Pujols signs with Angels pg 151

[davearm2]

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.

Well at least you realize when you're confused.

 

I don't believe either of those things, nor have I said anything to suggest I do.

 

In the end I guess your concept of making money just differs from mine. To me, you're making money when your revenues exceed your costs.

 

You've got some other idea, apparently, since you contend the Cubs would be "making money" paying Pujols $30M but realizing marginal revenues of $10-$15M.

[davearm2]

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.

Fangraphs and the like computes player value based upon the premise that the cost to purchase wins on the free agent market is like $4M or $5M per win. So if a guy is a 3-win player, he should command $12-15M on the open market. None of what they do tries to quantify player value in terms of revenue generation.

 

Lilly was a bargain at $10M a year under Fangraphs' interpretation of player value. He didn't make the Cubs more profitable however, for the very reason you indicate: he didn't generate revenue to match his salary. And neither would Pujols.

 

So I'll say it yet again. If you want Pujols because he'll make the Cubs better, have at it. If you want Pujols because he'll improve the bottom line, guess again.

[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.

Well at least you realize when you're confused.

 

I don't believe either of those things, nor have I said anything to suggest I do.

 

In the end I guess your concept of making money just differs from mine. To me, you're making money when your revenues exceed your costs.

 

You've got some other idea, apparently, since you contend the Cubs would be "making money" paying Pujols $30M but realizing marginal revenues of $10-$15M.

 

I'm confused because you keep talking like the Cubs' costs exceed what they make. Or that they would if they signed Pujols to $30 million a year. That's a nonsensical position to take.

 

And once again, your projected "marginal revenues" are faulty and based on the idea that the Cubs will continue to average around 3.1 million tickets sold in the regular season for the foreseeable future (or that they'll even sell 3.1 million tickets this year) without significant improvement to the team.

[Sammy Sofa]

So I'll say it yet again. If you want Pujols because he'll make the Cubs better, have at it. If you want Pujols because he'll improve the bottom line, guess again.

 

Fascinating.

[Hairyducked Idiot]

Are we counting the possible increase in the value of the franchise if it becomes more prestigious because the team is better?

[Sammy Sofa]

Are we counting the possible increase in the value of the franchise if it becomes more prestigious because the team is better?

 

No, apparently nothing increases the value or the money made by a franchise if a player cannot generate enough increased ticket sales to offset their salary.

[dew1679666265]

Well at least you realize when you're confused.

 

I don't believe either of those things, nor have I said anything to suggest I do.

 

In the end I guess your concept of making money just differs from mine. To me, you're making money when your revenues exceed your costs.

 

You've got some other idea, apparently, since you contend the Cubs would be "making money" paying Pujols $30M but realizing marginal revenues of $10-$15M.

 

If the Cubs sign Pujols and don't increase the overall payroll, how much has their overall cost increased by signing Pujols?

 

You're looking at this incorrectly. It's not a matter of Pujols making his personal cost and then some for him to generate revenue for the team. If the Cubs sign Pujols and stay within this year's payroll (~$130 mil), then their cost has not increased at all. If their revenue then increases by, say, $10 million over this year's then they're making a profit of $10 million from one season to the next. If Pujols is the primary offseason acquisition, then it's safe to assume he's the primary reason they're making more money in 2012 than they made in 2011 - that means Pujols has made the team money.

 

Now, if the team bumped payroll up to ~$160 million next year in order to sign Pujols, then he'd have to generate them $30 million just to break even financially on his deal. If overall cost doesn't change, however, then any increase in revenue is pure profit and Pujols would be the primary catalyst for that increase - thus he's making the team money.

[davearm2]

I'm confused because you keep talking like the Cubs' costs exceed what they make. Or that they would if they signed Pujols to $30 million a year. That's a nonsensical position to take.

No, I don't. And that's why you're confused.

 

What I'm saying is, the Cubs' costs FOR PUJOLS would exceed what they'd make FROM PUJOLS being on the team.

