(A note at the top: This piece is more a criticism of MLB than the Cincinnati Reds. However, it is my feeling that the Reds, as part of MLB are complicit in everything I discuss below. So far, the Reds have had an excellent offseason, but they are not yet a truly competitive team and could certainly do more.)

Something is going on in Major League Baseball. For the last two offseasons, all we’ve heard when it comes to free agents is excuses for why a player shouldn’t be signed. “He’s not worth it. He’s asking for too many years. We already have so-and-so. He’s too old.”

Bologna.

The reason free agent signings haven’t been happening is because owners don’t want to pay the players. They have never wanted to pay the players. Every work stoppage that has ever happened in baseball. Every legal fight between owners and players. It has all been because the owners – with their ridiculous anti-trust exemption – were working the system to give as little money as possible to players. And you know what? Fine. Run your business how you want to run it. But don’t expect me – your customer – to care or keep coming back when you refuse to provide the best product possible. Also, if you want to run it this way, I see no good reason for you to keep your anti-trust exemption.

Now the Reds, of course, have added payroll this year. They’ve made some trades and the team is better. Good. But they haven’t signed a free agent yet. And their are free agents out there who could help the team.

Dallas Keuchel is the best pitcher left on the market. Sign him. He wants 5 years? Cool. Paying Dallas Keuchel $20M a year for five years isn’t gonna make anyone in the ownership group go hungry. Sign Pollack, too. And Machado. Trade for Kluber, and then put that team on the field and go win 95-100 games.

Major League Baseball is a giant corporation with tons of revenue that is split amongst the various teams. Do we know how much revenue each particular team gets? No. But the rare glimpses we’ve seen into team books indicate that the age-old owner line about not wanting to make money, just win baseball games, is malarkey.

Further – and this is really worth noting – a lot of weight gets placed on player “value” often using the WAR/$ method. This is NOT a sabermetric stat. It is only a measure of how much of their profits owners are willing to devote to players on the open market. That really is all it measures and I know of no fan who should really be concerned with how many piles of money the local owner has to count.

If the Reds – or any team – want to open their books fully and be honest about revenue and their actual budget, then I will gladly listen and return to thinking about what the team can afford.

Until then? The only argument I care about is, “Will this player make the team better?” If the answer is yes, I want the Reds to sign him and I don’t care how much it costs the guys who are making money hand-over-fist. I don’t care if MLB’s owners get richer. I want to watch good baseball. If the owners can’t make money while putting a good product on the field, maybe they should go find a different industry to mess up.

The header photo for this article is used under a Creative Commons license, which can be found here. Original photo was slightly altered.

134 Responses

  1. scotly50

    We live in the United States of Greed. It is what this country is founded on. It is almost un-patriotic to write such an article.

    • TR

      Greed is a part of life. What sets America apart from many countries is our ideals.

      • Bob Purkey

        Maybe, JUST MAYBE, Kuechel dosn’t want to sign with the Reds. I feel for Jake Arrietta who had to take a 4-year, $100 million contract and not a 5-6 year contract which is what he wanted. . . BOO HOO

        As far as I am concerned, arbitration is the biggest culprit of the system. A player can make $5.0MM today, hit .235 and get $8.5MM in arbitration just because some moronic owner pays their .235 hitter that much. The player goes to arbitration and says “look, Joe Schmoe makes that, I am better than him” and he gets his money.

        Now, I am not advocating a return to the days when Ralph Kiner led the league in HRs and when in to negotiate his next year’s contract looking for a raise and Pittsburgh offered less than he made the previous year with the famous line “we finished last with you, we can finish last without you.” Many of the bench players are making way too much money for what they do. If the Reds had gone to arbitration with Billy Hamilton, he was going to get $9-$10 million. Absurd!!!

        Tough Bologna to the players. I don’t begrudge any player what he can make in a negotiated contract, but arbitration is ridiculous and reduces some money given to star players

    • Greg Pearson

      Oh, good grief. Greed is immoral.

      None of this is immoral in any way, even if you simply don’t like it.

  2. Matt Hendley

    Noce article, no doubt that the CBA needs an overhaul, but there have been some suspect individuals getting contracts that are well out of their weight class. Bryce and Machado should already be off the board. Keutchel should be a red or have stated publicly he is not signing with them for any amount. Unfortunately we will have to accwpt this at least til ’22

  3. AvgRedsFan

    This is news? It’s always about the money. And frankly, the owners have earned the right to make money. I don’t know how much they’re making, but it ought to be more than the players. All the players do is play, someone else worries about everything for them. They have it easy. The owners are the only ones risking money to make money. If the fans aren’t happy, MLB will feel it in their wallets. If every team was jumping over the others to spend big, you’d quickly see players making $40M/yr instead of $20M/yr? And where would it stop? The owners are all in this to make money. And so is every player. The market sets the price.

    • AvgRedsFan

      The only two parts of this article that I agree with in essence are that (1) any owner who claims their goal isn’t money, but winning baseball games, is full of crap and (2) that customers have no obligation to support them if they don’t like what they’re getting.

    • Jason Linden

      Lol at the owners having it harder than the players. Many of them (including Castellini) inherited most of their wealth, but that’s beside my point. Also, if MLB wants the normal considerations and privileges given to businesses in America, they should forfeit the anti-trust exemption. I’d love to see what would happen if sales, for instances, didn’t have to be approved by MLB (teams often don’t go to the highest bidder because of this).

      • AvgRedsFan

        Lol all you want. How many businesses do you run.

      • Mike

        Assumptions without any facts in your article.

      • John Christopher Wheeler

        I do not believe the people responding to this understand the concept of anti-trust exemption. It means they do not have to respond as a business to market forces except the ones they choose. Anti-trust exemption is killing competitive baseball. It is nonsensical.

    • John Christopher Wheeler

      If you want the market to make decisions then remove the anti-trust protections..then they can’t act like a cartel or have to face legal challenges.

