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The Brewers are slashing payroll

Dec 11, 2012, 10:30 AM EDT

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Tom Haudricourt has a good story up about the state of the Brewers. Specifically, the financial state. A state informed by the worst TV contract in baseball at a time when a great number of teams are raking in the local broadcast dollars. The upshot: a team that draws nearly three million people a year is still a financial have-not and has to slash payroll:

… Brewers owner Mark Attanasio stretched his payroll to a franchise-record $100 million in 2012. He lost that gamble when the team sputtered at midseason and dropped from the playoff race. Despite a late push by the Brewers, attendance dropped from 3.07 million to 2.83 million, and the Brewers finished well in the red for the year. Those financial losses prompted Attanasio to lower his budget significantly for 2013. Melvin said he expected the team’s payroll to be about $80 million or slightly above, depending on what personnel opportunities arise.

It’s tough out there for a small market team. And getting comparatively tougher.

  1. ame123 - Dec 11, 2012 at 10:43 AM

    Brewers are getting a raise on their TV deal for 2013 but they are signed through 2019. They have far from the worst TV deal however. That honor goes to your Atlanta Braves, who have a horrendous TV deal that they can’t get out of until 2031.

    • Francisco (FC) - Dec 11, 2012 at 11:16 AM

      Even if they could, a bigger obstacle is Liberty Media. That ownership barely allows the Braves to increase the payroll. I’m not entirely sure that even a generous TV deal would have that much of an effect.

  2. padraighansen - Dec 11, 2012 at 10:50 AM

    This is a good example of the problem that exists, and why teams like the Marlins, and Pirates (for many years, anyway) didn’t “go for it” – because ultimately, for the small market teams, you end up in the red. Kudos to the Brewers for not just sitting back and lower costs to increase profitability, but now obviously they have to lean on their younger, cost-controlled talent and hope they continue their positive end to 2012. This is a talented team, but one that will be exposed for it’s lack of depth, and lack of resources to fill those holes when injuries occur. Very good team, very good manager, solid GM, and great owner. But for them to get in, everything has to fall their way – and there’s a lot of teams in similar situations.

  3. mdpickles - Dec 11, 2012 at 11:01 AM

    Well, it was a good run for the Brew Crew. Time to trade Ryan Braun to the Phillies.

  4. brewcrewfan54 - Dec 11, 2012 at 11:05 AM

    Frustrating to watch the winter meeting comes and go knowing your team isn’t going to much of a player for anyone. I’m scared to see how this teams rotation, bullpen and bench fill out. Still a lot of talented position players on this team but if anyone gets hurt it could be over before it barely gets started.

  5. badger80 - Dec 11, 2012 at 11:09 AM

    The Brewers have hurt themselves by trading away the young talent they have recently produced. Melvin/Attanasio cashed in on Brett Lawrie,Jake Odorizzi, Alcides Escobar, etc. to acquire Grienke and Marcum for a two season window. They got one playoff appearance out of it, but damaged their ability to build stronger roster. The lack of Lawrie pushed them to sign Aramis Ramirez to fill their hole at third, so not only did it drain cheap young talent from the system, but they also had to pony up in an effort to squeeze out another urn while they had Greinke on the roster. It’s foolish if they think they can compete by putting teams together like that going forward.

    • brewcrewfan54 - Dec 11, 2012 at 11:13 AM

      They went all in for a World Series and came pretty damn close. That’s the name of the game sometimes. I’ll take that NLcS over waiting for guys who may or may not pan out.

      • xmatt0926x - Dec 11, 2012 at 3:12 PM

        Your on the money brewcrewfan54. You do have to go for it once in a while and the Brewers did. People act like there’s a perfect way of doing things. You can do the prospect hoarding as well. Just ask the Pirates and Royals how that works year in and year out. The answer has to be somewhere in the middle and I think most teams are gravitating towards that where they keep most of their prospects but are still willing to trade some to get that extra piece or two to try and get over the top. It’s not always going to work but I’ll take several years of real competitive baseball and some hope over the 15 or 20 teams who will never really have a shot. I’m not a Brewers fan but I’d be fine with my ownership group taking that chance and going all in here and there.

      • brewcrewfan54 - Dec 11, 2012 at 3:55 PM

        Agree xmatt 100%. Don’t think I could type it up any better than you did.

    • paperlions - Dec 11, 2012 at 12:27 PM

      I’m a huge prospect fanboy….but it isn’t like having Lawrie, Odorizzi, or Escobar the last few years would have been a help…none have done anything more than be a solid regular thus far. Plus, when they traded Greinke, they got Segura (who should be better than Escobar), Hellweg (who is a good prospect that just needs to cut down on his walks), and Pena…so the Greinke transactions were a net positive when you add in the production from having him.

  6. canuck54143 - Dec 11, 2012 at 11:11 AM

    This is why baseball is no longer Americas favorite past-time. Baseball is about money, and fans hate when their favorite teams can’t win .

