An overly-simple measure of quantity (rather than quality) of a baseball organization’s financial commitment is the oft-quoted total salary of the players that make up their major league roster.
There are many variations to these numbers, depending on whether one is looking at the total salaries of the players regardless of which club is actually paying for them (hello, Jim Edmonds!), the timing of the view (start or end of season), how compensation elements such as salary deferrals and incentives are accounted for and more.
A changing 2009 picture
Yet, using any measure, current course and speed, the 2009 St. Louis Cardinals are currently on a trajectory to open the season with a lower total salary commitment than they expected last fall.
In October, general manager John Mozeliak told me to expect a 2009 payroll “north of $100 million”. As has been reported time and time again, things have changed.
Now, in a report I first referenced here the other day, Yahoo Sports is forecasting a $91 million total for the ’09 Cards, considerably below the $99.6 million they quote for 2008 (a season-opening count as well).
Who’s spending more and who’s spending less?
I am not here to nitpick the numbers, but I do want to look into them, as there is a lot more than first meets the eye. Fortunately, a regular on the Scout.com message board, “Oquendo11”, already did much of the initial research.
Using the Yahoo series of articles as a consistent guide, with 22 teams having been covered so far, Oquendo noted that the number of clubs apparently increasing payroll in 2009 is equivalent to the ones cutting back.
I extended that several steps further to add their ranking from 2008. This can help us better understand which clubs are moving in which direction. In other words, are the big spenders planning to spend more while the small spenders are spending less?
| 2009 vs. 2008 | 2008 rank | Avg rank | Avg 2008 $ |
| Increase (9) | |||
| Chicago Cubs | 8 | ||
| Philadelphia | 12 | ||
| Houston | 14 | ||
| Cincinnati | 18 | ||
| Baltimore | 22 | ||
| Kansas City | 24 | ||
| Oakland | 28 | ||
| Tampa Bay | 29 | ||
| Florida | 30 | ||
| Avg ’08 rank/$ | 21 | $67.7 M | |
| Decrease (9) | |||
| New York Mets | 2 | ||
| Detroit | 3 | ||
| Boston | 4 | ||
| LA Angels | 6 | ||
| Seattle | 9 | ||
| Atlanta | 10 | ||
| St. Louis | 11 | ||
| Toronto | 13 | ||
| Pittsburgh | 27 | ||
| Avg ’08 rank/$ | 9 | $117.7 M | |
| Flat (4) | |||
| Texas | 21 | ||
| Washington | 26 | ||
| NY Yankees | 1 | ||
| Milwaukee | 15 | ||
| Not included (8) | |||
| Chi White Sox | 5 | ||
| LA Dodgers | 7 | ||
| Cleveland | 16 | ||
| San Francisco | 17 | ||
| San Diego | 19 | ||
| Colorado | 20 | ||
| Arizona | 23 | ||
| Minnesota | 25 |
Meet you in the middle
Nope, it is just the opposite. The two extremes are coming in toward the middle. The clubs that were spending the most in 2008 are the ones cutting back in 2009 while the lower-spending clubs are generally planning increases.
The average rankings illustrate this even better. The cutting teams averaged ninth in payroll last season or just into the top third, while the increasers averaged 21st in spending across MLB last year, just into the bottom third.
Taking the rankings even closer to reality, last season’s ninth-highest spending team dropped $117.7 million on players, while the 21st-ranked club spent a whopping $40 million less. Even with an increase on 2009, the 21st ranked club would have a long way to travel to come anywhere near reaching parity.
To make sure I am clear, what this shows is that in terms of their 2009 payroll planning, the Cardinals are behaving very much like the other clubs in their financial ballpark.
Consider how the money is being spent
I want to reinforce one point that has been made over and over again. There is no sure correlation between spending more money and winning more championships. The top payroll in baseball year after year comes from the New York Yankees, a club that missed the playoffs last season and hasn’t won a World Series since 2000.
If one remains unconvinced, just look at the 2008 Seattle Mariners. They became MLB’s first-ever $100 million payroll club ($117.7 million at #9) to lose 100 games (101, to be exact – second-worst in baseball). It’s clearly not how much you spend as much as it is how you spend it.
If disgruntled Cardinals fans want to engage on that point – how the player payroll money is spent – then I can understand completely.
Another reality that is difficult to measure is the impact of a stronger farm system. Common sense tells us that a rookie will always have a lower salary than a veteran. What is far less clear is what percentage of the money saved by replacing an older, more expensive player with a younger, less costly one should be plowed back into upgrading another position at the major league level. Also, should that be a linear relationship, i.e. does it change based on the number of youngsters vs. veterans?
