When asked about the size of the Twins’ payroll, Terry Ryan and Bill Smith have always said that it’s simply a function of revenue — that the team will always spend right around 52% of revenue on the major league payroll. It’s a good excuse for keeping the payroll low; “we don’t have enough money” is something that seems to resonate with both fans and sportswriters.
But is it true? Khoi Vinh, a Yankees fan, did some research on this very topic in the interest of defending the Yankees* against those who would say they only won the World Series because they have the most money.
* Personally, I don’t think that’s necessary at all. And doesn’t the fact that this is what everyone’s talking about kind of tarnish their championship celebration? I’m sure the media and the Yankees themselves would have found some other way to tarnish it, but still. Let’s all get over the fact that they have the most money. We knew it before they won another World Series, and we know it’s going to continue. It’s just reality, folks.
What he came up with was a table comparing 2008 revenue to 2009 payroll, and compared them to get an “investment rate” in the team’s payroll. The Yankees’ investment rate was 4th, at 54%. The Tigers led the league with a 62% investment rate.* And the Twins? Well, the Twins were in the bottom third of the league, with a paltry 41% investment rate.
Given the numbers Vinh cites, the Twins should have had an $82M payroll in 2009 rather than $65M, based solely on their revenue and their claimed level of reinvestment in the team.
* Does anyone else think the Tigers are setting themselves up for some financial trouble in the near future? I mean, they’re in Detroit. How is their revenue not going to continue to drop? I’m guessing all those big long-term contracts are causing some ulcers in the front office right now.
It’s worth noting, of course, that the Twins’ 2008 revenues were the 4th lowest in the league, ahead of only the Marlins, Pirates, and Royals. So while it’s certainly easy to accuse them of not spending a large enough percentage of their payroll, they’re not exactly wrong that they simply lack the funds of other franchises.
The revenues probably went up in 2009, as they sold out an inordinately high number of games, took down the curtain to open up several thousand extra seats and sold those out, and played an extra home game with the curtain down. Additionally, revenue will certainly increase with the new stadium, as people rush to see the place, and season ticket sales climb, and (perhaps most importantly) the Twins actually get a reasonable share of the revenue from the Dome.
(I’ve written before about the Twins’ deal with the Metrodome. Basically, it’s the only stadium deal in professional sports that is not set up for the team to continually siphon off extra money from the municipality, instead allowing the local government to siphon money from the team. Minneapolis and Minnesota have received over $100M of free money from the Twins since the Dome was built. In all other stadium situations, that flow of money is reversed. I’m guessing that Target Field will be more common, so in addition to generating more revenue overall, a larger percentage of that money will find its way to the Twins.)
They could probably also use a more lucrative cable deal, which is increasingly one of the things that sets apart the large-revenue teams.
But the thing to watch, as the Twins move into Target Field next year, is not only the revenue increases, but also the level of investment in the team — if the percentage remains as low as it currently is, the increased revenues from the new stadium will simply go as profits, and will not help the team’s competitiveness as much as they should.12 comments