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Friday, October 13, 2017

Miami Marlins new owners plan to cut payroll to $90 million | Miami Herald

Getting a team to take the contract *and* send young controllable players back won’t be an easy task.

If the current roster was left unchanged, next year’s payroll would approach $140 million, meaning ownership would need to eliminate about $50 million to get to the $90 million target figure they presented to owners. The owners could always choose to exceed or fall below $90 million.

An opening day payroll of $90 million would have ranked 26th of 30 teams in the majors last season, ahead of only the Oakland A’s ($82 million), San Diego Padres ($71 million), Tampa Bay Rays ($70 million) and Milwaukee Brewers ($63 million).

Jim Furtado Posted: October 13, 2017 at 02:34 PM | 45 comment(s) Login to Bookmark
  Tags: giancarlo stanton, marlins

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   1. snapper (history's 42nd greatest monster) Posted: October 13, 2017 at 02:47 PM (#5553282)
I'm going to thoroughly enjoy the trash fire that the Jeter Administration will be in Miami. It's going to be fascinating to watch the media that has fellated him for 20 years turn on him.
   2. Traderdave Posted: October 13, 2017 at 02:49 PM (#5553287)
You can take the Marlins out of Loria, but you can't take Loria out of the Marlins.
   3. jmurph Posted: October 13, 2017 at 02:52 PM (#5553293)
From TFA, my bold:
According to a Major League Baseball source, Jeter and fellow owner Bruce Sherman proposed cutting the team’s 2018 payroll to around $90 million — down from last season’s franchise-record $115 million — as part of the operating plan they submitted to league owners during the approval process.

So are we to take from this that part of the appeal of this group's bid, to the other 29 owners, was that they would spend less on players?
   4. snapper (history's 42nd greatest monster) Posted: October 13, 2017 at 02:54 PM (#5553296)
So are we to take from this that part of the appeal of this group's bid, to the other 29 owners, was that they would spend less on players?

No, the appeal was that they would pay more because they planned to slash payroll.
   5. The Yankee Clapper Posted: October 13, 2017 at 03:05 PM (#5553311)
Given how the coverage of the Marlins sale was all over the place with contrary reports on who was winning the bidding process, we might want to hold off crediting every anonymous source that claims to know what the future portends for the team.
   6. Larvell B Posted: October 13, 2017 at 03:10 PM (#5553316)
The market can't support a payroll higher than shoestring. If it could, every single owner over the past 20 years -- now three and counting -- who has looked objectively at the books wouldn't have responded by cutting the payroll to shoestring.

At some point, that simply has to be faced.
   7. Jeff Frances the Mute Posted: October 13, 2017 at 03:14 PM (#5553320)
So are we to take from this that part of the appeal of this group's bid, to the other 29 owners, was that they would spend less on players?


The appeal of this group is that this sale sets the floor of a MLB franchise value at $1.2 billion. Also, they think having Jeter as part of the club will make them look good. That is why they are willing to overlook the unsustainable debt load.
   8. Pops Freshenmeyer Posted: October 13, 2017 at 03:15 PM (#5553322)
Then why would those who look objectively at the books take on hundreds of millions of dollars in debt?
   9. Fiore Gino Posted: October 13, 2017 at 03:15 PM (#5553324)
I'm going to thoroughly enjoy the trash fire that the Jeter Administration will be in Miami. It's going to be fascinating to watch the media that has fellated him for 20 years turn on him.

The only thing the media loves more than building someone up is tearing them down
   10. Nasty Nate Posted: October 13, 2017 at 03:16 PM (#5553327)
Given how the coverage of the Marlins sale was all over the place with contrary reports on who was winning the bidding process, we might want to hold off crediting every anonymous source that claims to know what the future portends for the team.
This one at least has some specific facts related, although still anonymously.

The earlier reports were less credible, because it was just one vague speculation being passed around and repeated.
   11. Rally Posted: October 13, 2017 at 03:17 PM (#5553328)
I'm going to thoroughly enjoy the trash fire that the Jeter Administration will be in Miami. It's going to be fascinating to watch the media that has fellated him for 20 years turn on him.


The media have proclaimed this as Jeter owning the Marlins. If thinks go really bad, St. Jeter might be safe. Blame can be directed towards Bruce Sherman, who actually owns most of the Marlins.
   12. BrianBrianson Posted: October 13, 2017 at 03:19 PM (#5553333)
Just because they're slashing payroll, doesn't mean it wasn't the smallest payroll slash any of the bidders planned.
   13. Edmundo got dem ol' Kozma blues again mama Posted: October 13, 2017 at 03:21 PM (#5553336)
The only thing the media loves more than building someone up is tearing them down


They don't do this in a vacuum -- their readership/watchership(?) can't get enough of it either. Face it, it's us.