Some fans would say “100% of money saved should always be spent on other major leaguers, of course!” Yet the owners are in business to make money. Why should they not be entitled to reap some of the benefits from efficiencies gained via their smart investments in player scouting and development?
What if a club decides to spend more in the international market or on draft bonuses? Do fans think that is new money or realistically, does it have to be reallocated from somewhere else?
I don’t pretend to know the proper mix or how to measure it, but I am pretty sure that the folks on the far ends of either side of this equation – the “alls” as well as the “nothings” are too extreme for reality.
E:R can neither be fully understood nor ignored
Expanding this one step further, let’s consider the revenue side of the equation. We do not know the actual revenue the Cardinals generate each year, though respected industry watchers like Forbes do their best to make educated estimates.
The Cardinals are clearly signaling they expect down revenue in 2009. Given all that is going on around us in this world, it is not a surprising conclusion to draw.
Still a doubter?
I just read this headline on CNN: “More than 10,000 job cuts announced Tuesday”. The day before they screamed: “Bloody Monday: Over 71,400 jobs lost” on the heels of 40,000 cuts the week prior.
If you don’t think there are scores of Cardinals fans working for these affected companies – Midwest employers like Caterpillar, John Deere, The Home Depot and Target – then you are hopelessly out of touch.
Let’s face it. For most of our country, baseball is a luxury, not a necessity. It is entertainment, not sustenance. When times get tough, we trim the fat before hitting the bone.
Here is a question I challenge everyone to consider.
In any endeavor, including running a baseball team, isn’t it wise to try to keep revenue and expense in balance?
Where can they cut?
One can certainly debate how a club goes about achieving savings. The Arizona Diamondbacks, for example, ranked 23rd in player payroll last season, recently laid off 31 front office personnel, or 9% of their staff.
Is that better for the organization than cutting player expenditures? How could we ever answer that from our perspective? Instead we have to assume ownership carefully weighed their alternatives and did what they thought was best for the organization overall.
One can also debate when cutting expense finally hits the bone – leading to a further decline in revenue and sending the organization into a financial death spiral.
Yet I cannot see how a reasonable, rational person cannot appreciate the most basic financial relationship presented above – if take in less, then I should spend less. The only reason to deviate is if I can determine a valid way to make more by spending more.
Whether we consider it this way or not, the responsible ones among us follow this simple E:R guideline in our own daily lives. Why should we expect others to act differently?
In conclusion
As noted above, the real challenge is in how the Cardinals actually execute their revised 2009 game plan, both on their financial spreadsheets and on the field of play.
In the meantime, let’s see if the club makes any further investments as camp begins and prices on players drop. Let’s see if the younger players step up and contribute. Let’s see if they decide to upgrade the team in-season if they contend in 2009. Let’s see if the Cardinals can weather the economic downturn or if fans stay home in record numbers.
In closing, I am not suggesting that everyone should agree with ownership and management. I disagree with them frequently on any number of specific issues.
However, I am saying that is both unfair and inaccurate to assume that a cut in payroll also represents a move to increase profits and a reduced commitment to putting a winning product on the field.
Those who still don’t get it need to open their eyes and look at what is happening all around them.
Nice article (as usual) Brian. At the end of my post I asked what does the data mean and concluded not much. I think you were able to draw meaning from the data (the convergence to the middle).
One comment I thought of when considering the use of the “savings” of having a rookie rather than a veteran is: what are the savings? If bringing up a rookie took a roster spot of a veteran making $10.4 M, is the savings $10M? Is it the $10 M that should be invested in another veteran in another position? Usually a $10 M veteran is not going to sign a signal year contract, should the $10 M be spread out over the length of the contract or should it be a $10 M AAV contract? As the rookie gains experience his salary will increase from one year to another. A top prospect may be making several million in his third year and more in his forth and further years. If a veteran is signed for n years, how does the team calculate what the rookie will make over those n years so as to subtract from the “savings” in order to spend on the other veteran. I hope I am making sense.
I would not take it as a given that the Cardinals will see reduced revenue in 2009 and going forward even in a tough economy. MLB.com is still seeing growing revenues I believe and MLB network looks like it may be profitable as early as 2010.
The other big issue is the relative payroll issue. The Cards were as high as 6th a few years ago and have dropped to 11th in 2008. If overall payroll falls but their relative rank remains they will probably be Ok.
CC you are on to something, that I had not thought of, the MLB Network. If MLB divides the revenue from that network evenly this would represent a greater increase (percentage wise) for the smaller revenue teams than the larger revenue teams. So if attendance is down evenly across all teams (in terms of percentage) and MLB network revenue is greater (percentage wise) for the smaller revenue teams, smaller revenue teams can increase expenses while larger revenue teams may need to decrease expenses.
