Astros GM is going to have a long 2 months.

[Frobby]

Overall, the Astros have done a great job.   They don't have a great bullpen, but they have a great team.    

[Ripken]

1 hour ago, Frobby said:

Overall, the Astros have done a great job.   They don't have a great bullpen, but they have a great team.    

To defend them some, since I have given them a hard time, they could be set for the next decade if they do things right.  I know they have some FAs coming up but there's no reason to mortgage the, potentially very bright, future for a slightly better shot this year.

[Tx Oriole]

22 hours ago, Moose Milligan said:

I mean, the Astros GM isn't the one that put the kibosh on the deal.  Can blame that guy all you want but Petey screwed everyone here, not the other way around.

That's what I think too. But I feel the Stros can cover not getting Britton. 

 

[Cumberbundy]

Can't say Petey screwed it, they had the ability to offer enough for Petey. They should have stepped up.

 

Houston, you have a problem.

[sportsfan8703]

42 minutes ago, Ripken said:

To defend them some, since I have given them a hard time, they could be set for the next decade if they do things right.  I know they have some FAs coming up but there's no reason to mortgage the, potentially very bright, future for a slightly better shot this year.

From a business perspective you can see where the owner was coming from. They haven't been bringing in revenue like a team with that record should. So why not keep as many young, cheap, lotto tickets as possible. Notice how not meeting expectations money wise is rarely mentioned when talking about the genious of their plan. 

I wonder if they cave to pressure and make a really risky move in Verlander?  

[hoosiers]

We'll see what happens with the Stros.  They certainly have a deep system and could afford to part with a couple prospects for ZB.

That said, we see articles about how the playoffs are a crapshoot and then others here post about even non-closer relievers "moving the needle".  Personally, I would take the lengthened multi-year run that might occur when top prospects are kept than to see it shortened considerably (like the Cubs appear to have done) by moving top prospects.

[FlipTheBird]

34 minutes ago, hoosiers said:

We'll see what happens with the Stros.  They certainly have a deep system and could afford to part with a couple prospects for ZB.

That said, we see articles about how the playoffs are a crapshoot and then others here post about even non-closer relievers "moving the needle".  Personally, I would take the lengthened multi-year run that might occur when top prospects are kept than to see it shortened considerably (like the Cubs appear to have done) by moving top prospects.

The Cubs have been buying anyone and everyone, because they have the assets to do so. Their budget exceeds Houston's, and they benefit from it.

That said, I don't think the Astros would have shortened any run "considerably" by moving a few prospects.

1. They're still just prospects.

2. The Astros already have an exceedingly young, gifted core in place.

[bpilktree]

The decision to go for it or not go for it is the biggest decision I believe they will make in their career.  You can mess up in a draft and not take said guy for make the perfect pick and he will be a great player for you but that doesn't mean you will win in baseball like it does in other sports.  The Cavs stinking it up and then getting the lottery has turned that franchise completely around but in baseball the Dodgers selected the best pitcher in the last few decades and haven't even got to the World Series let alone win in. The Patriots selected a qb that didn't even start a full year in college and a coach that was ran out of two places before and have turned a dynasty.   Over the last 10 years or so we have heard a few times this team will be their for many years and they could win a couple titles and never even got to the World Series.  The Giants are the one team that has up til this year done it a few years and they really were a revolving door besides Bumgarner and Posey of players.  They didn't have the great farm system or top prospects yet they won.  The Nationals sat Stras because they thought they had a few more shots at it.  The Mets just two years ago were the darling with that rotation they expected to have.  The Cubs were thought to win it again this year and they might but they have not nearly dominant.  They actually went for it last year and added that key piece and got a title.  The other teams did not and they may not get another chance for awhile.  I think the same could be the same with the Astros.  If they don't get it this year the Yankees should be stronger next year and in 18 free agency they can outspend everyone and get the top of the free agents.  I do think the Yanks did mess up this year though as I don't think they are quite ready to win it and they gave up some of their prospects for this season.  The Astros may have only this year and next to do it if the Yankees keep the young guys and add to the team through free agency. 

[SouthRider]

I'm just glad the O's have Zach for next season.  

[Cumberbundy]

4 minutes ago, SouthRider said:

I'm just glad the O's have Zach for next season.  

And Boston & NY are not. We just need to find a way to get to him.

[spiritof66]

On 8/6/2017 at 10:17 AM, Can_of_corn said:

That's a load on nonsense.

Give me an example of MLB moving a team without ownership's approval.

They don't care if teams win games or if payroll is low or even if fans come out.

If ownership hadn't wanted out of Montreal they never would have moved.

It takes stuff like what went on with Frank McCourt to get their attention.

 

MLB can't force a team to move. (MLB did force Bill Veeck to sell the Browns by not allowing him to move the team after the sale of the Cardinals to Busch made it clear which team would survive in St. Louis.

MLB owners don't want anybody to move since they want the best available cities to remain "open" so that, when they're ready to expand, they can maximize the entry fees for the two new franchises, which the owners will share. I don't know how the owners would look at Baltimore becoming an open city for expansion.

[Cumberbundy]

Dodgers pen blew up, they needed ZB tonight.

