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 Post subject: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 4:21 am 
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Reading about the CC Sabathnia/Yankees/Doug Melvin saga on the ESPN boards and reading the arguements about how the Yankees are the death of baseball vs those who say the "small market" owners pocket the luxury money instead of investing it in the team.. it all got me to thinking. Where exactly is this money going? And logically why couldn't we spend say 75 million if we wanted to? I have a feeling of where it is going, I'd just figured this is the one time the eternal optimists on this board come in handy and give me some hope.

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Last edited by omgardd on Mon Nov 17, 2008 8:28 am, edited 1 time in total.

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 4:31 am 
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Just to add to make it a little more clear what I'm trying to get at: I'm intrigued by the possibility that this whole big market vs small market thing is really an illusion, that there is or can be parity like in the NFL, but rather its a case of those clubs who choose to spend their money vs those clubs who don't. So is there any reason beyond having a cheap owner as to why our payroll is constantly among the lowest in the league, especially considering we have a fairly new stadium? Is there really any reason beyond Bob Nutting why we couldn't have signed Bay in addition to signing say an AJ Burnett to build around in additon to having a McCutchen and Alvarez on the way?

Basically my question is: Why are the Pittsburgh Pirates small market? And will we always be?

When our football team is throwing 108 million dollars at its quarterback, I have reason to doubt it's due to the size of our fair metropolis.

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 6:45 am 
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comparing football to baseball is apples to watermellons. The NFL splits their money between everyone equally. The TV income is the main revenue and big city, small city get an equal amount of it. In addition the Steelers sell out every game and pre-season game. The also sell an amazing amount of clothing for which they get a piece. So, spending a large amount for a few players is not a problem for them.

No, baseball is not an equal opportunity player. I don't know where our share goes and if more should or could go to salaries. Someone with more details of the teams budget and their profit numbers might be able to answer your questions.

I do have another question for consideration about team finances. Several years ago, I recall the Yankees, who are by far the biggest payer of the tax to help balance the money, decided to build a new stadium. That expenditure would be subtracted from the tax and result in a large decrease in all small market money. Is that the case? They have a new ball yard this season. How does that impact the Pirate share?

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 8:47 am 
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[quote="Substitute2"]

I don't know where our share goes and if more should or could go to salaries.

quote]

I'm not saying that right now we should be going out and throwing money at useless free agents just to spend, that would be the Bonifay/Littlefield way. It's really all just hypothetical, although I wouldn't be sad if I woke up in Dimension X and found that the Pirates signed AJ Burnett.

I'm just wondering if it's really all that impossible for us to spend that kind of money to go after these types of players and/or if the truth about the unevenness of the playing field in MLB when it comes to these types of things has been stretched a little to give the public an excuse as to why their club is cheap.

And I'd like to know where the luxury tax money has been going all this time.

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 9:34 am 
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Hypothetical situation: The Bay trade never happens, in fact lets give him a four year 48 million dollar extension. The Pirates go out and sign AJ Burnett and Pat Burrell to their asking price in the offseason. The 2009 Pirates play to their potential and manage to finish 85-77 in an exciting season (mind you hypothetical) finish in third place but only 4 1/2 games back and average about 30-35,000 fans nightly to PNC over the course of the season.

Wouldn't Nutting still make a profit?

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 10:19 am 
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omgardd wrote:
Hypothetical situation: The Bay trade never happens, in fact lets give him a four year 48 million dollar extension. The Pirates go out and sign AJ Burnett and Pat Burrell to their asking price in the offseason. The 2009 Pirates play to their potential and manage to finish 85-77 in an exciting season (mind you hypothetical) finish in third place but only 4 1/2 games back and average about 30-35,000 fans nightly to PNC over the course of the season.

Wouldn't Nutting still make a profit?


