How much does 2023 payroll impact the sale of the team?

[Docwaukee]

Question for all you finance folks out there.  

I get how long term obligations would have an impact, but what happens if they were to spend 200m instead of 170m on payroll but that extra 30m would be off the books next year?  Does that impact the overall valuation of the team (I would think not).  

And is it just too simple to think that if Arte got 3b for the halos then that extra 30m spent on 2023 payroll is just a little over a 1% hit to Arte's overall profit?

[Lou]

It wouldn't have an impact at all. 

[Dtwncbad]

The simplest answer is. . .

If a $200m payroll (instead of a $170m payroll) is an issue for the incoming owner, they are making a deal with the wrong buyer.

[Jay]

Probably wouldn't matter to the buyer but it may make a difference to the seller.

[Docwaukee]

5 minutes ago, Jay said:

Probably wouldn't matter to the buyer but it may make a difference to the seller.

why though?  that's what I'm sorta asking.  If the value of the team is almost 3b and 30m is a big deal then is it more emotional.  Like 'why give up 30m if you don't have to' sort of thing?  And I get that mind you.  30m is generational money to just about everyone.  Or it could go a long way with a charity or organization of need (don't say it).  

[jsnpritchett]

9 minutes ago, Docwaukee said:

why though?  that's what I'm sorta asking.  If the value of the team is almost 3b and 30m is a big deal then is it more emotional.  Like 'why give up 30m if you don't have to' sort of thing?  And I get that mind you.  30m is generational money to just about everyone.  Or it could go a long way with a charity or organization of need (don't say it).  

This is just speculation, but it seems to me like Moreno is just over it all and wants to be done, given all the drama with the city, various lawsuits, continued losing, etc.  If I'm him, I'm not going to add to the payroll for next year, as the sale price of the team isn't going to be impacted by how successful the team is next year.  There's not much of an incentive for him to spend more.  I certainly wouldn't if I were him. They dumped the Iglesias contract for basically nothing, so I don't really get the impression Moreno is focused on winning next year. 

(And lest any of the usual suspects jump in here: obviously as a fan, I want them to dramatically improve the team for next year and beyond.  The above is just my interpretation of how they may be thinking from a business standpoint.)

[Blarg]

37 minutes ago, Docwaukee said:

why though?  that's what I'm sorta asking.  If the value of the team is almost 3b and 30m is a big deal then is it more emotional.  Like 'why give up 30m if you don't have to' sort of thing?  And I get that mind you.  30m is generational money to just about everyone.  Or it could go a long way with a charity or organization of need (don't say it).  

See Disney for re-investment into a commodity they were selling.

[Docwaukee]

13 minutes ago, jsnpritchett said:

This is just speculation, but it seems to me like Moreno is just over it all and wants to be done, given all the drama with the city, various lawsuits, continued losing, etc.  If I'm him, I'm not going to add to the payroll for next year, as the sale price of the team isn't going to be impacted by how successful the team is next year.  There's not much of an incentive for him to spend more.  I certainly wouldn't if I were him. They dumped the Iglesias contract for basically nothing, so I don't really get the impression Moreno is focused on winning next year. 

(And lest any of the usual suspects jump in here: obviously as a fan, I want them to dramatically improve the team for next year and beyond.  The above is just my interpretation of how they may be thinking from a business standpoint.)

getting that sense as well with all of what you've mentioned.  It would be pretty disappointing if he just clapped his hands like a black jack dealer and went out.  Leaving an opportunity on the table and the franchise in a lurch.  

I would imagine there could be some benefit to winning and getting butts in chairs for his final year.  But it does seem he might have a sour taste in his mouth.  But I'm not overly inclined to feel sorry for him as he's ultimately responsible for the dysfunction and poor decision making.  Hopefully, he'll come around and realize that even some 1yr deals for 2023 could have a pretty significant impact on this team's chances of being a legit playoff contender next year.  

That's also going to hinge on whether he trusts Perry to spend his money properly and not essentially flush it down the toilet.  That's a lot of dough he's shelled out for the last 7 years and not even a real sniff of a chance at the playoffs.  

[Blarg]

Doc, Moreno no longer has any incentive at all to invest in the future of the Angels, just like Disney in 2003. You're going to have to get over it. 

[Docwaukee]

2 minutes ago, Blarg said:

Doc, Moreno no longer has any incentive at all to invest in the future of the Angels, just like Disney in 2003. You're going to have to get over it. 

