Schmuck: Angelos back in Warehouse and in Duquette's old office!

[Frobby]

I have been refraining from posting on weekdays unless there is specific news that is worthy of comment, but I can't hold my tongue here.

To me, the Angelos-bashing and Duquette-bashing is out of control and premature. It's December 5. The Winter Meetings haven't even taken place yet. Duquette has publicly stated that the money saved by trading Jim Johnson will be spent on other players, and that this year's payroll budget will be higher than last years. Duquette hasn't telegraphed how much higher his budget will be. Last year, the O's payroll increased about $18 mm from the year before (going by year-end numbers, not Opening Day payroll).

I will be just as unhappy as anyone else if the O's don't have a significant payroll increase, and more importantly, acquire players who I feel put the team in position to be better than they were in 2013. But I just don't see why everyone is so hysterical right now. There are plenty of good players -- some who will be expensive, some who are not as expensive but who can still improve our team -- who are on the board. The next three weeks are usually the busiest transaction weeks of the year. I just don't see why so many posters are just assuming that the O's won't make significant moves to improve the team, and are criticizing the payroll limitations when we have no idea what the payroll is going to look like by the time the offseason is over.

But I do have two things to say about the payroll. First, I seriously doubt that all teams, or most teams, are going to spend all of the extra $27 mm in TV money on payroll this offseason. The reason is simple: that's too many dollars chasing a limited pool of players. The players who are available on the free agent market simply aren't worth the amount of money that's available to pay them. Maybe in 3-4 years, the average payroll will be up by $27 mm, but it's not going to happen in one offseason.

The second thing I have to say is that I'm continually amazed at the assumptions people have about how much money is available from MASN. The truth is, we have very little visibility into that. Earlier this offseason, there was an article that attributed to SNL Kagan (a media consulting firm) the statement that MASN was expected to have $146 mm in revenues and $29 mm in cash flow this year. Cash flow is not the same thing as profit, but it gives a good idea of the cash the company has that theoretically, would be available to distribute to the shareholders. So, it's my assumption that, if the owners of MASN so chose, they could dividend out that $29 mm ($25 mm to the Orioles, $4 mm to the Nats) and still have enough resources within MASN to run that company. But, there also are at least two reasons why that money might be left within MASN: (1) to fund expansion of MASN's operations or invest in its infrastructure, and (2) to avoid having to share some of that revenue with the other 28 teams in MLB through their revenue-sharing procedures. The bottom line is there is way too much we don't know about MASN's finances to really get a fix on whether Angelos is hoarding money, and of so, exactly how much. But in my opinion, it's probably not quite the giant cash cow that some people seem to think it is.

Putting MASN to one side, the Orioles' gross revenues were $206 mm in 2012 according to Forbes. That's $19 mm less than the Nats, $32 mm less that the Tigers, $33 mm less than the Cardinals.

I don't want to come off as an Angelos defender, I am simply saying that it is too soon in the offseason to jump to conclusions, and we should await the results of the full offseason before making any judgments.

[Satyr3206]

I personally think this is much ado about very little. Peter Angelos owns the Orioles. Well, he's the majority partner. He can pretty much do what he wants, within reason. If he wants to take the top two floors of the Warehouse and turn them into whatever I don't care. I'm a draft and develop guy so big name FA's aren't my cup of tea. Just look at some of the recent megadeals, Pujols, Hamilton, Tex, etc, etc. Very few of these big signings pay off for the franchise. What's far more important is the rebuilding of the Farm System and the Scouting Dept. Both of these look to be vastly improved over the last few years. I used to have long discussions with a friend of mine and the recipe for a mid market team competing in the same division as the Yankees and Red Sox is the same now as then. Draft and develop intelligently. Pour money into Scouting. And stop complaining about the Owner when there is nothing anyone can do about it and other teams are successful with a smaller budget.

[tntoriole]

Potter sure gets himself a lot of play for an 84 year old guy!! I know how tired I get just as old as I am, lol.

[Dark Helmet]

I have been refraining from posting on weekdays unless there is specific news that is worthy of comment, but I can't hold my tongue here.

To me, the Angelos-bashing and Duquette-bashing is out of control and premature. It's December 5. The Winter Meetings haven't even taken place yet. Duquette has publicly stated that the money saved by trading Jim Johnson will be spent on other players, and that this year's payroll budget will be higher than last years. Duquette hasn't telegraphed how much higher his budget will be. Last year, the O's payroll increased about $18 mm from the year before (going by year-end numbers, not Opening Day payroll).