Keeping Bay and signing AJ Burnett is not the answer to the Pirates woes. The answer is to build a contending team from within and only add pieces like a Burnett or Sabathia at the right time to get us over the top. The Pirates could afford to pay Bay, that wasn't the issue. Retarded news outlets labeled the trade a "salary dump" when in fact Bay was very affordable to the Pirates. The issue is the lack of depth throughout the organization and Bay was one of our few trade value pieces. Pirate fans must buy into this "new deal" in order to keep their sanity, this is different from every other "5 year plan" because the Pirate Front Office has a very clear plan and they are following it to the letter. What I like is that they are doing what is best for the team in the long run as opposed to trying to appease the fans in the short, sacrificing our long term success.

As far as the tax on the Yankees, I believe that receive luxury tax credits during the building of the new stadium.


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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 10:52 am 
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Wasn't asking if it should be done, that's neither here nor there at this point.

Was more interested in finding out if it could be done, i.e. if having a baseball team with a high payroll is possible in Pittsburgh and if no then why not.

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 11:12 am 
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ImageImage
You mean you have not figured out where all the money is going? Paying down debt, or in other words in our pockets. My Daddy and Uncle Bill know how to run a business. We do not have to put a winning team on the field to make a nice fat profit and we're not about to risk that profit spending to get better proven players. Dont like it? You'll be back...you cant help yourself...and we know it!

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 12:06 pm 
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omgardd wrote:
Was more interested in finding out if it could be done, i.e. if having a baseball team with a high payroll is possible in Pittsburgh and if no then why not.


Location, location, location.

Consider that the Pirates averaged 20k seats per game compared to 53k for the Yankees. One would surmise that it must be because of a superior product (a valid point for sure), but it has more to do with population than anything else.

Some quick math, working backwards to show my point. Allegheny county has a population of 1.25 million. If the Pirates average 20k per game, that means that roughly 1.6% of the population supports the Pirates on a per game basis.

If the Yankess garnered that much support, and with a metro population of about 20 million, they could expect to sell 320,000 tickets per game. That's not a typo. Capacity at Yankee stadium is 57k and they average only 53k per game.

Pirates fans should be lauded for such support considering the team has stunk for 15 years.

Other things to consider:

* The Yankee's YES network brings in close to $400 in revenues per year
* The new stadium will add a minimum of $100 million annually
* Rent for the new stadium will drop from $10 million per year to $10 (not a typo)
* Top 10 teams in merchandising (2007)
    NY Yankees 25.4%
    Boston Red Sox 8.2%
    Chicago Cubs 6.7%
    St. Louis Cardinals 6.2%
    Los Angeles Dodgers 5.8%
    Chicago White Sox 5.7%
    Detroit Tigers 5.6%
    New York Mets 4.6%
    Atlanta Braves 4.3%
    Philadelphia Phillies 3.1%

So what does all this mean? Well to me it means that the Yankees have the luxury of making mistakes and not having to worry about their affect on the ability to do business. A Burnitz kills the Pirates, he's just a write-off for the Yankees. It should be relatively easy to field a contender when the only limit is the availability of signable players.

Now I'm not letting the Pirates off of the hook either. They've been incredibly mismanaged and I do believe that a properly managed team can compete in this market so I don't jump on the woe is me revenue sharing bandwagon.

BUT.............the owners are in business to make money, anyone who begrudges them that lives in the wrong country. The amount of money Steinbrenner takes out of the Yanks, whether it be directly or indirectly, is astronomically more than the Nutballs take from the Pirates but nobody is screaming for his head in NYC. Why, because he has the resources to field contenders on a yearly basis, money be damned. At best the Pirates will be able to make runs every few years, pinching pennies the whole way.


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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 12:14 pm 
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omgardd wrote:
And logically why couldn't we spend say 75 million if we wanted to?


After all my bantering in the previous post, my simple answer is yes, they could spend this amount. Coonelly and Huntington have said as much. But spending $75 million to go 71-91 instead of 67-95 makes little sense.


