Braves CEO: There’s No More Money

Context is Important

Everything requires context if it is to be understood. In an interview with the AJC last Wednesday, Braves CEO Terry McGuirk provided much needed context to the present and future payroll situation.  In doing so he confirmed what I wrote the day before; the Braves have no money to spare -  there is no payroll flexibility. While this was the most revealing interview we’ve had from the Braves front office it still requires some use of my diplomatic translator to clear away the fog of diplomat speak.

Mr. McGuirk began by defending the current payroll, saying the Braves have “a little over $90 million right now” committed to it right now. That wasn’t a huge secret. I wrote that I calculated the Braves had already committed between $93-94 million this year. After looking at my estimates for pay increases to a few higher performing, not yet arbitration eligible players in light of his interview, I’ve lowered that to $91.65 million. (Details of my details are further down the post.) He went on to say the maximum available money this year for payroll is $94M. That is new, details please.

Translator on

McGuirk: The Braves  will have “no profitability, no free cash flow.” 

Translation: We’re not broke but dang close to it. We can pay the bills and eat but there will be no luxuries – anything that requires an increase in payroll – in this year’s budget

The Braves are effectively a nonprofit organization without the tax advantages This year’s projected income and expenses add up to zero and Liberty Media will not help.

McGuirk: The $94M “will look more like $84 million in actual players on the ground”

Translation: We’re still paying for that awful Lowe contract and the ill-informed trade for McLouth so while spending $94M we have an effective payroll of $82.5M. I rounded up to 84, that’s allowed isn’t it?

Time for that payroll spreadsheet. . .

Braves   salary + earned bonus payments  
  Roster   2012 2013
1 Jones, Chipper   $14,000,000.00 option
2 Uggla, Dan   $13,200,000.00 $13,200,000.00
3 McCann, Brian   $11,500,000.00 Club Option $12M 500K Buyout
4 Bourn, Michael   $6,845,000.00 FA
5 Prado, Martin   $4,700,000.00 Arb 3
6 Diaz, Matt   $2,125,000.00 FA
7 Ross, David   $1,630,000.00 FA
8 Hinske, Eric   $1,500,000.00 FA
9 Jack Wilson   $1,000,000.00 FA
10 Freeman, Freddie   $480,000.00  
11 Tyler Pastornicky   $480,000.00  
12 Constanza, Jose   $480,000.00  
13 Hicks, Brandon   $480,000.00  
14 O’Flaherty, Eric   $2,490,000.00 Arb 3
15 Heyward, Jason   $560,000.00 Arb1
16 Hudson, Tim   $9,000,000.00 Club Option $9M $1M Buyout
17 Jurrjens, Jair   $5,500,000.00 Arb 3
18 Hanson, Tommy   $520,000.00 Arb1
19 Medlen, Kris   $495,000.00 Arb1
20 Venters, Jonny   $495,000.00 Arb1
21 Kimbrel, Craig   $480,000.00  
22 Martinez, Cristhian   $480,000.00  
23 Beachy, Brandon   $480,000.00 Arb1
24 Minor, Mike   $480,000.00  
25 Moylan, Peter   $1,000,000.00 FA
  25 Man Total   $80,400,000.00 Max $34.2M Min $14.7M
  Gone but Still expensive   Notes
  Lowe, Derek   $10,000,000.00 Paid to Cleveland
  McLouth, Nate   $1,250,000.00 Buyout
  Total Est Payroll   $91,650,000.00  

Notes:

  • Salary estimates from Baseball Prospectus -COTS and various posts on www.MLBTraderumors.com
  • Assumes Peter Moylan will be added to the 25 man roster.
  • Assumes minimum wage players will get the minimum wage –$480K – and no morre. This includes Freeman and Kimbrel.
  • Assumes Hanson, Medlen and Venters will get raises that maintains  the existing differential between their salary and the major league minimum last year.

