Pujols signs with Angels pg 151

[Sammy Sofa]

You've said repeatedly that Pujols would make the Cubs a lot of money.

 

How exactly do you figure the guy's going to make the Cubs a lot of money if the added revenue he generates isn't even enough to offset his salary? Doesn't exactly take a CPA to see the flaw in that logic.

 

The Cubs are selling around 2.6 million tickets this year. Signing Pujols would make them sell a lot more tickets. Pujols' salary doesn't have to be offset by the ticket sales for the Cubs to make money since the Cubs are already a very profitable team; he would make them MORE profitable, due to increased ticket sales, due to making the playoffs and (on a smaller scale) due to increased merchandise sales (yes, those are split around baseball, but imagine how many Pujols jerseys and the like will be sold to the very, very large Cubs fanbase. Yes, not a huge bump, but hey, more money is more money).

 

You're approaching this like the Cubs are operating at a loss. They're obviously not, and obviously signing Pujols would result in them making more money than they are now.

[davearm2]

You've said repeatedly that Pujols would make the Cubs a lot of money.

 

How exactly do you figure the guy's going to make the Cubs a lot of money if the added revenue he generates isn't even enough to offset his salary? Doesn't exactly take a CPA to see the flaw in that logic.

 

The Cubs are selling around 2.6 million tickets this year. Signing Pujols would make them sell a lot more tickets. Pujols' salary doesn't have to be offset by the ticket sales for the Cubs to make money since the Cubs are already a very profitable team; he would make them MORE profitable, due to increased ticket sales, due to making the playoffs and (on a smaller scale) due to increased merchandise sales (yes, those are split around baseball, but imagine how many Pujols jerseys and the like will be sold to the very, very large Cubs fanbase. Yes, not a huge bump, but hey, more money is more money).

 

You're approaching this like the Cubs are operating at a loss. They're obviously not, and obviously signing Pujols would result in them making more money than they are now.

You do understand that the definition of profit is revenue - expenses, correct?

 

The expense half of the equation is set at ~$30M. I'm still waiting for you to explain how marginal revenue from signing Pujols is going to exceed $30M.

 

I've already shown that a realistic estimate is about a half to a third of that.

[Jazz]

Isn't the best equation to use here have to do with W's and L's though....and more specfically the WS variable....

[davearm2]

If they sign Pujols and have a payroll at, or lower than, current levels, he doesn't need to pay for his own salary to make the Cubs money. Any increase he provides will make them money. It appears you're trying to look at it that he needs to cause a $30+ mil increase for the Cubs, that's not true. If they have a payroll of $125 mil and a profit of $5 mil this year, and they sign him for $30 mil per next year which eventually leads to a payroll of $125 mil and his presence creates a profit of $10 mil, he made them $5 mil. All that needs to happen is his presence causes them to make more money next year.

 

As for that entire argument, I actually disagree with it, to a point. I don't think he needs to make them more money. All he needs to do is make them a better team and he's earned his money. If they win the WS next year with him at first, even if they lose money, it's worth it. And, quite frankly, that's all I care about. I understand the Cubs want to make money and that's fine, they should care about that, but as a fan, I want them to win and Albert gives them the best chance to do that. That's why it's worth it to give him $30 mil per year if that's what it takes. If signing him breaks the bank and they can't sign anyone else that's any good which causes them to be a worse team, then no they shouldn't sign him. That, however, isn't reality. Reality says they can give Albert $30+ mil per year and still bring in other, needed, good players.

The first paragraph is misguided. There are obviously a whole lot of other corresponding roster moves going on at the same time that clouds the conclusion. If you're telling me the Cubs could add Pujols, keep payroll the same, and increase profits by $5M, then my next question is, what would profits look like if they made all the same roster moves but didn't sign Pujols, and had a payroll $30M lower? They're going to increase by more than that $5M.

 

The second paragraph I can agree with. The reason to sign Pujols is to increase your chances of winning. It's not to improve the bottom line.

[Sammy Sofa]

And, yet again, your conclusion is based off of the faulty idea that the Cubs are going to sell 3.1 million tickets this year. Even if this was some kind of weird situation where Pujols' salary had to be offset by ticket revenue (once more, it doesn't have to since the Cubs are already running at a substantial profit), you're underestimating how much the Cubs can increase their ticket/food/drink revenue with a good offseason (actually increasing from around 2.6 million and not 3.1 million). If you're so adamant that his salary has to be offset by ticket revenue, then look at it accurately: let's say they're able to to boost fan interest by having a great offseason that includes Pujols. The Cubs go back to selling 3.3 million tickets a season. Let's use that $50 a head average again (actual annual average cost: $52.56). So a boost of approx. 700,000 more tickets sold for the season. 700,000 x 50 = $35,000,000. And that's using a lower average, not factoring in increased food/drink revenue, potential playoff money and whatever increase would come across baseball with the bump in Pujols merchandise (probably pretty minimal). Edited May 23, 2011 by Sammy Sofa

[Guest]

Compare Pujols to the alternative. Yes, he'd be costing the Cubs $30M per year, but Pena is making $10M so the difference is only $20M. Sure, he'll be making more in terms of payroll, but he's going to be bringing in a hell of a lot more in terms of tickets + concessions, etc., especially since people aren't paying to see Carlos Pena hit.