I believe the Cardinals did state their revenue projections for 2009 are down. Are you doubting that, CC? (Edit: I don’t know if that is down from 2008 or down from their initial 2009 projections. I suspect the latter.)
I have no idea how the start-up costs from establishing the MLB Network were assigned, but they had to be considerable. It is hard for me to imagine that it will profitable for some period. I do think it will be a money-maker over time, though.
The comment about relative team payroll rank is a good one. The Yahoo numbers are clearly interim in nature since all the big free agents aren’t signed and all teams were not included. They also did not address the magnitude of the changes up or down. It will surely be worth revisiting when the season starts.
Oquendo–
I doubt seriously that Internet revenues are anywhere near ticket revenues. There might be a slight tick up in Internet revenues during a recession versus ticket sales, but I’m not convinced that even that would happen.
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As far as the payroll goes, I think it is fair to keep in mind the club has a minor league system to support, international development, and so forth. Payroll is only the most visible component of expenses. I would rather the team plowed another few million into pitching scouts than spending it on a no-hit backup catcher, for example.
RedC, I (and CC) was talking about the TV channel MLB Network not the internet site MLBTV.com. I have no idea about revenues from the TV network and how they relate to attendance.
I agree with you about the value of pitching scouts (and minor league pitching coaches) vs. major league payroll.
Brian,
I agree with you completely. I would expect them to look at payroll with the state the economy is in. I also realize that the money they are putting in their Minor Leagues and in Latin America has to be counted as a good expense, and to many fans are not looking at that, they are only looking at payroll. My problem is where we spend the money. Just today we find out that we have signed another foreign pitcher, this one a righthander, to try out for the bullpen. I understand he won’t be all that expensive , but we don’t need any righthanded relievers, and that is one reason we didn’t sign Springer. This is about the 6th relief pitcher we have spent money on, and based on their records, they can’t help. Sign,or trade, for the one guy you really need and then commit to use your Minor Leaguers, like you say you are. We have a logjam at the top now.They say they are committed , but they are doing just the opposite. We even bid for the right to sign this player.I call it grasping for straws. It is time someone , probably the owners, opened their eyes,and used the minor leagues to fill the roster,and trade the others to fill what they don’t have.. I HAVE NO PROBLEM WITH PAYROLL.
Brian, you used the term “down revenue” not necessarily referring to projections. I don´t have any idea what they were projecting (think they want to share that info?
) but laymen can get an idea of increases or decreases to revenue in a relative sense from year to year. My point is that some revenue may decrease yet other revenue sources may increase.
Nice article, Brian, and nice site here. I hope to be able to contribute occasionally.
CC, you’ve always been a fair poster, considering your somewhat anti-management stance. Suggesting that the Cardinals’ payroll has been as high as sixth, though, is fudging more than a bit.
The 2005 payroll of $92.1M you are referencing contains roughly $10M paid to Larry Walker and Roger Cedeno by the Rockies and Mets, respecfully. Back out that not so insignificant amount and the payroll comes in 11th, behind the Dodgers.
Welcome, Diz. Check the archives as I have been pumping out content for the last six or seven weeks.
I’ve been lurking, Brian. It’s nice to see a place where the discussions are civil and about, you know, St. Louis Cardinal baseball.
That is the plan – talking Cardinals baseball. Even though this is my blog, it isn’t about me, so I’ll not be going on about what I had for lunch or what movies I saw this week. I’d rather report the story than be the story.
Brian, I hope some of your pieces are getting picked up nationally. Nicely prepared. In the end, I could care less what they’re payroll is. Here is a prediction of mine….we will all be admiring John Garland by June. The pretext of waiting till the bottom fell out has now been revealed to be a joke. BD made a killing in the last 4 years. I’m talking Mega change. The economic pretext is a joke. He is in a position to make a move now in a dead economy, but that is not his purpose. This has to do with cash flow models obscuring larger doings. He is not a sportsman. Please no conversation on this topic.
I heard a story today about a US manufacturing sector. It operated at 90 percent of production capacity in September. In December, it had scaled back to 50 percent production. Ouch.
Its understandable for fans to enjoy living in a baseball bubble. Who wants to hear about unhappy things?
Yet, out in the real world, hide from it or not, we are facing some seriously bracing adjustments, the full extent of which will take some time to play out. There will be heart-rending human costs. About which I care!
It makes sense baseball and other entertainment (non-essential) industries scale back.
Nice to “see” you again Diz. If you have been lurking at scout (as I believe), hopefully you know that you have been missed.
