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  • Do the Tigers really have that much more money than the Twins?

    This is back-of-the-napkin type math based on a lot of assumption so please, do not attempt to cite the concluded numbers as final. They are, in essence, an educated guess that is founded from bits and pieces of available public information. But letís use it to attempt to figure out why the Tigers are able to make it rain on the free agent market while the Twins are left counting pennies.

    The Tigers recently signed Torii Hunter to a two-year, $26 million deal. With that addition, Detroit now has five players under contract for 2013 who are scheduled to make $10 million or more for a grand total of $81 million. Plus, they have not completely ruled out extending pitcher Anibal Sanchez, who is seeking roughly $15 million per year. How is it that the Tigers are spending small principalities worth of money while the Twins stand idly by and target the one or two-year bargains?

    Detroit made approximately $93.93M at the gate last year (based on attendance multiplied by the $31 ticket price average sold). The Twins, on the other hand, made $91.74M (averaging $33 per ticket sold). Thatís without taking into consideration advertising the stadium, suites, luxury boxes, concessions (which can range from $3.4 million to $20 million depending on the attendance and offerings). Assuming the Tigers were one of the teams to make the higher end of that based on their competitiveness and relatively new stadium, with a payroll of $133 million in 2012, they likely came in $10 million short. Comparatively, the Twins who also likely made the higher end of the stadium-generated revenue from suites and concessions, could have potentially made $10 million in profits (without taking in to consideration the operating costs, farm system expenses, etc, etc).

    Then there is the benefits of being a playoff team. According to research done by BizofBaseball.comís Maury Brown, teams can stand to make an average of $1 to $2 million per game in the playoffs. If we split the difference, the Tigers could have made approximately $19.5 million for the 13 games played in October. In addition to that, Brown notes, the real windfall is the revenue generated for the following year as the club receives additional season ticket requests, sponsorships and are able to leverage that if local TV/radio contracts are up in the air. With the Twins not making it into even playoff contention for the second straight season, undoubtedly season ticket sales and sponsorship requests are down. The Tigers can plan for additional revenues whereas the Twins will likely brace for some fallout.

    The biggest difference maker between the two markets is the size of the TV contracts: The Tigers get an estimated $50M per season from their Fox Sports affiliate while the Twins are getting $29M per season.



    So, rather than having an operating loss as described above, the Tigers have somewhere closer to a $60 million profit thanks to the playoffs and broadcast rights. The Twins, meanwhile, could have somewhere in the ballpark of $39 million Ė a difference of $21 million in favor of the Tigers. Whatís more, both teams, starting in 2014, will receive $50 million from the MLB central fund because of the new television contracts with ESPN and TBS. This added bonus certainly is taken into consideration when teams and agents are projecting long-term contracts.

    In the end, the Tigers could be poised to spend roughly $110 million (with some operating expenses removed) in 2014 while the Twins will be trying to compete with $89 million (with operating costs and what is certain to be a decline in ticket/stadium-based revenue).

    While it is not at the level as Detroit, the Twins still have plenty of money to spend for 2013 (particularly when you consider how much they have dropped off their payroll from the 2012 season) so they should not be crying poor. Sure, the ownership may be pocketing this additional funds Ė and thatís their prerogative Ė but, based on my outsider calculations, there appears to be plenty of revenue to add a few of the gameís top free agentsÖif they wanted to.
    This article was originally published in blog: Do the Tigers really have that much more money than the Twins? started by Parker Hageman
    Comments 64 Comments
    1. chagen's Avatar
      chagen -
      Quote Originally Posted by Brandon View Post
      The blow it up talk is total crap. we are what 3 starting pitchers and a few bench/ bullpen arm away. not an impossible task to overcome. We do need to be smart how we deploy resources. We can sign a mid rotation pitcher and trade for another then we are just 1 arm away.....bench. there are several low cost options available and same with bullpen. Get the starting pitching and everything will come into place. The biggest offensive question has already been resolved with Parmalee going to right field that increases the power output in our lineup. Bench could be strengthened with several players, Gomez, Andrew Jones, Inge, and others. bullpen.... we should have plenty of options there too.

