5E7A6E66630F0 wrote: Yeah VA it is a shame. I have no doubt that ownership could easily have spent the money needed to bring in at least one top grade starting pitcher (David Price? Johnny Cueto? J.A. Happ) based on their revenue to try to improve or at least stay at the level of competitiveness of the 98 win team in 2015. Even if they deny that revenues are enough and debt is too great (although the rest of MLB's teams finances would belie that) the equity they have in the franchise which is almost $800 million should allow them to briefly have an inflated payroll even if it resulted in a bit of red ink.
It's abundantly clear after 2015 that Pirate ownership intends to run the franchise on the cheap while raking in league exceptional profits year after year. Their prior excuse about waiting to spend more on payroll when it is "the right time" has been exposed as pure hogwash.
As Cleveland is 6 5 4 outs away from going up 2-1 in the WS, Pirate fans are left with empty promises. Four prospects were traded for Miller to close games. We gave two prospects away to move Frankie's salary AND then unloaded OUR closer.... I gotta think long and hard about this. But it's clear - this FO was never willing to finish this team. I believed they would, but I was wrong. First KC, and now and even more revealing, Cleveland, have exposed them.
2017 Outlook
Moderators: SammyKhalifa, Doc, Bobster
2017 Outlook
5470646C69050 wrote: Yeah VA it is a shame. I have no doubt that ownership could easily have spent the money needed to bring in at least one top grade starting pitcher (David Price? Johnny Cueto? J.A. Happ) based on their revenue to try to improve or at least stay at the level of competitiveness of the 98 win team in 2015. Even if they deny that revenues are enough and debt is too great (although the rest of MLB's teams finances would belie that) the equity they have in the franchise which is almost $800 million should allow them to briefly have an inflated payroll even if it resulted in a bit of red ink.
It's abundantly clear after 2015 that Pirate ownership intends to run the franchise on the cheap while raking in league exceptional profits year after year. Their prior excuse about waiting to spend more on payroll when it is "the right time" has been exposed as pure hogwash.
this is why I think NH will get fed up and look for greener pastures. I can't picture someone in his position not wanting to get a championship and see what he could do with resources that most gm's have.
It's abundantly clear after 2015 that Pirate ownership intends to run the franchise on the cheap while raking in league exceptional profits year after year. Their prior excuse about waiting to spend more on payroll when it is "the right time" has been exposed as pure hogwash.
this is why I think NH will get fed up and look for greener pastures. I can't picture someone in his position not wanting to get a championship and see what he could do with resources that most gm's have.
2017 Outlook
153332253323500 wrote:
this is why I think NH will get fed up and look for greener pastures. I can't picture someone in his position not wanting to get a championship and see what he could do with resources that most gm's have.
That would seem to be a possibility with NH, but it's difficult for me to understand how an owner could have a team with the success that the 2015 Pirates had and not loosen the purse strings enough to try to finish the job. Can you imagine the Rooneys, Mario Lemieux or Mark Cuban not pushing their management teams for a championship and opening their wallets to do so if they had a team that close to winning it all the previous year? If NH isn't fed up yet when will it happen?
this is why I think NH will get fed up and look for greener pastures. I can't picture someone in his position not wanting to get a championship and see what he could do with resources that most gm's have.
That would seem to be a possibility with NH, but it's difficult for me to understand how an owner could have a team with the success that the 2015 Pirates had and not loosen the purse strings enough to try to finish the job. Can you imagine the Rooneys, Mario Lemieux or Mark Cuban not pushing their management teams for a championship and opening their wallets to do so if they had a team that close to winning it all the previous year? If NH isn't fed up yet when will it happen?
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Leyland1948
2017 Outlook
I read somewhere, do not remember where, that the new CBA may have a salary floor in the agreement if agreed to. If so hopefully it will be high enough to cause some payroll changes and force the team to spend more!