Brian, thank you for inviting me to participate. I have been searching for a place to hold courteous and engaging conversation with other like minded card fans. I wish Mo had better public relations skills. I think most fans are very understanding of the current economic conditions as it is directly effecting many. I think their concern lies more with the contradictory statements that the front office continues to make. One side of their mouth talks of “dry powder” and ” low hanging fruit”, while the other cries unanticipated expenses and a need to cut corners. Do they have money for free agents or not? Then Mo sites arbitration awards, which any fan would have figured into expenses long before Mo seemed to be surprised. Too much just doesn’t fly by the b.s. meter. Our new president likes to state that ” sunshine is the best solvent.” I agree and wish the cards did as well. I am also puzzled by their medical maladies. Is it my imagination, or do they have more trouble recovering from procedures than other teams? There seem to be too many repeat operations.
But I’m not trying to write a post here, I am only excited to release so much pent up frustration without having to undergo the flamers. So thanks for the opportunity and I appreciated your well conceived post.
kirotahoe, welcome. Part of why blogs like this exist is to try to read between the lines, to interpret and speculate together.
There will be disagreement. It is natural. Not everyone is of a like mind on every point. But if it isn’t civil, it won’t be welcome here. I just hope I can keep spending my time writing and commenting instead of refereeing!
Thanks for the kind words, Oque11. Yeah, I’ve read several threads over at the Birdhouse and I don’t see myself going back there. There are too many posters that seem to want to derail every conversation onto their own little siding.
I suspect the Cards will add another free agent or two. Didn’t Brian report that there are five openings on the 40 man roster? There might be another opening with us owing the Padres a player in the K. Greene deal. I don’t see all those roster spots being filled by NRI’s.
Randy Wolf would be my favorite choice. He seems to be healthy. I suspect, though, that he will end up with the stinkin’ Dodgers, his favorite team as a kid.
Great to see you Diz! You have been missed.
I agree in that I believe the Cards open the season with will include a different name or two than the ones already coming to spring training as well as a couple of those names may also be missing by the start of the year.
I think one of the major issues facing the current payroll is the uncertainty surrounding this season’s revenue. Until single game tickets go on sale, it will be unclear how much ticket revenue they will generate this year. That, in turn, effects all revenue, as it hits concession sales, jerseys, etc. As it currently stands, it looks like I will only catch the Cards at a weekend series in Cincy because it is so much cheaper than going to St. Louis. As long as there is uncertainty as to revenue, with wildly divergent estimates, it is reasonable to sit back and see where the chips fall.
Further, there are really no sure thing free agents out there that fit the Cardinals needs. Sheets, as has been widely discussed, has major injury questions, and the Cardinals are already paying a fortune to an injury liability (Carpenter). The Cardinals have no need for another outfielder and there really aren’t any free agent shortstops or second basemen that really impress and would be marked improvements over what they already have. It seems clear that the only way this team gets much better before spring training is via trade. Now that will almost certainly involve taking on more salary.
Based on most projections, as currently situated, this is a slightly above 500 team (86 wins or so). Any move the Cardinals make, at this point, must either substantially improve their odds in 2010 or 2011, ie trading for a top tier pitching prospect in AA or so, or put them in a position to win more than 90 games for a shot at the playoffs. There are only 2 positions where the Cardinals can easily increase their win total, based on current lineup projections, and that is at the backend of the rotation (someone 4 games better than Pineiro) or at 2nd. If 4 WAR is worth $16 million or so, then there is no way that the Cardinals can do that without finding a serious bargain.
Thanks, cards13.
One of the names I often see as a “solution” to second base is Orlando Hudson. While he has a wonderful track record, the dislocated wrist injury that ended his season in August worries me a lot. How much will that affect his hitting?
I would guess that if he is unsigned when Spring Training starts, his price will come way down but, even then, is a gamble on him worth the first round pick he would cost the team as a Type A free agent?
It seems to me that many of the people clamoring for a healthy Hudson and/or Sheets are the same ones claiming that Carpenter and/or Duncan are shot.
Chris, I bet even before single game tickets go on sale, the club has an idea on revenue based on season ticket renewals, which I hear are down.
DD, I happen to like Hudson – in a vacuum. When I think about the incremental value he would provide over Kennedy at the total cost of his salary (since Kennedy is untradeable without the Cards paying some or all of his salary anyway) plus the first-round draft pick as you note, I quickly lose interest.
I wouldn’t be surprised to see the Players Association in the next CBA (2012) to try to negotiate down the Type A to fewer players or get rid of it completely. For the top guys, it makes sense, but for the players like Hudson, it really limits their changing clubs. On the other hand, if Hudson wanted a guaranteed deal, all he had to do was accept Arizona’s offer of arbitration. So I don’t feel sorry for him in the least.