What is Albert Pujols or any star player worth to the bottom line? The truth is nobody really knows except the teams themselves. The data needed to tell us the answer isn’t all out there so unless you work in finance or business operations at an MLB team you can’t really tell the full story.
No fan or writer knows what television contracts, suite and premium seating contracts, insurance rates, and debt services look like for an MLB team. As baseball fans we try to put a value on every play. FanGraphs, Vince Gennaro, Andrew Zimbalist, J.C. Bradbury, and Nate Silver have all published individual studies on player valuation. Their studies and my previous work have helped served as a template of what you find before you. Due to third-party-related transactions (RSN/Legends), unforeseen revenue windfalls from a new national television deal, the ramifications in the upcoming CBA (revenue sharing/luxury tax/draft slotting),and the multiplier effect on the bottom line, no numbers can be said as being the end-all be-all formula. The numbers below are just a guideline as to which businesses (teams) have the most to gain by signing Albert.
Coming from the land of Kobe, Lindsay, Beckham, Britney, and Manny, the value of a one-name star and the best player in baseball is not lost on me. So I will try my best to put a value on his next contract from a business standpoint with a bit of baseball mixed in as well. Please note that the numbers below are interchangeable for a Prince Fielder contact. Fielder is four years younger, left-handed, and it will be argued that he is a scarcer resource as I’m sure the Boras and Co. will even though Albert is superior with the glove. Given the greater marketability and starpower of Pujols, I’ll be using him for the study.
For the study I first culled the top 15 revenue-producing teams in the league (based on 2010 Forbes data), then added in Milwaukee -- due to Prince Fielder’s impending free agency -- and Baltimore, as they own the television rights to not only the Orioles but over half of the Nationals. Now armed with 17 teams, I went out in search of the following data to see what teams are primed to best take advantage of signing Pujols. The teams included in the study are:
- New York Yankees
- Boston Red Sox
- Chicago Cubs
- Los Angeles Dodgers
- Philadelphia Phillies
- New York Mets
- San Francisco Giants
- Los Angeles Angles
- Minnesota Twins
- Chicago White Sox
- St. Louis Cardinals
- Texas Rangers
- Seattle Mariners
- Atlanta Braves
- Washington Nationals
- Milwaukee Brewers
- Baltimore Orioles
I took a look at this past seasons’ payroll, guaranteed payroll for the next three years (Thanks to Cot’s Contracts) and available funds moving forward to see how had the financial capacity to take on the $25-30 million annually one would need to commit to Albert and more importantly the revenue upside. As Nate Silver’s study in Baseball Between The Numbers suggests, it’s always important to understand how many wins the teams had won, as the value of incremental wins increase heavily from wins 85-90. It’s also worth noting that in Year 2 of the new Pujols contract a second wild card team will be added. This wild card will allow for a 33 percent chance to make the playoffs rather than the 25 percent under the current system. With a ticketing background, let’s take a look as to which teams had the most to gain, then take a peek at sell-thru rates the past two seasons at each team’s stadiums and what the value was of their dead inventory.
To value their unsold seats, they were merely multiplied by the average ticket price from Team Marketing Reports’ fan cost index. Additionally, suites and RSN ownership will definitely play a hand in each team’s formula as will having a large number of major-league-ready “minimum wage” players to be able afford to spend that type of dollars elsewhere on the diamond. The basic formula for putting a number to Pujols’ value to the bottom line and how that bottom line may increase takes the following categories into account:
Ticket sales + Premium ticket sales + Sponsorship + (Concessions Less Concessionaire’s Cut) + Parking (for those who own their own parking lots)
- 31 percent revenue sharing (although the number is slightly lower due to the way premium tickets are counted and is subject to change in the new CBA) - Insurance on the contract - Taxes on team profits (if any)
+ the 3rd party-related transactions : Television advertisements and subscriptions (for those who have RSN ownership or the potential to start one during the life of the contract).
Pujols, or even Fielder for that matter, must generate at a minimum $45 million in incremental revenue to justify a $30 million annual contract. This number does not include the postseason effect, though. Postseason valuations are tricky, because teams don’t make money that year, and most funds go to players unless they are involved in a long series. That value is on the next three years’ books, really.
By using the 17 teams above and looking at win totals below, I have attempted to reflect the importance of the playoffs but will not be putting a hard value on it. If a team consistently goes to the playoffs, there is a minimal effect on the bottom line (Phillies, Yankees, Red Sox). So now that we know what type of revenue we are looking at to generate, let’s take a look at what teams will find Pujols to be a worthwhile investment. Of the 17 teams included in the study one can easily argue to remove the NY Yankees (Mark Teixeira), Boston Red Sox (Adrian Gonzalez), Philadelphia Phillies (Ryan Howard), and Minnesota Twins (Justin Morneau), as they all have made substantial investments and sellout most if not all of their games. So let’s take a look at the baker’s dozen of other business contenders for Albert.