I will be just as unhappy as anyone else if the O's don't have a significant payroll increase, and more importantly, acquire players who I feel put the team in position to be better than they were in 2013. But I just don't see why everyone is so hysterical right now. There are plenty of good players -- some who will be expensive, some who are not as expensive but who can still improve our team -- who are on the board. The next three weeks are usually the busiest transaction weeks of the year. I just don't see why so many posters are just assuming that the O's won't make significant moves to improve the team, and are criticizing the payroll limitations when we have no idea what the payroll is going to look like by the time the offseason is over.

But I do have two things to say about the payroll. First, I seriously doubt that all teams, or most teams, are going to spend all of the extra $27 mm in TV money on payroll this offseason. The reason is simple: that's too many dollars chasing a limited pool of players. The players who are available on the free agent market simply aren't worth the amount of money that's available to pay them. Maybe in 3-4 years, the average payroll will be up by $27 mm, but it's not going to happen in one offseason.

The second thing I have to say is that I'm continually amazed at the assumptions people have about how much money is available from MASN. The truth is, we have very little visibility into that. Earlier this offseason, there was an article that attributed to SNL Kagan (a media consulting firm) the statement that MASN was expected to have $146 mm in revenues and $29 mm in cash flow this year. Cash flow is not the same thing as profit, but it gives a good idea of the cash the company has that theoretically, would be available to distribute to the shareholders. So, it's my assumption that, if the owners of MASN so chose, they could dividend out that $29 mm ($25 mm to the Orioles, $4 mm to the Nats) and still have enough resources within MASN to run that company. But, there also are at least two reasons why that money might be left within MASN: (1) to fund expansion of MASN's operations or invest in its infrastructure, and (2) to avoid having to share some of that revenue with the other 28 teams in MLB through their revenue-sharing procedures. The bottom line is there is way too much we don't know about MASN's finances to really get a fix on whether Angelos is hoarding money, and of so, exactly how much. But in my opinion, it's probably not quite the giant cash cow that some people seem to think it is.

Putting MASN to one side, the Orioles' gross revenues were $206 mm in 2012 according to Forbes. That's $19 mm less than the Nats, $32 mm less that the Tigers, $33 mm less than the Cardinals.

I don't want to come off as an Angelos defender, I am simply saying that it is too soon in the offseason to jump to conclusions, and we should await the results of the full offseason before making any judgments.

No offense Frobby, but every year we hear the "The offseason isn't over" talk. The winter meetings come and go with nothing being done. Sure, they'll pick up some filler fringe types, but nothing game changing. I'm not upset at DD. He can only work with what he's given. GMs come and go. But as long as Angelos owns this team, things won't change.

[TonySoprano]

Putting MASN to one side, the Orioles' gross revenues were $206 mm in 2012 according to Forbes. That's $19 mm less than the Nats, $32 mm less that the Tigers, $33 mm less than the Cardinals.

You keep talking about revenue. The operating income for each, meaning profit after operating expenses, reported in March 2013 was: Cardinals $19.9M, Tigers -$0.4M, Nats $28.4M, Orioles $30.1M. The Orioles and Nats were supposedly very close in profits as they were in 2012 payroll. Do you want to believe that the Yankees only made a profit of $1.4M? Since you want to go by Forbes, it should also be noted that the Orioles profit was the second highest in all of MLB, $2M behind the Cubs.

[Frobby]

You keep talking about revenue. The operating income for each, meaning profit after operating expenses, reported in March 2013 was: Cardinals $19.9M, Tigers -$0.4M, Nats $28.4M, Orioles $30.1M. The Orioles and Nats were supposedly very close in revenue as they were in 2012 payroll. Do you want to believe that the Yankees only made a profit of $1.4M? Since you want to go by Forbes, it should also be noted that the Orioles profit was the second highest in all of MLB, $2M behind the Cubs.

I go by whatever information I can find, always keeping in mind that the media doesn't always have things right. Yes, I'm aware that the O's had the 2nd-highest operating income of any team in 2012, according to Forbes. If you want to argue that the O's could afford to raise payroll by $30 mm from 2012 levels and still break even, I won't try to dissuade you from that. But let's remember that the O's, when they set their 2012 payroll, didn't know that attendance would increase by 350,000 or that they'd get several million dollars in playoff revenue. I'd say the $18 mm payroll increase in 2013 was basically them spending the extra money they made the year before. We don't know what 2013 revenue was so it's hard to say whether it increased again in 2013 over 2012 (250,000 more tickets sold, more merchandise sales, but no playoff revenue). I think it's likely revenue did increase, but we'll have to wait a few months to see what Forbes says about that (to the extent their numbers are accurate).