 

The reason being, Pujols' impact on total revenue will be significantly less than $30M.

 

Look there is a decent argument for signing the guy, but boosting the Cubs' bottom line ain't a part of it. They'd turn a bigger profit without him.

[Guest]

In general, the most profitable teams are the ones that spend the bare minimum and take in the revenue sharing from the other teams. So Davearm is probably correct that from a pure, short term financial perspective that signing Pujols would not be a profitable business move.

 

The points that others have made on why it may still be a good business move for the long-term health and value of the franchise haven't really been addressed.

[Sammy Sofa]

Look there is a decent argument for signing the guy, but boosting the Cubs' bottom line ain't a part of it. They'd turn a bigger profit without him.

 

But based on your own argument tract here they only they'd turn a bigger profit is if they don't spend the money they would have spent on him, which they will almost certainly do.

 

Of course, even then the idea of this kind of "profit" is based off of your faulty ticket projections and apparently the misunderstanding that the Cubs are anywhere near spending more than they take in.

[davearm2]

Well at least you realize when you're confused.

 

I don't believe either of those things, nor have I said anything to suggest I do.

 

In the end I guess your concept of making money just differs from mine. To me, you're making money when your revenues exceed your costs.

 

You've got some other idea, apparently, since you contend the Cubs would be "making money" paying Pujols $30M but realizing marginal revenues of $10-$15M.

 

If the Cubs sign Pujols and don't increase the overall payroll, how much has their overall cost increased by signing Pujols?

 

You're looking at this incorrectly. It's not a matter of Pujols making his personal cost and then some for him to generate revenue for the team. If the Cubs sign Pujols and stay within this year's payroll (~$130 mil), then their cost has not increased at all. If their revenue then increases by, say, $10 million over this year's then they're making a profit of $10 million from one season to the next. If Pujols is the primary offseason acquisition, then it's safe to assume he's the primary reason they're making more money in 2012 than they made in 2011 - that means Pujols has made the team money.

 

Now, if the team bumped payroll up to ~$160 million next year in order to sign Pujols, then he'd have to generate them $30 million just to break even financially on his deal. If overall cost doesn't change, however, then any increase in revenue is pure profit and Pujols would be the primary catalyst for that increase - thus he's making the team money.

That's not the correct comparison to be looking at, because you're not isolating Pujols' impact.

 

Tell me what the Cubs' profit level would be under your hypothetical: a $130M payroll, and Pujols playing 1B.

 

Then tell me what the Cubs' profit level would be with a $100M payroll, and Tyler Colvin playing 1B. All other roster spots identical.

 

Answer that question, and you'll know whether or not signing Pujols improves the Cubs' bottom line. And I'm telling you the revenue impact is less than $30M, making the latter scenario (the roster without Pujols) the more profitable one.

[Sammy Sofa]

In general, the most profitable teams are the ones that spend the bare minimum and take in the revenue sharing from the other teams. So Davearm is probably correct that from a pure, short term financial perspective that signing Pujols would not be a profitable business move.

 

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

[dew1679666265]

They'd turn a bigger profit without him.

 

If they took the $30 million a year they'd be paying him and instead pocketed the money, then yes, you'd be right. However, they're not going to drop payroll to $90-100 million next season (I wouldn't think) and pocket the $30 million each year. So it's not a matter of Pujols being worth more than that $30 million, it's a matter of him being worth more than the overall cost increase the team would incure by signing him.

 

They're reallocating funds, not spending new money that hasn't been spent previously.

[Sammy Sofa]

Well at least you realize when you're confused.

 

I don't believe either of those things, nor have I said anything to suggest I do.

 

In the end I guess your concept of making money just differs from mine. To me, you're making money when your revenues exceed your costs.

 

You've got some other idea, apparently, since you contend the Cubs would be "making money" paying Pujols $30M but realizing marginal revenues of $10-$15M.

