Money

Show Me The Money! Part 2/2

In part one, I showed that I believe the Braves 2018 payroll currently stands at $99M. Considering the 2017 Braves opened the season with a payroll of $126M and finished at $123.3M, one would think the Braves should have a lot of funds available to spend this season, perhaps as much as $30M or more. Which begs the question that I’ve heard time & time again this off-season: “Why haven’t the Braves spent any money?!?! Sign Martinez! Sign Moustakas! Bring in Jake Marietta!!! Spend some money you cheap bastards!!!” There are a multitude of reasons, but I need to start by explaining why my $99M payroll figure doesn’t tell the whole story of the Braves 2018 spending.

I think the Braves have to set aside more funds than just for the active roster payroll. I think their total expenditures for the season also has to include money for in-season acquisitions (like Matt Adams in 2017), bonuses for the amateur draft, and international free agency signings. In my experience, a suitable amount to set aside for in-season acquisitions is about $6M. In 2016, the Braves spent $16M on the amateur draft, but they had 2 extra picks in the first 2 rounds which boosted their pool amount. In 2017, they “only” spent $11.8M on the amateur draft. The pool values for the 2018 amateur draft have not be released yet, and the final draft order won’t be known until the remaining free agents that received qualifying offers are signed (Jake Arrieta, Alex Cobb, Greg Holland, Lance Lynn, & Mike Moustakas). The Braves have the 8th pick in the 2018 draft but they lost their 3rd round pick and the money that goes with it. The Braves max out their draft spending every year, almost always spending up to 99.5% of their pool. Using the pool value of the team with the 8th pick in the 2017 draft, my rough estimate for the Braves amateur draft spending for 2018 is $9.8M. The Braves international bonus pool for 2018-2019 is $4.75M but they’re limited to signing players for no more than $300,000 since they went over their pool during the 2016-2017 signing period. I would guess that they’ll try to trade some of that money to other teams that aren’t restricted but I think they’ll also sign some talent. Let’s be generous and say they use a little over half of their pool for 2018 – $2.5M.

$6M + $9.8M + $2.5M = $18.3M

Add that to the $99M for active roster payroll and the total for player costs comes to $117.3M. Even with a budget of $130M (which I think is a little high), that actually only leaves $12.7M to spend on free agents, which isn’t much. I can only venture to guess at what the Braves’ budget for player costs is, but I think it’s fair to say they might be looking at the total picture, rather than just the active roster payroll. This could explain why they haven’t spent any money this off-season – they actually have less available than we think.

I’ve read lots of opinions on why the Braves haven’t spent any money this off-season – Liberty Media is cheap, they want to recoup the signing bonus money they lost when MLB took away their international prospects, the free agents aren’t a fit, Liberty Media wants to sell the team, the team is gun-shy after the big money failures of Bartolo Colon, BJ Upton, Hector Olivera, etc. All of these might come into play in some form or fashion, but I’m pretty sure it all starts with what happened on October 2, 2017.

That’s the day John Coppolella was forced to resign by the Braves for his infractions in the international free agency market. That forced the Braves to completely reset the way they run the team – they had to bring a new GM (Alex Anthopoulos) and overhaul the entire front office. It would make sense that this new front office might not be the kind of free spenders the fans would expect, especially when they have to get used to a brand new team, learn about the assets they have, and the budget that might be imposed by team ownership. Going into the off-season, prior to the IFA penalties that MLB dropped on the Braves, it was probably fair to say that the Braves could be spenders this off-season in an effort to turn the page on the re-build. But once Coppy was canned and a whole new front office was brought in, I think the Braves organization had to take a big step back and look realistically at where they are and whether it was a good idea to spend a lot of money this off-season. They decided that 2018 was not the season to spend big and that they would make every effort to move any cumbersome contracts that would restrict their future spending *cough* Matt Kemp *cough* and see what the young stash of prospects they have can do at the major-league level.

Let’s take a quick look at what the Braves have on their team right now. They have a known quantity at first base, center field, and one rotation spot. That’s it. 3 players. 3. Right field, catcher, & 2 starting pitchers (Brandon McCarthy & Scott Kazmir) are free agents after the 2018 season. Left field (assuming it’s Ronald Acuña), second base, 2/5 of the rotation, and over half the bullpen are rookies or players with less than a year of experience. Shortstop still has a lot to prove, third base is a black hole and has been since Chipper Jones retired. The Braves aren’t going to be able to answer the questions at those positions by spending a whole bunch of money in 2018. They have to give it another year to really see what they have. If the young starting pitchers click & third base remains a black hole, then they know they need to spend on third base next year. If Austin Riley slugs his way to AAA by the end of the year, Ronald Acuña wins the 2018 NL Rookie of the Year, but the rotation struggles, the Braves know they need to sign an ace to lead the staff next year. If the 2018 Braves bullpen blows lead after lead after lead this year, that’s where some of the future spending might have to go. There are too many unknowns on this team right now to warrant spending much money this season.

