The Dow Jones is down over 1200 points since the close of 2008. Unemployment is up almost three percent since the start of 2008. Every talking head on the TV machine tells us that it's only going to get worse before it gets better and that at best we can hope to avoid a "lost decade" like Japan suffered in the 1990's. So is it any surprise that Mark Attanasio, the principal owner the Milwaukee Brewers, is uneasy over spending big bucks to field a baseball team in the current economy?
"We feel a little more comfortable with [the pitching]. I think when we saw everybody at the fan event [in Milwaukee last month], we were still at a bit of a discomfort point.
"Now, I'm at a little bit of a discomfort point on the payroll."
That line drew a laugh, but at the same time it's serious business. If Gagne makes the team and he and other players reach what Attanasio called reachable incentives, Milwaukee's payroll would push past $90 million, a tough number to support in one of baseball's smallest markets.
If you believe the reports that came from Miller Park last year, the Brewers stood to lose money on the year if they failed to make the playoffs carrying a 90 million dollar payroll. Making the playoffs is a huge windfall for any franchise, and hosting two games put the team well into the black, but they had to get there to make that money. Early ticket sales for 2009 have been strong (over 1 million sold, according to the article), but if the team falls out of contention in the summer, it will be next to impossible to equal last year's three million fan mark as no-shows become a big issue with a disappointing team, especially in a bad economy.
Making matters worse....
He (Attanasio) expects the Brewers' share of Major League Baseball revenue sharing to be lower in 2009, and he's trying to preserve a manageable budget so the Brewers can afford the rising salaries of their young stars. Prince Fielder's pay, for example, jumped from $670,000 in 2008 to $6.5 million this season and will go to $11.5 million in 2010 as part of his two-year contract extension. Corey Hart just signed a $3.25 million, one-year contract on Tuesday after earning $444,000 last year.
The Brewers are in a very dangerous position here. If they don't make the playoffs this year, they're almost certainly going to lose money in 2009. In that event, it will be up to management if they want to risk another year where they lose money, and they very well might decide to start trimming payroll back to compensate for past losses. Should it come to that, the team will almost certainly have to decide if it's time to scrap the current core group of players and embark upon a rebuilding project a year or two early simply for fiscal reasons. Given the limited number of opportunities that any given team has in a success cycle, being forced to make a decision like that undercuts the whole mission of doing whatever it takes to win a World Series.
Beyond that, there are other potential hazards to running a big league payroll up close to your operating budget. Some of the best money that teams spend in any given year is the money they commit to signing bonuses of drafted and signed amateurs. If you are able to develop a star player, as the Brewers have recently done so often, you end up saving millions on payroll due to the cheap control years that those players are obligated to play out before cashing in. At times in the past, teams have cut back their budget for signing amateurs significantly to squeeze out a million or two for a mediocre veteran or two. It's key that the Brewers do not do this, as they'll have a few extra picks this year that they need to take advantage of. Furthermore, there is talk that the economy will likely cause a downturn on bonuses in general, leaving the door open for a big time opportunity for those with some money to spend.
Last year, the Milwaukee Brewers made a few bets at the all-star break to give the franchise a shot at making the postseason and they ended up paying off in the end. It would appear that they are doing the same thing this year, despite a rapidly deteriorating economy and without the benefit of having half the season under their belt while sitting right in contention. It's always hard to be able to separate fact from fiction when it comes to a sports teams finances, but it does seem safe to say that the Brewers are once again sticking their neck out for a shot at winning.
They just better hope that it doesn't get lopped off.