3 Year Payroll Model?
Saw this piece on the East Valley Tribune site: http://www.eastvalleytribune.com/story/102881
The jist, as far as I can tell, is that they don't mind spending more this year because they are going to (somehow) lump the costs of the next 3 years together. I had heard that the payroll for this year was going to be in the 70-75 range. Isn't 230 divided by 3, 76.6? What's the difference?
Someone smarter then me want to explain this? Sounds a whole lot like what Colangelo did to me.
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Fascinating piece
by Jim McLennan on Nov 28, 2007 4:17 PM EST reply actions 0 recs
Heres the deal
Originally payroll was going to be 75 this year, or 5 million more than last year, and they were going up in 5 million increments
75
80
85
--
240
What they might be doing is something like
80
75
85
This isn't the same as doing what Colangelo did, which was defer salary. They have Ortiz coming off the books next, and RJ too. So they will have some added flexibility next year. What they seem to be doing is shifting next years flexibility to this year.
Overall...whether or not they exceed 240 over the next 3 years remains to be see...but I emphasize...re read the article. Kendrick would not give Magruder a figure....Magruder guessed at 230-240...but he doesn't really know. (neither do I)
by shoewizard on Nov 28, 2007 6:44 PM EST reply actions 0 recs
Shoe is right on.
by Adam1 on Nov 28, 2007 6:50 PM EST up reply actions 0 recs
So I'm not crazy
The only way this makes sense is if the total number has gone up. I think someone has already speculated that higher then expected attendance may equal more money to spend this year.
by nihil67 on Nov 28, 2007 6:51 PM EST up reply actions 0 recs
No,
Hypothetical...
Say they project over the next 3 years to be committed to $195M in payroll (including deferred, arbitration, everything). And they have projected to spend $240M. Going year by year, they would have say, $5M this year, and $20M in both 2009 and 2010. Instead, you can lump it together and say they have $45M to spend. That way, you can go out and commit $30M+/- on a pitcher.
by Adam1 on Nov 28, 2007 7:15 PM EST up reply actions 0 recs
Fishy?
I mean, if you had initially budgeted x total dollars for player payroll over three years, based on old revenue and cost projections, and you suddenly had extra moolah and you've decided to rebudget current payroll and you've been advertising this intention to increase payroll commensurate with the club's improving financials...well, doesnt this story kind of write itself in a very straightforward way? We got more money, so we're going to spend it, or at least budget it, on players.
But instead, we get this determined effort by Mr Kendrick to leave the distinct impression that they're not really increasing payroll at all - not in any meaningful, longterm sense. So, if you're not increasing payroll under your new fiscal calendar, and your revenue unexpectedly spiked, and not a cent is going into the partners' pockets, and deferred salaries were accounted for in the previous budget, where is the "extra" money going?
Is there an "unexpected" expense tying up this new money? The scoreboard's new. Josh Byrnes, Derrick Hall and some other executives are receiving extensions, amounts undisclosed. Anything else? I'm all ears.
Further, does anything seem fishy about the Dbax hot pursuit of Carp? If you really intended to sign Kuroda, would your principle (Kendrick) proclaim Kuroda's better than any available pitcher in North America, while the offer's pending? I understand Kuroda has yet to express an interest in visiting the valley. This offer sounds DOA, and I suspect this new money will go, if not straight into the partner's pockets, somewhere other than Japan.
by Diamondhacks on Dec 2, 2007 12:56 AM EST reply actions 0 recs
Oh for heavens sakes
First of all, what are you talking about when you say :
"Kendrick's unspoken suggestion that the three year umbrella payroll will remain relatively static in the face of unexpected revenue windfalls."
Your level of speculation to try to buttress a point wholly unsupported by fact or knowledge is astonishing.
Like all businesses, they have a plan. At the same time, they have shown they can be flexibile in adjusting that plan as circumstances change. For example, their original stated payroll plan prior to last year called for a payroll budget of
60-65 in 07
65-70 in 08
70-75 in 09
By which point they expected the majority of deferred salary to be paid off, and they would be able to make more substantial increases by 2010.
However, they had more revenue than expected in 2007, and actually ended up spending 70 million on payroll, or at least 5 million above budget. (Not all of it wisely spent of course, but that is a separate issue). The point is they increased their spending on player payroll above their original plan, in response to increased revenues and the opportunity to compete.