   14. dlf Posted: October 13, 2017 at 03:23 PM (#5553338)
The media have proclaimed this as Jeter owning the Marlins.


I don't read much media from Los Angeles; is this how Magic Johnson is treated w/r/t the Dodgers' ownership group?
   15. Edmundo got dem ol' Kozma blues again mama Posted: October 13, 2017 at 03:24 PM (#5553339)
meaning ownership would need to eliminate about $50 million to get to the $90 million target figure they presented to owners. The owners could always choose to exceed or fall below $90 million.


This is a confusing sentence. "Ownership" <> the collection of "owners"?
   16. bfan Posted: October 13, 2017 at 03:25 PM (#5553341)
This will only end perfectly if Jeffrey Loria ends up with Hannah Davis Jeter.
   17. Rally Posted: October 13, 2017 at 03:32 PM (#5553348)
I don't read much media from Los Angeles; is this how Magic Johnson is treated w/r/t the Dodgers' ownership group?


They don't make the error of calling him the sole or majority owner, they know he has a small percentage of the team. But he is mentioned more often than the other owners (whose names I can't even recall).
   18. Nasty Nate Posted: October 13, 2017 at 03:37 PM (#5553351)

This is a confusing sentence. "Ownership" <> the collection of "owners"?
It's a little clearer in the article. Read it as:

meaning Marlins ownership would need to eliminate about $50 million to get to the $90 million target figure they presented to the other 29 owners. The Marlins owners could always choose to exceed or fall below $90 million.

   19. Larvell B Posted: October 13, 2017 at 03:39 PM (#5553355)
Then why would those who look objectively at the books take on hundreds of millions of dollars in debt?


Because they believe they'll be able to convince some other sucker to also take it on when and if the time comes.
   20. Jeff Frances the Mute Posted: October 13, 2017 at 03:40 PM (#5553357)
Then why would those who look objectively at the books take on hundreds of millions of dollars in debt?


Jeter only put in ~$20 million and allegedly is paying himself back with a finders fee, hefty salary, and lavish expense account. Who knows what Sherman is thinking, but he loves to spend money on shiny things. Maybe he thinks there is going to be a windfall from a new TV deal?

There is a decent chance that Michael Dell will be the control person for the Marlins in 3-5 years due to the structure of the preferred equity deal that Jeter needed to complete the purchase.
   21. The Yankee Clapper Posted: October 13, 2017 at 03:51 PM (#5553364)
This one at least has some specific facts related, although still anonymously. The earlier reports were less credible, because it was just one vague speculation being passed around and repeated.

There were specific "statements", whether they are "facts" remains unknown. Seems clear that the Marlins will spend what Bruce Sherman wants to spend, or what Jeter can convince him to spend if you prefer. None of these Marlins articles appear to be sourced to the Sherman camp, just anonymous Loria holdovers or those being shown the door, and folks allegedly tied to MLB. I suspect the MLB source isn't Rob Manfred, but it could be the guy who gets his coffee and relies on BBTF for his insight. It's not surprising that reporters are still relying on their old sources if that's all they have, but more than a few grains of salt should be mandatory. Trying to grow revenue, rather than cut player payroll, still seems like the smart move.
   22. Dag Nabbit at ExactlyAsOld.com Posted: October 13, 2017 at 03:56 PM (#5553371)
"Marlins owner" is the baseball version of "Bears quarterback."

The names change, but they keep doing the same things people didn't like about the previous ones.
   23. Nasty Nate Posted: October 13, 2017 at 03:58 PM (#5553372)
None of these Marlins articles appear to be sourced to the Sherman camp, just anonymous Loria holdovers or those being shown the door, and folks allegedly tied to MLB.
This one could be sourced to any of the 29 other ownership groups who were supposedly presented with the proposal to reduce payroll to $90m. But who knows with these anonymous reports, though.
   24. snapper (history's 42nd greatest monster) Posted: October 13, 2017 at 04:43 PM (#5553416)
The market can't support a payroll higher than shoestring. If it could, every single owner over the past 20 years -- now three and counting -- who has looked objectively at the books wouldn't have responded by cutting the payroll to shoestring.