    • greenmtred

      “All the players do is play.” Of course, if they didn’t, there’d be nothing to watch, no money to be made. They also do a good deal more than just play, generally having devoted an enormous part of their lives to date working on their skills.

  4. Old-school

    I agree to an extent. Who says the Reds can only spend $130 million and that’s an All time high so be happy? I say increase the budget this year to win.

    On the other hand, paying players who are past their prime at 32 for what they did at 27 makes zero sense. Aging curves are real. The real issue is why would you commit money now and compromise winning in 2022/23?

    Brandon phillips is a great Red but he wanted that 6 th year so bad he called the owner a liar and lost his mind jealous over Joey Votto. How’d that turn out in year 6?

    Sure… Pay Scooter and Keuchel this year….. But don’t commit to paying them now in 2022 or 2023. That’s dumb.

    The game is about youth. It’s about 23- 32 year olds. It’s not about paying 35 year olds for what they did at 27.

    • Jason Linden

      Well, you could do that. But if you did, salaries for elite players would go up. Prime-Votto is probably “worth” $40M/yr. Trout, probably $50M. People gripe about the Phillips deal, but it worked exactly like those deals are supposed to. It brought down the present day value, but overpaying at the end and underpaying at the beginning.

      • Colorado Red

        Nope.
        Value is in the eye of the holder.
        A house is worth what someone will pay for it, and nothing more.
        Players are the same way.
        Very easy to spend someone else’s money.
        I still like Dallas at 4/80 to 84

      • Old-school

        Phillips at 5/60 was fair. This was a guy who was on the verge of losing his career at 25 and literally ran out of Cleveland. Still love the player and will go to his Reds HOF induction.
        But as an owner you take collective risk. Were the contracts for Homer Bailey and Devon Mesoraco market based and fair? Sure…. But their injuries crippled the rebuild.

        Paying players over 35 rarely works out. Let alone 32. That’s just the truth. I’ll take my chances with the 25 year olds who have proven themselves every step up the ladder.

      • Jason Linden

        Old-school. I generally agree about 35 yo players vs. 25 yo. BUT 25 yo are never allowed to seek employment on the open market in baseball. So, if you are team trying to improve, you have limited options. It’s also why there’s almost certainly going to be a labor stoppage next time the CBA is up.

      • Doug Gray

        Colorado, here’s the problem with the value is in the eye of the beholder thing: The owners are almost certainly suppressing the values in concert. This isn’t like a house market. There aren’t just 30 people looking to buy a house where they can all trade phone calls and be like “look, if we all just offer 70% of what this is worth, we can all get houses we want for a lot cheaper”.

      • Colorado Red

        Doug,

        Collusion cost the owners a lot before.
        If it is proven, or at least demonstrated it will cost then 10 of billions this time.
        The risk is too high.
        Honestly, I think analytics has changed the playing field.
        The Player are going to need a work stoppage to change the conditions.
        If I was them, I would ask for the following.
        5 years to FA.
        81 games = full season.
        A soft/hard cap on minimum
        95 losses 4th year in a row, and drop 10 draft spot.
        Lottery for the 1 – 3 draft picks.

      • Doug Gray

        The risk isn’t too high if they can get away with it.

      • Old-school

        Jason- you are right about labor stoppage and your positions are well supported, especially in the context of the last two FA off-seasons. I hope the Reds can make the next 2 seasons fun for us fans.

      • BK

        There’s not even one report of collusion in the press; that is total conjecture.

      • Doug Gray

        Of course not. It’s incredibly tough to prove with actual evidence. But there’s all sorts of speculation out there from writers on it. You must not be looking very hard because I see it almost every single day.

      • BK

        Writers speculating are not facts. In today’s digital age, there would very likely be an electronic trail.

        I’d love to see an article about the CFs the Reds might pursue or how they could build their bench. Are there hidden gems left in the FA market. All topics I’m sure the writers here would do an amazing job with.

  5. Bill

    To me you lose credibility when you say you don’t care how much money a player costs all you care about is improving the team. If you ran your home budget like that you would be quickly bankrupt. I don”t know what the Reds or others can afford, but I don’t believe they are heating their homes by burning their cash in the fireplace either. The value of the franchise does not equate to billions of dollars of profit.

    • Jason Linden

      Of course people don’t. But I’m not running the Reds, I’m consuming a product. When you buy a couch, you don’t wonder how much profit the company making it gets, you worry about whether or not it’s a comfy couch. I don’t care how much a good baseball team costs the owners. I just want to watch good baseball.

      • Scott Anson Benhase

        I agree. Sign Machado today

      • Mike

        So easy to say, Jason. No facts in this article about how much the Reds make and how much they spend.

  6. Ghettotrout1

    I actually think it has less to do with the financial commitment and more to do with the tanking. Teams have no incentive to be mediocre and a lot of free agents won’t move the needle enough so they would rather suck than spend medium money and be average. I think I strict salary floor and cap would make more teams spend.

  7. BK

    I find it incredible at how little responsibility the writers on this site assign to the players for the implications of the MLB CBA. True the CBA does an outstanding job of increasing the value of each team’s franchise–monetizing that value is a tough proposition. The CBA also favors elite players of mid-tier and talented young players–this is totally on the players. Once both sides have agreed to how baseball’s revenue will be split among the owners and players it is up to the PLAYERS to allocate that revenue amongst themselves. Since Harper and Machado must be given contracts upwards of $200M, we must wait for these two elite players to determine their futures. It is for them everybody waits. to me, these one-sided “populist” articles really detract from the awesome baseball analysis this site delivers everyday.

    • AvgRedsFan

      Yup. There’s no value in this piece.

    • Steve Mancuso

      I’d be careful generalizing about writers on this site.

