Rick Hahn

[Chicago White Sox]

The point is the White Sox can easily afford a higher payroll than they claim.

How many other teams could we say this about? Probably almost all of them.

 

Are you mad that businessmen want some immediete return on their investment? I get it, we'd all love an owner that spends beyond the organization's means, but that is the exception not the rule. At the end of the day, the Sox are a business and are going to be run like one to some extent. If you don't like ownership's business model and corresponding product, then simply stop supporting it.

[Marty34]

Therein lies the disconnect. If someone a little less biased and with a solid understanding of business can analyze your resources (Scott Boras' opinions aside) and determine that they are, in fact, making profit that could not possibly be re-entering the business, then I will concede your point.

 

Forbes magazine is a reliable source.

 

[ptatc]

You're mixing up revenue and profit or rather operating income.

No I'm not. You are. You've shown nothing that shows what their profit is. Thus, you cannot say they can 'easily" put more money into the team payroll.

[witesoxfan]

You have still failed to mention what you would spend that additional $25 million a year on. Would you have really committed $25 million this year to the ticking time bomb that is Josh Hamilton, leaving yourself little to no wiggle room in the future for further additions while potentially crippling yourself from making other moves in the following offseasons without cutting payroll prior to making them?

 

This sounds like someone who makes $50,000 a year buying a $75,000 car. They can afford it, but they're much safer buying something cheaper so they have some money as insurance.

[ScottyDo]

Forbes magazine is a reliable source.

Yes. Marty's interpretation of an uncited Forbes article (my apologies if you linked to it earlier in the thread) is not a reliable source, however. I would need to read the resource myself to have any faith in it, but even still my business acumen is not as good as some others' on this board, so I'd rather have their take on your material.

[ptatc]

Forbes magazine is a reliable source.

Thanks for pointing that out. The player expenses were 138 mil last year according to the site. Also 125 mil. of the 600 mil valuation of the team is the stadium which they don't own.

 

I think 138 mil for players is plenty of money for the team.

[bigruss]

You have still failed to mention what you would spend that additional $25 million a year on. Would you have really committed $25 million this year to the ticking time bomb that is Josh Hamilton, leaving yourself little to no wiggle room in the future for further additions while potentially crippling yourself from making other moves in the following offseasons without cutting payroll prior to making them?

 

This sounds like someone who makes $50,000 a year buying a $75,000 car. They can afford it, but they're much safer buying something cheaper so they have some money as insurance.

The gamble is if the Sox spend more, will they win more? Because winning brings in more revenue (tickets, food, etc).

 

The risk is, spending doesn't equate more winning necessarily. Given the recent data on how a variety of teams with large payrolls and small payrolls have similar success pretty much debunks the theory that spending more means we will win (hello 2011 as well).

 

The Sox need to invest wisely, meaning more behind the scenes investments (staff, scouting, development), that can pay off in higher dividends rather than the usually poor ROI seen from FAs, especially in an under supplied FA market.

 

Just because the Sox payroll isn't going higher, doesn't mean they aren't spending more. There is still a risk with this strategy, but a lot less and a lot more sustainable.

[Marty34]

How many other teams could we say this about? Probably almost all of them.

 

Are you mad that businessmen want some immediete return on their investment? I get it, we'd all love an owner that spends beyond the organization's means, but that is the exception not the rule. At the end of the day, the Sox are a business and are going to be run like one to some extent. If you don't like ownership's business model and corresponding product, then simply stop supporting it.

 

I'm not mad at all. In my opinion, it shows that it's small risk/small reward outfit. The value of the asset has gone up 2900% If the Sox decided to take a $60-70M loss over some future three year period my guess is as a worse case scenario they'd make it up in franchise value. One of the reasons that isn't going to happen is because Chairman Reinsdorf has always been at the forefront of holding the line on player salaries.

[PorkChopExpress]

So something they did during the season was why they ended the season as one of the best offenses in the AL.

 

I bet if you take out their worst months, they're even better too.

 

Come on, what do you think is closest to this team's true talent level - what they did when they were cold, what they did when they were hot, or the cumulative result of everything that happened over the duration of the season? I'm going to guess the latter.

 

Yes, one great month of stats (May) makes their overall season look better than it was. Over the six months of baseball in 2012, the Sox were a top 5 OPS in the AL twice. Teams that were a top 5 OPS more times in the AL: NYY (6), TEX (5), LAA (3) and DET (3). Teams that were also a top 5 OPS twice in the AL like the Sox: BOS, OAK, TBR and MIN.

 

On the flip side, the Sox were a bottom 5 OPS in the AL twice. Teams that were a bottom 5 OPS in the AL less than twice: NYY (0), TEX (1), LAA (1), DET (1). Teams that were a bottom 5 OPS in the AL twice like the Sox: BOS, OAK, TOR, BAL and CLE.