Drew Sutton’s contract is reported to be $500,000. Adding him in place of Hicks – I expect that to happen – would obviously raise this estimate by $20,000.

McGuirk: “I think this team is on a glide path where it has the ability with all our youth to be good for a long period of time, continue to raise enthusiasm in Atlanta and drive revenue and allow us to spend more on the team.”

Translation: An aircraft gets on its glide path just before landing; the Braves are coming back to earth due to lack of fuel (money) for the engine (everyday player roster.)  Whether this is a touch and go landing or a layover depends on future revenue. Right now it looks like a layover. If the fans don’t come out and support the team in bigger numbers it will get worse. Non-payroll expenses go up annually. If income doesn’t increase at least that much expenses (payroll) must go down or the Braves lose money. Oh and Liberty Media? They won’t help.

His point is easy to understand when you look at the numbers. There’s about $28.1M coming off the books in 2012.

  • The Braves need to extend or replace Ross, Diaz, Hinske, Wilson, Moylan and Bourn as well as find someone to fill Chipper’s roster spot IF he retires.
  • Based on this year’s arbitration numbers it could take as much as $14.2 million more to pay Jurrjens, Hanson, O’Flaherty, Beachy, Prado and Heyward in 2013.
  • Bourn will get $8-10M/year as a free agent so extending him will cost that and is probably a fantasy
  • Ignoring a possible Bourn extension, that leaves around $13.85M to fill those 7 positions.
    • If Chipper doesn’t retire his option starts at $7M and grows to  $9M if he plays 123 games this year. It goes up $1M @ 128,133,138, 140.

    Bill James projects Chipper to play 110 games. But if Chipper has the year the Braves need him to have in order to contend,  he will reach at least the $9M level. If he then decides to play in 2013 it leaves around $5M to replace the departing players.

    So when Mr. McGuirk says, “I think that is part of what the quiet this winter reflects — a real confidence in our minor-league system. I wouldn’t trade our young people for any team’s youth corps. I think the state of the franchise is extremely positive.”

    It translates to: It isn’t going to get better soon folks. Remember the 2005 Baby Braves? They did very well and we have some good young players now that we hope will do well too.  That’s what we’ll have to do for a while, it’s all we can afford.

    The Braves have to hope their minor league system begins developing every day players the way it’s produced pitchers in the past.  Looking back it is obvious they knew this and may have already (I hope) implemented the needed changes. It was a long drought from the arrival of McCann and Jeff Francoeur to the Heyward and Freeman era.

    Liberty Media

    The interview was quite specific that Liberty Media have no plans to sell the team today. Unlike an individual owner who takes a personal interest in the team and wants more than anything else to win, Liberty doesn’t care if we win as along the value of the team rises. With the current spend what you earn edict in place the Braves cost them nothing to run while their value continues to rise relative to the original investment.

    Unlike a company making widgets that requires investment to retain value, Liberty Media don’t have to invest money to increase the value of the Braves franchise.  They just watched a depleted Houston Astro team sold for $600million.  The lesson? No matter how bad a team plays the owners make money when the franchise is sold. My personal view is that they see this as a bad time to sell the franchise because the economy has yet to rebound and that one of four things will eventually generate a corporate decision to sell.

    • They need an infusion of capital to invest in their core business and a buyer for the Braves exists with that much money available.
    • The team starts to operate at a loss – probably because they aren’t competitive – and they sell to cut their losses.
    • Internal politics will cause the shareholders to force a sale either directly or indirectly.
    • Bud Selig will put pressure on them to sell to suit his own agenda
    • I will hit the Powerball and form a group that convinces Liberty Media to sell us the team. (don’t hold your breath, I’ve never won anything.)

    The Future

    The limitation on money spent each year means the immediate future will look like the recent past. We have some bright lights in the farm system but many bright lights dim quickly when they arrive at The Show.  To win a division title and progress in the post season everything has to go perfectly – on the field and heath wise – because we have no margin for error.