 

If the Cubs sign Pujols and don't increase the overall payroll, how much has their overall cost increased by signing Pujols?

 

You're looking at this incorrectly. It's not a matter of Pujols making his personal cost and then some for him to generate revenue for the team. If the Cubs sign Pujols and stay within this year's payroll (~$130 mil), then their cost has not increased at all. If their revenue then increases by, say, $10 million over this year's then they're making a profit of $10 million from one season to the next. If Pujols is the primary offseason acquisition, then it's safe to assume he's the primary reason they're making more money in 2012 than they made in 2011 - that means Pujols has made the team money.

 

Now, if the team bumped payroll up to ~$160 million next year in order to sign Pujols, then he'd have to generate them $30 million just to break even financially on his deal. If overall cost doesn't change, however, then any increase in revenue is pure profit and Pujols would be the primary catalyst for that increase - thus he's making the team money.

That's not the correct comparison to be looking at, because you're not isolating Pujols' impact.

 

Tell me what the Cubs' profit level would be under your hypothetical: a $130M payroll, and Pujols playing 1B.

 

Then tell me what the Cubs' profit level would be with a $100M payroll, and Tyler Colvin playing 1B. All other roster spots identical.

 

Answer that question, and you'll know whether or not signing Pujols improves the Cubs' bottom line. And I'm telling you the revenue impact is less than $30M, making the latter scenario (the roster without Pujols) the more profitable one.

 

So in no way will you consider declining ticket sales/attendance and the difference in money made between teams that make the playoffs consistently and those that do not?

[Banedon]

What I'm saying is, the Cubs' costs FOR PUJOLS would exceed what they'd make FROM PUJOLS being on the team.

 

It doesn't matter, but even for the sake of argument, that's the wrong question to be asking. It isn't "Will the money they make from Pujols outweight his cost?" It's "Will the money spent on Pujols bring in more money than the 4 other players that we would otherwise spend that money on?"

[davearm2]

In general, the most profitable teams are the ones that spend the bare minimum and take in the revenue sharing from the other teams. So Davearm is probably correct that from a pure, short term financial perspective that signing Pujols would not be a profitable business move.

 

The points that others have made on why it may still be a good business move for the long-term health and value of the franchise haven't really been addressed.

Right. The owners that run their teams with the bottom line as the top priority are usually the owners that fans come to despise, because profit-maximization and win-maximization are not objectives that align particularly well. Jeffery Loria and Carl Pohlad come to mind.

[Banedon]

Tell me what the Cubs' profit level would be under your hypothetical: a $130M payroll, and Pujols playing 1B.

 

Then tell me what the Cubs' profit level would be with a $100M payroll, and Tyler Colvin playing 1B. All other roster spots identical.

 

Answer that question, and you'll know whether or not signing Pujols improves the Cubs' bottom line. And I'm telling you the revenue impact is less than $30M, making the latter scenario (the roster without Pujols) the more profitable one.

 

Nooooooo. They're spending X payroll either way. If $130mil is the payroll budget, they'll spend ~$130 million with or without Pujols.

[Sammy Sofa]

In general, the most profitable teams are the ones that spend the bare minimum and take in the revenue sharing from the other teams. So Davearm is probably correct that from a pure, short term financial perspective that signing Pujols would not be a profitable business move.

 

The points that others have made on why it may still be a good business move for the long-term health and value of the franchise haven't really been addressed.

Right. The owners that run their teams with the bottom line as the top priority are usually the owners that fans come to despise, because profit-maximization and win-maximization are not objectives that align particularly well. Jeffery Loria and Carl Pohlad come to mind.

 

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

[davearm2]

In general, the most profitable teams are the ones that spend the bare minimum and take in the revenue sharing from the other teams. So Davearm is probably correct that from a pure, short term financial perspective that signing Pujols would not be a profitable business move.

 

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

Haha that list proves the point. The most profitable teams are the Nationals and Padres.