Furthermore, it was stated clearly by Jeff Moorad in September that the team would "spend more in 08 than 07"...leading to the clear conclusion that the 3 year payroll plan they had in place had been accelerated.
Recently, prior to the above linked article, Josh Byrnes had been quoted as saying the 2008 payroll budget would be 75 million. However, since this article has come out, they are now indicating they can spend more than that in 08 if they have too.
I am sure they have some concept of what their revenues are likely to be over the next 3 seasons. However, should those revenue projections be exceeded by a large amount, there is clearly precedent showing ownership is willing to re invest at least a portion of that extra revenue into player related expenses.
To say otherwise is to ignore the facts, and is simply an attempt to construct yet one more unfounded criticism.
by shoewizard on Dec 3, 2007 11:32 AM EST reply actions 0 recs
God forbid
Conservative? Back in 2006, rock bottom attendance (24th in MLB), slightly lower ticket prices and comatose merchandising couldnt prevent an operational profit of $5-10M. Given baseball's notorious penchant for understating revenue, I wonder how much they actually cleared -and how much more AZ could have applied to payroll. More relevant, how far above and beyond the 06 profits were the 2007 windfalls? I estimate an addtl $5M in attendance(200k x $25 ave ticket), and considerably more than that via concessions and the new Aztro duds. Gila River paid undisclosed wampum to coarsen everything associated with the game, but judging from their ubiquitous ballpark signage, broadcast presence and status as a casino, I'm sure it's not too material to the Dbax bottom line [cough].
Seven playoff games, four at Chase. TV ratings were up all year, according to Derrick. Plus, revenue sharing in a red hot industry reporting $6 billion gross must come in handy. So, what'd they clear this year? Who knows? Twenty million? Thirty million? Forty million?
This is not to denigrate the notion of profit, or to criticise revenue generating decisions outright, but more to suggest that the Dbax are not operating on nearly as precarious a cost/revenue tightrope as they'd have the public believe and that these annual payroll increments arent as aggressive as some would have it. Further, I think 2007's big revenues, not just in Arizona but around baseball overall, make Mr Kendrick's remarks about 2009 payroll below 2008 and the whole 3 year budget thing, sound contrived and cheap. Not binding or egregious or wrong. Just fussy and cheap. You're welcome to disagree. Hopefully, it's just Ken being Ken, and not indicative of an organization that places cost containment above building a champion.
I certainly dont think their actions to date warrant comparisons to Jeff Loria or Bill Bidwill, but settling for the NL's worst offense and platooning overmatched minor leaguers in RF in the middle of a pennant race, while incubating one of MLB's deepest cadres of young talent like a mother hen, leaves this FO, like it's predecesor, open to questions as to how it balances its passion for winning with fiscal considerations.
by Diamondhacks on Dec 4, 2007 4:53 AM EST up reply actions 0 recs
I honestly don't understand
I guess it just depends on how you want to view things. I don't view the public comments as doom and gloom at all. I actually think they are pretty upbeat. I think they are getting healthier and healthier by the year, certainly healthier than they were back in 2003-2004 when they were still sitting on over 300 million in debt, including 200 million in deferred payroll salary. Is it your opinion that the deferred salary debt didn't exist, or that it doesn't need to be paid off, and that ownership is somehow lying about the status of that debt? You are free to doubt whatever you want, but unless you have evidence that such debt did not exist, I don't really see any point here.
If the debt exists, than it needs to be paid. Basically when you look at the D Backs payroll, you should be adding 30 million a year to the "reported" payroll to get an idea of what they have REALLY been paying for player expenses.
If D backs payroll was reported as 90-100 million every year for the last several years, would you still feel that they were not ponying up enough for player salary? Because thats what they have actually been paying for player expenses. But unfortunately, half of that has been going to players no longer on the roster. This is not speculation, it's a fact.
I just don't understand why some people are so unwilling to allow the team to pay down the deferred salary debt and construct their roster at the same time in such a way as to not incur losses, and god forbid, turn a profit. I realize most fans are not as informed about the club as people posting here. But you don't have that excuse Ben. You know full well what went on. You have read everything. Yet you choose to ignore the facts. 200+ million in deferred salary....being paid off at roughly 30 million a year. Do you deny this debt existed, or don't feel it needed to be paid?