SELECT READ MORE TO SEE DETAILS FOR ALL THE CLUBS IN THE STUDY
Fixed Payroll for next 3 seasons: $86, $28, $19 million ($25 million post-arb to spend per MLBTR)
Wins past 3 seasons: 83 wins, 75 wins, and 71 wins (0 playoff appearances)
This year’s overall sell-thru rate: 92% (Down 1% from LY)
Estimated Value of dead inventory this season: $14 million
Size of premium inventory: 60 suites, 3510 club seats ($103.47 average ticket price)
RSN: Comcast Sports Network Chicago
Top Players in Farm System & Pre-Arb: Geovany Soto, Starlin Castro, Brett Jackson, & Matt Sczur
Los Angeles Dodgers
Fixed Payroll for next 3 seasons: $46, 47, $17 million ($20 million post-arb to spend per MLBTR)
Wins past 3 seasons: 95 wins, 80 wins, and 82 wins (0 playoff appearances last 2 seasons)
This year’s overall sell-thru rate: 65% (Down 14% from LY)
Estimated Value of dead inventory this season: $48.5 million
Size of premium inventory: 35 suites, 1982 club seats ($222.38 average ticket price)
RSN: To Be Decided by new owner (Worst TV ratings in league)
Top Players in Farm System & Pre-Arb: Dee Gordon, Jerry Sands, Zach Lee, & Allen Webster
New York Mets
Fixed Payroll for next 3 seasons: $67, $45, and $9 million ($19 million post-arb to spend per MLBTR)
Wins past 3 seasons: 70 wins, 79 wins, and 77 wins (0 playoff appearances)
This year’s overall sell-thru rate: 72% (Down 5% from LY)
Estimated Value of dead inventory this season: $30 million
Size of premium inventory: 54 suites, 7800 club seats ($102.13 average ticket price)
RSN: 51% ownership of SNY (153K HH/Game, 4th in MLB)
Top Players in Farm System & Pre-Arb: Bobby Parnell, Ike Davis, Matt Harvey, & Zach Wheeler
San Francisco Giants
Fixed Payroll for next 3 seasons: $73, $22, and $7 million ($10-15 million post-arb to spend per MLBTR)
Wins past 3 seasons: 88 wins, 92 wins, and 86 wins (1 playoff appearance, 1 Championship)
This year’s overall sell-thru rate: 100% (Up 10% over LY)
Estimated Value of dead inventory this season: $0 million
Size of premium inventory: 64 suites, 8514 club seats ($78.73 average ticket price)
RSN: CSN Bay Area (127,000 HH/game, 5th in MLB)
Top Players in Farm System & Pre-Arb: Buster Posey, Madison Bumgardner, & Gary Brown
Los Angeles Angels
Fixed Payroll for next 3 seasons: $102, $47, and $37 million ($20 million post-arb to spend per MLBTR)
Wins past 3 seasons: 97 wins, 80 wins, and 86 wins (0 playoff appearances last 2 seasons)
This year’s overall sell-thru rate: 86% (Down 3% over LY)
Estimated Value of dead inventory this season: $8.8 million
Size of premium inventory: 80 suites, unknown number of club seats ($67.71 average ticket price)
RSN: FSN West (29th in ratings)
Top Players in Farm System & Pre-Arb: Mark Trumbo, Mike Trout, Jean Segura, and Kaleb Cowert
Chicago White Sox
Fixed Payroll for next 3 seasons: $90, $65, $42 million ($15-20 million post-arb to spend per MLBTR)
Wins past 3 seasons: 79 wins, 88 wins, and 79 wins (0 playoff appearances since 2005)
This year’s overall sell-thru rate: 61% (Down 6% over LY)
Estimated Value of dead inventory this season: $52 million
Size of premium inventory: 95 suites, 1833 club seats ($99.77 average ticket price)
RSN: Comcast Sports Network Chicago
Top Players in Farm System & Pre-Arb: Chris Sale & Tyler Flowers
St. Louis Cardinals
Fixed Payroll for next 3 seasons: $85, $57, $24 million ($12-15 million post-arb to spend per MLBTR)
Wins past 3 seasons: 91 wins, 86 wins, and 90 wins (2 playoff appearances, 1 Championship)
This year’s overall sell-thru rate: 87% (Sales flat over LY)
Estimated Value of dead inventory this season: $14.4 million