      • BK

        Honestly not trying to be offensive to any of the writers. I simply haven’t seen a different viewpoint in an article or in the comments section from any of the writers on this site. The last article focusing on baseball economics I read was your comprehensive piece last month. This article closely mirrors your perspective. In the baseball related articles, the analysis is fact-based and comprehensive. That’s why I come here. Just feedback, absolutely no insult intended.

      • Steve Mancuso

        While I agree with the general notion in Jason’s post that the Reds should boost their payroll spending, I disagree with plenty in the post and expressed that in the comments here.

      • Ghettotrout1

        Steve you have very little concept of cash flow and or running any business you last piece on saying the reds should spend more than they make bc the value of the franchise has gone up is lunacy. No business owner in their right mind would operate that way. Don’t get me wrong I’m not trying to downgrade what you all do on this site but that article a few weeks ago made zero sense no offense.

      • Steve Mancuso

        No business owner in their right mind would borrow money in the short term to improve their investment over the long term?

      • BK

        Steve, I’ve read every comment posted. You’ve pointed out that there is no evidence that a labor stoppage is coming and that there is no reported evidence of collusion as asserted in the comments. There is only one viewpoint advocated for here … owners spend more money. Also, your clarifications were not posted when I posted my first critique.

      • Steve Mancuso

        Jason and I agree that the Reds should spend more money. We part ways (sorta) when it comes to other teams and the labor-relations aspect of the situation. Thanks for reading everything.

  8. Detroit Redleg

    1) I still hear a lot of complaining about other people’s money. If you don’t like why continue to post?

    2) Company valuation does not equal cash flow. Business ownership 101.

    • Jason Linden

      MLB had revenue of $10.5B last year. #cashflow

      • Ghettotrout1

        Comparing an mlb franchise which has been around forever to a Silicon Valley start up makes zero sense

    • Doug Gray

      Do you know how many companies operate in the red year after year after year because the company value continues to grow and they know, or hope, that they can cash out on that in the future? The entirety of silicon valley is made up of companies that lose money hand over fist with the hopes that one day in the future they can be profitable. They use investor money to pay the bills.

      The Reds current ownership group has watched their $270M investment become valued nearly 4 times that in 12 years. The owners are worth so much money that it’s silly. Almost every company at some point pulls money out of investors pockets to put back into the company. Why are we acting as if that doesn’t happen? This team could operate on a huge loss for years, then sell the team and make it all back and then some.

      • BK

        Can you please actually cite a list of companies that have thrived long-term while losing money? Can you site a list of long-term stable companies that have a reverse dividend? No MLB team is a start-up, There is no comparison to Silicon Valley where the investors all understood they may lose ALL of their money.

      • Doug Gray

        The Miami Marlins sold for over a billion dollars. These owners aren’t going to be losing ANY MONEY.

        Netflix is currently losing money hand over fist right now as they invest in things for the future of the company. Amazon did it for a decade plus.

      • Mike

        No Silicon Valley companies quoted, Doug. Kind of amateur hour here.

      • Doug Gray

        Learn to use Google, Mike. It’s not difficult.

      • BK

        From the article you linked,

        “Last month, Uber reported a third-quarter loss of nearly $1.5 billion, bringing its 2017 year-to-date red ink to $3.2 billion. Losses of this magnitude are clearly not sustainable, and call for an explanation of why Uber has been unable to rein in ballooning costs and what it will need to do to survive, let alone prosper.”

        “not sustainable” means Investors will eventually pull the plug.

      • Doug Gray

        And yet Uber still exists and is running just fine despite losing billions of dollars in a single year. The idea that the Reds would somehow just fold and die off if they were asked to invest money in the team rather than put it in their pocket is insane. Businesses do it all of the time. Lose short term to win long term. Whether that’s in a new factory or new technology or new equiptment. Or in baseball terms, new players to try and win – which will result in more tickets sold, merch sold, hopefully playoffs which means even more of both of those things, better advertising rates to be sold.

      • Steve Mancuso

        Exactly. Like borrowing to build a new stadium.

      • jay johnson

        it is a fact that both football and baseball teams could play to empty stadiums and still make $ because of tv revenue.So why spend to give your fans a winner?Why because your fans deserve it.I despise any team owner that doesnt atleast try to give their fans a winner.The $ being made when the team is sold makes up for any bad signing of players,no matter how much you overpay.Of course dont be ridiculous but you cant be frugal either.that means you BobC.

      • BK

        “Do you know how many companies operate in the red year after year after year because the company value continues to grow and they know, or hope, that they can cash out on that in the future?”

        Of course companies operate at a loss from time to time to implement a new strategy, promote a new product or something of the like. But they don’t “operate in the red year after year” without going out of business. If you’re advocating that the Reds could grow revenues by bumping up payroll for a year or two, then I’m in full agreement. But this concept is not sustainable.

        Keep in mind, Uber and the Reds are in completely different points of the business cycle. But make no mistake, Uber will go under if they don’t fix their underlying cost problems. Just ask Sears, Toys R Us, Bombardier (just sold the rights of their newest airliner and now focused only on trains), etc. Debt can only take you so far.

      • jay johnson

        Sports franchises and every other business cant be compared.How many businesses value grows 5x in ten years other than sports franchises?
        You could inflate expenses yearly and just by accident you will increase revenue,renewed tv/radio contracts is a pretty significant start and probably all you would need .

      • BK

        Sports franchises and business do differ. Owners (ownership groups) sometimes put all/nearly operating revenue back into their team because they want to compete whereas commercial entities pull money out to pay their owners. The underlying value of a company has nothing to do with yearly spending. I highly recommend the very well-written article on the Padres finances (the link is below) if you want better insight into a team’s economic situation. The author was allowed to see the Padres books–no speculating, just facts. It’s a good read, free from emotion and personal bias.

      • greenmtred

        I take your point, Doug, but it does overlook the possibility that the owners don’t want to sell the team. In it for the money, but not just the money. In such a case, the owner(s) might reasonably try to avoid continuously operating in the red.

