davearm2

I'm surely not going to apologize for exploring the profit issue. I think the business side of sports is fascinating to analyze and discuss. And you're not going to find a better case-study (in baseball anyway) than Pujols. That said, I get that it's totally dry and uninteresting to some folks. Which is fine.

It not just those guys. It's if the Cubs keep talking themselves out of guys like Dunn and Fielder and Pujols and whoever shows up. There's always going to be a good argument against sinking a ton of money into a FA superstar. If the Cubs keep listening to that side of things they're not going to be very good unless they pull of some miracle trades and/or some miracles happen in the farm system. Isn't that pretty much any team, though? You have to have a solid combination of all of those things. Look at the Red Sox: yeah, they've traded for and resigned Gonzalez, signed Crawford, traded for Beckett, signed Lackey and Drew, etc... but they also have a ton of homegrown talent, including Pedroia, Youkilis, Lowrie, Ellsbury, Papelbon, Bucholz, Bard, Lester, etc... in addition to some good buy low candidates such as Salty and Ortiz. Basically, they've done everything right and the Cubs haven't and that's why they've won. Well, that and Manny and Ortiz were on the juice. Oh, there definitely has to be a balance. The problem is that the Cubs really don't have anyone in their farm system that project beyond beyond solid everyday players as their ceiling now that Castro is up. Those kind of prospects can still be plenty valuable, but the Cubs also need superstar "tent-pole" players they can build around. Curious if you would take ARod (and his contract) off of the Yankees' hands for free right now.

It's all moot anyway, he's staying in St. Louis. And frankly I want nothing to do with Fielder and his basket of issues. So I hope you're wrong that the Cubs are doomed to an(other) entire decade of futility without either of those two guys.

Very few, which is precisely why I jumped all over the "walking moneymaker" comment in the first place. It's a fantasy. But you do realize you've created your expectations for what that phrase means, right? I wasn't arguing that he would pay for himself. What it means to make money? I don't think I'm out in left field on that one.

Very few, which is precisely why I jumped all over the "walking moneymaker" comment in the first place. It's a fantasy.

I have no idea what is going on here but I hope this wasn't just accepted as the base from which any disagreement would be discussed. What would you estimate the Cubs' average annual attendance will be over the next 10 seasons? For reference, it's averaged ~3.1M over the last ten years, and maxed out at 3.3M. Hey if you've got a much better guess, then I'm all ears. And for bonus points, give me one number with Pujols on the team, and one without.

The Forbes article linked earlier places the Cubs' franchise value at $773M, broken down as follows: Sport: $133 mil Market: $340 mil Stadium: $172 mil Brand Management: $128 mil So let's say optimistically that adding Pujols boosts the value of the Cubs' brand by 10%. Now he's paid for about $13M of his contract... about 4% or 5% of a $250-300M deal.

Which becomes approximately $1 Billion dollars if they win the World Series. Show your work please ;)

So if the Cubs sign Pujols, keep their payroll the same and their profit goes up, they haven't made money? They have. Despite Pujols. They could have made even more. So you can prove that the increase in profit was not due to Pujols and that he had no impact on the profit increase? How so? I showed the analysis earlier. A reasonable estimate for Pujols' impact on the Cubs' revenue is $10-15M.

But you didn't do most of that. All you did was break down whether $30 million would be offset by a gate revenue increased based on 3.3 million fans instead of 3.1 million fans. That's it. I didn't use gate revenue. I used average local revenue per fan. It's an all-in number. And it's in your Forbes article.

So if the Cubs sign Pujols, keep their payroll the same and their profit goes up, they haven't made money? They have. Despite Pujols. They could have made even more.

Yes, in a loop of insanity. This statement you just made only makes sense if you are honestly convinced that the Cubs are running at a loss or would be running at a loss if they signed Pujols for $30 million a year. Which is it? Marginal analysis is completely beyond your grasp, I see. A loser deal is still a loser deal whether you're printing money like Google or taking it in the shorts like the Wilpons. Whaaaaaaaaaaaaaaaaat isssssssssssssss thiiiiiiiiisssssssssssss. You're talking about this like the Cubs would automatically be spending more on their players than they are this year. You're also talking about the ticket revenue and Pujols' salary like they exist in a vacuum. Assess the Cubs' financials. Compute their profitability. Add Pujols. Recompute their profitability, given $30M in additional costs, x additional ticket sales, y additional media revenue, z additional sponsorship revenue, etc. Compare profitability A with profitability B. Marginal analysis.

Yes, in a loop of insanity. This statement you just made only makes sense if you are honestly convinced that the Cubs are running at a loss or would be running at a loss if they signed Pujols for $30 million a year. Which is it? Marginal analysis is completely beyond your grasp, I see. A loser deal is still a loser deal whether you're printing money like Google or taking it in the shorts like the Wilpons.

Just stop with, "the appeal of signing Pujols is his playing ability" and you'll be fine. ;) Nope. Alright you want to take a crack at computing how Pujols is going to generate more than $30M in additional revenue all by himself? It's a gamble. Every signing is. You're gambling that Pujols can help you win, and that winning will bring in more revenue. If Pujols falls apart right after signing, the Cubs will lose money on the deal. There's no way to figure out the money that Pujols will bring in. The act of trying to is an activity I have no interest in. I believe that Pujols would help the Cubs win, and thus increase their income. If you owned the Cubs, would you investigate this as part of your decisionmaking process? It's a pretty straightforward cost/benefit analysis. Getting the numbers right might be a challenge but conceptually it's very basic.

Just stop with, "the appeal of signing Pujols is his playing ability" and you'll be fine. ;) Nope. Alright you want to take a crack at computing how Pujols is going to generate more than $30M in additional revenue all by himself? Nobody ever said he needs to or would. Except that's how you make money. And around we go.

You didn't, actually. The decline in attendance the Cubs have witnessed this year is due to a combination of factors: the team's not as good, the weather's been crappy, the economy's still bad, attendance is down around baseball, etc. Pujols only helps the first of those. Expecting some miraculous return to 2008 if they sign Pujols is foolish, but even more foolish would be to attribute it entirely to Pujols.

Just stop with, "the appeal of signing Pujols is his playing ability" and you'll be fine. ;) Nope. Alright you want to take a crack at computing how Pujols is going to generate more than $30M in additional revenue all by himself?

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? I brought it up to disprove the misinformation you were putting out there.

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. Just stop with, "the appeal of signing Pujols is his playing ability" and you'll be fine. ;)

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.

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.

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.

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.

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.

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.