[TonySoprano]

On 8/6/2017 at 1:54 PM, spiritof66 said:

MLB has gotten burned recently when teams couldn't compete because of the owner's financial problems, most recently with McCourt. More than just about anything else (besides making money), MLB's owners want to avoid those situations, and they realize that the way to do that is to vet potential new owners' finances rigorously.  That, IMO, is why the owners would  not approve a transfer of control of the Orioles to one of Angelos's sons.

George Steinbrenner's ship building company got a $58M bailout from your tax dollars and mine, and he was still able to pass the Yankmees to his sons.  ( https://www.washingtonpost.com/archive/politics/1993/02/01/how-congress-delivered-for-steinbrenner/d5e14320-98ba-40b5-9548-c41fff3a5790/?utm_term=.81c0b701776f )

I have no doubt that Peter and his legal eagles already have a solid inheritance plan in place, taking advantage of every available loophole.  The only way I see the kids selling the team is because it's their choice not MLB's.  Help me understand what financial situation the Angelos family is in to prevent that.

 

[Ohfan67]

On 8/6/2017 at 0:54 PM, spiritof66 said:

Once an owner is in place, there's not much MLB can do as long as the owner pays the bills, puts a team on the field and complies with the limitations on debt in the CBO.

MLB has gotten burned recently when teams couldn't compete because of the owner's financial problems, most recently with McCourt. More than just about anything else (besides making money), MLB's owners want to avoid those situations, and they realize that the way to do that is to vet potential new owners' finances rigorously.  That, IMO, is why the owners would  not approve a transfer of control of the Orioles to one of Angelos's sons.

The Dodgers' player payroll was in the top ten almost every year McCourt was owner and was never below the median or mean. The Dodgers spent a ton of money on payroll during McCourt's tenure as owner and often had the most expensive managers, invested heavily in foreign players, etc. His divorce was incredibly messy and was apparently the most expensive in the history of California, but the Dodgers ability to compete financially was never hampered by the divorce (despite what MLB may have said in a press release). By the way, McCourt ultimately made a fortune on the sale of the Dodgers and land around the stadium. 

[spiritof66]

2 hours ago, TonySoprano said:

George Steinbrenner's ship building company got a $58M bailout from your tax dollars and mine, and he was still able to pass the Yankmees to his sons.  ( https://www.washingtonpost.com/archive/politics/1993/02/01/how-congress-delivered-for-steinbrenner/d5e14320-98ba-40b5-9548-c41fff3a5790/?utm_term=.81c0b701776f )

I have no doubt that Peter and his legal eagles already have a solid inheritance plan in place, taking advantage of every available loophole.  The only way I see the kids selling the team is because it's their choice not MLB's.  Help me understand what financial situation the Angelos family is in to prevent that.

 

MLB's owners clearly have the right to withhold approval of the Angeloses owning the team. I don't know whether they would withhold that approval, but I think they would. Either the current owner or his sons may decide to sell the team for the same reason, which I'll try to explain below. I am using numbers in Forbes' 2017 report on MLB teams except where I indicate otherwise. https://www.forbes.com/mlb-valuations/list/#tab:overall  Aside from my taking the Forbes numbers at face value, I have of necessity made some guesses and assumptions in here, and if they seem wrong (or I've made other errors), I'd be glad to hear about them.

I'm assuming that Peter Angelos owns about 80 percent of the Orioles, that he continues to do so until he dies, and he leaves his ownership interest in the team to one or both of his sons. I am pretty certain that there is no "estate plan" that will enable his estate to avoid paying taxes if that occurs. As described below, the estate tax problem that would arise on these assumptions is the same one created when the owner of a family farm dies and bequeaths it to his children, who have to sell the farm to developers to pay the estate taxes on it.  More accurately, any such plan would involve making arrangements that would complicate the ownership of the team, which MLB would not allow.

There is one way to defer those taxes, either in the hope that federal estate tax law will change or on the premise that paying taxes tomorrow is better than paying them today: if Angelos leaves the team to his wife, there will be no estate taxes due, but the same problems will arise if she tries to leave the team to the Angelos sons, and the tax burden will be greater if MLB team valuations continue to increase -- unless the law has changed at the time of her death.  

Some numbers. Forbes valued the Orioles earlier this year at $1.175 billion. I think the IRS would make a more aggressive valuation and could get away with it, especially if valuations and actual sales continue to climb. But let's use $1.2 million. The Orioles are reported to have $200 million in debt -- in apparent violation of MLB rules -- making the value of the equity of the Orioles around $1.0 billion. I understand from various sources I've seen that Angelos owns about 80 percent of the team, so the value of what he passes along to his sons would be about .8 x 1.0 billion, or $800 million.

The Forbes valuations include the value of teams' cable rights fees but do not include the value of their interests in regional sports networks. It's very hard to value MASN while the rights fees dispute is pending, but that's something that would need to be done. In 2013, a Forbes writer valued MASN at $600 million. I'll discount that value in light of the likelihood of large rights fee increases, and estimate the value of the Orioles' majority interest in MASN at $250 million. 