      • Steve Mancuso

        The owners could sell a share of the (rapidly appreciating) team, not the whole team.

      • BK

        Plausible; companies do this (think IPOs). Reds almost certainly have a charter giving all of their partners rights to protect their ownership % and MLB may even get a vote as this would change the ownership makeup … very tough obstacles to overcome.

  9. redsfan06

    For someone who understands statistics very well when it comes to player performance, it amazes me you totally miss the boat on player contracts. Free agency has had a long enough history for teams to study the results of the outcomes of paying huge guaranteed multi-year contracts to players who will still be collecting when they are well past their prime. That is if the player makes it to the field since he collects whether or not he gets hurt.

    There have been numerous articles written about the folly in awarding these contracts. Look at what Alex Rodriguez did for the Texas Rangers. And he was still producing at a high level well after he was traded to the Yankees. More recently and closer to home, how do you think the Mesoraco and Bailey contracts impacted the Reds last year? If that $35-40 million was spent on productive players, they might have been able to compete last year.

    The issue of what is a reasonable contract to give to any one player should not be confused with that of what is a reasonable amount for the owners to spend in aggregate on payroll. There are ways to force an increase in the AAV of player contracts. Limiting contracts to no more than 5 years, installing a minimum payroll and increasing the league minimum salary are all things that could help bring an increase.

    • Jason Linden

      It’s true. All of those things would help (probably) but the owners aren’t going to do them without a labor stoppage. And again, we do not KNOW what teams can afford. We do know that the player salaries are stagnant as revenue continues to increase, which would indicate that most teams have substantially more to spend than they are letting on. Under the current system, everything is cost-controlled except free agents, which means that’s where most of that extra money should be going if you are trying to win ballgames. That, and actually calling up players when they’re ready instead of playing service time games (which is another post entirely). The current trends among MLB owners indicate that fielding competitive teams is no longer a priority across the industry.

  10. Michael Smith

    Unlike the NFL and the NBA , MLB does not have a cap and does not have revenue sharing with the players which is going to be an issue in the next CBA. The other two major sports leagues have cap minimums. MLB does not but it has a nice little luxury tax ceiling. I am not a proponent of paying more in free agency. Having said that I am a believer in setting up a system that compensates the players for their prime years which means they have to start paying more in years 1-6 or shorten the period to get to the open market like you can in the NBA and NFl.

  11. Nick Doran

    Two franchises opened their books this offseason (Braves and Padres) and both of those franchises have lost tens of millions of dollars over the last several seasons despite increasing revenues. The narrative that teams are raking in profit in an orgy of greed is a false narrative. Yes revenues around the league are going up, and so are expenses. Casual fans with no background in finance have no idea of all the expenses these teams have. Player salaries make up less than half of a team’s overall expenses for most teams. Most of the ownership groups are deeply in debt after purchasing a team — much like a real estate investor goes into debt to purchase a rental property. These owners are not purchasing teams with cash from their pocket — they essentially take out a mortgage on the value of the team and they have to use the revenue to pay off the mortgage, just like someone who buys a house to rent it out.

    The other point is that cranking up player salaries does not actually improve the product on the field across the league. The supply of star players does not grow just because salaries go up. A player does not play better just because he gets paid more. All of the unsigned players on the market will get signed (unless they aren’t good enough).

    I am all for players getting as much money as they can get, I just don’t understand why so many people get so emotional about the topic. The owners are not allowed to be “greedy” but the players are? Smart business people run their businesses the way they see fit. The players are certainly not getting screwed — even the worst of them get 20x more than the average American worker earns. There are hundreds of players earning more in one year than most Americans will earn in their entire lives. It is ridiculous to claim the players are victims here. If you want to claim the owners must give their money away just because they have it, then give it to the non-player employees of the clubs such as the clubhouse managers, ground crew, ticket-takers and marketing folks who earn a tiny fraction of what the players get yet work just as hard for the same business.

    • Michael Smith

      @NickDoran

      The latest information I could find was a 37 million dollar profit in the second quarter for 2018 after depreciation. The year over year for that quarter went from 1 million dollar loss to the 37 million in the black.

      https://www.ajc.com/sports/braves-quarterly-financial-results-revenue-and-profit-are/7bYTP2CEwqjHLgSPvgWywI/

      Below is the info for the 3rd quarter with operating profit of 45 million.

      https://www.ajc.com/sports/braves-revenue-profit-increase-latest-quarter/58qwdbRMmcSsjSmhZUOADP/

      • Big Ed

        1. “Operating profit” does not take into account debt or depreciation. Without looking at the statements, I am certain that the Braves have a lot of debt associated with the new facility.

        2. From the story, revenues in Q3 were 50% of YTD revenue, which would make sense in light of the season (and sales) takes place almost entirely in Q2 and Q3. The Braves’ revenue (and operating income) in Q1 and Q2 would be much lower, and the interest would continue to accrue.

        Thus, showing an “operating profit” in the season (Q2 & Q3) tells us almost nothing.

        Without audited financial statements, it is fruitless to speculate in any detail what the Reds are really in position to do financially.

        I do agree that there is no business or legal reason for baseball to have an antitrust exemption. The law does recognize, outside of the exemption, that sports leagues do have unique qualities-the business need for some semblance of competitive balance-that allows them to implement things like the NFL draft.

    • Steve Mancuso

      Nick’s point about the product on the field bears emphasizing and it undercuts a big chunk of the logic for the original post, at least without further evidence.

      It’s one thing to say an individual team like the Reds should spend more money (I’ve written about that in great detail) and argue for the Reds front office to sign Pollack, Machado, Keuchel etc.

      But after the Reds make those moves, who should the rest of the teams sign? Put another way, suppose the Reds get outbid for Pollack, Machado, Keuchel and Kluber, who are the next four players the Reds should spend that much money on?