[TonySoprano]

I go by whatever information I can find, always keeping in mind that the media doesn't always have things right. Yes, I'm aware that the O's had the 2nd-highest operating income of any team in 2012, according to Forbes. If you want to argue that the O's could afford to raise payroll by $30 mm from 2012 levels and still break even, I won't try to dissuade you from that. But let's remember that the O's, when they set their 2012 payroll, didn't know that attendance would increase by 350,000 or that they'd get several million dollars in playoff revenue. I'd say the $18 mm payroll increase in 2013 was basically them spending the extra money they made the year before. We don't know what 2013 revenue was so it's hard to say whether it increased again in 2013 over 2012 (250,000 more tickets sold, more merchandise sales, but no playoff revenue). I think it's likely revenue did increase, but we'll have to wait a few months to see what Forbes says about that (to the extent their numbers are accurate).

I talked about the Yankees' numbers and my sense is Forbes has no idea about the money the Yankees are getting from their RSN. Case in point, Forbes lists the Yankees 2012 revenue as $471M, but Bloomberg lists the number (2013?) at $570M, which is a huge difference, even if they are talking about two different but consecutive years. It's possible they're both talking about the 2012 numbers because the numbers they have for the Nats ($230M) and O's ($210M) are much closer in agreement. Having said all that, if Forbes isn't totally up to speed on YES then I doubt they are on MASN. Maybe somebody knows if Detroit or St. Louis has their own RSN because I honestly don't know. (ETA, I looked it up. They're both on FSN, and not their own RSN, per wikipedia)

Finally, yes, we get it, the offseason is still early. "You don't need a weatherman to see which way the wind blows." Duquette has talked over and over about building the team through farm development. I don't disagree with the need for this but that doesn't sound like a team looking to add a lot of payroll either.

[LookinUp]

I don't like Peter Angelos. I hate that he's the owner of my favorite team and I hate any inkling that he's meddling.

I just don't like basing complaints on the Johnson trade. Better allocation of resources is exactly what we need. DD needs to be more aggressive in this regard, not less. It wasn't wrong to describe the trade that way, it was accurate and a smart thing to do.

So complain about total payroll all you want, I'm on board. Let's just not confuse total payroll with the Johnson trade.

[eddie83]

I talked about the Yankees' numbers and my sense is Forbes has no idea about the money the Yankees are getting from their RSN. Case in point, Forbes lists the Yankees 2012 revenue as $471M, but Bloomberg lists the number (2013?) at $570M, which is a huge difference, even if they are talking about two different but consecutive years. It's possible they're both talking about the 2012 numbers because the numbers they have for the Nats ($230M) and O's ($210M) are much closer in agreement. Having said all that, if Forbes isn't totally up to speed on YES then I doubt they are on MASN. Maybe somebody knows if Detroit or St. Louis has their own RSN because I honestly don't know.

Finally, yes, we get it, the offseason is still early. "You don't need a weatherman to see which way the wind blows." Duquette has talked over and over about building the team through farm development. I don't disagree with the need for this but that doesn't sound like a team looking to add a lot of payroll either.

I think I saw on the Forbes site that they don't include RSN's in their numbers and Bloomberg does. I think Forbes has some articles on their site talking directly about RSN's. I will try to find some articles.

[hoosiers]

I have been refraining from posting on weekdays unless there is specific news that is worthy of comment, but I can't hold my tongue here.

The second thing I have to say is that I'm continually amazed at the assumptions people have about how much money is available from MASN. The truth is, we have very little visibility into that. Earlier this offseason, there was an article that attributed to SNL Kagan (a media consulting firm) the statement that MASN was expected to have $146 mm in revenues and $29 mm in cash flow this year. Cash flow is not the same thing as profit, but it gives a good idea of the cash the company has that theoretically, would be available to distribute to the shareholders. So, it's my assumption that, if the owners of MASN so chose, they could dividend out that $29 mm ($25 mm to the Orioles, $4 mm to the Nats) and still have enough resources within MASN to run that company. But, there also are at least two reasons why that money might be left within MASN: (1) to fund expansion of MASN's operations or invest in its infrastructure, and (2) to avoid having to share some of that revenue with the other 28 teams in MLB through their revenue-sharing procedures. The bottom line is there is way too much we don't know about MASN's finances to really get a fix on whether Angelos is hoarding money, and of so, exactly how much. But in my opinion, it's probably not quite the giant cash cow that some people seem to think it is.