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DemDog
2017 Outlook
7E574B5E535C56030B060A320 wrote: I read somewhere, do not remember where, that the new CBA may have a salary floor in the agreement if agreed to. If so hopefully it will be high enough to cause some payroll changes and force the team to spend more!
What frustrates me the most about the Pirate ownership is that spenders like them need a rule like what you heard about. It might be something that players may go for but the owners, well I doubt it.
Unless perhaps there is some kind of revenue sharing where at least TV revenues are shared pretty equally. Unfortunately that is a dream that has about as much chance of flying with ownership as does Pirate ownership paying top $$ for a great starting pitcher. For baseball to succeed and to become more competitive where teams don't have to wait 71 years to make a WS appearance it needs to level the playing field and to me revenue sharing and a salary cap would seem to be a way to consider.
What frustrates me the most about the Pirate ownership is that spenders like them need a rule like what you heard about. It might be something that players may go for but the owners, well I doubt it.
Unless perhaps there is some kind of revenue sharing where at least TV revenues are shared pretty equally. Unfortunately that is a dream that has about as much chance of flying with ownership as does Pirate ownership paying top $$ for a great starting pitcher. For baseball to succeed and to become more competitive where teams don't have to wait 71 years to make a WS appearance it needs to level the playing field and to me revenue sharing and a salary cap would seem to be a way to consider.
2017 Outlook
There has been talk before about a spending minimum but the players association has opposed it. While some owners (the richer ones) are frustrated that they are watching some low income teams stuff money in their pockets instead of spending on the team, the players association is more afraid that allowing the idea of a minimum salary will soon lead to a maximum salary - a salary cap. So the result is a weird inversion of interests, with the players and small team owners against the big revenue teams. So it could happen, but probably not.
2017 Outlook
I don't see a salary floor helping the Pirates at all. They would still be at bottom of league in terms of payroll.
I will end by being optimistic since this is just the start of the off season.
The Bucs are going to do something(s) to show fans that last year wasn't acceptable to them and that they expect to rebound in 2017.
I will end by being optimistic since this is just the start of the off season.
The Bucs are going to do something(s) to show fans that last year wasn't acceptable to them and that they expect to rebound in 2017.
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NewMexicoLobo
- Posts: 107
- Joined: Thu Oct 27, 2016 11:53 am
2017 Outlook
63424A634840270 wrote: I read somewhere, do not remember where, that the new CBA may have a salary floor in the agreement if agreed to. If so hopefully it will be high enough to cause some payroll changes and force the team to spend more!
What frustrates me the most about the Pirate ownership is that spenders like them need a rule like what you heard about. It might be something that players may go for but the owners, well I doubt it.
Unless perhaps there is some kind of revenue sharing where at least TV revenues are shared pretty equally. Unfortunately that is a dream that has about as much chance of flying with ownership as does Pirate ownership paying top $$ for a great starting pitcher. For baseball to succeed and to become more competitive where teams don't have to wait 71 years to make a WS appearance it needs to level the playing field and to me revenue sharing and a salary cap would seem to be a way to consider.
I agree that the whole system would have to change in the way that you say for something like a salary floor to happen. Until or unless it does the Pirate financial model and way of trying to sustain winning for multiple seasons has to continue.
Being a small business owner for the last thirty years I can tell everyone that managing money and cash flow in ANY business is similar to doing it in your own household, except that fluctuations in revenue make it even scarier. And when ownership's financial personal guarantees are probably sprinkled throughout it's easy understand why financial conservatism rules the day. In the Pirates' case, the financial model they must follow for sustained success is going to backfire from time to time from the standpoint of positive results for any single season. That being the case I'd really think they'll look at this season's failures from the standpoint that they'll probably have to risk a negative fluctuation in cash flow in the form of increased payroll (starting pitcher?) in order to maximize their chances of winning next year, which in theory will generate more revenue. If that fails there will be a sell-off. Just look at Kansas City as an example of what a small-market team must do if they fail to win with a higher payroll than what they can afford.