    The Braves must draft  more effectively, develop more everyday players quickly and waste picks less often.  Transactions must be smarter. Money and talent wasted on deals like those involving Kenshin Kawakami, Nate McLouth, or Mark Teixeira must be a thing of the past, there is no safety net – no owner with pockets full of extra money – to pick up the slack like Mike Ilitch just did in Detroit.

    One last thing. The Braves front office must continue to be more open and less obtuse with the fans. The Terry McGuirk interview – as painful as it was – is the best, most open explanation fans have had about what’s driving player decisions. Understanding why won’t make us – well me anyway – passively accept what I consider bad decisions. But at least we’ll have some context for those decisions.

    What do you think? Can the Braves maintain a competitive roster – by competitive I mean  capable of winning a post season series every year – or will we start to see a slide back to the bad old days?  Comment below and let me know.

    You may follow me on  Twitter @fredeowens or email [email protected]

    Tags: Liberty Media Payroll Terry McGuirk

    • http://tomahawktake.com/ CarlosCollazo

      It really sucks that Liberty Media owns the team. I feel like we will still be competitive, we have a young team full of talent, and tons of pitching. Let’s hope that Liberty sells the team before that dries up.

    • http://tomahawktake.com/ CarlosCollazo

      It really sucks that Liberty Media owns the team. I feel like we will still be competitive, we have a young team full of talent, and tons of pitching. Let’s hope that Liberty sells the team before that dries up.

    • aryanspecial

      Top 10 thoughts to Braves Success. Redundant, yes I know.
      1. For the good of the franchise, it seems like Chipper needs to retire after 2012.
      2. I like that the team stays in tact. We don’t see it enough these days. When you have talented guys (and the Braves do), let them develop.
      3. Uggla can’t hit .180 the first 2 months of the season. He needs to have big power numbers and hit in at least the .270 range consistently. He’s a big investment and needs to produce all season.
      4. Obviously, Heyward needs to bounce back. I’m not expecting him to win a batting title or anything. Just drive in runs.
      5. Two of these young super prospect starting pitchers have to have a solid season. Our top 3 starters have injury concerns.
      6. Brian McCann has to stay healthy. This offense is just not the same without him.
      7. My biggest worry like almost everyone else is Pastornicky. I keep hearing how average of a fielder he is and how he isn’t a great hitter either. I feel better with Jack Wilson being there, but that hole just keeps reminding me of Elvis Andrus.
      8. Tim Hudson needs to prove me wrong. Back surgery? Sounds like a disappointing season to me. He’s been pretty consistent throughout his career, but if that back becomes an issue, I can’t see the ERA staying in the lower 3s this year.
      9. The Michael Bourn effect. Ah, I remember those Braves team that had speed in the top of the order. It was fun having Otis Nixon or Deion on the basepaths. Liked watching Furcal too in his day. If he has a big year (contract year for him) he could be a huge piece for the offense.
      10. The return of Prado. Please, be the .300 hitter we all expect you to be.

    • aryanspecial

      Top 10 thoughts to Braves Success. Redundant, yes I know.
      1. For the good of the franchise, it seems like Chipper needs to retire after 2012.
      2. I like that the team stays in tact. We don’t see it enough these days. When you have talented guys (and the Braves do), let them develop.
      3. Uggla can’t hit .180 the first 2 months of the season. He needs to have big power numbers and hit in at least the .270 range consistently. He’s a big investment and needs to produce all season.
      4. Obviously, Heyward needs to bounce back. I’m not expecting him to win a batting title or anything. Just drive in runs.
      5. Two of these young super prospect starting pitchers have to have a solid season. Our top 3 starters have injury concerns.
      6. Brian McCann has to stay healthy. This offense is just not the same without him.
      7. My biggest worry like almost everyone else is Pastornicky. I keep hearing how average of a fielder he is and how he isn’t a great hitter either. I feel better with Jack Wilson being there, but that hole just keeps reminding me of Elvis Andrus.
      8. Tim Hudson needs to prove me wrong. Back surgery? Sounds like a disappointing season to me. He’s been pretty consistent throughout his career, but if that back becomes an issue, I can’t see the ERA staying in the lower 3s this year.
      9. The Michael Bourn effect. Ah, I remember those Braves team that had speed in the top of the order. It was fun having Otis Nixon or Deion on the basepaths. Liked watching Furcal too in his day. If he has a big year (contract year for him) he could be a huge piece for the offense.
      10. The return of Prado. Please, be the .300 hitter we all expect you to be.

