Who is really to blame for the Pittsburgh Pirates payroll woes?
On Friday, Pittsburgh Pirates general manager Neal Huntington joined 93.7 The Fan’s morning show to discuss the 2016 season, and as to be expected, many of the questions revolved around the team’s payroll and the quiet off-season the Pirates have had so far.
As the final countdown to spring training begins, one look at the roster and payroll has fans counting down the days until the team competes financially or ceases to be competitive at all in arguably the toughest division in all of baseball. Huntington was quick to address both aspects. “I understand that people think the ability to spend other people’s money is really, really simple,” Huntington said. “If you look at the last three seasons, nobody’s given us a chance to win, and this club is probably more talented than most people give it credit for.”
Of course, he’s referring to team majority owner Bob Nutting, but the statement is actually reasonable on all accounts. If you can find someone happy to pay taxes and the thought of paying more, you would be the first. The analogy is not unlike the frequent gripes of Pirates fans in relation to Nutting’s finances.
Historically speaking, pirates are notorious for their ability to seek out treasure. These Pirates have become known for their ability to turn other teams’ trash into their treasure. Huntington would like to remind fans they have been the best in baseball at turning small investments into formidable returns. “We’re one of three teams in baseball that’s made the playoffs each of the last three seasons, despite having a bottom-ten payroll,” he said.
Money never guarantees wins or playoff appearances, but it does help, especially in a sport without a salary cap. As one of the smallest markets in baseball, the Pirates have traditionally had a small payroll in relation to the rest of the league, but they have also understood the value of increasing payroll to retain talent. From 1990 to 1992, the Pirates more than doubled their payroll, but after the Atlanta Braves knocked the team out of the NLCS and key players like Bobby Bonilla and Barry Bonds left Pittsburgh, the payroll was as mediocre as the team that took the field year after year.
Since 2010, the Pirates have seen their payroll more than double once again, but can they do more? Neil Huntington thinks so. “Our attendance has risen,” Huntington said. “We’ve set the franchise record each of the last two years, and that is awesome, and it’s a testament and tribute to our fan base. The reality is our attendance still sits in the middle of the pack for the industry. We have a good television contract for the size of the market, but it still sits below the large markets…so there is a limit as payroll rises.”
What is the realistic limit for the Pirates payroll?
The standard sports industry measuring stick used to be fifty percent of a team’s revenue. Since 1996, it has dropped to just 38%.
The Pirates were 17th in revenue in 2014 at $229 million. They were fifth in operating income, which is the amount of money a team has after operating expenses have been accounted for minus taxes, inflation, etc., and their current 2016 payroll of about $96 million is roughly equal to that standard. Given a weak 2016 free agent class, it can only be hoped that the rest of the revenue money will go to help improve depth before or during the 2016 season or retaining the talent it has taken the organization a decade to acquire, instead of frivolous aesthetic efforts or pocket profits.
There are really only three ways a baseball team can increase its revenue: revenue sharing, television deals, and revenue from fans. Neal Huntington has very little, if any, control over revenue sharing. From his comments, he appears to feel that the team’s deal with ROOT Sports is adequate. Just as fans have been discontent with a lack of spending, Huntington appears to imply the feeling is mutual.
The complaint is hardly rational. As one of the smallest ballparks in the major leagues, PNC Park and the Pirates would have only ranked fifth had they been able to sellout every game. As it stands, the droves of rabid fans that have made an already beautiful stadium one of the best environments for a baseball game, for fans and players not named Cueto alike, as evidenced by attendance marking 80.4% of the potential season capacity in 2015. The comparisons have been made between the Pirates and the Kansas City Royals who, as it stands now, will have a payroll of about $129 million in 2016. Huntington had an answer, however.
“The Kansas City Royals also had a much higher attendance to build upon as they go forward. Their jump in attendance was significantly higher than ours, and as a result, they’ve generated more revenue to put back into the team. We will continue to spend what we take in, and whatever the fans generate for us, and whatever the revenue sharing is…we’ll continue to pour that right back into the team and the organization.”