 

The Cubs average attendance from 07-09 was 3.24M (3.27M for just 07 and 08). This year they're on pace for 2.84M. That's an extra 400,000 fans. The Cubs average ticket price this year is $46.90. Those extra fans at the average ticket price is an extra $18.76M for the Cubs, which would nearly cover the increase in salary from Pena to Pujols. Drop the tickets to $30 per (i.e. if the extra tickets sold are more of the cheaper variety) and it's an extra $12M, which is still 60% of the difference in salary. And we're not even counting things like concessions.

 

If the attendance drops to the 2.6-2.7M range for the season, you're looking at a range of $16.2M-25.3M (an extra 540K fans) to $19.2M-30M (640K).

[dew1679666265]

You do understand that the definition of profit is revenue - expenses, correct?

 

The expense half of the equation is set at ~$30M. I'm still waiting for you to explain how marginal revenue from signing Pujols is going to exceed $30M.

 

I've already shown that a realistic estimate is about a half to a third of that.

 

Is it your assumption that the Cubs will raise payroll by $30 million if, and only if, they sign Pujols? If the plan is to keep payroll at $130 million with or without Pujols, then overall cost isn't increasing by adding Pujols. How you're allocating that cost is, but overall player cost is still $130 million.

 

The Cubs are going to spend that $30 million on something over the next 10 years - they're not going to have a $90-100 million payroll for the next decade, so that cost can be assumed whether we sign Pujols or not. Thus, all Pujols has to do is be more profitable than the other options - and I think there's little question he'll generate more revenue than Prince or a journeyman stopgap would. Will Pujols generate $30 million worth of revenue each year he's in Chicago? No, but he doesn't need to. All he has to do is be more profitable than the alternatives, and there's no doubt he will be - probably by a substantial margin.

[TruffleShuffle]

if you look at it purely based on what type of revenue pujols will generate, then yes it's probably a loser. pujols isn't likely to singlehandedly generate $300m in revenue or whatever for the cubs, since the club is already popular and plays in a landmark, so they'll draw a decent crowd even if they stink. plus they have pretty good media revenue.

 

but yeah, most players except for young inexpensive guys will look like money-losers under this microscope. is carlos pena generating $10m in revenue by himself this year? are people buying $6m in tickets and t-shirts because of matt garza? highly unlikely. but the franchise makes enough money to afford these things. looking at every signing from a "how much money will he generate" would lead to a $10 million payroll and a team that loses 100+ games, but hell they'd turn mega profits.

[Guest]

RE: Pujols' down season thus far - I thought this was interesting. Don't know if his hamstring has been talked about a lot this season.

 

http://benbadler.tumblr.com/post/5750619372/whats-wrong-with-albert-pujols

[davearm2]

And, yet again, your conclusion is based off of the faulty idea that the Cubs are going to sell 3.1 million tickets this year. Even if this was some kind of weird situation where Pujols' salary had to be offset by ticket revenue (once more, it doesn't have to since the Cubs are already running at a substantial profit), you're underestimating how much the Cubs can increase their ticket/food/drink revenue with a good offseason (actually increasing from around 2.6 million and not 3.1 million). If you're so adamant that his salary has to be offset by ticket revenue, then look at it accurately: let's say they're able to to boost fan interest by having a great offseason that includes Pujols. The Cubs go back to selling 3.3 million tickets a season. Let's use that $50 a head average again (actual annual average cost: $52.56). So a boost of approx. 700,000 more tickets sold for the season. 700,000 x 50 = $35,000,000. And that's using a lower average, not factoring in increased food/drink revenue, potential playoff money and whatever increase would come across baseball with the bump in Pujols merchandise (probably pretty minimal).

My conclusion is based off of an assumption that the Cubs would draw about as many fans over the next 10 years without Pujols as they have averaged over the last ten years without Pujols. That number is 3.06M per year. I rounded to 3.1.

 

Is it your contention that the Cubs' annual attendance will average 2.6M fans over the span of Pujols' contract, if he signs elsewhere? And further that Pujols alone will increase that number by 700K every year, to 3.3M, if he signs here?

 

So it's a permanent return to the '90s without, and ten straight years of 2008 with? C'mon. Don't be ridiculous.