    • FredOwens

      @CarlosCollazo I’d love them to sell as well but as I pointed out they have no motivation to do so. Corporate ownerships are never good for a sports franchise unless the corporate owner like Turner takes a personal interest. Most are just faceless names in Forbes who can’t find the ballpark without a map.

    • FredOwens

      @aryanspecial Top ten replies :-)

      1. Agreed. He really should have gone this year but most retired ball players say they advise you to stay until they rip your uniform off. I had hoped for a graceful on top exit. I fear that won’t happen and injury will force him out instead.

      2, I like keeping them together as well but we lack young everyday player talent. Currently there is no major league ready CF or LF and Prado is at best a average everyday third baseman who will be more expensive than his numbers support soon, possibly when he gets 7+M next year in arbitration. The bog question is whether we sign McCann long term or trade him for high level prospects before age and injury eat his effectiveness and our payroll. Bethancort is either close or not close depending on the scouting report you believe.

      3. Uggla will be fine for a couple of years ZIPS projects .248 .330 .451 29HR 82RBI in 150 games while the always optimistic James .288 .251 .337 33/95 in 161. Uggla plays everyday so I expect him closer to James.

      4.Getting rid of Parrish will help I don;t know your age but I have two sons. When they were Heyward’s age and I told them to go hard for something it didn’t end well. That’s what happened to Jason when he was told to be more aggressive. Francoeur like holes appeared in his swing. He’ll be back perhaps to his hype but probably slightly less which will be good enough more most outfielders.

      5. IF we need two young prospects to blossom to ala Matt Moore at once we have a problem. Teheran and Delgado must show they can put people away without throwing 100 pitches in 4+.

      6. Agreed.

      7. Pastornicky has always hit and he’s fast. I’d slot him in the 2 hole so he gets a lot of fastballs to hit and doesn’t get stuck trying to do anything to get on in front of the pitcher. Fearless Fredi won;t be that brave a Brave. His fielding is a concern because Chipper doesn’t go to his right well anymore and we’ll give up hits that should be outs because he TP can’t cover Chipper and up the middle at the same time.

      8. Hudson’s back is a concern though Randy Johnson pitched fine after had more serious surgery and Huddy is in better shape. As we saw last year however if he can’t get on top of the ball and his sinker doesn’t sink he is more a 5th than a # 3 starter.

      9. In a walk year I expect Bourn to continue and improve on the year he started last year in Houston. The question really is, if we aren’t in it at the break is he traded? We will not get a draft pick for him under the new rules because the Braves won’t offer him the kind of money to qualify for it – about $12 million is the estimated level. So, if we’re 6 games back do we keep him and get nothing or trade him for a couple of prospects? Assuming of course he doesn’t fall in love with ATL and take a discount to stay- remember he’s a Boras client and we haven’t dealt with Boras well at all.

      10. Prado isn’t a 300 hitter, even James predicts .289.339.423 11/56 and that’s high. He doesn’t walk or strike out much and a lot will depend on whether he decides he’s the guy who hits gap to gap or tries to provide the numbers a left fielder is expected to put up, That in turn depends on where Fredi bats him. He didn’t do well hitting behind Bourn last year and trying to allow Bourn to steal. Another reason TP should hit second IMO.

      Thanks for the comments, always glad to hear what other fans think!

