Monday, January 13, 2014

Where is the money going?

In 2012 the Brewers pushed their opening day payroll over the $100 million mark for the first time ever.  By the end of the season, after trades, they ended up committing a total of approximately $98 million.  It has been claimed that they lost several million dollars that season.  Whether that means they actually operated in the red or just didn’t make as much money as expected is up for debate.  Regardless, the Brewers scaled back the payroll in 2013 to a little under $89 million in order to make up for some of the losses.  I happen to think it was a prudent move.  I agreed with it despite the fact that they were to receive an additional $9 million (approximately) from their unfortunately awful local TV contract.  We shouldn’t expect them to use all that money for roster construction, but theoretically some could go towards it.  From all this, one can infer several things:

1. Prior to the increased local TV revenue, $98 million was several million over what the Brewers could spend and just break even.

2. Prior to the increased local TV revenue the Brewers could break even by operating somewhere around $92-94 million (several million below the $98 million spent in 2012). 

3. After increased local TV revenue is factored in the Brewers could break-even by operating somewhere over $92-94 million (or in other words, some millions more than several million below the $98 million spent in 2012).

I’ll also note that each club will begin receiving an additional $26 million dollars in 2014 from National TV contracts.  I’ll have more to say on this later.

Judging by the moves the Brewers have not made (e.g. not trading players to enter a rebuild phase) one has to assume the plan is to compete in 2014.  It’s possible that they could explore selling players at the trade deadline.  That is, however, less of a plan than a lack thereof.  For the sake of argument, I’m going to assume the plan is to compete.  The question then becomes what areas are in need of improvement?  One could argue that the rotation is weak and the bullpen needs bolstering.  I would say, even though they may not be exceptional pitchers, the 5 rotation spots can be filled in house and the bullpen is less important.   It is my assertion that the only glaring need is first base. 

Let’s go back to the money side of things for a moment.  Above I have inferred that $92-94 million was approximately the point at which the Brewers could operate without losing money.  This is before factoring increased revenue ($35 million) from local and national TV contracts.  It’s impractical to ask the Brewers to commit that full sum to the payroll, but I think it’s fair to say that they could commit as much as $10 million of it if not more (The rest of the TV money would go to things like the first year player draft, international signings, and improving facilities and various programs throughout the franchise).  Let's hedge our bets and say that before factoring the national TV revenue, the Brewers payroll limit was $92 million.  After factoring the new national TV money the Brewers current payroll limit is, very conservatively, $102 million dollars.  I have previously estimated the Brewers payroll to be $80.2 million with two open roster spots for a first baseman and a reliever.  That means the Brewers could theoretically spend as much as almost $22 million for those last two spots.

I’m not saying the Brewers should spend all that money for the sake of spending it.  I’m not saying they should be spending $100 million annually.  I’m certainly not saying they can compete with other clubs for elite free agents nor do I think they should try.  I understand the desire to stay away from long term deals and I agree with that in general.  I understand why they didn’t want to give James Loney something like 3 years and $27 million.  That is all the quarter I'll give them, though, because I don’t understand why they were unwilling to offer Corey Hart the deal Seattle did.  And I am absolutely saying I reject the notion that they could not afford it.  Anyone that tells you that is either lying or misinformed.  They have more than enough money.  In point of fact they have over $8 million more than enough.  I understand the risk associated with his knees but that risk is mitigated by limiting the deal to one year and making it incentive based.  Hart was a better option than anything now left to the Brewers.  He was a step closer towards legitimate contention, and also offered the ability to trade him mid-season, but that’s another conversation.  The point is they have money to spend but were unwilling to spend it on the one thing they need most in a year in which they claim their goal is to contend.  By doing they so arguably left themselves worse off.

I have many questions for the Brewers.  But for right now, the one foremost on my mind is this: If they are unwilling to spend the money they have on the one area they need most, where exactly is that money going?


  1. I think your estimate is a bit off... their payroll currently sits at approximately $87M. That doesn't leave alot left to add someone for 1B that is going to significantly improve the team and get them into playoff contention. My guess is that they would've already traded some guys if they had gotten any decent offers. Players like Ramirez, Weeks and Gallardo aren't going to get much in return and the Brewers would likely have to eat a good portion of their contracts. Might as well see how they perform in the first half of the season to increase their trade value.

  2. My estimate is not off. Where are you getting your information? I'm going to guess it's not including the money being deferred from Ramirez's contract. Six million of that is to be paid at a later time.

    1. Good point. I forgot about that. In any case, $8-10M isn't going to get them the pieces they need to make this team a legitimate contender.

      Also, even if the Brewers offered to match the deal Hart accepted, I think the Mariners would've upped their offer. Considering what Jack Z has spent this offseason, it's obvious that they aren't going to be outbid... particularly by the Brewers.

    2. I'm sorry but you're only making guesses about how far the Mariners would go. For all we know they could have laid all their cards on the table with that offer, but it doesn't matter. The point is the Brewers have plenty of money to spend but they're crying "small market" and it's only true to a point. They offered Hart half of what the Mariners did and it wasn't even guaranteed money. It was half what they offered IF he hit all incentives. They didn't even try.

      And to your point about 8-10 million not making them a contender, if you've read my other articles you'd know that's been my contention all along. I also said they have as much as $22 million to spend, but again that's not important. The point is they haven't done anything to start a rebuild so their intention, regardless how viable we think it may be, is to contend yet they have done nothing to bring them closer to their purported goal.

      The thing about Hart is he would have been a prudent move regardless because he could be traded for prospects or even just a major league player with some years of control. Things aren't as black and white as people want to believe. A team can sign free agents when they aren't a contender if they're smart about it because they can trade them for talent to help them when they are contending. It's what the Cubs are doing.

    3. Yes, I am making a guess about how far the Mariners would go, but considering how aggressive they've been this off-season, I think it's a fairly good one.

    4. I understand your point that you feel that the Brewers have more money to spend (up to $22M) and could've offered a better contract to Hart. Beyond that, who else do you think the Brewers should spend that money on?

      The Brewers are always going to publicly say that their goal is to be a contending team... even if they think otherwise.

    5. I actually don't think they should spend a lot of money on anyone that's left. I'm not advocating spending money just to spend it.

      I would look to sign a reliever like Ryan Madson (or Jesse Crain when he was still available). Madson has shown an ability to pitch in high leverage situations and will be cheap because he hasn't pitched in a couple of years. My goal would be to flip him mid-season like the Brewers did with K-Rod last year. I would also be open to signing Johan Santana to a minor league deal w/invite to spring training. He might never be good again, but there's no risk in that type of contract. If he can be good, even just for a month or two, the upside is huge.

      It's not just what they say publicly, but the things they've done that suggest their goal is contending. They traded Aoki for a reliever. Maybe they couldn't have done better, we'll never know, but if they were rebuilding one would think they'd try for a prospect. They're holding on to all their other players with trade value, few though they may be. If they were rebuilding they'd be open to trading one or more of Lohse, Gallardo, Gomez. They can still trade them later, but like I said in the article, that's not a plan. It's the absence of.