Size of premium inventory: 64 suites, 667 club seats ($71.96 average ticket price)
RSN: FSN Midwest (2nd highest ratings of all MLB teams)
Top Players in Farm System & Pre-Arb: David Freese, Shelby Miller, Carlos Martinez, & Tyrell Jenkins
Fixed Payroll for next 3 seasons: $63, $33, and $17 million ($5-10 million post-arb to spend)
Wins past 3 seasons: 87 wins, 90 wins, and 96 wins (2 World Series appearances)
This year’s overall sell-thru rate: 74% (Up 11% over LY)
Estimated Value of dead inventory this season: $19.2 million
Size of premium inventory: 123 suites, 5500 club seats ($67.17 average ticket price)
RSN: Fox Sports Southwest
Top Players in Farm System & Pre-Arb: Neftali Feliz, Martin Perez, Jurickson Profar, & Leonys Martin
Fixed Payroll for next 3 seasons: $60, $38, and $21 million ($20 million post-arb to spend per MLBTR)
Wins past 3 seasons: 85 wins, 61 wins, and 67 wins (0 playoff appearances)
This year’s overall sell-thru rate: 49% (Down 5% over LY)
Estimated Value of dead inventory this season: $51.7 million
Size of premium inventory: 61 suites, 5059 club seats ($56.98 average ticket price)
RSN: FSN West
Top Players in Farm System & Pre-Arb: Michael Pineda, Danny Hultzen, and Taijuan Walker
Fixed Payroll for next 3 seasons: $65, $15, and $13 million ($15-20 million post-arb to spend)
Wins past 3 seasons: 86 wins, 91 wins, and 89 wins (1 playoff appearance)
This year’s overall sell-thru rate: 60% (Down 2% over LY)
Estimated Value of dead inventory this season: $31.2 million
Size of premium inventory: 60 suites, 5243 club seats ($49.26 average ticket price)
RSN: SportSouth (74K HH/Game)
Top Players in Farm System & Pre-Arb: Freddie Freeman, Jason Heyward, Craig Kimbrel, & Julio Teheran, Arodys Vizcaino, & Randall Delgado
Fixed Payroll for next 3 seasons: $45, $36, $23 million ($40 million post-arb to spend per MLBTR)
Wins past 3 seasons: 59 wins, 69 wins, and 80 wins (0 playoff appearances)
This year’s overall sell-thru rate: 60% (Up 6% over LY)
Estimated Value of dead inventory this season: $41.1 million
Size of premium inventory: 79 suites, 2200 club seats ($166.25 average ticket price)
RSN: MASN2 (29,000HH, worst in MLB)
Top Players in Farm System & Pre-Arb: Stephen Strasburg, Drew Storen, Bryce Harper, Anthony Rendon, AJ Cole, & Brad Peacock
Fixed Payroll for next 3 seasons: $58, $40, and $45 million ($12-20 million post-arb to spend)
Wins past 3 seasons: 80 wins, 77 wins, and 96 wins (1 playoff appearances)
This year’s overall sell-thru rate: 91% (Up 10% over LY)
Estimated Value of dead inventory this season: $6.7 million
Size of premium inventory: 66 suites, 641 club seats ($39.59 average ticket price)
RSN: Fox Sports Wisconsin (72,000 HH/Game)
Top Players in Farm System & Pre-Arb: John Axford & Wily Peralta
Fixed Payroll for next 3 seasons: $43, $33, and $22 million ($10-25 million to spend per MLBTR)
Wins past 3 seasons: 64 wins, 66 wins, and 69 wins (0 playoff appearances)
This year’s overall sell-thru rate: 48% (Up 3% over last year)
Estimated Value of dead inventory this season: $46.2 million
Size of premium inventory: 72 suites, 4800 club seats ($43.72 average ticket price)
RSN: MASN (31,000 HH/Game, 28th in League)
Top Players in Farm System & Pre-Arb: Dylan Bundy, Manny Machado, & Jonathan Schoop
From a ticketing standpoint, the teams with the most outstanding inventory are the White Sox ($52.1 million), Mariners ($51.7), Dodgers ($48.5), Orioles ($46.2), Nationals ($41.1), Braves ($31.2), and the Mets ($30.3). Now which of these teams seem to be closest to the playoffs every year with a need at first base?