Related to all of that a business's bottom line is not some pot of gold or lump of coal that is realized at the end of the fiscal year or rainbow (if successful fiscally). It is spent, saved, or absorbed little by little as the year unfolds. For this reason, trust me in that this money is not going lump-sum into Nutting's pocket. And also related to that, every successful business is forced to retire long-term debt by virtue of payment schedules, for which ownership is usually personally at risk (the aforementioned personal guarantees). And what's misleading to the bottom line is that reduction of the principal IS NOT booked as an expense. It is only the interest portion that is an expense (what most would call a "write-off"). So a company could technically be profit-rich and cash-poor. And even being profit rich would probably constitute no more than a 3% to 5% bottom-line profit. I would turn hand-springs if my company had been able to do that from one year to the next on a consistent basis.
Finally, a traditional-style business (and certainly no sports team) is going to be a cash cow for ownership. You just hope to maximize opportunity and minimize risk as you operate from year to year. If your business is successful and there is a market for the product, the real money is made when you sell. In the traditional capitalist society this is the potential reward for having taken the risks and employed many people over the years and contributed to their well-being as well as to your own family's.
So all of this is what the Nuttings are doing and as fans it will be very interesting for all of us to see what Bob Nutting does going forward. After all, the market value of a business can fluctuate wildly from what the so-called book value is.
What frustrates me the most about the Pirate ownership is that spenders like them need a rule like what you heard about. It might be something that players may go for but the owners, well I doubt it.
Unless perhaps there is some kind of revenue sharing where at least TV revenues are shared pretty equally. Unfortunately that is a dream that has about as much chance of flying with ownership as does Pirate ownership paying top $$ for a great starting pitcher. For baseball to succeed and to become more competitive where teams don't have to wait 71 years to make a WS appearance it needs to level the playing field and to me revenue sharing and a salary cap would seem to be a way to consider.
I agree that the whole system would have to change in the way that you say for something like a salary floor to happen. Until or unless it does the Pirate financial model and way of trying to sustain winning for multiple seasons has to continue.
Being a small business owner for the last thirty years I can tell everyone that managing money and cash flow in ANY business is similar to doing it in your own household, except that fluctuations in revenue make it even scarier. And when ownership's financial personal guarantees are probably sprinkled throughout it's easy understand why financial conservatism rules the day. In the Pirates' case, the financial model they must follow for sustained success is going to backfire from time to time from the standpoint of positive results for any single season. That being the case I'd really think they'll look at this season's failures from the standpoint that they'll probably have to risk a negative fluctuation in cash flow in the form of increased payroll (starting pitcher?) in order to maximize their chances of winning next year, which in theory will generate more revenue. If that fails there will be a sell-off. Just look at Kansas City as an example of what a small-market team must do if they fail to win with a higher payroll than what they can afford.
Related to all of that a business's bottom line is not some pot of gold or lump of coal that is realized at the end of the fiscal year or rainbow (if successful fiscally). It is spent, saved, or absorbed little by little as the year unfolds. For this reason, trust me in that this money is not going lump-sum into Nutting's pocket. And also related to that, every successful business is forced to retire long-term debt by virtue of payment schedules, for which ownership is usually personally at risk (the aforementioned personal guarantees). And what's misleading to the bottom line is that reduction of the principal IS NOT booked as an expense. It is only the interest portion that is an expense (what most would call a "write-off"). So a company could technically be profit-rich and cash-poor. And even being profit rich would probably constitute no more than a 3% to 5% bottom-line profit. I would turn hand-springs if my company had been able to do that from one year to the next on a consistent basis.
Finally, a traditional-style business (and certainly no sports team) is going to be a cash cow for ownership. You just hope to maximize opportunity and minimize risk as you operate from year to year. If your business is successful and there is a market for the product, the real money is made when you sell. In the traditional capitalist society this is the potential reward for having taken the risks and employed many people over the years and contributed to their well-being as well as to your own family's.