[TruffleShuffle]

WHO CARES

[davell]

Do we even CARE whether or not Pujols is making the Cubs money? He'd make the Cubs a much better team. Would we probably overpay to get him? Yeah. Would we have a probable 5 year window to get something done? Yeah. But, isn't that better than hoping Justin Bour, Rebel Ridling or some scrap heap like Pena catches fire and has HALF the season Pujols could have. Is it really going to come down to "well, we're paying Pujols alot more money than what we could have spent at 1B if we had done it smartly". God, I hope not.

[Sammy Sofa]

My conclusion is based off of an assumption that the Cubs would draw about as many fans over the next 10 years without Pujols as they have averaged over the last ten years without Pujols. That number is 3.06M per year. I rounded to 3.1.

 

So what moves are you assuming/hoping they would make that would keep them at those levels? The 3.1 average since 2003 was based out of having competitive teams in 2004, 2007 and 2008. Once you get a couple season away from those types of season things start to drop. You saw that in the number of people actually showing up in 2006 and 2010 and now without a bounceback year like they had in 2007 you're seeing the result of fielding a mediocre team for several seasons.

 

Is it your contention that the Cubs' annual attendance will average 2.6M fans over the span of Pujols' contract, if he signs elsewhere?

 

If they continue to field a mediocre at best team? Of course. What you're seeing now is the trend that was very visible in 2006 but was curtailed by their success in 2007. Yes, they sold over 3.1 tickets; but nowhere near that number was ultimately showing up over the last 2+ months. This is the same thing we saw last year, where again they sold over 3.1 million...and now they're projected to sell 2.6-2.7 million. I have little doubt that you'd see continued similar sales, or worse, if the team doesn't becomes significantly better.

 

That said, you seem to be now steering this towards the idea that I've been saying that the Cubs HAVE to sign Pujols or they're doomed. I'm not saying that. Signing Fielder and Reyes would no doubt provide similar renewed interest/enthusiasm in regards to attendance. Pujols isn't the "only answer."

 

And further that Pujols alone will increase that number by 700K every year, to 3.3M, if he signs here?

 

If he produces at a typical Pujols-level (though the first year alone would of course see a huge surge sight unseen)? Yes, I have little doubt that you'd see the numbers rebound by 600,000-700,000. He is not, however, the only option that would get people buying more tickets.

 

So it's a permanent return to the '90s without, and ten straight years of 2008 with? C'mon. Don't be ridiculous.

 

Again, you're forcing this weird parameters that nobody is suggesting. I never said it's an all or nothing option in regards to signing Pujols. What I'm saying is that if the Cubs want to see their ticket sales to bounce back and consistently stay at the top of what they can sell they need to field a team that is a perennial playoff contender, and they have options in this coming FA class that could very easily put them right back in that position. I never said it would be a permanent drop in ticket sales if they don't sign some big FA's this offseason; that would be a crazy suggestion. What I'm saying is that they'll see lowered and lowering sales so long as they field a mediocre or worse team. If they can change that, they change their ticket sales. Simple.

[Sammy Sofa]

RE: Pujols' down season thus far - I thought this was interesting. Don't know if his hamstring has been talked about a lot this season.

 

http://benbadler.tumblr.com/post/5750619372/whats-wrong-with-albert-pujols

 

Yeah, it's definitely more than a bit worrisome at this point.

[Sammy Sofa]

if you look at it purely based on what type of revenue pujols will generate, then yes it's probably a loser. pujols isn't likely to singlehandedly generate $300m in revenue or whatever for the cubs, since the club is already popular and plays in a landmark, so they'll draw a decent crowd even if they stink. plus they have pretty good media revenue.

 

but yeah, most players except for young inexpensive guys will look like money-losers under this microscope. is carlos pena generating $10m in revenue by himself this year? are people buying $6m in tickets and t-shirts because of matt garza? highly unlikely. but the franchise makes enough money to afford these things. looking at every signing from a "how much money will he generate" would lead to a $10 million payroll and a team that loses 100+ games, but hell they'd turn mega profits.

 

Right. It's not an issue of "does this player make back his salary?!?!" It's an issue of "does this player make the team better AND thusly makes people spend money on the Cubs?"

[davearm2]

if you look at it purely based on what type of revenue pujols will generate, then yes it's probably a loser. pujols isn't likely to singlehandedly generate $300m in revenue or whatever for the cubs, since the club is already popular and plays in a landmark, so they'll draw a decent crowd even if they stink. plus they have pretty good media revenue.

 

but yeah, most players except for young inexpensive guys will look like money-losers under this microscope. is carlos pena generating $10m in revenue by himself this year? are people buying $6m in tickets and t-shirts because of matt garza? highly unlikely. but the franchise makes enough money to afford these things. looking at every signing from a "how much money will he generate" would lead to a $10 million payroll and a team that loses 100+ games, but hell they'd turn mega profits.