The Mariners (Justin Smoak) and Orioles (Chris Davis) are in rebuilding phases, the Braves have six more years of Freddie Freeman and the Nationals seem set on Michael Morse at first. So that leaves the White Sox, Dodgers and Mets as the teams best-positioned to take advantage of signing Pujols, though they’re not alone. Let’s take a deeper look at each team and their competition:
Chicago White Sox
The White Sox would seem to be an ideal fit. If they sold half of their inventory outstanding and another $5 million in sponsorship they could easily pickup the rest in concessions and increased ticket usage. Then take into account the non-financial factors: The team has not appeared in the postseason for six years, Pujols could be an ideal DH for the later years of the contract, Chicago boasts a large Hispanic community and there’s growing competition from their neighboring Cubs due to Theo Epstein’s arrival in the front office. The team seems to be just outside the postseason annually and adding the 6-9 win player that is Albert Pujols would put the team in a position to compete for the playoffs every year.
On the down side, the team has many long-term commitments that make signing Pujols unlikely; however, a simple trade of Adam Dunn to one of the also-rans in the Pujols sweepstakes accompanied with moving Paul Konerko to DH would pave the way for what would prove to be a wise business transaction.
Los Angeles Dodgers
The Dodgers, like their Camelback Ranch counterparts, are a perfect fit. James Loney is in his last year of arbitration. The team could lose Matt Kemp after next season. The team has averaged 81 wins over the past 2 seasons and are about to launch a television network or sell their television rights. The LA market is the 2nd largest in the United States and since we’ve ruled out New York it’s the largest market in play for Albert’s agent. Los Angeles has a very strong Hispanic community and would fit Albert’s personality as being just another celebrity in a town full of them. The team knows what winning will do to their bottom line with back to back LCS performances a few years back. Given McCourt ownership of the parking lots and the land acquiring Albert Pujols would be the ultimate power play while Kobe sits on the sideline during the lockout and the NFL seems years away. The team is controlled now by MLB as they are in the process of being sold, so I can’t see the expenditure.
New York Mets
The Mets take the back seat to the Yankees on a daily basis and are bracing for the departure of Jose Reyes. Based on their talent level throughout the minors and financial issues, they seem to be in the worst position of any NL East team. If the team wasn’t in need of a cash infusion against the backdrop of a Madoff clawback this would be a nice landing spot for Pujols. For a team that seems to be having massive fiscal issues, Ike Davis for 1/60th of the cost it would take to land Pujols seems to be the route they’ll end up taking.
The Cubs seem to have already made their big offseason acquisition in Theo Epstein. Based on his competitive nature, I can see him getting into the bidding fray if for no other reason than to raise the costs on his division rivals. The club has $14 million in dead inventory, and I see that number potentially rising if the team keeps losing. The team has already announced adjustment in ticket pricing for next season.
If Ricketts owned Wrigley, the land, and the RSN, then signing Pujols would be a no-brainer for the new head of Cubs business operations. But he only owns the team and a small portion of the RSN. I think a back-loaded contract would make sense for the organization, something that would make a statement of change. Coming off a 71-win season and with a second wild card being an option in 2013, one could easily make the argument that adding Pujols and Epstein would make the Cubs a viable player in 2013. The value of taking the best player off your divisional rival can’t be understated both on and off the field.
Los Angeles Angels
The Angels organization has shied away from long-term contracts under Arte Moreno just like their neighbors up I-5. Mike Scioscia, the Angels’ de facto GM right now, recently stated that current first baseman Mark Trumbo deserved to be Rookie of the Year this season. Even though they’ve missed the postseasons two years running, they still seem to be selling most of their tickets. They could be a team to watch, though, as they are negotiating a new television deal as you read this.
St. Louis Cardinals
World-champion St. Louis is in a very tough spot, as the team would be spending a lot of money just to supposedly maintain its current revenue streams. They only had $14 million in outstanding inventory, already moved stadiums recently and just won the World Series. One could argue given Adam Wainwright’s return, the expectation of Fielder leaving Milwaukee, and with the addition of the second wild card that re-signing Pujols is a poor baseball decision. The need on the business and baseball side is just not there.
This is a decidedly personal move as there is very little new upside in the short-term revenue of re-signing the perennial All-Star. Marketers will tell you that Joe Mauer, Cal Ripken and Derek Jeter had it right by playing for one team their whole careers. Dan Lozano, Pujols’ agent, must weigh this heavily in deciding against moving Pujols out of the city he’s called home his entire big league career. CNBC’s Darren Rovell recently predicted that Pujols would stay home for a slight discount, and I tend to agree with him. If the offers that come in are within $20-25 million of what St. Louis offers, then I think he stays. But whose left to blow the Cardinals’ offer out of the park?