It is hard to accept such a statement when comparing the Royals and Pirates more closely. Over the last five seasons, the Pirates have had a total attendance of 11,230,369 compared to 9,880,094 for the Royals. He was correct in assuming the Royals experienced a higher growth rate of 36.3% compared to the Pirates rate of 28.8% over the same time. However, the Royals only experienced a trifling 13.5% growth rate until after the astounding run from Wild Card to World Series runners-up in 2014.
At the average ticket price of $22, the Pirates can only stand to add a maximum of $13,391,972, or 19.6%, in ticket revenue without increasing ticket prices, although I would hardly like to give Huntington that idea.
Huntington is probably thinking of a case to present to ownership when the current television deal expires after the 2019 season. The ten-year deal signed in 2010 is back-loaded, but unlike many other clubs that have received new contracts in the last decade, the Pirates and Root Sports Pittsburgh have refused to be transparent to the details of their deal. It has been estimated that the annual payout is near $20 million. In 2013, team president Frank Coonelly said, “Our TV contract places us in the top half of all Major League Baseball clubs even though our market ranks 27th out of 30. We are well positioned moving forward.”
It would hardly be prudent for the Pirates to start belittling the contract that contributes to refilling the team’s coffers, but it would be nice if they wouldn’t try so hard to belittle the intelligence of the fans by praising a television contract that is more laughable than competitive. According to the television blackout map below, the Pirates blackout market is roughly equivalent to division foes Milwaukee Brewers and Cincinnati Reds or inter-league “rival” Detroit Tigers, but the best comparison may be the St. Louis Cardinals.
Last summer, the Cardinals signed a contract of over $1 billion paid out over 15 years. The Arizona Diamondbacks have a bigger market, but this off-season they received a $1.5 billion, 15-year television contract. The Pirates may not have the record of consistency that the Cardinals have, but they are a more proven entity than the Diamondbacks. The Pirates were also fourth in the league in 2015 in terms of their television rating at 7.61, behind just the Royals, Cardinals, and Tigers.
After the 2016 season, the current collective bargaining agreement expires, and as it was agreed upon when the last one was negotiated, the top 15 markets in size will no longer stand to be given a check as part of revenue sharing in an effort to improve competitive balance, unless that gets overturned as part of the first bargaining agreement under commissioner Rob Manfred later this year.
The change should benefit the Pirates as revenue sharing would be split among 15 teams instead of 30, and at a time when baseball is seeing record revenues, that should start the transition to payrolls competitive with teams like the Royals ($128 million), Cardinals ($136 million), and Seattle Mariners ($135 million). At the very least, it should allow them to resign several key pieces to keep them competitive and improve their negotiating ability for a television contract extension in 2020.
The Pirates may not get a television contract like the Philadelphia Phillies or Diamondbacks, but they should still be competitive enough to get a contract comparable to the Cardinals with their star-studded on field product, the prospect of a deep farm system for years to come, and a top notch broadcasting crew that includes Greg Brown, Bob Walk, Steve Blass, and new addition Joe Block.
Neal Huntington and the rest of the Pirates front office shouldn’t expect fans to overwhelmingly financially support a team that has spent a whopping $39.275 million between arbitration, extensions, and free agency this offseason, a good portion of which was spent on bench or platoon players and questionable pitchers.
When the front office failed to put a competitive team on the field for 20 years, the fans were not to blame for supporting the team only to see mismanagement and under-performance derail talented teams. When the front office failed to negotiate a competitive television contract in 2010, the fans were not responsible for dumping every notable player on the team in advance of the negotiations as part of the complete rebuilding process. When the fans responded to the rebuild effort that produced players like Andrew McCutchen, Gerrit Cole, Starling Marte, Neil Walker, Gregory Polanco, etc., it was the front office that has not responded by spending the money to overcome the Cardinals in the division.
If Neal Huntington wants to see more fans in the seats, the team will have to continue winning. Winning requires talent, and talent often requires money. If the front office wants to see fan revenue increase naturally rather than artificially by raising ticket prices, their only option is to build a winning team.
“If you build it, [they] will come.”
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