At some point, that simply has to be faced.


Yeah, this can't be true. The Marlins get something on the order of $80-90M in free money from the rest of the league. Forbes estimates their total revenue over $200M. Then can easily sustain a payroll over $100M indefinitely.

The owners choose not to because the free money means sucking doesn't hurt their top line as much as it does for a real team. They'd rather have a $50M payroll and $175M in revenue, and suck, and pocket the profits.

Shame on the rest of the owner for letting the Marlins get away with this scam.
   25. The Yankee Clapper Posted: October 13, 2017 at 05:07 PM (#5553451)
The Marlins are not a small-market team. By most measures they are right in the middle of the MLB pack. It's absurd to suggest no one can do better running the team than Wayne Huizenga or Jeffrey Loria, two guys whose ineptitude and excessive focus on short-term results were noted repeatedly in dozens of BBTF threads.
   26. Walt Davis Posted: October 13, 2017 at 06:34 PM (#5553552)
The question is how do they get down to $90 M. Obviously you start with Stanton but even if they don't eat any money, that saves just $25 this year.

Chen has a 3/$52 M option (he has to exercise all three options within 4 days of the WS ... basically an opt-out) and he'd be a fool not to do it. It's only $10 in 2018 but then $20 and $22. That puts them at the estimated $140 at b-r.

They'd also seem to be stuck with the 2/$28 owed to Prado (13, 15) and the $13 owed to Volquez.

They might be able to move Gordon's 3/$38 without eating too much money -- with running and defense he's about a 2.5-3 WAR player but he's getting to the ages where the speed might decline. Let's say that saves them $9 M this year.

They owe $9 M to Brad Ziegler who just had his first terrible year -- can probably move it if they eat $4 M unless he's hurt. They also owe $7 to Tazawa who had a terrible season after two mediocre ones, they're eating all of that.

So to get to $90 means trading Yelich (on a great 4/$44 plus option contract) and Ozuna (2 arb years left) but even that probably only saves them about $14 M this year.

Or trading a bunch of arb players but these offer little short-term savings plus Realmuto is the only one other teams will have a strong interest in.

They'd get a ton of talent for Yelich but that's also the sort of player they'll need around to get some butts in seats over the next 3-4 years and he's dirt cheap. If they don't think they can compete, trading Ozuna makes sense. Getting out from the commitment to Stanton is understandable.

So a challenge to get down to $90 this year without entirely gutting the team. Maybe by 2019, certainly by 2020 they can shave a ton off.
   27. BrianBrianson Posted: October 13, 2017 at 06:43 PM (#5553558)
Shame on the rest of the owner for letting the Marlins get away with this scam.


The better your team does, the more money you make. You're not incentivized as an owner to have other teams be more competitive so your team does worse and you make less money.
   28. Tim D Posted: October 13, 2017 at 07:13 PM (#5553593)
There is zero reason the Miami market can't support a big league team. The last thing they should do is cut payroll. They have some good pieces, they should add. Don't tell me they can't afford it; these guys are worth billions. If they fill the park and max the TV revenue they can make a lot of money.
   29. Edmundo got dem ol' Kozma blues again mama Posted: October 13, 2017 at 08:03 PM (#5553611)
#18, Thanks, Nate.
   30. Ziggy's screen name Posted: October 13, 2017 at 08:09 PM (#5553617)
If they fill the park and max the TV revenue they can make a lot of money.


While taking on a lot of risk. If the team doesn't turn out as well as you'd hoped, you're in the red. The Marlins are the prefect investment vehicle for the risk averse. It's a guaranteed profit, even if you could probably get a bigger profit elsewhere. And it's safer than T-Bills - the probability of government disfunction leading to a default has got to be greater than the probability of MLB going belly-up.

We react negatively to this strategy because we're baseball fans, but it really is a great strategy for an investor who doesn't want to risk losing money.
   31. snapper (history's 42nd greatest monster) Posted: October 13, 2017 at 08:46 PM (#5553628)
The better your team does, the more money you make. You're not incentivized as an owner to have other teams be more competitive so your team does worse and you make less money.

But why not take away their revenue sharing? If I owned Baltimore or Milwaukee, I'd be pissed at the league shipping money to the Marlins who make a bigger profit by intentionally sucking than I do by trying to win ballgames.
   32. The Duke Posted: October 13, 2017 at 11:02 PM (#5553731)
Stanton has more leverage every day.