Texas is armed with a new ownership group and back-to-back World Series appearances, and the team will see another financial windfall this offseason. Just last season they closed on an $80 million annual television contract that begins in 2015. The revenues are there to justify the expense, but how much real incremental value will be picked up by signing him? The team has $19.2 million in outstanding ticket inventory, but judging by the secondary market for the World Series, it will have no problem selling much of the inventory without him. Pujols represents a major upgrade at first base over current starter Mitch Moreland, and the Rangers can choose to DH Pujols in his later years just like the White Sox could.
Like the Dodgers face with Matt Kemp, Josh Hamilton is a free agent after next season, so a nine-figure contract seems to be coming for the Rangers one way or another. The question is, will they give it to Pujols, Fielder or Hamilton? In the end, the Rangers have what the White Sox and Dodgers wish they had: an opening at first and television money in hand. This is the best landing spot for Pujols from all angles.
Milwaukee Brewers/San Francisco Giants
The last ones take a look at are the Brewers, who are in a similar situation to the Giants. They would both love to sign Fielder or Pujols, but the incremental revenues aren’t there to justify the expense. Both teams have solid cores and steady revenues but it would seem to be a better business and baseball move to sign Jose Reyes this offseason. He’s new, cheaper, and fills a void at the top of their lineups. The second wild card spot is almost a disincentive to these teams as they are 85-plus-win teams without signing Pujols. Brandon Belt, when healthy, seems to be the Giants’ future at first base.
The three wild cards in the Pujols sweepstakes are Baltimore, Florida, and Washington. The Orioles, who have $46 million in outstanding inventory, could view Pujols as an investment into their television networks.
Another team that would seem to make a lot of sense is the Marlins, considering they’ll have a new stadium. Coming off another losing season with thousands of seats to sell in a large Hispanic community with Ozzie Guillen to manage him would justify his signing from a business standpoint. Armed with more than 10,000 club seats and 195 suites, the Marlins’ new stadium might need somebody like Pujols in order to sell out.
It’s always worth reminding fans that the Lerner family, which runs the Nationals, is the wealthiest ownership group in the league. The club could easily move Michael Morse to outfield, making way for Pujols at first base. A lineup card of Ramos-Pujols-Desmond-Espinosa-Zimmerman-Harper-Werth-Morse in 2013 seems to be one that could easily compete for a wild card berth.
So where will Pujols be playing baseball next year? Nobody really knows. It makes the most sense to say “in the Central time zone” (Chicago, St. Louis, Texas), with slim chances of either South Beach or the Beltway. Those seven teams are the only ones on a business side that can justify the expense and make it happen right now (sorry Mets and Dodgers fans).
Pujols and Fielder picked the absolute wrong year to hit the market, as the top 10 teams in league revenues might not all be bidding for their services: The Yankees (Teixiera), Red Sox (Gonzalez), Cubs (heavy long-term payroll commitments and no DH possibility), Dodgers (bankruptcy court), Phillies (Howard), Mets (fiscal issues), Giants (Brandon Belt and rising costs of pitching staff), Angels (heavy long-term payroll commitments and Trumbo), Twins (Morneau), and the White Sox (heavy long-term payroll commitments and Konerko) all have reasons to pass.
Next on the list are the two World Series combatants in Texas and St. Louis. Ultimately, I can see only two or three teams making a serious bid for Pujols outside of St. Louis. I think one of the newer owners, or the one with a new ballpark, in Ryan, Lerner, or Loria, make him an offer to top Alex Rodriguez’ free-agent record of $250 million, and Pujols will remain with the Cardinals after they go a bit higher from their original offer. The team will use its newfound World Series funds to raise prices and revenues. The contract will contain the highest level of deferred funds ever so St. Louis can afford to build a team around him. I foresee a prolonged bidding process similar to the Dodgers pursue of Manny Ramirez in 2009, as the teams will want a better understanding of 2012 revenues and the new CBA. The more time they have the more informed of a bid they can make. If another bidder goes $40-50 million higher than what St. Louis offers, then this will put Pujols, his agent, and the MLBPA in a very tough spot. In the meantime, remember the decision to acquire Albert isn’t just a baseball decision, but a business decision as well. While the purist baseball fan in all of us is rooting for a return to St. Louis, I see it happening thanks to the Cardinals’ World Series revenues and the fact that there’s no better landing spot for the Pujols brand than the place where it’s been cultivated for years.
David Simmons is a graduate of the University of Central Florida who worked in the front office of the Los Angeles Dodgers over 4 seasons and has a decade of ticketing experience.. He serves as CFO for Players For The Planet and currently resides in Baltimore. You can follow David on Twitter @davidesimmons
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