      It doesn’t follow that the prescription for an individual team to spend more on salary will work league-wide. To make the broader case, you’d need to show a large number of valuable free agents remain unsigned and are worth the money they’re asking.

  12. TurboBuckeye

    You present no evidence whatsoever supporting your opinion that the Reds have the free cash flow to make your desired acquisitions. In fact, all available data from similar market clubs (including the recent FG article about the Braves’ finances) contradicts your viewpoint.

  13. Abdul

    The reds management takes all the profits and uses the “small market” to BS the public

  14. Steve Mancuso

    I agree with some of the sentiment in the original post. But here are a couple areas where I see things a little differently:

    1. I don’t think there is league-wide collusion to hold down player salaries. As is often the case, fundamental change often has many causes. There are several explanations for the free agent market weakening that don’t involve every team holding back. The aging curve has gotten steeper with greater enforcement against PEDs including amphetamines. Players are more developed (physically) at a younger age. Improvements in analytics have demonstrated with ruthless precision the actual value of aging players, stripping sentimentality out of the equation. Several teams take themselves out of the free agent market each year because of tanking (the official tolerance of this might be viewed as a mild form of collusion). The soft salary cap from the last CBA, which hasn’t escalated to match the growth of league-wide revenues, has shown its teeth. Several of the big-stack teams have consciously paid attention to spending because of it.

    2. No case has been made that it will take a labor stoppage to fix the salary structure. It might. But the above trends in the game have happened largely during the most recent agreement. We don’t know what new salary structure the players might propose (fewer years to free agency, higher league minimums, etc.). And we don’t know how the owners will respond. The free agent market collapse last year was unforeseen. Yes, the owners should be willing to pay more in salary, but I put a lot of the onus on the players to come up with a better system. We should wait and see if the current negotiating process can work until we deem the ramparts unavoidable.

    • Big Ed

      I pretty much agree with this. The big change over the past 6 years or so, as I see it, the analytics-based conclusion that older players were overvalued-that is, that aging curves were very real. Part of this is the emphasis on power pitching, because hitting 100 mph fastballs comes easier for younger hitters.

      The union’s challenge is to understand the factors driving the change, and not devolve into glib allegations of collusion. As the Kyler Murray issue shows, baseball has a problem from the players’ perspective that most can’t truly cash in until they are in their mid-20s or older. The recent unwillingness to pay aging players has really narrowed the window to cash in. Plus, a guy like Jesse Winker is pretty much stuck with the Reds from age 18 to nearly age 30.

      I would like to see the new CBA open the cash window earlier.

      • Hotto4Votto

        I agree, excellent post. The owners aren’t colluding by realizing, with the information available, that paying aging players more value than they’re worth is not good business.

  15. Ryan Singer

    I enjoyed this article and as a lifelong Reds fan, I’m of the belief that if you “can’t” spend up to the salary cap of spending that is allowed then you shouldn’t own a baseball team. It is ridiculous that these wealthy people claim they can’t compete with other wealthy people. You are either rich enough to own a professional sports team or you are not, in my opinion. I’m just tired of always being a “small market” fan and sooner than later this has to change for the good of the sport b/c it would get rid of teams tanking (which it seems nowadays half the teams in the league are doing each year).

    • Bill

      I could be wrong, but these owners aren’t in a spending contest with each other. They are in it to make more money. I’m also guessing you don’t hold any sort of business degree or have any experience operating a conpany

      • Ryan Singer

        And I’m guessing you don’t know what education level I have. If you don’t think that owning a professional sports team is a luxury of the wealthy, than you’re mistaken. And yes, I happen to own and operate my own business, so we an discuss that all day long if you want. Professional sports teams are not social services, or necessary businesses that are needed fundamentally in society, so as a fan of a “small market” team it is frustrating when our rich owners don’t spend what they are allotted to spend like the others do. If you can’t afford to spend, get out of the game. There’s a reason there’s different limit poker tables in Vegas and other casinos.

      • Bill

        So would you care to share how much money a year you lose on your business to make other people happy? How much more money you spend than your competition

        And if you are not losing money I suggest you start outspending all your competition. If you can’t afford to do that you need to get out of the business.

        I’ll be happy to review your financial statements and tell you how to spend your money

  16. Michael

    Where does the revenue come from? TV contracts are a large source. Cable companies have been lying to anyone and everyone about the amount of customers dropping traditional cable over the last few years. The numbers are real and they are no longer able to hide it. I believe team owners know this and have been told by MLB that large TV contracts may not be there next time around. If you think your future revenue is going to decline, cutting costs (payroll) to offset it is a natural reaction from a business standpoint. Average attendance has also been declining for over a decade. I think MLB owners are just trying to reset the market to deal with a new reality.

    As a baseball fan, do I like it? No, I hate it. I agree that negotiating a better CBA with this in mind is extremely important for the future of the game, for owners, players, and especially the fans.

  17. TurboBuckeye

    This article is so inflammatory and provides no evidence to support its conclusion that it might as well be considered click bait. Combined with Steve’s big article positing that the Reds should dramatically increase payroll just because Bob has a high net worth thanks to the appreciated value of the team and the fact that no balancing viewpoints are shared—well it seems the RLN has abandoned analysis and become a Boras/MLBPA mouthpiece.

    • Steve Mancuso

      The balancing viewpoint is losing 90+ games a year indefinitely.

      • TurboBuckeye

        That doesn’t follow. I meant a viewpoint from the FO side.

      • Steve Mancuso

        I know what you meant. The opposing viewpoint is the status quo. 90+ losses a year.

      • TurboBuckeye

        You’re conflating a few things, and being a little dishonest about it in the process. The opposing viewpoint is not the “status quo” where you have defined it as losing 90+ games a year.
        Rather, it’s that there is simply no data or evidence to support the claim that the Reds can spend at the level you and Jason desire. The number of games the Reds win or lose is only loosely coupled to their ability to spend on payroll.