I don’t think Liberty Media is being cheap this year. I think the new front office, led by the bright and forward-thinking Alex Anthopoulos, is making a concerted effort to actually see what the Braves already have and where they may need to spend in the future to create a fully competitive team. I can’t image a smart guy like Anthopoulos would have accepted the Braves GM job if he knew that ownership was gonna handcuff his ability to spend.

I read somewhere once that most Unsuccessful rebuilds pay money for something they think they need before they actually know what they need when they are truly ready to compete. That screams of the San Diego Padres of the last few years to me. The just signed Eric Hosmer to a huge deal thinking he’s their answer, but is he? Most don’t think so. To me, if the Braves were to sign Mike Moustakas to a huge deal this season, it would be the exact same thing – sinking a lot of money into something that a lot of fans think is the answer for the team, but in reality, it’s not. Why spend a fortune on a guy who averages 2 WAR per season when you could wait a year and get one who averages 7 (Josh Donaldson)?

Side note: the argument for signing Moose to a cheap 1-2 year deal since he’s stuck out there on the free agent market is also a bad argument b/c he would cost the Braves their 4th round pick in this year’s draft. There would be no way to recoup that pick either because Moustakas can’t be given another qualifying offer when his contract is up – player’s can only receive one in the their career under the new CBA. With the Braves’ restrictions on signing international players from now until 2021, I feel like amateur draft picks should be treated with even more value than before – the Braves are going to need as many of those as they can get to keep the farm system stocked with top tier talent in the coming years.

The Braves rebuild has taken over 3 years now, and it’s destined to take one more before we fans really get to see the upswing and return to legit contention. But the Braves have the pieces in place with a lot of potential to be a great team very soon. I’m sure a lot of fans are tired of being patient with this team and really want them to do something big RIGHT NOW to start winning again RIGHT AWAY. But think about it – would you rather spend it all too early to maybe win once, or would you rather hang on to see if your investments grow into valuable commodities, then spend to fill in the gaps to send the team over the top and win for many many years to come?

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Show Me The Money! Part 1/2

The Braves have long been tight-lipped about their annual budget for the 25-man roster. Rarely has it ever been stated “Hey, we have $100M to spend this season.”, but I suppose that’s pretty normal for most ball clubs to not come right out and tell the public what their roster budget is for the year, except for the Marlins, but that’s a dumpster fire for another day. Apologies to their fans, both of them.

While we never really know what the Braves roster budget is for a season, we can estimate it based on previous years’ payrolls and what the team already has on the books for that season and beyond. The Braves’ 2017 Opening Day payroll was $126M and by the end of the season, they’d shed almost $3M from that total – the final tally for 2017 was $123.3M. Those totals, combined with statements from the team that revenues should pick up from the new stadium and surrounding Battery, led many to think $130M could be the rough roster budget for 2018. Then Coppy resigned & Alex Anthopoulos was hired and the entire front office was re-worked and in short, things changed drastically. I’m not so sure that we can expect the payroll to be that high anymore, or at least, we have to change the way we think about what the Braves are spending their money on.

All that being said, leads us to my breakdown of the Braves 2018 payroll so let’s dig into what that situation is right now. As of today (2/22/18), the Braves have 15 players under guaranteed1 contracts for 2018:

Total Guaranteed Salaries – $77.66M

1 Only the first 8 contracts listed are guaranteed. All the rest are 1-year arbitration contracts or non-guaranteed major-league deals signed during Spring Training. These 7 players can all be released before the end of Spring Training and only be owed a portion of their salary (30 or 45 days’ worth, depending on the day they’re released). Once they’re placed on the 25-man roster, their contract becomes guaranteed.

2 Half of Kazmir’s $16M salary for 2018 is deferred to 2021.

3 Moylan’s contract is non-guaranteed. It becomes guaranteed and escalates to $1.25M if/when he makes the 25-man roster

4 Brothers and Whitley signed non-guaranteed split contracts for 2018. This means they’ll get one base salary if on the major-league roster ($1.1M for Brothers, $0.8M for Whitley), and a different, smaller salary if in the minors. The totals above are the minor-league base salaries for their split contracts so I’m adding that in as the guaranteed amount for those 2 players.