So the marlins have to package a couple of their bad contracts with Stanton to get down to 90. Someone will have to take a lot of crap on top of huge Stanton commit. It means the marlins get zero return.

Some big market team will do it. Maybe the dodgers will throw Puig back the other way

   33. fra paolo Posted: October 14, 2017 at 12:10 AM (#5553760)
None of the main Marlins blogs, to my knowledge, is disagreeing with the strategy outlined in these rumours. Everybody is lining up behind the 'time for the Marlins to rebuild' line coming out from the club. I am confident that in a year or so's time people will start muttering about how 'There is only one Marlins owner in the world. One Marlins owner, with many faces.' And at that moment, any hope of a decent baseball market in Miami will be gone for good. Eventually it will be the place people threaten to move a team to.

In the meantime we have this abject surrender to the power of Mystique & Aura
   34. McCoy Posted: October 14, 2017 at 12:22 AM (#5553763)
Geezus Christ. The Marlins have 2 WS championshisp in the last 20 years. That's better than 26 other teams in the league. Get over it people. If history repeats itself expect the Marlins to win it all in a few seasons.
   35. DFA Posted: October 14, 2017 at 12:59 AM (#5553768)
They don't do this in a vacuum -- their readership/watchership(?) can't get enough of it either. Face it, it's us.


Yes! I knew I was the problem all along!
   36. DFA Posted: October 14, 2017 at 01:03 AM (#5553769)
The owners choose not to because the free money means sucking doesn't hurt their top line as much as it does for a real team. They'd rather have a $50M payroll and $175M in revenue, and suck, and pocket the profits.


Exactly this. I can't believe the new ownership group spend over a billion dollars just to make some chump change and the cache of owing a sports team.
   37. Dr. Vaux Posted: October 14, 2017 at 01:13 AM (#5553773)
When teams were selling for $200 million, MLB could sell the public on the idea that the owners were doing it for fun and just wanted to not lose money. When they're going for upwards of a billion, nobody's going to believe they're not making huge profits. Even the most economically-illiterate #### knows that if a business can attract that kind of investment, it must be bringing in commensurate returns.
   38. Non-Youkilidian Geometry Posted: October 14, 2017 at 10:49 AM (#5553805)
Even the most economically-illiterate #### knows that if a business can attract that kind of investment, it must be bringing in commensurate returns.

You're underestimating SBB's capacity for ignorance.
   39. snapper (history's 42nd greatest monster) Posted: October 14, 2017 at 11:04 AM (#5553813)
Geezus Christ. The Marlins have 2 WS championshisp in the last 20 years. That's better than 26 other teams in the league. Get over it people.

Actually, it's not. The point of winning is to entertain your fans, and generate more fans and revenue. If no one cares that you won, a World Series Championship is meaningless.

The Marlins have done less to entertain their fans, and more to enrage them, than pretty much any sports franchise over the last 25 years.
   40. fra paolo Posted: October 14, 2017 at 12:34 PM (#5553824)
The Marlins have done less to entertain their fans, and more to enrage them, than pretty much any sports franchise over the last 25 years.

I don't know about that.

I have been one of the cheerleaders against 'Marlins Rebuild V', but there are some sound reasons to consider it as an option.

a) The farm system is in very poor shape. This is entirely Loria's fault.
b) Jose Fernandez untimely death blew apart the strategy of building around Stanton and Fernandez. There was an attempt to make the loss of Fernandez not as bad as it might otherwise have been last offseason, but it didn't work. And contributed to (a)
c) This is an underperforming middle-sized market, with complicating issues peculiar to it. A big payroll is probably beyond it right now. The big payroll is a result of (b).

So, as the proverbial Irishman giving directions might say, 'I wouldn't start from here.' But that's not an option and is complicated by the fact that (c)'s problems are amplified by the 1998-9 teardown, and the effects of Loria's blustering campaign for a new stadium.

Anything people were saying about the Montréal market circa 2004-6 can be read as now applying to Miami. Nobody liked Loria-Sampson, the Miguel Cabrera trade hurt like post-1994 Expos' trades, the ballpark is poorly sited, the radio broadcasts have been swapped around the market's three sports stations, nobody had any faith in the ownership's willingness to build a competitive team.

The only strategy that will bring back older fans is one that takes the current team and tries to repeat last season's formula of trying to catch lightning in a bottle in the rotation and building a bullpen that can reliably hold a lead from the sixth inning onwards. That means a payroll in excess of $150m for one more season. If that doesn't work, then the rebuild option would appear lost.

