Appel in 2012. Let’s hope transactions involving Appel can be directly related to two All-Star Players.

Scott K

We’ll see how smart they look in breaking the bank for Heyward. I have a sinking suspicion his bat speed isn’t going to increase with age.

leefoo

and that Appel continues to be a dud? 🙂

thecrow124

And Lucas Goilito was available when we drafted Appel. I was pissed when the Pirates passed on Giolito, then again a bunch of other teams passed on him as well. I never held any ill will towards Appel, he had said all along that he was returning to college, there was no need for the Pirates to draft him.

leowalter

Giolito had TJ surgery before he was out of high school. The majority of orginizations know that there is a 6 0r 7 year window for a pitcher till TJ problems return.

thecrow124

No, he had TJ surgery after he was drafted by the Nationals. He was the best prospect in that draft, even with the concern over the injury he had. It was a bad decision not to draft him.

EWS34

I’m surprised the Pirates are not more vocal about the economic unfairness. No small market owners are. When the Penguins were in a similar position Mario was out in front saying they needed a salary cap and a new arena to compete. I wonder what the difference is between the NHL then and baseball now.

Scott K

The Giants could never dominate like the Yankees! Here’s a couple reasons why: First, the NFL unlike MLB does not have a local TV deal. Second, because there are only 10 home games/season (includes pre-season), and stadiums are similar in size, they don’t benefit from ticket sales like Yankees.

Scott K

The NFL didn’t implement a salary cap with UFA until the 90’s. MLB FA came about in the 70’s.

thecrow124

And now the NFL is horrible. They were striving for parity, but they achieved mediocrity.

Gallatin

It’s a leadership issue. Commissioner Bettman spent many years rallying hockey owners around the concept that a hard cap was best for everyone.

Meanwhile, MLB had 20 years of Bud Selig. There’s your answer.

EWS34

This is anti-NHL saying that Bettman did something right. 🙂

joebaseball

Looking at your table, it is clear that the dividing line for teams that continually compete is $120MM. Pirates spend that much and compete into the post season and the revenue will increase with it.

jsdspud

Tim, I have an issue with your second paragraph. Every business literally, has to spend money before revenues come in. That is why some businesses go bankrupt. I worked for a start up at one point in my career. We had to sign a lease, purchase equipment, and hire employees before we sold anything. I was hired in April and we didn’t sell anything until May, an entire $600. The company is still in business and profitable now. Drug companies spend years researching new formulas and only a fraction ever see the market.

Chris M

But they did win and go to World Series two years in a row!!

John W

Cleveland spent more than 9M more in 2016 than the Pirates did in either 2015 or 2016. That is a meaningful distinction.

I’m using Spotrac which has them a hair under 115M vs the Pirates at 105M both years. You made a comment about Spotrac in the past and how it incorporates minor league salaries. I don’t care, this washes out between teams and if anything makes the Pirates look better as far as payroll commitment as they generally seem to be spending slightly more on minor league commitments than other teams(around 6M)

piraddict

Cleveland is also a significantly larger market than Pittsburgh.

Chris M

That is incorrect mil pit cle cin kc are very similar

piraddict

I checked the MSA’s and the way they define Cleveland you are correct. But I think they undercount fans out of Columbus and Toledo. But your general point that the cities you listed are more similar than different is correct.

John W

Huh? “Knowingly using incorrect data?” Please explain. And please don’t just brush aside the comment about added figures before offering an explanation.

For example- the 105M includes about 6M in draft spending the PIrates spent on Will Craig etc. If you back that out you get to under 99M. Other teams had slightly less than 6M in draft spending. How is that penalizing Pirates in terms of a comparison?

escilade18

How about revenue sharing? I have heard some argue that with revenue sharing the Pirates should be able to spend what the Dodgers and Yankees spend.

emjayinTN

I think at it’s very best year’s, Revenue Sharing was worth between $25 and $30 mil to the Pirates. That was when they invested heavily into improving the infrastructure of the Franchise. Some physical examples were the Academy in the DR, Pirate City and McKechnie Field Upgrades. The non-physical are harder to see, but it took plenty to install the minor league system of development currently in use, and upgrading the scouting aspect of the game. They also extended ‘Cutch and Marte while dipping into the bargain basement of Free Agency by signing guys like Russell Martin, AJ Burnett, Liriano, etc. And aggressively spending in the Amateur Draft every year.

As the Pirates have become more successful, I think the amount of RS has diminished. They do get more now from the league in the general MLB TV Rights from 3 users, and there is mention of even sharing the benefits from individual clubs. Like to see how that will work.

Hank

Everyone knows that there is revenue inequality that is killing the game. That is problem 1 for the Pirates. Problem 2 for the Pirates is that ownership has set a maximum payroll budget to target an approximate $20m profit. That is a problem which might have kept us out of the playoffs last year if it led to the decision not to sign Happ, then snowballed to hurt our future with the giveaway of prospects to dump Liriano. Major league owners should not need yearly profits with the money they are making in franchise appreciation. Plus look at the list….a $100 m salary max is not going to make a team a long term winner.