 

I'm not sure what stats Balta is using to say they were the 4th best offense in MLB, maybe it is just total Runs, which they were 4th (and since everyone keeps comparing to DET, they were 6th), but looking at other stats like H's the Sox were 8th (DET 4th), 2B's the Sox were 14th (DET 5th), 3B's the Sox were 7th (DET 1st), HR's the sox were 3rd (DET 10th), SB's the Sox were 8th (DET 13th), CS (the least) Sox were 11th (DET 1st), BB's Sox were 11th (DET 5th), BA Sox were 8th (DET 3rd), OBP Sox were 7th (DET 2nd), SLG Sox were 5th (DET 4th), OPS Sox were 5th (DET 4th) and OPS+ Sox were 8th (DET 3rd). So for all of these offensive stats, the Sox were 4th or better in 2 categories, Runs and HR's (DET in 8 - Hits, 3B's, CS, BA, OBP, SLG, OPS, and OPS+).

 

That is not a top offense. They are middle of the pack at best with some HR hitters, but apparently can't get a 2B for the life of them. That's the team's true talent level in my opinion.

[Quin]

Scotty_Do, WHERE IS YOUR SIG?

 

Your sig is always the best.

[Chicago White Sox]

Also, let's clarify how Forbes describes "Operating Income":

 

Earnings before interest, taxes, depreciation and amortization (aka EBITDA).

 

To claim the Sox made $175 million is definitely not true. And quite frankly, no one here knows enough about their capital structure, their financing needs, and their tax status to say how much net income the sox made with any level of certainty.

[Chicago White Sox]

I'm not mad at all. In my opinion, it shows that it's small risk/small reward outfit. The value of the asset has gone up 2900% If the Sox decided to take a $60-70M loss over some future three year period my guess is as a worse case scenario they'd make it up in franchise value. One of the reasons that isn't going to happen is because Chairman Reinsdorf has always been at the forefront of holding the line on player salaries.

Franchise value cash flow, you don't seem to get this. The Sox owners don't want to finance their losses by selling their stakes in the team.

[Marty34]

The gamble is if the Sox spend more, will they win more? Because winning brings in more revenue (tickets, food, etc).

 

The risk is, spending doesn't equate more winning necessarily. Given the recent data on how a variety of teams with large payrolls and small payrolls have similar success pretty much debunks the theory that spending more means we will win (hello 2011 as well).

 

The Sox need to invest wisely, meaning more behind the scenes investments (staff, scouting, development), that can pay off in higher dividends rather than the usually poor ROI seen from FAs, especially in an under supplied FA market.

 

Just because the Sox payroll isn't going higher, doesn't mean they aren't spending more. There is still a risk with this strategy, but a lot less and a lot more sustainable.

 

The thing is why not use use the enormous equity they have built up to bankroll a 4 year payroll of year 1 $130M, y2: $140M, y3: $150M, and $160M? Maybe they'll do something like that after this group rolls off and the farm starts producing, but like I wrote in an earlier post I don't think Chairman Reinsdorf would ever escalate salaries that way because of his past history.

[Balta1701]

The thing is why not use use the enormous equity they have built up to bankroll a 4 year payroll of year 1 $130M, y2: $140M, y3: $150M, and $160M? Maybe they'll do something like that after this group rolls off and the farm starts producing, but like I wrote in an earlier post I don't think Chairman Reinsdorf would ever escalate salaries that way because of his past history.

You haven't explained how a group of owners could turn that equity into liquid cash.

 

Do they all sell some portion of their stake to generate cash? If so, what if the new ownership group opposes that spending because they aren't as charitable as you want them to be?

 

Does one owner do so and then give the cash to the team as a gift? Why?

 

Do they take out a loan against the value of the team, effectively giving a financial institution a portion of the control over the team? (Because the bank, in that case, would be very unlikely to allow the team to operate at a revenue deficit for even a short time).

[Marty34]

Franchise value cash flow, you don't seem to get this. The Sox owners don't want to finance their losses by selling their stakes in the team.

 

Worse case scenario they take on some debt. When the asset has gone up by 2900% it's a very small risk.

[Balta1701]

Worse case scenario they take on some debt. When the asset has gone up by 2900% it's a very small risk.

I see, so you're going with the "Give up control of the franchise to a financial institution" option.

 

So why would that financial institution allow the franchise to operate in the red, threatening the value of their asset?

[Marty34]

You haven't explained how a group of owners could turn that equity into liquid cash.

 

Do they all sell some portion of their stake to generate cash? If so, what if the new ownership group opposes that spending because they aren't as charitable as you want them to be?

 

Does one owner do so and then give the cash to the team as a gift? Why?

 

Do they take out a loan against the value of the team, effectively giving a financial institution a portion of the control over the team? (Because the bank, in that case, would be very unlikely to allow the team to operate at a revenue deficit for even a short time).

 

You're on the right track.

 

[Balta1701]

You're on the right track.

That none of them are practical options with even a basic understanding of financial accounting? You're correct.

[caulfield12]

UGH.

 

It's not rocket science.

 

It has nothing to do with spending $25 million more.

 

It has everything to do with developing younger players that will all hit years 2-5 at roughly the same time, combined with, at the very least, above average starting pitching and bullpen. And the right mix of veteran leadership at 2-3-4 positions on the field.