That 2001 Trophy came with a large price tag. I realize most fans, like most Americans, don't like to pay off their debts. They just want to keep borrowing on the future, and not pay it off. Thats why the national debt is up to 30K for every man woman and child in the country. So some people just can't understand why a baseball organization wouldn't run itself the same way.
Excuse me for holding the view that such people are acting like spoiled babies. They DEMAND that the team spend over 100 million every year on payroll to keep up with the big market teams that have much more revenue. Well...you can't always have everything you want, whenever you want it.
Finally, your critcisms of how they handled the roster in a pennant race are laughable. They won the division and made it to the NLCS. Sure, there are always moves that us message board pundits won't agree with. But trying to point to any specific move, and using that as evidence that they don't want to win, especially in a season in which they DID win, is well.....ridiculous. There is no other way to describe that type of rhetoric.
There isn't a doubt in my mind that these people want to win, and have a deep commitment to doing just that. However if you expect them to spend themselves back into hundreds of millions of debt to do so, well than you are rooting for the wrong team.
by shoewizard on Dec 4, 2007 11:30 AM EST up reply actions 0 recs
Mostly crosstalk
I don't view the public comments as doom and gloom at all.
Me neither. Gloom and doom has given way, in the Trib article, to "excessively measured". The gist that rang false was that the Dbax had fashioned some miraculous accounting principle that suddenly made them a player in the free agent market (Kuroda), when the much larger fact (also in the article) is they can open things up now because revenues are way up. Making a big deal about shifting a little 2009 money to 2008 is more about creating bullshit bottom line impressions than it is about managing tangible finances, IMO.
trying to point to any specific move, and using that as evidence that they don't want to win, especially in a season in which they DID win, is well.....ridiculous.
First of all, there's a big difference between "wanting to win" and this "deep commitment" to winning you're trying to sell. Everybody wants to win. Second, if you praise upgrades in losing seasons as proof of a "deep commitment" to winning (and you do), surely I can rebut that with el cheapo non-moves in 2007.
If the Dbax had fallen short, while fielding their AAA hitting team, observers would rightly question the lack of upgrades and by extension, this "deep commitment" to winning - especially given the FO's preseason boast of earmarking funds for just such a late upgrade and then essentailly standing pat (other than Bob Wickman's cup of coffee). Even by their public accounting, it's not as if they didnt have the money.
Winning the div quieted the loudest criticisms, understandably, but doesnt absolve any FO from questions about underlying choices, whether it's the RF platoon, or watching bargain basement Conor take three years to emerge into a weak to fair first baseman. The notion that AZ won despite these choices, not because of them, is quite widely accepted, regardless whether you find it 'ridiculous'.
There isn't a doubt in my mind that these people want to win...
Want to win? Agree.
...and have a deep commitment to doing just that.
So far, I'd call ownership's commitment on the cautious side rather than "deep" - and that's accounting for, not ignoring, the early debt. The NLDS was great fun, but the truth is that the financially responsible cabal you energetically exalt hasnt produced a .500 pythag club in three years, not even within a freefalling National League. This, despite holdover Brandon Webb, a very rich, inherited farm, & the fact div foes with similar payroll(COL, SD) do manage to significantly surpass .500 pythag.
...if you expect them to spend themselves back into hundreds of millions of debt to do so[ie to win]
False dichotomy.
DEMANDING 100 million active payroll?
Cmon, who around here DEMANDED Albert Pujols? Not me - a Colbrunn or Durazo type at first would've suited me just fine.
Well...you can't always have everything you want, whenever you want it.
Ha, you sound like Ward Cleaver :-)
by Diamondhacks on Dec 4, 2007 9:28 PM EST up reply actions 0 recs
Dude, it's all rhetoric
Occam's razor my friend. The debt is there. The Debt was large. The deferred salary had to be paid.
You have a mid market team at best, spending 100 million a year or more on payroll, but you always accuse them of lying, cheating, stealing, and being cheap and dishonest.
It gets old. You are a good writer, and have some talent, and can be quite clever. But you waste your talent. What a shame.
by shoewizard on Dec 4, 2007 11:08 PM EST up reply actions 0 recs
Ooops...So sorry
by shoewizard on Dec 4, 2007 12:06 PM EST reply actions 0 recs

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