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Twins Budget

There’s some question about how much money the Twins are going to spend on payroll next year. They’re on the hook for about 80 million dollars, and they spent $115 million this year (2011) on players. In order to properly plan for next year, the number crunchers in the Twins frontoffice need to guess at how much money they’ll make next year. This is not easy, as winning produces its own revenue. But you need to win a lot. If you can’t guarantee about 90 wins, your gate receipts won’t go up (see previous post on this topic).

Some will say the new stadium will keep attendance high, but this is a fallacy. Attendance did drop a bit this year, and it will drop even more next year as the standard new stadium honeymoon is about two years (source 1, source 2 p28). Unless the Twins are at or near the top of the AL Central Division all year, the Twins should expect a precipitous drop in attendance.

And I don’t see the Twins being able to win 90+ games next year even if they spent a bunch of money and Morneau/Span/Mauer came back completely healthy. If I were the Twins frontoffice number cruncher, I would be pessimistic. I would predict a 10% decline in gate receipts (about $10 million). In order to preserve the current EBITDA, the Twins shouldn’t spend more than $105 million on payroll. In fact, I would suggest aiming for the $100 million mark. Thus, the Twins will have less than $20 million dollars to spend on free agents.

That’s if I were the analyst. If I were the GM, I would take a completely different direction and start reconstructing the organization. I would spend next to nothing on free agent players (though I would bid up Clint Barmes). I’d be trading veterans and some of the lesser prospects (Ben Revere) and I would be openly relying on AAA/AAAA players all year. The organization is completely dry and the Twins can’t afford to get into a situation where they spend all their money on free agents to reload every year. They will lose this strategy. Smith needs to start planning longterm.

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