Analysis: Why are Brewers outspending Pirates?
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MILWAUKEE -- The Milwaukee Brewers, based in the National League's smallest market and a region two-thirds the size of Pittsburgh's, will outspend the Pirates by more than $20 million in player payroll this season.
And the Brewers, as executive vice president Rick Schlesinger confirmed in an interview last night at Miller Park, will have budgeted their franchise-record $70.9 million payroll on nothing more than their usual revenue streams.
No cash calls from ownership.
No outside money.
And, maybe, if all goes well, no operating at a deficit.
"We have a fiduciary obligation to make this franchise stand on its own," Schlesinger said. "That's our goal, and we'll work hard to meet it."
The Brewers' payroll figure is based on the full season's worth of salaries to the 25 players on their opening-day roster. The Pirates' figure in that category is $38.5 million, but their payroll that includes all deferments, bonuses and a $5.5 million payment to the Oakland Athletics as part of the 2004 Jason Kendall trade, is at $45.6 million. Also, ownership has authorized general manager Dave Littlefield to spend $4 million more, making the actual commitment $50 million.
Still, that leaves a $20 million gap between two teams that are so similar in so many ways.
Each is based in one of Major League Baseball's six smallest markets, with the Pittsburgh metropolitan area home to 2.2 million and Milwaukee's home to 1.5 million. Each has played in a new, taxpayer-built stadium since 2001. Each receives a comparable revenue-sharing check from MLB, the Pirates getting $25 million last year and the Brewers $23 million. Each has a local broadcasting deal in the range of $10 million.
Even on the field, their stories are the same, with each having failed to produce a winning season since 1992.
So, why, then, would the Pirates' payroll be so much lower?
If the Brewers can afford to top $70 million by pushing their financial bounds, why is it not happening in Pittsburgh?
Three possible explanations:
1. The Brewers have significant financial edges in attendance and parking.
The 2006 attendance at Miller Park was 2.3 million to the Pirates' 1.8 million. That difference of 500,000 tickets sold, multiplied by Milwaukee's average ticket price of $18, brought $9 million that the Pirates did not get.
The Brewers also get $5 million or more by controlling all parking around Miller Park, which is just outside downtown and surrounded by seas of surface lots. In stark contrast, the Pirates control no parking around PNC Park. The only lot they own is a small one inside the stadium for players and staffers.
2. The Pirates' ownership is not spending all it could.
That charge is common in public and baseball circles, largely because national revenues keep increasing while the Pirates' payroll remains flat.
In 2001, the first year of PNC Park, their payroll was $52 million, or $2 million less than the self-imposed limit this year. This despite the revenue-sharing check being about $22 million higher now, national television monies nearly doubling, and other money-making properties such as the Internet growing exponentially.
As a private company, the Pirates have no legal obligation -- nor do they choose -- to open their books or even discuss specifics of financial matters, other than to say all profits are going back into the business.
3. The Pirates are spending less now so they can spend more later.
Almost all of their current players, veterans and youngsters alike, are signed through 2009. But the payroll will have to increase markedly to keep the group intact, even before that span expires, because arbitration will bring hefty raises for many.
No public commitment has been made yet to that effect, but CEO Kevin McClatchy yesterday made clear his stance that the current payroll represents only the current experience level on the roster.
"Our thinking is to develop the players we have, and that alone keeps the payroll low in the early stages of that process," McClatchy said. "That's a natural course, if you have young, talented players you can put out there, which we do. If we went out and signed other players at this stage, those young players wouldn't be out there."
Neither principal owner Bob Nutting nor McClatchy will talk about how their operations compare to those of other teams, including the Brewers. But McClatchy did say, "I'm very comfortable with where our payroll is."
Milwaukee has a mostly young group, too, but upper management is of the mind that the time is now to fortify it.
Mark Attanasio, a 49-year-old Los Angeles investment banker, bought the Brewers in January 2005 and inherited a franchise with a measly payroll of $27.8 million and more than $100 million in debt. He immediately hiked payroll to $40.8 million, then to $54.5 million last season and, now, its $70.9 million ranks 19th among MLB's 30 teams.
Attanasio's commitment in the past few months has included an offer of $12 million a year to try -- in vain -- to keep outfielder Carlos Lee from leaving through free agency, and the four-year, $42 million deal struck with pitcher Jeff Suppan shortly thereafter. The latter deal was done over dinner at Attanasio's house.
Milwaukee general manager Doug Melvin allowed yesterday that "not everyone thought Suppan was a great signing" at that price. And he added that, a year earlier, he never would have entertained it.
"We had a group on the field, kind of similar to where the Pirates are now, where it just didn't make sense for us to do it," Melvin said. "But, if you look at where our team is now, we saw great value in Jeff. You look at teams like Minnesota and Oakland, they build that core, establish a window, then go for contention. That's what we're looking to get started here right now."
"The team has to be ready for you to make a move like that, from the baseball and economic standpoint," Schlesinger said. "A few years back, we reduced payroll because we had such a young group and, candidly, we didn't feel it was worth it to spend the money just to improve the public perception. It wasn't very popular. Right now, we feel ready to take the next step."
Attanasio was not available for comment because he was vacationing with family in Hawaii, but he told the Milwaukee Journal-Sentinel earlier this month there is a chance the Brewers will "lose a little bit of money" this year.
But he stressed, perhaps true to his investment-banker mentality, that putting a quality product on the field now could pay off later.
"You need to run the business well to put yourself in a position to field a good team," Attanasio said. "With all of that, and with revenue sharing, the answer is: We will find out. Last year, every team that had a payroll below $60 million was below .500. Our payroll is now above $60 million."
Schlesinger described Attanasio, as do many in the Milwaukee organization, as being deeply committed to winning.
"He's a smart businessman, and this is a tough business in which to win and make money, especially in a smaller market like ours," Schlesinger said. "But it can be done, and that's Mark's message to us. He's looking at this beyond the financial impact of this year. He's looking at what this franchise can become for a very long time if we all put everything we have into it."Kevin Eisenhut, Milwaukee Journal Sentinel
Brewers owner Mark Attanasio has hiked payroll from $27.8 million in early 2005, when he bought the team, to $70.9 million this season.
Click photo for larger image.
Game: Pirates (LHP Zach Duke 1-1, 7.20) vs. Milwaukee Brewers (RHP Jeff Suppan 1-2, 3.72), 1:05 p.m., Miller Park.
Radio: WPGB-FM (104.7)
Key matchup: The top of the Pirates' order vs. Suppan. Chris Duffy is 3 for 5 with a walk against him, and Jack Wilson 10 for 33.
Of note: Jason Bay's second-inning home run was the 100th of his career, making him the sixth Canadian to achieve the milestone. The others: Larry Walker (368), Matt Stairs (220), Jeff Heath (194), Cory Koskie (124) and George Selkirk (108).
First Published April 18, 2007 11:13 pm