      • Steve Mancuso

        Ownership can spend anything they want on payroll. The entire point of my long post about Reds finance was that looking at “cash flow” was the wrong way to evaluate the financial position of major league baseball teams. People seem to think saying “but cash flow” is a reply.

      • TurboBuckeye

        Because “but cash flow” is the most fundamental way to evaluate expenses. If the money to support your operating expenses cannot be sustained by cash flow, then where do you say it comes from? Please be specific.

      • Steve Mancuso

        Borrowing or spending out of present wealth.

      • Ghettotrout1

        There seems to be a running theme here most posters think there is some validity to the reason why all small market teams operate in a similar fashion when it comes to payroll and to differing degrees Steve Doug and Jason think it’s either a lie and owners are rolling in all the money made by the reds, are colluding to force payroll down or should just spend haphazardly in hopes of recouping it at the end. Someone on the site should do a pole to see what the most popular reason is for the reds lack of spending. One more point has anyone thought that maybe Dallas just doesn’t want to play here regardless of money bc he thinks he has a better chance at a ring elsewhere.

      • Steve Mancuso

        Baseball owners *are* rolling in the wealth produced by their teams the past few years.

    • Big Ed

      That is an excellent article, and it shows that these franchises are complicated enterprises.

      In the long run, the interest Reds’ ownership (whoever it may be) in running a profitable business is entirely compatible with the customers’ desire for a competitive team. Winning pays the bills, by increasing media rights and churning the turnstiles.

  18. jay johnson

    Jason
    Best article on this site in years.I cant believe any real FAN of any team can disagree.The owners make huge money when they sell the team,they shouldnt care at all about losing anything on a year to year bases.Have people been seeing what sports franchises are getting sold for?Billions,and thats with a B.How many years of losing,lets just say 50 mil per year, would it take to lose a billion?You do the math.
    Go for it every year.Never let a quality player leave because any amount of money,sign free agents that help your team,and most of all,my personal pet peeve,”stop with this SMALL MARKET B.S.Every and I mean every sports franchise owner/owners is a very wealthy person.No exceptions.Give the fans a winner even if it means a few less dollars in your pocket from year to year.
    And for all you naysayers who compare sports ownership to any other business,you shouldnt.They just are two different animals.

    • TurboBuckeye

      You said it yourself. “The owners make huge money when the sell this team”

      Ok, where does the money come from to support big payrolls before they sell the team?

      • jay johnson

        Turbo
        You mean to say that you dont think the Cincinnati Reds corp.has the money to pay a higher payroll?Youve got to be kidding?Your earlier posts sounded quite intelligent though you are taking the opposite side of this discussion from myself,but that question you ask to end your last post is the opposite of intelligent..Do you really not know where sports teams get revenue?

      • TurboBuckeye

        Jay,
        When it comes to the revenue that the Reds bring in, I know what you know—which is to say not much. We Google and find revenue sharing, average attendance for home games, radio and advertising, and their prior TV deal income. Get aggressive with those numbers (especially the new local TV deal) and you can get close to the current payroll number. Not $150mm tho. And of course, we have the direct comps of similar markets coming in very close to the Reds’ payroll.
        Which makes articles like Steve’s and Jason’s all the more bizarre.

    • jay johnson

      Bil
      I believe you and I have had this argument before.
      Your replies implied that your position is the fact and anything else is false.
      Tough to really discuss anything with a mentality like that.

      • Bill

        I haven’t implied anything is fact. The problem is you and others not providing any facts. Instead assuming the owners are rolling around in piles of money or that they should lose money because they are rich.

        Maybe you could take out a loan and pay Machado’s salary since you are a rich business owner? It’s obviously the right thing to do

    • Hotto4Votto

      As a side note, and not directed at anyone in particular, why is it so common to further explain the billion is spelled with a B? I doubt most of us are elementary school students (though based on some replies, there may be a few). Most of us are very familiar with the nuances of spelling straight forward common words. It’s written down, people clearly see that billion is spelled with a B. The emphasis placed on the letter is amusing to me, and unnecessary.

      • Steve Mancuso

        Half of respondents to a survey thought $1 million is half-way between $1 thousand and $1 billion (with a b).

      • LWBlogger2

        I don’t know Hotto4Votto. I’m a 48 year-old IT professional but I misspell an awful lot of those straightforward, common words. I do generally know the difference between the sound an “M” makes versus the sound a “B” makes, especially in regards to the printed/written word. I guess that’s a start.

  19. KDJ

    If players were still making less than 100K/year, the argument would carry a lot of weight. However, when below average players are guaranteed over 5M/year for playing a seasonal sport, it is difficult to view them as being exploited. Imagine the following at your workplace . . . a worker has an above average year and renegotiates salary of over 100M for five years. After that the employee is only available for work a fraction of the time, and when present is one of the worst employees on staff. Yet, the employee gets paid over 100M while producing no product. It looks to me that the fans are the ones being exploited.

    • Bill

      The real crime is what minor league players make. Those are the guys being hurt, not a backup SS making $3 million a yar

  20. redsfan06

    The Padres ownership group has had to chip in tens of millions of dollars out of their own pockets along with $45 of the $50 million payment from Bamtech to pay down the debt owed by the team. The team is also paying $28.75 million to players no longer with the team; such as, Matt Kemp, for poor choices in signing long term contracts.

    Reducing the debt to get the payments under control has contributed to the team value increasing from $600 million to $1.2 billion. Padres ownership claims it will soon allow them to invest more in player contracts to put a better product on the field.

    They also do not see returning to spending on huge contracts tried by the prior ownership. The $40 million bump in payroll in 2015 only brought in an additional $15 million in revenue. Not exactly a strong argument for more spending on player contracts.

    I have not heard anything about the level of debt the Reds carry. Payments on debt load is one aspect of team spending that I do not recall being discussed in any of the articles written on RLN.