    • FredOwens

      @CarlosCollazo I’d love them to sell as well but as I pointed out they have no motivation to do so. Corporate ownerships are never good for a sports franchise unless the corporate owner like Turner takes a personal interest. Most are just faceless names in Forbes who can’t find the ballpark without a map.

    • TLanceB

      great information

      To me, this means, don’t expect a new OF. Don’t expect anything major at the trade deadline. And the 25 that break camp are the 25 that we will play with most of the year. Yay (sarcasm)

    • FredOwens

      @TLanceB That about sums up the results indeed, Like you I am thrilled :-p

    • FredOwens

      @aryanspecial Top ten replies :-)

      1. Agreed. He really should have gone this year but most retired ball players say they advise you to stay until they rip your uniform off. I had hoped for a graceful on top exit. I fear that won’t happen and injury will force him out instead.

      2, I like keeping them together as well but we lack young everyday player talent. Currently there is no major league ready CF or LF and Prado is at best a average everyday third baseman who will be more expensive than his numbers support soon, possibly when he gets 7+M next year in arbitration. The bog question is whether we sign McCann long term or trade him for high level prospects before age and injury eat his effectiveness and our payroll. Bethancort is either close or not close depending on the scouting report you believe.

      3. Uggla will be fine for a couple of years ZIPS projects .248 .330 .451 29HR 82RBI in 150 games while the always optimistic James .288 .251 .337 33/95 in 161. Uggla plays everyday so I expect him closer to James.

      4.Getting rid of Parrish will help I don;t know your age but I have two sons. When they were Heyward’s age and I told them to go hard for something it didn’t end well. That’s what happened to Jason when he was told to be more aggressive. Francoeur like holes appeared in his swing. He’ll be back perhaps to his hype but probably slightly less which will be good enough more most outfielders.

      5. IF we need two young prospects to blossom to ala Matt Moore at once we have a problem. Teheran and Delgado must show they can put people away without throwing 100 pitches in 4+.

      6. Agreed.

      7. Pastornicky has always hit and he’s fast. I’d slot him in the 2 hole so he gets a lot of fastballs to hit and doesn’t get stuck trying to do anything to get on in front of the pitcher. Fearless Fredi won;t be that brave a Brave. His fielding is a concern because Chipper doesn’t go to his right well anymore and we’ll give up hits that should be outs because he TP can’t cover Chipper and up the middle at the same time.

      8. Hudson’s back is a concern though Randy Johnson pitched fine after had more serious surgery and Huddy is in better shape. As we saw last year however if he can’t get on top of the ball and his sinker doesn’t sink he is more a 5th than a # 3 starter.

      9. In a walk year I expect Bourn to continue and improve on the year he started last year in Houston. The question really is, if we aren’t in it at the break is he traded? We will not get a draft pick for him under the new rules because the Braves won’t offer him the kind of money to qualify for it – about $12 million is the estimated level. So, if we’re 6 games back do we keep him and get nothing or trade him for a couple of prospects? Assuming of course he doesn’t fall in love with ATL and take a discount to stay- remember he’s a Boras client and we haven’t dealt with Boras well at all.

      10. Prado isn’t a 300 hitter, even James predicts .289.339.423 11/56 and that’s high. He doesn’t walk or strike out much and a lot will depend on whether he decides he’s the guy who hits gap to gap or tries to provide the numbers a left fielder is expected to put up, That in turn depends on where Fredi bats him. He didn’t do well hitting behind Bourn last year and trying to allow Bourn to steal. Another reason TP should hit second IMO.

      Thanks for the comments, always glad to hear what other fans think!

    • TLanceB

      great information

      To me, this means, don’t expect a new OF. Don’t expect anything major at the trade deadline. And the 25 that break camp are the 25 that we will play with most of the year. Yay (sarcasm)

    • FredOwens

      @TLanceB That about sums up the results indeed, Like you I am thrilled :-p