05 January 2018

Peter Angelos is Not Cheap

If one frequents Twitter for long enough, you hear a common refrain that takes many different forms.  Boil it down and it is a resounding "Peter Angelos is too cheap to spend any money".  This mantra is said often.  You tend to get it coupled with the idea that the Orioles are a sleeping giant (which I think is properly credited to Peter Gammons during the Flanny/Beattie years), which ignores how power and money have largely left the confines of Baltimore to other locations either by migrating down to DC, migration/buyouts to other areas of the country, or simply mainstays of Baltimore economy drying up.  A very complex issue is expressed very simply and Baltimore's presence as a top tier American city is something many Marylanders believe to their very core regardless of inconvenient facts like market size, corporate presence, population, etc.

To try to nail down the facts a bit, we could lean on Forbes and assume their estimates for payroll and revenue are fairly accurate.  If you accept that, then the Orioles have the ninth lowest revenue in MLB.  That is something that MLB itself would largely agree with as the Orioles quality for special compensation in the form of draft picks and revenue sharing because they are categorized as a low revenue club.  To those who might scoff at that, in what interest is it in MLB to make the Orioles look better off than they actually are.  Other teams would want that compensation.  MLB might well would prefer the Orioles to look better so that the tangled issues with MASN might untangle a little easier.

Anyway, below we have a list of clubs, payroll, and revenue.  It is ordered greatest to least in club's proportion of revenue dedicated to MLB payroll. 

Rank 2017 Team 2017 Payroll Estimated Revenue % MLB Payroll
1 Tigers $200 $275 72.7
2 Orioles $164 $253 64.9
3 Royals $146 $246 59.3
4 Marlins $120 $206 58.3
5 Rangers $173 $298 58.1
6 Nationals $165 $304 54.1
7 Mariners $154 $289 53.4
8 Blue Jays $144 $278 51.8
9 Rockies $128 $248 51.6
10 Dodgers $226 $462 48.8
11 Cardinals $150 $310 48.5
12 Angels $164 $350 46.9
13 Mets $156 $332 46.9
14 Indians $126 $271 46.4
15 Braves $126 $275 45.9
16 Giants $182 $428 42.4
17 Twins $105 $249 42.1
18 Red Sox $179 $434 41.2
19 Astros $122 $299 40.9
20 Cubs $177 $434 40.8
21 Reds $93 $229 40.6
22 Athletics $82 $216 37.8
23 W. Sox $100 $269 37.2
24 Yankees $195 $526 37.1
25 DBacks $93 $253 36.8
26 Rays $71 $205 34.8
27 Pirates $92 $265 34.5
28 Phillies $112 $325 34.4
29 Brewers $61 $239 25.4
30 Padres $61 $259 23.7
As you can see, and pretty much what we have said here at the Depot for awhile, the club's current philosophy is to highly leverage their operation into MLB pay.  As such, the Orioles devote the second highest percentage of revenue to MLB payroll.

At the very least, I think this helps show that there is uncertainty in saying that Angelos is cheap.  Indicators exist that the opposite might well be true.


Anonymous said...

I think people are equating cheapness to risk-averseness when they criticize Angelos. We all want him to go boldly where the Yankees and Red Sox go and that never seems to happen. It's a lot harder when you have to compete and beat such big market teams every year.

Steve Caimano said...

There's only one problem with this analysis.
Angelos bought the team at auction for $173M in 1993. It's actually kind of funny to read this NYT article about how risky this was seen at the time (also, holy crap Loria nearly bought the Orioles).


They're now worth about ONE BILLION DOLLARS more than that and that's not even the price they would sell for if Angelos put them up for sale. Just their estimated value.

Jon Shepherd said...

That doesn't matter.
You can be worth a trillion dollars, but if it is not in a movable form of value then you cannot really use the value to spend on current items.

Pip said...

This is a very good article, I have said often and accurately that there's too much evidence that the problem is not an unwillingness to spend, but foolish and contradictory spending.

Pat said...

Does the Forbes revenues include MASN, and the amount the Nationals pay the Orioles? I suspect the revenue is higher.

Jon Shepherd said...

Orioles received 48 MM last year and MASN profits were split about 80-20 with more going to the Orioles.

When you look at most other organizations you find similar sheltered holdings. Matt Perez has better info on this.

That all said, the money shifts the percent around, but not this overall list all that much. Other clubs have entities like that or other contracts like with parking lots or other stadium deals.

I think if you do a plus/minus of 10% then you probably get a general truth. MASN would really need to be much much more valuable that what I have seen suggested for them to drop into the lower half of payroll leveraged clubs.

It is important to recognize that MLB k ow what MASN generates and they still consider Baltimore a low revenue club. To me, that suggests that the end result would not differ all that much.

MASN would have to be the most valuable team sports channel in the US to push Baltimore into the bottom half.

Matt Perez said...

The Nationals don't pay the Orioles anything, unless you're referring to revenue sharing. The Orioles receive larger profits from MASN than the Nationals. The rights fees that MASN pays to the Orioles is counted in their revenue.

The profits that MASN pays to Angelos is not considered the Orioles' revenue by anybody. Just like the profits that MASN pays to the Nationals isn't considered their revenue. Or just like the profits that the Rangers, Angels, Phillies and others receive from their deal isn't considered revenue. Or just like the profits that the Yankees, Red Sox and Mets receive from their networks aren't considered revenue.

If you did take those profits into account, the Orioles would go from #2 to #5.

vilnius b. said...

Good article. As PTCello said, it's spending money on the wrong players. Exhibit A being Chris Davis, an Angelos favorite.

Anonymous said...

The tough part of blogs is if your response doesn't mirror the post don't expect your comment to be approved. I was an Orioles fan during the days of Frank, Brooks and Boog. Many of the current recent rosters at times had very good comparative players. The glaring problem over the last 30+ years has been management. Blogs are great when the purpose is to set your own perspective in a posting format in which you control. Everyone knows what's wrong with the Baltimore Orioles, until that determined gritty owner passively supporting the club and a genius sits at the helm both missing the Orioles will continue to be without a World Title. The person at the helm needs to make it clear, this clubs goal is one thing and one thing only a World Title anything less is failure. There is one winner and the next club is only the first loser and on down. I'm tired of owners undetermined, I'm tired of players managers left right lefting us to death. As Coach Brooks said, "Gentleman you don't have enough talent to win on talent alone" A person tells you managers mean nothing is a fool, bad managers show up like a sore thumb in the World Series. Francona tanked the 2016 series all by himself.

Jon Shepherd said...

Keep in mind that if you comment on a months old post that blogger thinks you are a disingenuous poster.