    • ezthinking - Dec 11, 2012 at 12:42 PM

      “Baseball is about money”

      I suppose the NHL, NBA, and the NFL are all non-profits only looking out for the fan interests.

      • historiophiliac - Dec 11, 2012 at 2:27 PM

        He means unlike back in his day when Ty Cobb played for altruistic reasons.

  7. albertmn - Dec 11, 2012 at 11:18 AM

    MLB needs to look into this. I don’t believe that local TV and radio rights are shared, although I could be wrong. When some teams are raking in $100-200 million or more per season in local rights, while others are at $15-30 million, it creates a very unlevel playing ground. I don’t believe all of the money should be shared, but a portion (even 30-50%) should go into a pool that was then shared back to all teams equally. And, stipulate that the extra money MUST be spent on payroll, not just go in the owners’ pockets. That would still leave the Yankees, Dodgers, Angels, etc. making considerably more money, but would allow more teams to compete. When some teams make double or triple other teams’ payrolls in just their local TV, this isn’t a system that can hold up long term.

    Unfortunately, until every WS is won by the Yankees, Dodgers, Angels, etc. for 5-10 consecutive seasons, those owners can still claim that the little teams can compete and nothing needs to change. Because a “small market” team can throw together a few career years and turn it into a playoff run for 1-2 seasons, they claim there is enough parity. Meanwhile, the Pirates haven’t finished even .500 for what, 20 seasons?

    • paperlions - Dec 11, 2012 at 12:37 PM

      What you are describing is exactly what happens (http://www.fangraphs.com/blogs/index.php/marlins-mlb-revenue-sharing-syste/):

      The revenue sharing plan has two building blocks: the base plan and the supplemental plan. Let’s start with the base plan. All 30 clubs contribute 34% of their Net Local Revenue to the base plan pool. The base plan pool is then distributed equally to the 30 clubs. Some teams, like the Yankees and Red Sox, contribute significantly more to the base plan pool than they receive, and are known as Revenue Sharing Payor Clubs. Others, like the Rays and the Pirates, receive more than they contribute, and are known as Revenue Sharing Payee Clubs.

      The supplemental plan is trickier. The goal of the supplemental plan is to raise the overall percentage of revenue shared by the Payor Clubs from 34% (in the base plan) to 48%. But each Payor Club contributes a different amount to the supplemental plan, based on something called a Performance Factor. Here’s how it works.

      The Net Local Revenue of each club is added together and then multiplied by .48 (for 48%). The result is the “Net Transfer Value” for the revenue-sharing year. We know the Net Transfer Value of the base plan is 34% of total Net Local Revenue. That means the Net Transfer Value of the supplemental plan is 14% of total Net Local Revenue. The question is how to generate the 14%. That’s where the Performance Factors come in. (and on and on)

      • ezthinking - Dec 11, 2012 at 12:44 PM

        Well said. It’s always good to actually take the time to be informed.

      • jwbiii - Dec 11, 2012 at 1:54 PM

        Wendy Thurm at Fan Graphs has been writing quite a lot about this issue lately. Here’s a post which which lists most teams’ TV contracts

        http://www.fangraphs.com/blogs/index.php/dodgers-send-shock-waves-through-local-tv-landscape/

        The Brewers, A’s, and Braves are getting the shortest ends of the stick. The Braves may be in the worst shape because their contract is the longest.

        Here’s another one which discusses the vagaries of TV revenue, net local revenue, team ownership of cable companies, and a peculiarity in the Dodgers mega-deal

        http://www.fangraphs.com/blogs/index.php/revenue-sharing-flexibility-stretches-with-new-tv-deals/

      • stex52 - Dec 11, 2012 at 2:40 PM

        I find this information very confusing in the context of the huge new Dodgers expenditures. If their local revenue is subject to a tax of up to 48% (a lot, even if the bankruptcy ruling limits their liabillity) and the luxury tax kicks in at 178 MM$, then they might be knocking up to 140 MM$ off of their actual projected earnings, with only a fraction of that coming back in sharing with the league. So how come the big spending spree?

  8. muskyhunter2542 - Dec 11, 2012 at 12:30 PM

    Exactly why a salary cap is needed in MLB. The NFL elevated its status as the biggest of the pro sport leagues because every team has a chance going into the season.

    • paperlions - Dec 11, 2012 at 12:38 PM

      The NFL’s success has NOTHING to do with a salary cap and EVERYTHING to do with revenue sharing and the fact that ALL of their TV contracts are league-wide contracts (not local ones).