[davearm2]

Tell me what the Cubs' profit level would be under your hypothetical: a $130M payroll, and Pujols playing 1B.

 

Then tell me what the Cubs' profit level would be with a $100M payroll, and Tyler Colvin playing 1B. All other roster spots identical.

 

Answer that question, and you'll know whether or not signing Pujols improves the Cubs' bottom line. And I'm telling you the revenue impact is less than $30M, making the latter scenario (the roster without Pujols) the more profitable one.

 

Nooooooo. They're spending X payroll either way. If $130mil is the payroll budget, they'll spend ~$130 million with or without Pujols.

Not if they're maximizing profits they won't.

 

EDIT: before anyone gets even more confused, I'm not saying the Cubs SHOULD or WILL act to maximize profits. I'm just pointing out what the course of action would be if they did.

Edited May 23, 2011 by davearm2

[davearm2]

What I'm saying is, the Cubs' costs FOR PUJOLS would exceed what they'd make FROM PUJOLS being on the team.

 

It doesn't matter, but even for the sake of argument, that's the wrong question to be asking. It isn't "Will the money they make from Pujols outweight his cost?" It's "Will the money spent on Pujols bring in more money than the 4 other players that we would otherwise spend that money on?"

If you want to prove or disprove the assertion that Pujols is a "walking moneymaker" or what have you, then it's exactly the right question to ask.

[Sammy Sofa]

In general, the most profitable teams are the ones that spend the bare minimum and take in the revenue sharing from the other teams. So Davearm is probably correct that from a pure, short term financial perspective that signing Pujols would not be a profitable business move.

 

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

Haha that list proves the point. The most profitable teams are the Nationals and Padres.

 

Check some of the teams near the bottom. Not spending isn't the automatic moneymaker you're assuming it is. Plus the Nationals are spending close to $90 million dollars.

[Banedon]

Tell me what the Cubs' profit level would be under your hypothetical: a $130M payroll, and Pujols playing 1B.

 

Then tell me what the Cubs' profit level would be with a $100M payroll, and Tyler Colvin playing 1B. All other roster spots identical.

 

Answer that question, and you'll know whether or not signing Pujols improves the Cubs' bottom line. And I'm telling you the revenue impact is less than $30M, making the latter scenario (the roster without Pujols) the more profitable one.

 

Nooooooo. They're spending X payroll either way. If $130mil is the payroll budget, they'll spend ~$130 million with or without Pujols.

Not if they're maximizing profits they won't.

 

EDIT: before anyone gets even more confused, I'm not saying the Cubs SHOULD or WILL act to maximize profits. I'm just pointing out what the course of action would be if they did.

 

I'll admit to being confused. Because what you're arguing doesn't matter. Who cares what they would do in a hypothetical scenario where winning is meaningless? The appeal of signing Pujols is the combination of playing ability and his "money making-ness". Of course it doesn't make financial sense if you take playing ability/winning out of the picture.

[Sammy Sofa]

Tell me what the Cubs' profit level would be under your hypothetical: a $130M payroll, and Pujols playing 1B.

 

Then tell me what the Cubs' profit level would be with a $100M payroll, and Tyler Colvin playing 1B. All other roster spots identical.

 

Answer that question, and you'll know whether or not signing Pujols improves the Cubs' bottom line. And I'm telling you the revenue impact is less than $30M, making the latter scenario (the roster without Pujols) the more profitable one.

 

Nooooooo. They're spending X payroll either way. If $130mil is the payroll budget, they'll spend ~$130 million with or without Pujols.

Not if they're maximizing profits they won't.

 

EDIT: before anyone gets even more confused, I'm not saying the Cubs SHOULD or WILL act to maximize profits. I'm just pointing out what the course of action would be if they did.

 

So then why even bring it up unless it's to just dig yourself out of the hole you've burrowed so furiously into?

[SouthSideRyan]

That's davearm we do it!