Agree people should hold their tongue in the criticisms until the team is constructed - let our GM do his job.

Regarding MASN, we've discussed this ad nauseum. The thread below, of which you were an active participant, suggests (my conclusion) that MASN is grossly mis-priced as a channel considering the product offering is two teams and this has caused PA, the Os and the Nats to leave significant, significant $ on the table. One does not need to be a financial genius (and I have a CPA background) to understand that if current market values for the TV rights for the Nats are in the $80M-$110M range and the Os in the $40M-$60M range, that those estimates suggest programming TV rights costs to MASN of upwards of $150M which is more than the reported total revenue of MASN (!!!) before considering operating costs and owner's profits. If PA, through MASN, has left significant $ on the table in these dealings, it has come at a considerable cost to the Os and the Nats (and PA himself). It is difficult to reach any other conclusion besides the fact that MASN is horribly managed.

http://forum.orioleshangout.com/forums/showthread.php/137008-New-Summary-of-Os-Nats-MASN-TV-Rights?highlight=orioles+masn+nats

[TonySoprano]

I think I saw on the Forbes site that they don't include RSN's in their numbers and Bloomberg does. I think Forbes has some articles on their site talking directly about RSN's. I will try to find some articles.

Then why are the revenues for the Orioles and Nats so close between the two sources? Maybe you're right and Bloomberg has YES, but that would also indicate they don't have MASN which would be inconsistent reporting. Nobody knows for certain until MLB opens up all its books, which will never happen.

[TouchemAll]

I had always heard that Angelos had an office there that he never used and it got filled with storage. Did the GM never have his own suite separate from Angelos' on the top floor? That wouldn't make sense, so what happened to it?

Angelos meddling again? I never really thought he stopped.

ETA, yesterday he said this. Please explain the connection

YEP :agree:

[brooksfrankjim]

Agree people should hold their tongue in the criticisms until the team is constructed - let our GM do his job.

Regarding MASN, we've discussed this ad nauseum. The thread below, of which you were an active participant, suggests (my conclusion) that MASN is grossly mis-priced as a channel considering the product offering is two teams and this has caused PA, the Os and the Nats to leave significant, significant $ on the table. One does not need to be a financial genius (and I have a CPA background) to understand that if current market values for the TV rights for the Nats are in the $80M-$110M range and the Os in the $40M-$60M range, that those estimates suggest programming TV rights costs to MASN of upwards of $150M which is more than the reported total revenue of MASN (!!!) before considering operating costs and owner's profits. If PA, through MASN, has left significant $ on the table in these dealings, it has come at a considerable cost to the Os and the Nats (and PA himself). It is difficult to reach any other conclusion besides the fact that MASN is horribly managed.

http://forum.orioleshangout.com/forums/showthread.php/137008-New-Summary-of-Os-Nats-MASN-TV-Rights?highlight=orioles+masn+nats

Why should we be surprised MASN is mismanaged? Some guy that mismanages Orioles runs this network.

[weams]

I had always heard that Angelos had an office there that he never used and it got filled with storage. Did the GM never have his own suite separate from Angelos' on the top floor? That wouldn't make sense, so what happened to it?

It was where Flanny and Jim Duquette worked. Then MacPhail came in as President. They were all there at one time. When Dan Duquette was hired, he moved into Andy's office, which had been Peter's

[eddie83]

Then why are the revenues for the Orioles and Nats so close between the two sources? Maybe you're right and Bloomberg has YES, but that would also indicate they don't have MASN which would be inconsistent reporting. Nobody knows for certain until MLB opens up all its books, which will never happen.

Here is part of a paragraph from the Forbes site.

The ownership stakes of teams in their local television deals is not included in our valuations because teams and regional sports networks can be sold separately (witness the recent purchase of 49% of the YES Network by Fox). The San Diego Padres were sold to a group headed by the O’Malley family last year for $800 million; $200 million of the purchase price was for the team’s 21% stake in its new RSN, Fox Sports San Diego. We value the Padres at $600 million.

http://www.forbes.com/sites/mikeozanian/2013/03/27/baseball-team-valuations-2013-yankees-on-top-at-2-3-billion/2/