Brian Z

Crickets…..not going to say your source of the $20MM profit statement?

Anthony M

You have just explained how asset bubbles are created; investments with no annual cash flow and speculatively relying on 100% of profits at reversion (i.e. see recent real estate market crash). How does franchise value appreciate if the franchise consistently breaks even or loses money? That doesn’t sound like a very attractive investment. All risk and no reward. This is Econ 101. The fact that you know what major league owners need from their investments is comical.

Hank

I have seen multiple sources over the last year project the Pirates revenue and bottom line profit, and I think one of them was discussed here. I don’t remember the specific sources, as my job is not to track those things, but the assumptions looked solid. If someone wants to do the research, we can pull out all the reliable sources who attempt to track franchise profitable.

Scott K

Pirates Prospects Comments section?

piraterican21

Better yet, if that is true, so what, it is a business. Players, actors, singers and many CEO of companies make that a year and then some. When did it become wrong for a business to make money? Isn’t that the point.

Scott K

Some people have a hard time getting their mind around the fact the Pirates aren’t just a MLB team, but an actual business.

ctalboo

I also am grateful that you refuse to sanction the payroll (Nutting is cheap) debate. However, I would like to see MLB do more to address the huge differences in the ability for teams to acquire and retain talent. I cannot see how such enormous payroll inequity is good for the game, but alas short of the forbidden salary cap (and floor) I don’t ever see a solution. The NFL doesn’t have much of a small market issue, I wonder why?

mouse

The NFL shares TV money, MLB generally does not, and the big markets teams are not likely to start doing so (or voting to do so) anytime soon.

David N

The budgets are relatively small because the market is relatively small, as Tim has explained. These are facts of life. This is not Lake Woebegone where all the markets are above average. I’m not so sure I agree entirely with Tim’s point that this is the system MLB has created. IMO, television revenues, which historically have been tied to size of market, have largely (again imo) shaped the economic landscape in which baseball operates. Whether, and to what extent, MLB helped determine the current state of affairs or merely went along with the broadcasters for the ride may be a separate topic.

I strongly agree with your main point, ctalboo. MLB should do more to address the huge differences in the ability of teams to acquire and retain talent. Other than a salary cap and floor — which I do not favor — perhaps a system like that where Japanese teams (and maybe some others) that hold the rights to players receive direct payments when those players become free agents, as opposed to the current system in which all financial benefits flow to the player, would help level the field. Why the smaller market teams aren’t fighting more vigorously to resolve payroll inequities is again, another topic.

Mike

That is honestly the best metaphor for the situation I’ve ever heard.

Bill Harvey

What exactly is the free agent problem? I ask because I honestly don’t know.

Scott K

I certainly agree with you on first part of this post. However, it is an overstatement to say if a high priced player fails, they can just go and purchase a suitable replacement.

A good example will be Rich Hill. If he gets hurt, the Dodgers pitching will suffer because they have shown an unwillingness to trade their better prospects to upgrade the team in season. The smart large market teams realize they need cheap young talent, too.

juniorkrz

Tim, perfectly said. That’s the chief problem with MLB. Small market teams cannot afford to keep their good teams together for extended periods of time and also cannot compete for FA’s if they so desire. I think it is 2018’s offseason when Harper, Machado et.al are free agents. Even the casual fans knows half the league cannot even consider signing them. IMO, that’s not the way sports were designed to simply throw money at a problem. It is all about being a better judge of talent, being more athletic, better coach, etc., not writing a check to offset your shortcomings in that sport.

Bill Harvey

That’s not really a free agency problem as much as it is someone deciding that the rules don’t apply to them. If the Dodgers have accepted the punishment ( IE. Luxury tax, diminished production), before the even broke the rules…….well, there is no fix for that.

jaybell

Bravo Tim. Thanks for contributing facts to this issue. I’m sure there are other ways to skin this cat, but I would have to believe other / similar methodologieswould produce comparable results.

emjayinTN

I guess that is the entire issue in a nutshell – it is what it is, and MLB is enjoying a run of heightened popularity. Therefore, no reason to make adjustments. Small Market Teams like Pittsburgh, Cleveland, Kansas City and others are still very relevant.

Saw an article in Forbes addressing MLB Prime Time Television Ratings for 2016. “The data culled from Nielson . . . . . from Apr 3-Sep 25 shows that nine clubs had the No. 1 ranking across all TV networks in prime time (Royals, Tigers, Orioles, Pirates, Indians, Red Sox, Mariners, and Giants).

The Royals, Pirates, and Indians are all small market, but winning, and having a recognizable product are key factors for all of these nine teams.

rich

Thank you for being a voice of reason in this ongoing irrational and emotional debate!

meatygettingsaucy

I plan to be both irrational and emotional to counter this level headed presentation of facts

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