    • Steve Mancuso

      When are people going to stop accepting the public “woe is me” poverty pleading by baseball owners at face value? The Padres’ ownership group took over the team because they know an MLB team is a terrific investment.

      • Ghettotrout1

        Doug talks down to everyone in his comments here Twitter and his other site. So he can be condescending but other ppl can’t point out lack of facts?

      • redsfan06

        I don’t quite understand how you would interpret my post as me accepting the owner’s cry of poverty. I personally think you are glossing over a legitimate point, at least as far as the Padres situation. Which, as I said in my post, I do not know how it applies to the Reds.

        The Padres had too heavy of a debt load in order to function as a prosperous major league team. To reduce the debt, the ownership did as you advocate and threw in some of their own money plus 90% of the money they received from Bamtech.

        If a team’s debt load gets to be too high in relationship to income, they are forced to constantly call for more from the owners or take the government’s path and borrow more money every year.

      • Steve Mancuso

        Or sell a fraction of their rapidly appreciating asset.

    • TurboBuckeye

      They don’t bother with any serious analysis. The things you mention can be gotten rid of with “hand waving” and an appeal to the fact that the owners are rich. Facts, numbers, and evidence don’t matter. As far as the narrative espoused by RLN goes, the owners are rich so they can afford anything they want.
      Of course, for people living in poverty, Steve and Jason are rich. They can’t understand why Steve and Jason don’t get 2nd mortgages on their houses to lease new Ferraris. They could get the latest model if they “wanted” to.

      • Steve Mancuso

        You’re treading pretty close to the line against personal attacks on this site. You should dial back the personal nature of your comments. This is a site about the Reds not about the authors.

      • TurboBuckeye

        Oh good grief. It’s not a personal attack nor was it meant as one. You could replace the names above with any two names from the Comments section and the parallel would remain the same. It merely highlights the absurdity of the expectation that someone mortgage their asset to fund expenses that their budget cannot afford.

        It’s foolish for a fan that says they want a consistently competitive team to say they want the Reds to borrow money to be competitive. Let’s say the amount is $100mm over 4 years to increase payroll $25mm/year. After the 4 year “competitive window” has closed, that money (which would now be ~$115mm with interest) would have to be paid back. If we assume the breakeven payroll is $125mm, that means it’d go to $150mm during the window. Then after the window it’d have to go down to ~$97mm/year for a period of 4 years to repay the loan. Yes, revenues may increase between now and then resulting in slightly higher figures across the board, but the payroll cut amounts would be the same. You’re talking about a horrible disadvantage. You’re robbing Peter to pay Paul.

      • Steve Mancuso

        Meanwhile, during those four years, team owners would see their personal wealth increase by another half-billion dollars. And they would be protected against large losses by revenues from new national TV contracts, new streaming deals, new gambling revenue and a new local TV contract — plus the league’s revenue sharing program.

        The point of my article from earlier is that evaluating the financial situation of a professional baseball team has to be done by different metrics than the standard business enterprise.

      • BK

        I really think yesterday’s article about the Padres does a pretty good job of explaining why the proposition of borrowing to boost present day competitiveness is unlikely to work. The owners (with books open) explained how debt has affected their competitiveness for 6 years. Someone, eventually must pay off the debt.

        Borrowing works when you believe spending in the present is more valuable than spending in the future will be. On a personal level, buying a house works this way. Home ownership is typically less expensive than renting (provided you don’t move too frequently) and the value of the home typically appreciates. Overtime, the savings in expenses and appreciation outweigh the cost of borrowing.

        Borrowing would work for a stadium (mentioned by Steve above) or for a new idea (think BamTech). For the Reds it could work if they thought that increased fan interest would lead to new revenue that would exceed the cost of borrowing. The Reds attendance really lags franchises in similarly sized markets (look at St. Louis and Milwaukee as examples). I could easily believe that boosting payroll for a couple of year could become sustainable over the long-term if attendance consistently rose to 2.5-3M.

        I think where the argument breaks down is the implication that the underlying asset has appreciated so much that the wealthy owners must simply pour money into what has been a losing franchise. I have not read a good explanation of how the borrowing would eventually be balanced on the books.

        This concept is not sustainable and would negatively impact the franchise’s value. Payroll does not guarantee success, and past rates of return are not guaranteed to continue, if fact, in almost every industry they are cyclical so we should expect they will plateau at some point. Lots of wealthy investors loose big-time believing they can continually outperform the US market.

      • TurboBuckeye

        I think where your argument breaks down is the assumption that a) the franchise will continue to increase in value at a rapid pace and, b) that the increase in payroll would be responsible for said increase. There’s no evidence of either. Past increases in value do not guarantee future increases.
        Look at the profligate spending of the Tigers during the Mike Illitch years. Their value isn’t that much different than that of the Reds.

      • LWBlogger2

        Nah, robbing Peter to pay Bryce Harper!

        I thought a little silliness was appropriate to lighten the mood a bit.

  21. IndyRedsFan

    I remember many years ago when players started getting million dollar contracts. Many people said, “Baseball players aren’t worth that, my God, teachers only make 20,000, firemen 15,000 etc.” The reply (from those supporting the players was, “They’re worth whatever someone is willing to pay them”. I agreed with that then.

    But now, that argument doesn’t seem to hold. Players are being asked to take “whatever someone is willing to pay them”…and that’s not enough.

    I’m believe that they ought to be paid what someone is willing to pay………ie: let the market set the price.

    • Big Ed

      That is Forbes’ estimate, not an actual audited number, but it is probably a pretty good estimate.

      Again, “operating income” does not include interest, taxes, depreciation and amortization. The Forbes estimate is $100 million in debt (extrapolating from its estimate of debt-to-value), so interest is likely at least $6mm/year if the are lucky.

  22. Bill J

    When Pete got his million dollar contract I think it was Trumpy that ask him if he thought he was worth it, Pete said NO, but if somebody offered it to you would you refuse it.