 

Right. It's not an issue of "does this player make back his salary?!?!" It's an issue of "does this player make the team better AND thusly makes people spend money on the Cubs?"

When you toss around phrases like "walking moneymaker" and "will make the Cubs a lot more money" etc. etc., the implication is clearly the former, plus much more.

 

How could the guy be a walking moneymaker if he isn't even earning back his salary? It's nonsensical.

[Sammy Sofa]

This is still really confusing. I just explained as plainly as possible as how I think he would make the Cubs more money than they're making now. I really don't know how else I can break it down. And I can't help it if you're taking what I said in extreme ways I never meant. To you a "walking moneymaker" is apparently someone who is somehow farting out money. To me it's an impact player who is going to make the Cubs take in significantly more money than they are now. Like it's been pointed out, it's not like the Cubs wouldn't spend the Pujols money on other players, so the issue is whether or not it's spent on players that are going to significantly make the team better and thusly draw in more fans. It's not like the money is somehow spent "more" on Pujols.

[TruffleShuffle]

ugh don't let the pujols thread get davearmed too :(

[SouthSideRyan]

While I agree with Truffle's "WHO CARES" sentiment, I'd like to point out that davearm "rounded" 3.06M to 3.1M.

[davearm2]

This is still really confusing. I just explained as plainly as possible as how I think he would make the Cubs more money than they're making now. I really don't know how else I can break it down. And I can't help it if you're taking what I said in extreme ways I never meant. To you a "walking moneymaker" is apparently someone who is somehow farting out money. To me it's an impact player who is going to make the Cubs take in significantly more money than they are now. Like it's been pointed out, it's not like the Cubs wouldn't spend the Pujols money on other players, so the issue is whether or not it's spent on players that are going to significantly make the team better and thusly draw in more fans. It's not like the money is somehow spent "more" on Pujols.

And I explained as plainly as possible why you're wrong.

 

You're not making money when your cost (salary) exceeds the revenue you generate.

[Banedon]

This is still really confusing. I just explained as plainly as possible as how I think he would make the Cubs more money than they're making now. I really don't know how else I can break it down. And I can't help it if you're taking what I said in extreme ways I never meant. To you a "walking moneymaker" is apparently someone who is somehow farting out money. To me it's an impact player who is going to make the Cubs take in significantly more money than they are now. Like it's been pointed out, it's not like the Cubs wouldn't spend the Pujols money on other players, so the issue is whether or not it's spent on players that are going to significantly make the team better and thusly draw in more fans. It's not like the money is somehow spent "more" on Pujols.

And I explained as plainly as possible why you're wrong.

 

You're not making money when your cost (salary) exceeds the revenue you generate.

 

What's your fear? That the Cubs will go bankrupt from signing Pujols?

[TruffleShuffle]

so basically don't sin anyone for more than the major league minimum.

[Sammy Sofa]

The Cubs' payroll is not overtaking the money they make, even if they added Pujols' asking price to the current payroll. It would definitely narrow the gap, and they really don't need to be spending $180 million a year, but let's be realistic here.

 

http://www.forbes.com/lists/2011/33/baseball-valuations-11_Chicago-Cubs_335092.html

 

I will it say it yet again: this is very confusing. davearm seems to honestly believe that a player's cost needs to be offset by an increase in ticket sales. He also seems to think that regular season ticket sales are the only way a team can make money.

[TruffleShuffle]

there are websites like fangraphs and baseball prospectus - i'm sure davearm has these bookmarked and visits them daily - which attempt to quantify player value. my sense is that they take the amount that they calculate how much each team pays out in salary, then how much they pay per win, and then evaluate players on how many "wins above replacement player" they provide. that's a reasonable way of attempting to determine a player's value.

 

what's not reasonable is to expect a player to pay for himself by ticket sales and merchandise. by almost any measure, ted lilly was a bargain for the cubs at $10m a year, but probably like 12 people bought ted lilly sherseys or said "boy i want to go to this game because ted lilly is pitching." the vast majority of money the team makes is because of its brand and the popularity of baseball. that's common sense.

[Sammy Sofa]

what's not reasonable is to expect a player to pay for himself by ticket sales and merchandise. by almost any measure, ted lilly was a bargain for the cubs at $10m a year, but probably like 12 people bought ted lilly sherseys or said "boy i want to go to this game because ted lilly is pitching." the vast majority of money the team makes is because of its brand and the popularity of baseball. that's common sense.

 

Right. I think he's convinced that I was saying that Pujols would effectively pay his own salary through some kind of quantifiable change in merchandise or ticket sales based specifically on him. What I, and pretty much everyone else, has been saying is that Pujols will make the team better and more popular, and a better and more popular Cubs team makes more money than when they're not very good and with a collection of rather motley veterans (except you, Starlin; your shining light brings a nation hope).