 

This whole idea of spending our way into contention was tried in 2011, was it not? That doesn't mean it can NEVER EVER in the history of the franchise, happen again...just that the front office considers it more financially prudent to stand pat than to go out on a limb again and take the risk they'll have to sell off assets like Edwin Jackson in order to clear guys like Teahen off the books, like in 2011. Or dumping promising young pitchers because the pressure's too great for them to stand up to a pennant race, like Daniel Hudson.

 

At least right now, they're in a much better position with Dunn and Rios than they were coming into 2012, but nobody's exactly clamoring for either of these guys in trade.

 

If anything, 2005 proves the intelligence of NOT adopting the Marty Method.

 

Dump Valentin, Ordonez and C-Lee, three players with big contracts. Add Garcia, Contreras, Vizcaino, Everett, Pods, Iguchi, Jermaine Dye, AJ, Hermanson, El Duque, McCarthy and Bobby Jenks. WIN.

 

You spread out the risk financially not having so many of those $10+ million contracts, like we've been dealing with in the Jake Peavy, Rios and Dunn situations. Or even Konerko, if he continues to struggle in 2013 (let's hope not).

 

Marty wants to spend that money on a Greinke or Josh Hamilton, and history has shown time after time those huge FA contracts work out about 15-20% of the time in the team's favor.

Edited January 15, 2013 by caulfield12

[NorthSideSox72]

This thread should be drug out into the street and shot. Then possibly incinerated.

 

[hi8is]

This thread should be drug out into the street and shot. Then possibly incinerated.

I approve of this message.

You've gotta admit thou - this offseason has been the least active in a long long time.

[ptatc]

UGH.

 

It's not rocket science.

 

It has nothing to do with spending $25 million more.

 

It has everything to do with developing younger players that will all hit years 2-5 at roughly the same time, combined with, at the very least, above average starting pitching and bullpen. And the right mix of veteran leadership at 2-3-4 positions on the field.

 

This whole idea of spending our way into contention was tried in 2011, was it not? That doesn't mean it can NEVER EVER in the history of the franchise, happen again...just that the front office considers it more financially prudent to stand pat than to go out on a limb again and take the risk they'll have to sell off assets like Edwin Jackson in order to clear guys like Teahen off the books, like in 2011. Or dumping promising young pitchers because the pressure's too great for them to stand up to a pennant race, like Daniel Hudson.

 

At least right now, they're in a much better position with Dunn and Rios than they were coming into 2012, but nobody's exactly clamoring for either of these guys in trade.

 

If anything, 2005 proves the intelligence of NOT adopting the Marty Method.

 

Dump Valentin, Ordonez and C-Lee, three players with big contracts. Add Garcia, Contreras, Vizcaino, Everett, Pods, Iguchi, Jermaine Dye, AJ, Hermanson, El Duque, McCarthy and Bobby Jenks. WIN.

 

You spread out the risk financially not having so many of those $10+ million contracts, like we've been dealing with in the Jake Peavy, Rios and Dunn situations. Or even Konerko, if he continues to struggle in 2013 (let's hope not).

 

Marty wants to spend that money on a Greinke or Josh Hamilton, and history has shown time after time those huge FA contracts work out about 15-20% of the time in the team's favor.

I think I would like to spread it out more. If they all it FA at the same time it would be to expensive. Then it's either a really large payroll jump or a total rebuild.

[Dick Allen]

I approve of this message.

You've gotta admit thou - this offseason has been the least active in a long long time.

Last year was pretty inactive.

[bigruss]

I think I would like to spread it out more. If they all it FA at the same time it would be to expensive. Then it's either a really large payroll jump or a total rebuild.

Ideally you'd like at least 2 impact players on the cusp of the majors each year (1 pitcher, 1 position player). By impact I mean a starting player, SP, or closer/setup type guy (potential of average player or higher). If you can get that out of your minors you'd be sitting pretty with your depth and would be able to manage your payroll much easier.

[caulfield12]

We're fine with outfield prospects, the biggest issue for this organization in the last decade has been developing catchers (of course, with AJ, they didn't absolute have to produce one, so they traded for Flowers) and infielders (3B, SS, 2B).

 

We "lucked" into Ramirez and unfortunately failed in our project of making Viciedo a 3B, where his offense would have been a huge plus. Uribe/Crede turned into Teahen/Viciedo/Vizquel, into Morel, into Hudson/Youk, into Keppinger. Not a lot of stability over there.

 

Sanchez definitely looks very promising, but he still has to prove last year wasn't a fluke.

 

When you project the 2013 season, the biggest risk right now is the failure of Tyler Flowers to stick as the everyday catcher. If that happens, then they're in a world of hurt. A lof of the offensive pressure will be on both Flowers and Beckham (and Dayan) to pick up the offensive slack.

 

And there has to be at least MILD concern about DeAza making the readjustment back to everyday play in CF, both psychologically and in terms of the wear and tear on his body playing 150+ games at that position.