So all of this is what the Nuttings are doing and as fans it will be very interesting for all of us to see what Bob Nutting does going forward. After all, the market value of a business can fluctuate wildly from what the so-called book value is.
2017 Outlook
5D76645E766B7A707C5F7C717C130 wrote: I read somewhere, do not remember where, that the new CBA may have a salary floor in the agreement if agreed to. If so hopefully it will be high enough to cause some payroll changes and force the team to spend more!
What frustrates me the most about the Pirate ownership is that spenders like them need a rule like what you heard about. It might be something that players may go for but the owners, well I doubt it.
Unless perhaps there is some kind of revenue sharing where at least TV revenues are shared pretty equally. Unfortunately that is a dream that has about as much chance of flying with ownership as does Pirate ownership paying top $$ for a great starting pitcher. For baseball to succeed and to become more competitive where teams don't have to wait 71 years to make a WS appearance it needs to level the playing field and to me revenue sharing and a salary cap would seem to be a way to consider.
I agree that the whole system would have to change in the way that you say for something like a salary floor to happen. Until or unless it does the Pirate financial model and way of trying to sustain winning for multiple seasons has to continue.
Being a small business owner for the last thirty years I can tell everyone that managing money and cash flow in ANY business is similar to doing it in your own household, except that fluctuations in revenue make it even scarier. And when ownership's financial personal guarantees are probably sprinkled throughout it's easy understand why financial conservatism rules the day. In the Pirates' case, the financial model they must follow for sustained success is going to backfire from time to time from the standpoint of positive results for any single season. That being the case I'd really think they'll look at this season's failures from the standpoint that they'll probably have to risk a negative fluctuation in cash flow in the form of increased payroll (starting pitcher?) in order to maximize their chances of winning next year, which in theory will generate more revenue. If that fails there will be a sell-off. Just look at Kansas City as an example of what a small-market team must do if they fail to win with a higher payroll than what they can afford.
Related to all of that a business's bottom line is not some pot of gold or lump of coal that is realized at the end of the fiscal year or rainbow (if successful fiscally). It is spent, saved, or absorbed little by little as the year unfolds. For this reason, trust me in that this money is not going lump-sum into Nutting's pocket. And also related to that, every successful business is forced to retire long-term debt by virtue of payment schedules, for which ownership is usually personally at risk (the aforementioned personal guarantees). And what's misleading to the bottom line is that reduction of the principal IS NOT booked as an expense. It is only the interest portion that is an expense (what most would call a "write-off"). So a company could technically be profit-rich and cash-poor. And even being profit rich would probably constitute no more than a 3% to 5% bottom-line profit. I would turn hand-springs if my company had been able to do that from one year to the next on a consistent basis.
Finally, a traditional-style business (and certainly no sports team) is going to be a cash cow for ownership. You just hope to maximize opportunity and minimize risk as you operate from year to year. If your business is successful and there is a market for the product, the real money is made when you sell. In the traditional capitalist society this is the potential reward for having taken the risks and employed many people over the years and contributed to their well-being as well as to your own family's.
So all of this is what the Nuttings are doing and as fans it will be very interesting for all of us to see what Bob Nutting does going forward. After all, the market value of a business can fluctuate wildly from what the so-called book value is.
Although I appreciate your insights into small business ownership and the difficulties presented in such an endeavor I would like to point out some significant differences between small business and the business of Major League Baseball ownership.