You might be wondering why I didn’t include Chris Stewart and his $0.575M salary for 2018. His deal, like Moylan’s, is non-guaranteed. I think he made a bet on himself to make the OD roster and guarantee the contract. When he said he wouldn’t come to Atlanta unless it was a major-league deal, he was at least guaranteeing himself $92,742 (30 days’ worth of his $0.575M salary, if he’s released before March 13). If he is DFA’d and remains with the Atlanta org, he’d still be entitled to the pro-rated portion of the $0.575M deal if/when he’s added to the 25-man roster during the season. If he’s DFA’d and chooses free agency rather than accepting the outright assignment, he’d forego the entirety of the $0.575M.

To fill out the rest of the roster, we can simply add in 10 players being paid league minimum. It doesn’t matter which players we use – Dansby Swanson, Ozzie Albies, Johan Camargo, Sean Newcomb, Luiz Gohara, AJ Minter, etc – they’ll all get paid roughly the same amount, league minimum, which is $0.545M for 2018.

10 players X $0.545M = $5.45M

It’s worth going ahead and adding in a league minimum player that will spend the year on the disabled list – there’s always at least one.

Grant Dayton$0.545M

Now for the retained money, aka dead money. These are funds paid to players that are no longer on the team. Either they were released, retired, or have bonus deferrals in their contracts

  • Dan Uggla – $0.25M (His $1M signing bonus was deferred to 4 payments of $0.25M from 2016-2019)

Total Retained Money – $22.25M

Plus that pesky fee for drafting a player in the Rule 5 draft (Anyelo Gomez). This is in addition to said players’ salary, which would be league minimum and is included in the “League minimum” total above.

Rule 5 fee – $0.1M

Add all those figures up and this is what you get:

TOTAL EXPENDED: $106.005M

But wait! There’s more! Believe it or not, the Braves are receiving money from other teams for BOTH of their Matt Kemp trades: $2.5M from the Padres in the trade that brought Kemp to ATL and $4.5M from the Dodgers in the trade that sent him back out west.

From others: $7.0M

Subtract that from the TOTAL EXPENDED amount and the final tally is…drum roll please…$99.005M.

Now, you’re probably thinking “But Boggy, why do other websites like Cot’s Baseball Contracts and Spotrac have the Braves at $116.1M and $109.8M respectively? Your number is WAY lower!” The easiest explanation is this: those sites pro-rate signing bonuses across the life of a player’s contract, which is the same thing MLB does for the purposes of calculating team payrolls in order to determine if a team has to pay the luxury tax. The easiest way to explain “pro-rating signing bonuses” is to use an example. Suppose a player signs a 5 year, $55M contract that includes a $5M signing bonus and salaries of $10M annually. For sites like Cot’s, Spotrac, & MLB, they divide up the signing bonus over the life of the contract ($5M / 5 years = $1M per year) and add that to the base salary for each year. Thus, to them, the player is making $11M per year.

But I have a big problem with that. To me, a player that receives a signing bonus gets that money right away. Otherwise, what’s the enticement to sign for that bonus? This is the real world, not the luxury tax world, and in the real world, that money is spent the year the contract is signed, unless otherwise noted (like Uggla). As an example, Brandon McCarthy’s contract included a $6M signing bonus that was paid in 2 installments the year he signed that contract. For my purposes, I will never pro-rate signing bonuses – I will always apply them to the year a contract is signed, unless otherwise noted.

That’s one difference between my figures & theirs. The other main difference is that those other 2 sites are not deferring half of Scott Kazmir’s salary to 2021. After much research into Kazmir’s deferred payments (and consultation with @jervass of Outfield Fly Rule), I’ve confirmed that the Braves are only responsible for Kazmir’s $16M, but that they will pay it out as noted in the deferral: $8M in 2018 and $8M in 2021. Here’s an AP source that states it clearly. This will inevitably vary by news source over the course of this season and future seasons, but for the sake of doing the most accurate bookkeeping, the $16M should be realized when it’s paid – half in 2018, the other half in 2021.

So, $99M is what I estimate is on the books for the Braves to open the 2018 season. I will go further into what this means for what’s actually available to spend in Part 2 of this post. For now, I’ve spoken enough about salary figures and deferrals and non-guaranteed contracts for one day. Please digest this and wait patiently (ha!) for Part 2.

Cheers knuckleheads.

– Boggy

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TICK. TICK. TICK.

The clock is ticking for MLB, and it’s ticking fast.