But, if one is willing to forego all the preceding quarter century and start from scratch, thinking like it was 1991 again (note the franchise was awarded in 1991, but didn't begin play until 1993), you can build a completely new fanbase. Burn it all down straightaway and cauterise the memories. 1997 and 2003 don't exist.

If the rumours are accurate, this is what Jeter-Sherman is going for, IMO. A revolution rather than a reform. The Jeter Rouge Option.
   41. snapper (history's 42nd greatest monster) Posted: October 14, 2017 at 12:46 PM (#5553826)
But, if one is willing to forego all the preceding quarter century and start from scratch, thinking like it was 1991 again (note the franchise was awarded in 1991, but didn't begin play until 1993), you can build a completely new fanbase. Burn it all down straightaway and cauterise the memories. 1997 and 2003 don't exist.

If the rumours are accurate, this is what Jeter-Sherman is going for, IMO. A revolution rather than a reform. The Jeter Rouge Option.


But then you are essentially paying $1B for an expansion franchise. That seems like a poor financial decision.

MLB really needs a rule that the combination of all central revenue (national TV, MLBAM, revenue sharing, etc.) can not be more than say 75% of your major league payroll. Why does the league want to subsidize these huge teardowns where the owners pockets oodles of cash while hurting the overall appeal of MLB?
   42. fra paolo Posted: October 14, 2017 at 01:02 PM (#5553830)
But then you are essentially paying $1B for an expansion franchise. That seems like a poor financial decision.

Forbes estimates the average value of a MLB franchise in 2017 as $1.5 billion.

In 1995, according to this site, Financial World estimated the average value as $115.4 million.

Wikipædia tells me the Diamondbacks were charged a franchise fee of $130 million in 1995.

Jeter-Sherman got in cheaply.
   43. snapper (history's 42nd greatest monster) Posted: October 14, 2017 at 03:07 PM (#5553860)
Jeter-Sherman got in cheaply.

I doubt it. Where's the revenue growth coming from to match the last 25 years?

Ticket prices are through the roof, and teams aren't selling out, despite the much smaller generation of ballparks.

Cable TV is seriously hurting. The networks have seriously overpaid for the rights, demonstrated by the inability of the rights owners to get the Dodgers and Astros on any systems in their markets, not owned by the rights holder. ESPN is shedding subscribers, along with the cable networks.

It's far more likely that TV revenue goes down over the next decade than it increases at the rate of the last 25 years. To me, Sherman (Jeter's an irrelevancy) got in near the top of the bubble.
   44. The Yankee Clapper Posted: October 14, 2017 at 04:45 PM (#5553883)
Ticket prices are through the roof, and teams aren't selling out, despite the much smaller generation of ballparks

With "ticket prices through the roof", teams don't need to sellout in order to make money. Overall attendance has been on a high plateau between 72M & 77M for more than a decade, mostly in the middle of that range, and with ticket prices only going up, teams are grossing more money than ever even if they aren't selling more tickets. Baseball is awash in dough, although there are a few teams, such as the Marlins, that aren't maximizing their own revenue. With better management, they, too, can join the party.

MLB is a content provider. They aren't tied long-term to any particular distribution method. They should be able to find a way to make money on platforms other than cable TV, and seem to be doing so.
   45. Walt Davis Posted: October 14, 2017 at 05:57 PM (#5553926)
#32 ... it's not clear any team wants Stanton's contract (10/$300 through age 37 with an opt-out after 2020) so the Marlins already are either eating money or not getting anything back. Nobody's taking another $30 M in dead payroll on top of that.

That 10/$300 makes him the biggest-contract player in baseball at the moment and second (tied with Miggy) only to Trout for AAV among position players. He'll probably end up a bargain after Harper and Trout go FA/extend but at the moment, as an FA, he'd be unlikely to do any better than 10/$300 with an opt-out. Granted, the contract is still back-loaded some so NPV is lower but nearly all big contracts are back-loaded these days.

As I've said before, the contract was so "under-loaded" at the front end that the Marlins got 14 WAR for $30 M. Two of those were arb years but they still got a great deal even on those -- they saved at least $20 M, probably closer to $25 M over the first 3 years. That is being paid back in the age 37 season plus age 38 buyout totalling $35 M in 2027 dollars. I'd insist the Marlins pay at least that much of the contract -- that's value the acquiring team will never get. Stanton at 10/$265-70 is reasonable.

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