      • muskyhunter2542 - Dec 11, 2012 at 2:40 PM

        For years, the New York Yankees have demonstrated their greatness, and the same can be said for Philman’s Bologna.” Although that last quote is just a hilarious impersonation of a New York Yankees radio advertisement by Matt Borkowski, it demonstrates a good point.
        With the economy at a low, it is harder than ever for MLB franchises to sign big-name players that could provide the spark they need to reach the playoffs. Teams like the Yankees don’t make it very easy for financially troubled teams to improve their station at all. The humorous part of this Borkowski joke is that teams like the Kansas City Royals look like Philman’s Bologna when compared the Yankees.
        The Yankees—the wealthiest team in baseball—were able to throw out hundreds of millions of dollars to multiple top-notch free agents this year, and still have the money to negotiate further. To teams like the San Francisco Giants, a player like Mark Teixeira—who was signed to a $180 million dollar deal with the Yankees this off-season—is prohibitively expensive. Many teams can’t even afford these players.
        So how does this situation get fixed? Some people are suggesting a salary cap: a limit on how much any one team can spend. I believe there already is a sufficient solution to this problem.
        The luxury tax in baseball has been providing teams like the Tampa Bay Rays (before their 2008 postseason run) money to improve their franchise. The Rays are a great example of how teams can succeed without the aid of a salary cap. The Rays had been the laughing stock of the league for years, but over those years, they received money from high-salary teams like the Yankees, Mets, and Red Sox via the luxury tax.
        For years, the Rays finished last in the AL East and drafted cream-of-the-crop prospects with their high draft choices, prospects such as Carl Crawford, Evan Longoria, B.J. Upton, Josh Hamilton, and David Price, among others.
        Some found it strange that the Rays weren’t using their luxury tax money to acquire big-name free agents. But instead, the Rays were quietly spending time developing these young prospects. Tampa Bay threw some of its luxury tax money to low-cost veterans like Eric Hinske, and in 2008, the Rays had themselves some talented young players on the roster under the wing of some veterans. All of these kids started performing in the field and at the dish, and eventually the Tampa Bay Rays ended up in the World Series.
        Because of the World Series run, the Rays increased their attendance, and ultimately increased their revenue. The revenue increase led to the signing of a big bat this year in Pat Burrell, and who knows what will come next? Maybe the Rays will develop into a team with a lot of money.
        The Rays demonstrated a franchise-managing model that is not dependent on signing big name players. However, this model does have some cons. Your team has to pretty much stink for at least five years to allow the development a good young team, because you will never have the money to sign a big name.
        Lacking big names could cause a drop in attendance, since the team will not be dominating on a daily basis, and there would be an ever-growing chance of franchise relocation. Applying a salary cap to baseball would prevent all of the best free agents going to a select few teams, and would give some lower-end teams the chance to acquire a big name like C.C. Sabathia. But, as a Yankee fan, I sadly know that money alone can’t buy victories.
        Even if a salary cap would benefit the MLB, the MLB likely still wouldn’t implement it. America’s National Pastime hasn’t made many significant alterations in how the game is played in nearly a century (save for the Designated Hitter). Major League Baseball is all about tradition. In fact, the installation of instant replay came as a huge surprise. My personal opinion is that franchises should put in the diligence and hard work to sculpt a team from dirt.

  9. ireportyoudecide - Dec 11, 2012 at 12:33 PM

    I agree you can’t play yourself, so all TV money should be split 50/50. Even with a 50/50 split the Dodgers would get 120 million plus the avg from the 30 teams combined and the national deals. There would still be big market and small market teams but the gap would shrink. At that point you could probably eliminate the luxury cap as well.

    • jwbiii - Dec 11, 2012 at 3:26 PM

      It does work kind of like that. Read the link in paperlions comment.

  10. Stiller43 - Dec 11, 2012 at 12:56 PM

    Ezrhinking,

    Actually, the NFL is non-profit.

    But i get your point. I do think baseball would be better if they were league wide tv deals with the rev being split up among all teams. Its ridiculous that the dodgers can blow ~250 mil and break even just on their tv deal while teams like the brewers (and my pirates) finally up their spending and end up in the red.

  11. tashkalucy - Dec 11, 2012 at 3:26 PM

    Bottom Line –

    Cable TV revenue is the the largest component in what makes MLB the most unequal playing field of all the major professional sports. What’s worse, the way revenues are being distributed is so cockamamie that it rivals the way NBA trades are made – which makes no sense to the average fan at all.

    But it also relates to the unequal pub that ESPN and the rest of the national media gives to MLB teams. The Yankees or Red Sox get more time on a rumor then most teams get for executing. And the deluge of Red Sox-Yankee games on ESPN every year is simply a joke (which The Onion cover quite well).

    In the NFL a Super Bowl between the Steelers (small market Pittsburgh) and Packers (small market Green Bay-Milwaukee) is marketed as a traditional battle between 2 major NFL powers. In MLB a World Series between the Giants (SF) and Tigers (Detroit) couldn’t even draw, in spite of the fact that both of those teams are from good sized markets.

    I’m an MLB lover because I’m an old guy and baseball was my favorite sport to play growing up. But it says volumes when the deeper the NFL playoffs go, the higher the national TV ratings. Yet the deeper the MLB playoffs go, the lower the ratings. Simple – MLB is like the NBA – once your team is out of it….most don’t care. It is why the NBA and MLB are no longer national sports.

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