In 2017, the average baseball game took 3 hrs 5 minutes and 11 seconds to play. Since 1978, the average time of an MLB game has increased 38 minutes. That’s an average increase of almost 51 seconds per year.  At that pace, in 15 years, MLB will be pushing a nearly 3 hour and 20 minute game. This would surpass the time of the average NFL game (3 hours 12 minutes).

Tick. Tick. Tick.

Currently, baseball is a network television driven business. Regional sports brands spend big bucks to leverage their channels from the value of team brands. This creates value for their entire channel and brings in revenue, not only through commercials during live games, but also through advertising on their other programming they are able to subsequently attract game viewers to consume. Think of it this way, Fox Sports South isn’t just getting Braves fans’ attention for Braves games, but also for episodes of Driven, College Football games, replays of Braves games, and much more. For these television networks, it is of vital importance that the game of baseball continues to attract fans to their broadcast format. This creates a sense of urgency for MLB to continue to regulate the game in a way that best packages the sport for network television formats and storylines that keep the undivided attention of its audience.

Tick. Tick. Tick.

There are a lot of different causes and solutions tossed about for why the game is ‘slow’ and how to most effectively speed it up. Baseball commissioner Rob Manfred and the MLB front office have attempted to take multiple steps to try to increase the pace of play within the game itself. Last year, they removed throwing pitches for intentional walks, instead giving free passes to first base. In spite of these changes, the average game actually increased 4 minutes and 30 seconds in 2017 compared to 2016.

MLB is likely to enact more pace of play changes like a pitch clock, allowing only one trip to the mound by a catcher per pitcher per inning, and raising the bottom of the strike zone. The players’ union has declined these changes for now, but they are likely to happen even without the players explicit permission. Manfred is even going to test the idea of starting extra innings with a runner on 2nd base (this is an incredibly dumb idea). While I think that some of these things might speed up the pace of play by a couple of minutes per game, at some point we must begin to question how much they change the integrity and nature of the game itself. There are many peripheral elements that affect the flow of the game.

The average MLB game you watch on TV will consist of more than 70 commercials. SEVENTY COMMERCIALS. If you’re an Atlanta Braves fan you know half of those commercials are the creepy don’t drink and drive commercials by the State’s Office for Highway Safety and the other half are for Cooks Pest Control.  

Those seventy commercials will make sports networks like Fox Sports South somewhere between $8-15 Million per season. Just one of those regular season spots can cost somewhere between $1200-$2500 depending on the teams playing.

In a 9-inning game, there will be 17-inning changes, (one after the top of the first, another at the bottom, etc) that create natural breaks in the game. Since the game began, the use of relief pitchers has gone up at an average of 1% per year. That seems pretty low, but we are all the way up to 3.2 relief pitchers per team per game now, that’s just shy of 7 pitching changes per game. If Walter Johnson knew it would come to this he would have pitched until he was 70. Not only does the pitching change itself take time, but the multiple mound visits by pitching coaches, catchers, and ultimately the manager, makes this a drawn out drama that can bring a baseball game to a grinding halt.

The breaks between innings and pitching changes alone attribute to 24 breaks in a baseball game. Much of that time can’t be compressed, as you need time for the teams to change sides, and for pitchers to stretch. However, if you could remove just one 20-second commercial per break you could easily decrease a game’s time by more than 5:40 minutes. However, removing those commercials would be an obvious loss for network tv resulting in the loss of millions of dollars of potential revenue over the course of a 162-game season. Obviously, it is unlikely such a solution would be pursued.

I’ve often suggested that moving to a soccer style of production, where the game doesn’t stop for television, could work. Of course that would open the door to the slippery slope of sponsored jerseys, sponsored teams, and create the necessity of cut away commercials. And of course it is doubtful this works for profit reasons as well. Let’s be real, network television and MLB don’t have a real problem with the length of games as much as what they consider the pace of play. The longer a game the more time and space for commercials, green screen spots, and in-park advertising, and I can guarantee you that MLB doesn’t mind that.

Tick. Tick. Tick.

What about instant replay? While I will always love the days of Bobby Cox getting tossed from the game, as well as the pitcher, batter, and half the team, replay has had some advantages. It gets calls correct, or at least it should. Replay takes a pretty good beating because it frequently takes so long. I can empathize with the fan who is willing to excuse the occasional bad call for the sake of living in the moment. I can’t imagine hearing Skip Caray call the famous “Sid Slide” and then having to wait for a replay break to confirm if he was safe or out. However, I can also appreciate the value of my team getting the benefit of having a play called correctly. At the end of the day, replay probably slows the game down slightly, but if you take into account the time it takes to restore order, get coaches back into the dugout after arguments with umpires, and continue the flow of the game prior to the implementation of replay it’s probably a minuscule difference. We can have a separate debate about replay’s role in the game today, but in regards to time, it’s a pretty small leak of total minutes.