      The blow it up talk isn't total crap if the twins aren't willing to go out and get 3 quality starting pitchers which i will be shocked if they do. I'm not talking Joe Blanton i'm talking quality pitchers
    1. ThePuck's Avatar
      ThePuck -
      'The blow it up talk is total crap. we are what 3 starting pitchers and a few bench/ bullpen arm away. not an impossible task to overcome.'

      is that all? JUST three starting pitchers and a few bullpen arms away? Not like that isn't needing a BUNCH in reality, but also how about a 2B, a shortstop, a 4th starting pitcher (since w only have 1 good one) and maybe even a 3B...
    1. USAFChief's Avatar
      USAFChief -
      Quote Originally Posted by Seth Stohs View Post
      I would say that when the Twins felt they had a team that could compete, two years ago, they went about $20 million over budget to bring in some final pieces. It makes no sense to spend that much to finish 3rd or 4th.
      Complete horsepoop. May I remind folks this is the same poster who told us when the new national TV contract kicks in, and Twins revenues go up by $25m, with zero new costs, we should only expect the Twins to spend half of that on payroll.
    1. Kwak's Avatar
      Kwak -
      Quote Originally Posted by ThePuck View Post
      Quote Originally Posted by powrwrap View Post
      Quote Originally Posted by Winston Smith View Post
      Ilitch and the Pohlads are both worth over 2.5 billion. Ilitch is 83 certainly can never spend all that money and wants to win while still alive.
      So do you think Illitch simply wrote out a check from his personal (not Tigers) bank account and picked up Prince Fielder and Torii Hunter?
      Actually, if I remember correctly, that's exactly what he did for Fielder...He definitely told his GM to go get him, period.
      I think that there is a difference in business philosophies between the Pohlads and Illitch. Illitch (it appears) uses the free cash flow from his food empire to fund his sports empire. Remember that Illitch also owns/funds the Detroit Red Wings which consistently ran a well above average payroll in the NHL to support a highly successful franchise. It appears that Illitch is doing the same for the Detroit Tigers. The Pohlads may (it looks that way to me) be using the the free cash flow from their sports empire to fund their other businesses--especially real estate. Perhaps the Pohlads see greater potential outside of sports than Illitch sees (in Detroit) so they spend differently. It's really nice for Detroit sports fans, and stinks for Minnesota Twins fans. Miami (again) blew-up their team, Oakland did so at the end of 2011, but was able to rebuild stronger than ever. I contend that that is the real problem with the Twins--the ability to rebuild, not the ability to spend.
    1. powrwrap's Avatar
      powrwrap -
      Quote Originally Posted by Kwak View Post
      I think that there is a difference in business philosophies between the Pohlads and Illitch. Illitch (it appears) uses the free cash flow from his food empire to fund his sports empire. It appears that Illitch is doing the same for the Detroit Tigers.
      You're speculating. Unless the Tigers and the Red Wings are legally under the same business entity there is a separation, "a corporate wall" between the two. Of course the Red Wings could loan money to the Tigers, but there would be an accounting and reporting of such on their tax returns.