Oh I get it.  Although I would argue he should at least piss on them while they're on fire.  If he's not willing to acknowledge that he was part of the problem then that's unfortunate.  At the end of the day, he owes us nothing.  But I am certainly gonna be left with even more of a bad taste in my mouth about him if he doesn't support the team financially for at least this one year.  

And I'm not gonna be unrealistic and hope he increases payroll.  Just give Minasian a fighting chance.  If he walks away with an extra 30m on top of his 3b then that's his right.  Yet if it's almost out of spite then that would be very disappointing and tell me a lot about him.  

[UndertheHalo]

I’m sure a bunch of you disagree about the specific nature of what this means.   But professional baseball teams are institutions that a lot of people care about and a lot of people spend a lot of their money on.  There’s a degree of public trust imo.  All the other stuff aside.  Arte is going to walk away with an incredible profit from the Angels.  The club is going to be around after he’s gone.  Until he leaves he’s the steward of it.  It’s wrong to make the team worse on purpose.  With the ohtani stuff particularly - it’s an important next couple of years.  There would be real malice in cutting payroll in a way that it hurts the club once he’s gone.  
 

he doesn’t have to do that.  I assume and hope that he won’t. 

Edited October 8, 2022 by UndertheHalo

[UndertheHalo]

Also, the Angels are more valuable with Ohtani.  They’re also more valuable if they’re good.  Much to consider. 

[jsnpritchett]

2 minutes ago, UndertheHalo said:

I’m sure a bunch of you disagree but professional baseball teams are institutions that a lot of people care about and a lot of people spend a lot of their money on.  There’s a degree of public trust imo.  All the other stuff aside.  Arte is going to walk away with an incredible profit from the Angels.  The club is going to be around after he’s gone.  Until he leaves he’s the steward of it.  It’s wrong to make the team worse on purpose.  With the ohtani stuff particularly - it’s an important next couple of years.  There would be real malice in cutting payroll in a way that it hurts the club once he’s gone.  
 

he doesn’t have to do that.  I assume and hope that he won’t. 

I don't think they're going to cut payroll in any significant way.  They really can't, even if they wanted to, given the nature of the contracts that are on the books.  I'm just saying that I don't think we'll see them sign any big long-term contracts (e.g., I'd be shocked (but happy!!) if they got one of the big SS free agents) or any Syndergaard-style contracts (i.e., one-year, $20M+-type deals).  My guess is that they'll boost the floor a little, improving some of the backup options, and maybe bring in a $5M-a-year-type SP, and a couple of moderately-priced bullpen options.

[jsnpritchett]

1 minute ago, UndertheHalo said:

Also, the Angels are more valuable with Ohtani.  They’re also more valuable if they’re good.  Much to consider. 

But they haven't been good for a while now, and it's unlikely that the sale price of the team is impacted much one way or the other between now and the time a new owner is found.  Presumably, people have already been kicking the tires for a while now, so the value has probably more or less been established, at least within a certain range.

[halomatt]

I've been thinking about this for about a week.  This could be Arte's year to go for it.  Like Doc says, what's 30-50 million when he's selling for billions?  I don't know about you all, but when I sell something, I try to make it as desirable as possible.  I could easily see some high dollar, short-term contracts doled out.  Having those players that many of us think could make an actual difference to the team shows what this possible with the team and gives buyers something to dream on. 

Also, I think, as much as Arte has tried, he has still under marketed and underdeveloped the organization and there is potential for the Angels organization to be one of the real flagship teams in the league.  By making those moves and upping payroll to go for it, he speaks to that potential. 

[jsnpritchett]

Just now, halomatt said:

I've been thinking about this for about a week.  This could be Arte's year to go for it.  Like Doc says, what's 30-50 million when he's selling for billions?  I don't know about you all, but when I sell something, I try to make it as desirable as possible.  I could easily see some high dollar, short-term contracts doled out.  Having those players that many of us think could make an actual difference to the team shows what this possible with the team and gives buyers something to dream on. 

Also, I think, as much as Arte has tried, he has still under marketed and underdeveloped the organization and there is potential for the Angels organization to be one of the real flagship teams in the league.  By making those moves and upping payroll to go for it, he speaks to that potential. 

See my posts above, though.  He announced the team was for sale in late August.  A deal might not be officially completed until late next season, but I would be shocked if we don't have some idea of who the new owners will be long before then--so it's unlikely that anything that happens next year would impact the sale price or a buyer's perception of what the team is/could be.