So the Oriole-related interests in Peter Angelos' estate have a value of about $1.05 billion. I think that's pretty conservative, but let's knock it down to an even $1.0 billion. The federal estate tax on that amount is 40 percent. The Maryland tax appears to be either an additional 10 percent or 16 percent. I'll take the lower figure. Therefore the estate would owe $500 million in federal and estate taxes on the Orioles-related assets. Peter Angelos' estate would have to come up with $500 million in liquid assets (cash, stock, bonds, etc.) to pay those taxes, right? Wrong. It's worse than that. Let's say that when Peter Angelos dies there's $600 million of cash in the estate. Before applying that to pay taxes on the Oriole-related assets, the estate has to pay taxes on that $600 million in assets. The federal and state taxes on $600 million would be about $300 million. So to pay taxes on Oriole-related assets valued at $1 billion, the state would need about $750 million in liquid assets -- which would be reduced after estate taxes to about $500 million, the taxes on the Oriole-related assets. 

I have no idea whether Angelos' estate has or could raise the $750 million in cash it would need to pay taxes. (I have some doubt about that based on what I've read, including estimates of his net worth.) It's my guess that Angelos expected that, before or soon after his death, MASN could be sold to pay a large part of the estate taxes that would come due. But MASN is not readily salable with the rights fees dispute unresolved. And if the rights fees stay as high as they were set after the original arbitration, the value of MASN will be reduced significantly. But one thing I'm certain of is that the $750 million in taxes, in addition to estate taxes on his other assets, will largely deplete Peter Angelos' wealth. 

And that's not quite the end. The MLB Constitution limits the debt a team is permitted to have, such that its operating income can't exceed 12 percent of its debt. The Orioles had operating income of $9 million in 2015 and operating losses of $2.1 million in 2016, and I have no reason to think that will change radically in 2017. The Orioles' 2015 and 2016 profits would support debt of only $75 million and 0, respectively, to be in compliance with MLB's rules. I would think that in connection with a proposed approval of a transfer of the team, MLB would insist that most or all of that $200 million be repaid. And as explained above, the estate would need $300 million before estate taxes to pay down debt of $200 million. So, while this part is speculative, there's a good chance that the $750 million in cash needs cited above would swell to more like $900 million or $1 billion. (I'm assuming that John and Lou won't have hundreds of millions of dollars, other than what comes out of the estate, to make these payments.)

If the estate can pay this amount and have the ability to transfer the Orioles  how would the other MLB owners look at a proposed transfer of the Orioles to John and/or Lou Angeles? For the first 100 years or so of major league baseball, the owners were in the baseball business. For some, that was the owner's business, in many cases becoming the family business, and the teams were financed from the profits they generated from baseball. Other owners used their teams to enhance their other activities, usually brewing. Still others were rich guys who thought it would be fun to own a team. Pretty much anyone with the resources to buy a team when it was put up for sale was welcome.

The rules of this game have changed. The owners now understand that are one another's partners in a multi-billion dollar business. They are interested in owners who won't rock the boat the way Bill Veeck and Charlie Finely, and to a much lesser extent Luria and Angelos, have done. But even more important, and this is something that Bud Selig stressed with the owners, they want owners or ownership groups who are financially secure -- after paying their hundreds of millions or billions for the team. They want partners who can weather financial downturns in MLB or in their outside businesses, and they realize that once an owner is in place and has financial problems there is a potential effect on all of MLB, including their own investments. So they're looking for owners who have lots of wealth and income outside of baseball, and they demand extensive documentation of it. The recent owners who have come into the game are billionaires or large corporations.

Unless I'm way off in my facts and assumptions, I don't see how wither Angelos son could qualify as the principal owner of the Orioles. They have no record of business or professional accomplishment or of financial success that I'm aware of. I'm pretty sure they'd have no significant sources of income outside the Orioles. Most important, after estate taxes were paid, they would have little in cash reserves to run a team that is in a very difficult competitive circumstance.  And they couldn't count on generating that cash from the Orioles -- which were one of five MLB teams to operate at a deficit in 2016 according to Forbes. They would be extremely unimpressive owners from any financial perspective. That's apart from the likelihood that the Commissioner, his predecessor and, in all likelihood, some owners view Peter Angelos as a difficult guy and wish that he had never become one of their partners. 

I suppose the Angeloses, or either of them, could put together a group to own the Orioles, in which others would put up lots of money but one or both of them would maintain control. I'm not sure how easily it would be to raise money that way, or how the MLB owners would look at that sort of arrangement. 

A quick word about the Steinbrenners. They inherited 70 percent  (I think that was George's percentage, but I'm not sure) of the NYYs -- a money-making machine that is now valued by Forbes at $3.7 billion and is debt-free. That's after the NYYs sold their interest in YES, their regional sports network, for $4 billion in 2014. Steinbrenner also owned hotels and other real estate, horse racing interests and other stuff. I don't know who inherited what from George, but it's likely his sons are each multi-billionaires. In large part, that's because their inheritances came with zero estate taxes, because of a glitch in federal tax law at the time of George's death and the absence of estate taxes in Florida, where Steinbrenner lived.