First, of course a MLB franchise is not a small business. Nor is it fraught with much of the uncertainty (which you've mentioned) that small businesses face. It is in fact a closed shop monopoly permitted by a federal antitrust exemption-about as close to a definition of "cash cow" as exists. The Pirates have virtually no uncertainty regarding revenue. They are guaranteed $25M yearly in TV revenue until 2020 when that figure will likely double to the MLB average of small market teams. They are guaranteed recipients of revenue sharing from the 'luxury tax' in MLB. They have no serious doubts regarding attendance stability as they have been gifted by taxpayers with one of the showcase venues in all of MLB, PNC Park, as their home and drew well even in a year when they didn't have a winning season. Other sources of revenue have been consistently on the increase for all teams in MLB for the past decade. The Pirates ranked 18th out of all MLB teams in revenue with $244M. Their payroll ranked 25th at $104M.
Forbes magazine has ranked the Pittsburgh franchise as the 18th most valuable of 30 teams at an estimated value of $975M. The Nutting ownership purchased the franchise for $98M. That places the equity in the business at roughly $780M after the 10% franchise debt has been settled. You make the assertion that "managing money and cash flow in ANY business is similar to doing it in your own household." I would agree. As such if I had a house that was worth more than 7 times what I paid for it I would consider a home equity loan to finance anything that I might not have the proper cash flow to deal with at a particular point in time. This equity is leverage for running a business and a safety net for any unexpected expenses or crises. Pirate ownership pleading poverty regarding payroll (which NH has already done after the season ended) is simply absurd. There is enough equity in the franchise to sustain a much higher payroll for more than just a run at a championship. Evidence from other MLB teams suggests that a team with $244M in revenue can sustain a payroll of ~$130M without going deep into the red. With the equity built into their business Pirate ownership should be looking to spend up to their limit when the chance for a championship is a reasonable possibility.
Finally you point to KC as an example of what a small market team has to do if they fail to win with a higher payroll. Somehow I don't consider winning a World Series Championship as KC did any kind of failure. The fact that their ownership decided to go for seconds with a higher payroll the following season was a reasonable risk. Reasonable not only because they had already won one championship but reasonable because any MLB team can mitigate subsequent payroll excesses through trades and youth development in the natural course of the business of MLB. If KC operates in the red for a couple of years before they can balance the books they'll have the increased value in the franchise that a world championship brought them in 2015 that will likely more than make up the deficit.
The Pirates ownership is well beyond a reasonable definition of fiscal conservatism. They are demonstrating a seemingly unethical disregard for the essence (sports competition) of the business they have chosen to participate in.
What frustrates me the most about the Pirate ownership is that spenders like them need a rule like what you heard about. It might be something that players may go for but the owners, well I doubt it.
Unless perhaps there is some kind of revenue sharing where at least TV revenues are shared pretty equally. Unfortunately that is a dream that has about as much chance of flying with ownership as does Pirate ownership paying top $$ for a great starting pitcher. For baseball to succeed and to become more competitive where teams don't have to wait 71 years to make a WS appearance it needs to level the playing field and to me revenue sharing and a salary cap would seem to be a way to consider.
I agree that the whole system would have to change in the way that you say for something like a salary floor to happen. Until or unless it does the Pirate financial model and way of trying to sustain winning for multiple seasons has to continue.
Being a small business owner for the last thirty years I can tell everyone that managing money and cash flow in ANY business is similar to doing it in your own household, except that fluctuations in revenue make it even scarier. And when ownership's financial personal guarantees are probably sprinkled throughout it's easy understand why financial conservatism rules the day. In the Pirates' case, the financial model they must follow for sustained success is going to backfire from time to time from the standpoint of positive results for any single season. That being the case I'd really think they'll look at this season's failures from the standpoint that they'll probably have to risk a negative fluctuation in cash flow in the form of increased payroll (starting pitcher?) in order to maximize their chances of winning next year, which in theory will generate more revenue. If that fails there will be a sell-off. Just look at Kansas City as an example of what a small-market team must do if they fail to win with a higher payroll than what they can afford.