[UndertheHalo]

14 minutes ago, jsnpritchett said:

But they haven't been good for a while now, and it's unlikely that the sale price of the team is impacted much one way or the other between now and the time a new owner is found.  Presumably, people have already been kicking the tires for a while now, so the value has probably more or less been established, at least within a certain range.

I’m just saying.  There’s no reason to pull the plug because he’s selling.  To your point, he can’t really do that very easily anyway but there reasons to be a little aggressive. 

[gotbeer]

2 hours ago, Docwaukee said:

why though?  that's what I'm sorta asking.  If the value of the team is almost 3b and 30m is a big deal then is it more emotional.  Like 'why give up 30m if you don't have to' sort of thing?  And I get that mind you.  30m is generational money to just about everyone.  Or it could go a long way with a charity or organization of need (don't say it).  

If you buy a car for $20,000, and you finance $15,000 of it.  

The buyer will give you $20,000 for it.  But the seller will only see $5000 of it.  The buyer will never say, here is $20,000 for it, and I will pay the $15,000 that you owe the bank for.

I would think the same goes for the value of a team.

The value of the team is $2.2 billion.  But the present day debt, ie. player salaries owed, would cut into that value.  Whether it be Trouts $283.6 million owed or Ohtani's $30 million owed.  So like a house, there is going to be a closing date of the deal.  And at that point, all debts will be determined and usually subtracted from the selling price.

This is why, when you see teams up for sale.  You usually see the present owner trading players and shedding salary, not adding salary.  Which is probably why Ohtani only got a one year deal, and not a long term deal like all of us would have wanted.  Which is probably why we extended Nevin for one year, instead of looking for the best manager we can hire.

Edited October 8, 2022 by gotbeer

[Dtwncbad]

45 minutes ago, gotbeer said:

If you buy a car for $20,000, and you finance $15,000 of it.  

The buyer will give you $20,000 for it.  But the seller will only see $5000 of it.  The buyer will never say, here is $20,000 for it, and I will pay the $15,000 that you owe the bank for.

I would think the same goes for the value of a team.

The value of the team is $2.2 billion.  But the present day debt, ie. player salaries owed, would cut into that value.  Whether it be Trouts $283.6 million owed or Ohtani's $30 million owed.  So like a house, there is going to be a closing date of the deal.  And at that point, all debts will be determined and usually subtracted from the selling price.

This is why, when you see teams up for sale.  You usually see the present owner trading players and shedding salary, not adding salary.  Which is probably why Ohtani only got a one year deal, and not a long term deal like all of us would have wanted.  Which is probably why we extended Nevin for one year, instead of looking for the best manager we can hire.

Current salaries and future salary obligations are not debt.

The Angels under Moreno have never had any debt.

[gotbeer]

5 minutes ago, Dtwncbad said:

Current salaries and future salary obligations are not debt.

The Angels under Moreno have never had any debt.

Have the Angels paid these salaries to these players?  Is it a future obligation to pay?  Then how is it not debt?

 

[Dtwncbad]

Just now, gotbeer said:

Have the Angels paid these salaries to these players?  Is it a future obligation to pay?  Then how is it not debt?

 

They are known expenses that will be paid out of revenue.  It’s not debt.  He didn’t borrow it.

[Taylor]

1 hour ago, UndertheHalo said:

I’m sure a bunch of you disagree about the specific nature of what this means.   But professional baseball teams are institutions that a lot of people care about and a lot of people spend a lot of their money on.  There’s a degree of public trust imo.  All the other stuff aside.  Arte is going to walk away with an incredible profit from the Angels.  The club is going to be around after he’s gone.  Until he leaves he’s the steward of it.  It’s wrong to make the team worse on purpose.  With the ohtani stuff particularly - it’s an important next couple of years.  There would be real malice in cutting payroll in a way that it hurts the club once he’s gone.  
 

he doesn’t have to do that.  I assume and hope that he won’t. 

How dare you prescribe your morals onto a billionaire. He earned his money and we should all admire him no matter what he does with it.

[Dtwncbad]

2 minutes ago, Taylor said:

How dare you prescribe your morals onto a billionaire. He earned his money and we should all admire him no matter what he does with it.

Said nobody ever.

[AngelsLakersFan]

19 minutes ago, Dtwncbad said:

Said nobody ever.

Taylor just said it

[Dtwncbad]

3 minutes ago, AngelsLakersFan said:

Taylor just said it

Taylor is a good person with a big heart.  I just really don’t get the automatic dislike/jealousy/envy/negative judgment of people with money.  It’s cool, I guess, to hate billionaires just for being billionaires.

Seems super silly to me.