      The Pohlads may (it looks that way to me) be using the the free cash flow from their sports empire to fund their other businesses--especially real estate.
      Same idea here. The Twins are a limited liability corporation and probably have no legal connection between the Pohlad's real estate businesses. If the Pohlad's want to loan the Twins money they could do so. Or if the Minnesota Twins LLC want to loan the real estate business money they could. You don't really think the Pohlad's take their profits from the Twins and deposit it into the real estate business bank account as if it were a gift, do you?
    1. nicksaviking's Avatar
      nicksaviking -
      Quote Originally Posted by ThePuck View Post
      Quote Originally Posted by powrwrap View Post
      Quote Originally Posted by Winston Smith View Post
      Ilitch and the Pohlads are both worth over 2.5 billion. Ilitch is 83 certainly can never spend all that money and wants to win while still alive.
      So do you think Illitch simply wrote out a check from his personal (not Tigers) bank account and picked up Prince Fielder and Torii Hunter?
      Actually, if I remember correctly, that's exactly what he did for Fielder...He definitely told his GM to go get him, period.
      Not to mention that Illitch got Comerica built with only 40% of the burden on the tax payers as opposed to 66% tax payer burden for Target Field. Illitch paid $180 million for his stadium while 10 years later the Pohlad's only chipped in $172 million despite the enormous amount of additional revenue the MLB label was producting.
    1. Winston Smith's Avatar
      Winston Smith -
      A business owner taking money out of his pocket to fund some business venture happens all the time. If it is a publically traded corp that won't happen (they could issue more stock for cash) but any private business can do it whenever they want. This summer when the Wild made the big free agent signings they asked all the owners to chip in some cash to cover the cost. The Timerwolves have lost money many times over the years and Taylor just writes out a check to cover the loss. Some owners are willing to do that and some aren't.
    1. powrwrap's Avatar
      powrwrap -
      Quote Originally Posted by Winston Smith View Post
      A business owner taking money out of his pocket to fund some business venture happens all the time. If it is a publically traded corp that won't happen (they could issue more stock for cash) but any private business can do it whenever they want. This summer when the Wild made the big free agent signings they asked all the owners to chip in some cash to cover the cost. The Timerwolves have lost money many times over the years and Taylor just writes out a check to cover the loss. Some owners are willing to do that and some aren't.
      My point is that they are not gifting the money. They are making a loan with the expectation of getting paid back. Or they are getting shares of stock.
    1. SweetOne69's Avatar
      SweetOne69 -
      Illitch owns both the Red Wings and Tigers. He is desperate to win WS title before he dies.
    1. mike wants wins's Avatar
      mike wants wins -
      The Tigers have more will to win. Whether that translates to wins is a different story. I would prefer the twins had more will, frankly. They get zero more of my money until I see evidence of that.
    1. JB_Iowa's Avatar
      JB_Iowa -
      Quote Originally Posted by powrwrap View Post
      My point is that they are not gifting the money. They are making a loan with the expectation of getting paid back. Or they are getting shares of stock.

      I don't know that anybody is loaning or gifting money in the case of the Tigers. It may simply be a willingness to forego a certain amount of profit. I haven't seen any figures that would indicate that the Tigers are running a deficit.

      I do think that Ilitch wants to leave a legacy of a WS championship to Detroit -- and from his appearance this post-season, the window of opportunity to do so may not be that long. (He looks a lot more frail than some 83-year-olds that I know.)
    1. powrwrap's Avatar
      powrwrap -
      Quote Originally Posted by JB_Iowa View Post
      I don't know that anybody is loaning or gifting money in the case of the Tigers. It may simply be a willingness to forego a certain amount of profit. I haven't seen any figures that would indicate that the Tigers are running a deficit.
      That's a good point.

      However, there are plenty of posts that say things like, "a business owner [should] take money out of his pocket" or "Pohlad's aren't going to spend money on their baseball team", or "Illitch can spend all the money he wants", or "The Tigers owner spends some of his own money out of pocket to improve the team" or "Illitch uses cash flow from his food empire to fund his baseball team". All of these statements presume that pro sports owners find funding outside of their team's profits. They presume that owners are 'cheap' if they don't want to make personal loans to the team so the team can buy free agents.

      Would I like it if the Pohlad's loaned the Twins $200M with no expectation of getting paid back with the purpose being the acquisition of free agents with which to win a World Series? Yes, I'd love it. But I don't expect them to, nor do I expect any reasonable owner to do so.
    1. Jim H's Avatar
      Jim H -
      I don't really care how much money the Tigers choose to spend. It is a fact that some franchises can/choose to spend more than others. In this case the Tigers just replaced Delmon Young with Torii Hunter spending a lot more money on Hunter than they did on Young. Now, at 37 Hunter is still likely a better all around player than Young. But his offensive numbers aren't likely to be a lot better if he can stay healthy, which isn't a given.

      I don't think anyone here really wanted Hunter for the Twins at this point of his career for $13 million a year. That Detroit decided to do that, may limit other fixes that they can do this offseason. Even if it does not, their overspending for an aging player will have little effect on whether the Twins make themselves competitive in the Central Division in 2013.
    1. OldManWinter's Avatar
      OldManWinter -
      CDog earlier posted Twins vs Tigers records which I assume is correct and reflects a long-term commitment to the Twins so I don't agree with the "lack of wanting to win theorists".

      It is sort of a standoff if the team ties payroll to revenues and fans won't buy tickets if team does not spend. If you enjoy the game buy a ticket, if not try fishing

      Team needs to figure a way out of morass, they need to be smart about players they sign. It is not about spending, it is about spending wisely in a highly competitive market when your competition needs something more than you are willing to spend or has some unique reason to outbid you.