Perhaps what is more fascinating, is the underlying philosophy that illustrates MLB’s dramatic shift in sacrificing the nature of its on-field product, a vital part of which has always been the uniqueness of the umpire, for the sake of accuracy that fits the television model’s values more effectively. Sometimes the greatest stories are the ones with the best embellishments.

While MLB is constantly evaluating ways to speed up the game and make its complexion more television friendly, I think we still are missing the actual problem that MLB has with pace of play.

Tick. Tick. Ti…………

Network Television is dead and the internet killed it.

In my opinion, MLB continues to go to the dentist when it needs to see a proctologist. The dentist can keep your teeth clean and your smile happy, but if the problem is the stick up your ass, then a proctologist is better suited for the job. Simplified, I think MLB’s ticking time problem has nothing to do with the pace of the game.

It is estimated that by 2021, 30% of all adults in the United States will not have traditional pay TV. That’s more than 81 million people. If you’re like me and are a cord cutter, you are very aware of how little traditional sports organizations have done to embrace you as a consumer. MLB (like most other sports organizations) drags its heels at every opportunity to empower its future audience to build rhythms that include baseball into their new consumer habits.

In 2017, traditional TV was still the most-used medium for that consumption with the average consumer taking in 170 minutes of TV viewing per day last year.

The internet – 140 minutes per day.

Estimates show that this could narrow to just a 7 minute gap by the end of 2018.

After that, traditional network television is dead.

The reason MLB is falling into this trap is that as network television becomes scarcer, the rates people are paying for prime advertising slots continue to skyrocket. Playoff games last year often cost advertisers more than $500,000 per commercial. Network channels like TBS and FOX paid more than $12.4 BILLION for the rights to carry the playoffs and All-Star games for 8 years. That is $1.5 Billion per year. The trap is being set for MLB by its own success. MLB is being paid more than ever for commercials because there are so few other avenues where people actually still sit and are forced to watch commercials.

Here’s the rub, if you eat the cow that you milk, eventually you run out of milk and meat. If MLB (and other sports) continue to build their entire product model based on meeting the needs of the dying goliath of network television, they are tying themselves to their own death anchors.

Not only is MLB already behind on cord cutting and how it has changed the media consumer landscape, future technologies are about to radicalize the way we think about consuming products even more dramatically. Virtual Reality technology is already changing how players prepare for games, but it’s only a matter of time before the statcast data, advanced analytics that are used to analyze every play in a game, and technologies like virtual and augmented reality are harnessed to alter the consumer experience. Consumer attention spans haven’t shortened, as the pace of play argument would suggest, instead, consumers have changed their expectation for how their attention is used on those things they consume.

MLB and teams must begin to think in ways that follow their end user market; can they imagine fans paying for season tickets to enjoy the Braves via virtual reality? What if the Braves could create a way for fans to digitally stand in the batters box beside Acuna as he faces Max Scherzer? What would fans pay for that experience? Sound futuristic? It’s not. The technology is already within grasp to augment the audience reality with instant stats like the spin rate on the pitcher’s curveball, or the distance a player runs to make a diving catch. MLB audiences would salivate at the opportunity to zoom in to watch replay through their augmented reality devices to see the player’s foot touch the bag from 3-inches away. There is no lack of innovation, there is a lack of pursuit of that innovation by MLB. These things are not far fetched they are all technologically attainable within the next ten years, but only if MLB prepares for them.

However instead of pursuing innovation, regional networks and MLB are more focused on pissing contests over blackouts and area coverages. If you’re a Braves fan living in Atlanta, you can’t even watch your favorite team if you cut the cord. This is the epitome of stupidity. Piss off, or at the very least ignore, your future base to feed your dying bloated giant cash cows their last meals.  While MLB thrives on fat television deals from those dying giants, there is an inherent problem. In 15 years, will those TV companies even still exist? Many fans expect the Braves to  save themselves in the competitive market with some miraculous new TV deal in 2027, but the truth is, will there even be a TV company around to be interested?

The clock problem that MLB has is not a problem with the pace of the game, but a problem with their inability to move their behemoth of an organization off it’s spoiled fat rump to keep up with the pace of the changing environment and habits of their primary future consumers. And the primary consumers they have forgotten are fans, not TV executives.

TICK. TICK. TICK.

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