  23. Soto

    I’m not sure what point the article is making; feels more emotional than analytical. But Jason has such an established track record that I’m likely missing something, so I’ll reread it tomorrow with fresh eyes. What I do object to is some of the comments above by the other writers. If you are going to engage, and respond emotionally or condescendingly, I don’t think it’s fair to claim others are treading “close to the line.”

    • Bill

      Hopefully this place doesn’t turn into Red Reporter now that Chad is gone.

      • Doug Gray

        Bill, if you see something inappropriate in the comments feel free to email me via the contact page. While this is certainly my full time gig to run the websites/write articles, there’s only so much time in the day. I try to pay attention to the comments, but especially with ones that get 50+ comments, it’s not always possible to keep up.

  24. REDSMAN

    Wow! Can’t really understand the haterish attitude seemingly prevalent among some of the responders! Nor the vehement cries of…’you haven’t the foggiest notion of what it takes to run a business’. Whether or not those who post here have ever run a business or not…big deal! I wager all the ‘Titans of industry’ complaining have never been a sports franchise owner either. (Unless of course they are FO types posing as regular guys!?) That does not preclude the possibility of complaining about something most all of us here are very passionate about, that being the Cincinnati Reds.

    I think that is the entire purpose of this website. Apparently, Steve previously and now Jason, have stumbled upon a hot button issue.
    Little wonder considering the series of last place finishes as well as the dreaded T word, which incidentally, I haven’t heard much of around here. But hey, one cannot help but have such thoughts these last few years. Of course one mans ‘rebuild’ is another mans ‘tanking’, ooops, there I said it!

    I think most of us are impatient with this rebuild and would like to see one more SP added or perhaps at least an Adam Ottavino type reliever. Sooo, when Yanks add him and Sonny Gray reappears on the radar, well people get a little frustrated. Who would not like to see a legitimate SP1 be added? With the options dwindling and time wasting away, the possibilities grow fainter and the promise of “we’re not done yet”, slowly fades away. Leaving in it’s stead negative thoughts, emotions and feelings.

    Here’s hoping for the fulfillment of “we’re not done yet!” Failing that, perhaps DJ is truly a wizard and one or more of our young guys will suddenly become the next Cueto, Leake or Miley?

    • greenmtred

      We seem to do better discussing baseball the game than we do discussing baseball the business. I’d guess quite a few of us own/run busineses.

  25. ToBeDetermined

    I know this doesn’t fit this thread, but MLB trade rumors says:
    ‘Yankees, Reds “Finalizing” Sonny Gray Trade’

  26. Cyrus

    This entire string highlights again how social media is doing as much damage as it is good. This entire discussion would go quite differently if people who really have the facts were assembled in a room to have a well-informed debate. We rarely treat people in person the way we treat them thru mediums like this.

    Athletes and entertainers get paid more than teachers, leaders and those who provide protection. That’s on us and that, my friends, is unsustainable on a far more important level.

    Remember when MLB players left the game to serve their country during wartime? Different priorities and values.

    Here’s a thought: take sports less seriously. Invest your free time in something that brings you a better return on your investment.

    Question: if the restaurant you grew up loving changed ownership and the menu along with the quality of the food went south, would you continue to eat there regularly but voice your dissatisfaction constantly? You know the answer.

    • scotly50

      Here’s a thought: take sports less seriously. Invest your free time in something that brings you a better return on your investment.

      And yet you read through this thread ???

      • David

        One thing I have heard repeatedly is that the owners will recoup any losses when they sell the team because the value has gone up so much. What would the next owner do? The value isn’t going to keep going up at the same rate so eventually you have to run in the black. Difficult to do if you have a huge payroll.

        Just a thought. I’m not a business expert but the argument about selling seems shaky but maybe someone can fill in the gaps.

  27. Spaceman Red

    This whole thing boils down for me to a few essential facts: 1) We do not know the exact financials of most major league teams and that includes the Red Legs; 2) It would appear from the revenues that they have income to spend [although that is a large assumption based on factors to which we are not privy] and; 3) this city is really hungry to have a winning team after years under Walt “Stand Pat” Jocketty. For me, it is all a cross section of the fan base.

    All views are legitimate, essentially. I cannot blame Mr. Linden for frustration and wanting a winner, although I recognize that this may be easier said that done regarding the free agent market. Dunno. I see them acquiring Gray and moving one more outfielder for a bona fide center fielder. Would also not be surprised to see them move Scooter or Peraza to clear room for Senzel. At least we have some legitimate hot stove in Cincinnati!

  28. REDSMAN

    Hey Spaceman! 1+.
    Plus now we have one more thing to add to the Hot Stove fodder.
    It is being reported Reds signed Drew Pomerania!

  29. Amarillo

    This is only fair if and only if we knew what the Reds revenues were as opposed to guessing. Only Milwaukee, Kansas City, and Pittsburgh have less populous metro areas out of Cities that have an MLB team than Cincinnati. This means that our revenues in the form of TV contracts in particular will never come close to that of NY or LA. When we are already limited to 67% of the resources of other clubs, trying to keep up in spending just isn’t possible. Maybe our owners are worth 2 Billion or whatever. That means they could out of personal funds theoretically sustain a payroll for roughly 10 years. But then what happens? I don’t think it is safe to assume that at the costs of running a team, that all of the owners can afford to operate at gigantic losses and certainly not the Reds. It is also not fair to say that the on field product being offered will improve with a higher payroll.

  30. Owen

    I appreciate you writing this Jason. I want the Reds to spend more money too. Since the legal monopoly enables ownership to extract money from local governments, move cities and easily collude to keep salaries down, I don’t have much sympathy for the owners’ crocodile tears.

    We don’t know for sure they have money to spend but it’s reasonable to believe they do. What’s most bizarre to me is that people feel the need to defend the uber rich.