      My perception is that the Pohlad family has money invested funding many projects and businesses.

      Lets say that maybe they are actually being asked to not fund a new entrepreneur and instead resign Hunter for $26 mil or Baker who has not proven himself for $7.5 mil?

      Which do any of you think is a better investment for Minnesotans as a whole?

      It is not as if the Pohlad family has a room full of money like King Midas.
    1. Jack Torse's Avatar
      Jack Torse -
      This was my comment in a Nick Nelson post, a month ago, about almost the same topic.

      Jim Pohlad said last off season that he had a difficult time investing more money into a 99 loss team. I doubt 96 losses changes his thinking much. I think we know where next season's payroll is headed. Looks like two nights of golf league next summer

      It's not even Thanksgiving yet so lets cut the Pohlads some slack with next years payroll already. That being said, I doubt they do much and with Scott Diamond as the only pitcher on the books, not much will matter for next season. What they really need to do is blow it up sort of like Florida did. The interesting aspect is how and when they are going to throw Gardy under the bus. If it wasn't a guy's career it would be comical but it's going to be baseball's version of Pickets charge.
    1. clutterheart's Avatar
      clutterheart -
      Twins and Marlins might officially ruin any argument for a Public Funded Stadium.

      Time for the voters of Hen, county to demand a refund - I would LOVE to see that on the ballot.
    1. Riverbrian's Avatar
      Riverbrian -
      I seriously could care less about payroll... and I think its flat out crazy to assume that the amount of money spent is some sort of proof that a team wants it more.

      The Tigers and Twins are simply in different places right now. After reaching the WS and a pitching staff of Verlander, Scherzer, Fister. The Tigers would be idiots to not go after someone like Hunter in consideration of the squad they have returning. This puts the Tigers in one boat and the Twins are clearly in a other boat.

      Someday(hopefully soon but maybe not) the tables will turn and somebody on a Tigers chat board will be saying the same about the Twins.
    1. Kwak's Avatar
      Kwak -
      Quote Originally Posted by powrwrap View Post
      Quote Originally Posted by Kwak View Post
      I think that there is a difference in business philosophies between the Pohlads and Illitch. Illitch (it appears) uses the free cash flow from his food empire to fund his sports empire. It appears that Illitch is doing the same for the Detroit Tigers.
      You're speculating. Unless the Tigers and the Red Wings are legally under the same business entity there is a separation, "a corporate wall" between the two. Of course the Red Wings could loan money to the Tigers, but there would be an accounting and reporting of such on their tax returns.

      The Pohlads may (it looks that way to me) be using the the free cash flow from their sports empire to fund their other businesses--especially real estate.
      Same idea here. The Twins are a limited liability corporation and probably have no legal connection between the Pohlad's real estate businesses. If the Pohlad's want to loan the Twins money they could do so. Or if the Minnesota Twins LLC want to loan the real estate business money they could. You don't really think the Pohlad's take their profits from the Twins and deposit it into the real estate business bank account as if it were a gift, do you?
      That's not what I said. I said FCF from food empire--pizzas etc. Used to invest in sports--the Red Wings and the Tigers. There is nothing about corporate entities. Illitch's money (after it leaves the corporation--though it may be in a trust) is simply invested elsewhere (sports) there is no violation of law involved.
    1. 70charger's Avatar
      70charger -
      Quote Originally Posted by Riverbrian View Post
      I seriously could care less about payroll... and I think its flat out crazy to assume that the amount of money spent is some sort of proof that a team wants it more.

      The Tigers and Twins are simply in different places right now. After reaching the WS and a pitching staff of Verlander, Scherzer, Fister. The Tigers would be idiots to not go after someone like Hunter in consideration of the squad they have returning. This puts the Tigers in one boat and the Twins are clearly in a other boat.

      Someday(hopefully soon but maybe not) the tables will turn and somebody on a Tigers chat board will be saying the same about the Twins.

      Oh come on. Now you're just being ridiculous. Posting logical arguments on a message board. What's wrong with you!?
    1. glunn's Avatar
      glunn -
      Why are the Twins local TV revenues so low compared with the Tigers and a lot of other teams? Don't they have a fairly big territory? Would a better broadcast team help?
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