Related to all of that a business's bottom line is not some pot of gold or lump of coal that is realized at the end of the fiscal year or rainbow (if successful fiscally). It is spent, saved, or absorbed little by little as the year unfolds. For this reason, trust me in that this money is not going lump-sum into Nutting's pocket. And also related to that, every successful business is forced to retire long-term debt by virtue of payment schedules, for which ownership is usually personally at risk (the aforementioned personal guarantees). And what's misleading to the bottom line is that reduction of the principal IS NOT booked as an expense. It is only the interest portion that is an expense (what most would call a "write-off"). So a company could technically be profit-rich and cash-poor. And even being profit rich would probably constitute no more than a 3% to 5% bottom-line profit. I would turn hand-springs if my company had been able to do that from one year to the next on a consistent basis.
Finally, a traditional-style business (and certainly no sports team) is going to be a cash cow for ownership. You just hope to maximize opportunity and minimize risk as you operate from year to year. If your business is successful and there is a market for the product, the real money is made when you sell. In the traditional capitalist society this is the potential reward for having taken the risks and employed many people over the years and contributed to their well-being as well as to your own family's.
So all of this is what the Nuttings are doing and as fans it will be very interesting for all of us to see what Bob Nutting does going forward. After all, the market value of a business can fluctuate wildly from what the so-called book value is.
Although I appreciate your insights into small business ownership and the difficulties presented in such an endeavor I would like to point out some significant differences between small business and the business of Major League Baseball ownership.
First, of course a MLB franchise is not a small business. Nor is it fraught with much of the uncertainty (which you've mentioned) that small businesses face. It is in fact a closed shop monopoly permitted by a federal antitrust exemption-about as close to a definition of "cash cow" as exists. The Pirates have virtually no uncertainty regarding revenue. They are guaranteed $25M yearly in TV revenue until 2020 when that figure will likely double to the MLB average of small market teams. They are guaranteed recipients of revenue sharing from the 'luxury tax' in MLB. They have no serious doubts regarding attendance stability as they have been gifted by taxpayers with one of the showcase venues in all of MLB, PNC Park, as their home and drew well even in a year when they didn't have a winning season. Other sources of revenue have been consistently on the increase for all teams in MLB for the past decade. The Pirates ranked 18th out of all MLB teams in revenue with $244M. Their payroll ranked 25th at $104M.
Forbes magazine has ranked the Pittsburgh franchise as the 18th most valuable of 30 teams at an estimated value of $975M. The Nutting ownership purchased the franchise for $98M. That places the equity in the business at roughly $780M after the 10% franchise debt has been settled. You make the assertion that "managing money and cash flow in ANY business is similar to doing it in your own household." I would agree. As such if I had a house that was worth more than 7 times what I paid for it I would consider a home equity loan to finance anything that I might not have the proper cash flow to deal with at a particular point in time. This equity is leverage for running a business and a safety net for any unexpected expenses or crises. Pirate ownership pleading poverty regarding payroll (which NH has already done after the season ended) is simply absurd. There is enough equity in the franchise to sustain a much higher payroll for more than just a run at a championship. Evidence from other MLB teams suggests that a team with $244M in revenue can sustain a payroll of ~$130M without going deep into the red. With the equity built into their business Pirate ownership should be looking to spend up to their limit when the chance for a championship is a reasonable possibility.
Finally you point to KC as an example of what a small market team has to do if they fail to win with a higher payroll. Somehow I don't consider winning a World Series Championship as KC did any kind of failure. The fact that their ownership decided to go for seconds with a higher payroll the following season was a reasonable risk. Reasonable not only because they had already won one championship but reasonable because any MLB team can mitigate subsequent payroll excesses through trades and youth development in the natural course of the business of MLB. If KC operates in the red for a couple of years before they can balance the books they'll have the increased value in the franchise that a world championship brought them in 2015 that will likely more than make up the deficit.
The Pirates ownership is well beyond a reasonable definition of fiscal conservatism. They are demonstrating a seemingly unethical disregard for the essence (sports competition) of the business they have chosen to participate in.