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How big a payroll can the Angels actually support?


eaterfan

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https://www.fangraphs.com/blogs/the-braves-profits-provide-glimpse-into-baseballs-books/

There has been a lot of debate on this board about how high a payroll Arte can support. It's not an apples to apples look at things, but here's a nice article on how much money the Braves have made and lost over the last half decade. They are a publicly traded company so their books are open.

It's Arte's money and he can spend or not spend as much as he wants, but I think he (and most owners) could support much higher payrolls if they really wanted. 

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No way to answer that really, we simply dont know. 

What we do know is that the team value has increased 10 fold since he bought it, it has zero debt, investors, 3M in attendance every year, still one of the better TV deals, and somehow a salary budget some 30-40M under the luxury tax cap.

If we are to believe everything we are told, somewhere around 175-180 appears to be what they are comfortable with, whatever that means.

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11 minutes ago, Kevinb said:

At the end of the day it’s still a business. As an owner you want to make yearly income from your investment. 

Yes, as I said it's not an exact comparison, but the Braves made $100 million last year with a terrible TV deal and 2.5 million tickets sold and a $130 million payroll. Angels have a good TV deal and drew 3 million fans. Also, if the author was being consistent, those figures were before depreciation and amortization. 

While making a profit each year is nice, franchise values have risen by about 8% a year. If you owned a stock that went up 8% a year a dividend wouldn't matter that much. Plus, with many ownership groups they draw salaries for being chairman of the board and pay their families for do nothing jobs. Those all factor into the "profitability" of the team.

Once again, I'm not saying Arte needs to spend more money. I just think the revenue is probably there to support a higher payroll if he wanted to spend the money before he actually started losing money on a yearly basis.

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It's up to Arte how he wants to treat this team.  Is it a business that he expects to cash flow every year or is it an investment where he builds wealth through building equity?

The reality is, at this point for Arte, there really is almost no level of payroll on over the next 5-7 years that wpuld REALLY change his lifestyle or the lifestyle of his kids and grandkids in the future.

He could sign Harper, Machado and Corbin and also extend Trout and he would still pass a net worth of billions to his heirs.

Obviously nobody expects him to do that.  My point is the true answer to the question is Arte could support a $275 million payroll. . .if he wanted to.

The team would "lose" money at about the same rate the value of the franchise increases.

But the functional answer is it appears that part of Arte's ego is to win in a way that isn't categorized as him simply buying a championship.  So he wants to be disciplined in how he spends on payroll.

I have no issue with him choosing this.  Its his team and his legacy.  But I do get frustrated when I hear fans say he can't afford a particular player because "he can't just keep losing money every year". . .

When you have a perfect vintage Ferrari, your expenses to maintain it on paper make it look like you are losing money on it but every year the value goes up in multiples of your expenses.  You are not losing money.

 

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2 hours ago, Dtwncbad said:

It's up to Arte how he wants to treat this team.  Is it a business that he expects to cash flow every year or is it an investment where he builds wealth through building equity?

The reality is, at this point for Arte, there really is almost no level of payroll on over the next 5-7 years that wpuld REALLY change his lifestyle or the lifestyle of his kids and grandkids in the future.

He could sign Harper, Machado and Corbin and also extend Trout and he would still pass a net worth of billions to his heirs.

Obviously nobody expects him to do that.  My point is the true answer to the question is Arte could support a $275 million payroll. . .if he wanted to.

The team would "lose" money at about the same rate the value of the franchise increases.

But the functional answer is it appears that part of Arte's ego is to win in a way that isn't categorized as him simply buying a championship.  So he wants to be disciplined in how he spends on payroll.

I have no issue with him choosing this.  Its his team and his legacy.  But I do get frustrated when I hear fans say he can't afford a particular player because "he can't just keep losing money every year". . .

When you have a perfect vintage Ferrari, your expenses to maintain it on paper make it look like you are losing money on it but every year the value goes up in multiples of your expenses.  You are not losing money.

 

this could be said about every MLB owner 

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