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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 1:57 pm 
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I'm still trying to wrap my head around the premise that 4 more years of a declining Jason Bay plus Pat Burrell and AJ Burnett puts the Pirates any closer to 85 wins than their current course of action.

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 4:05 pm 
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LtCol Kojak Slaphead wrote:
I'm still trying to wrap my head around the premise that 4 more years of a declining Jason Bay plus Pat Burrell and AJ Burnett puts the Pirates any closer to 85 wins than their current course of action.

Here's my guess as to where those numbers came from:
Image

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 6:25 pm 
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Oh my ! Could be the photo of the year. Bucfan is pissed he didn't find it first.


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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 9:12 pm 
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Still laughing. Man what an image.

Wilton that is without doubt, one of the best I've seen. Makes want to start posting everyday again.

Tahnks
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2011 Will Be Our Year -- well make that 2012 (just saying) So it looks like 2013 now - how long must this go on!
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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 9:20 pm 
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Gee, I just mentioned in another post how big Paulino was and you post a picture of his back-side....what are the chances?


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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 9:25 pm 
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omgardd wrote:
Just to add to make it a little more clear what I'm trying to get at: I'm intrigued by the possibility that this whole big market vs small market thing is really an illusion, that there is or can be parity like in the NFL, but rather its a case of those clubs who choose to spend their money vs those clubs who don't.


That can be a part of it. Most of it is a case of some clubs having way, way more money than other clubs.

Quote:
So is there any reason beyond having a cheap owner as to why our payroll is constantly among the lowest in the league, especially considering we have a fairly new stadium? Is there really any reason beyond Bob Nutting why we couldn't have signed Bay in addition to signing say an AJ Burnett to build around in additon to having a McCutchen and Alvarez on the way?

Basically my question is: Why are the Pittsburgh Pirates small market?


http://en.wikipedia.org/wiki/U.S._metropolitan_area

For Pittsburgh and New York to be equals, New York would need to have 6 or 7 more Major League teams.

Quote:
And will we always be?


Every projection I've seen says that the region is expected to continue to lose population for the foreseeable future.

Quote:
When our football team is throwing 108 million dollars at its quarterback, I have reason to doubt it's due to the size of our fair metropolis.

You're right. It has to do with a salary cap, a salary floor, and the sharing of most revenue.

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Mon Nov 17, 2008 10:45 pm 
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Willton wrote:
LtCol Kojak Slaphead wrote:
I'm still trying to wrap my head around the premise that 4 more years of a declining Jason Bay plus Pat Burrell and AJ Burnett puts the Pirates any closer to 85 wins than their current course of action.

Here's my guess as to where those numbers came from:
Image


Is that two pictures of Martha Stewart posted in the same day??!!! :lol:


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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Tue Nov 18, 2008 12:47 am 
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BBF wrote:
Willton wrote:
LtCol Kojak Slaphead wrote:
I'm still trying to wrap my head around the premise that 4 more years of a declining Jason Bay plus Pat Burrell and AJ Burnett puts the Pirates any closer to 85 wins than their current course of action.

Here's my guess as to where those numbers came from:
Image


Is that two pictures of Martha Stewart posted in the same day??!!! :lol:


Are you sure that's not Paulino in those dreadful red uniforms, looking from the dugout?

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Tue Nov 18, 2008 3:04 am 
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Argentum wrote:
omgardd wrote:
Was more interested in finding out if it could be done, i.e. if having a baseball team with a high payroll is possible in Pittsburgh and if no then why not.


Location, location, location.

Consider that the Pirates averaged 20k seats per game compared to 53k for the Yankees. One would surmise that it must be because of a superior product (a valid point for sure), but it has more to do with population than anything else.

Some quick math, working backwards to show my point. Allegheny county has a population of 1.25 million. If the Pirates average 20k per game, that means that roughly 1.6% of the population supports the Pirates on a per game basis.

If the Yankess garnered that much support, and with a metro population of about 20 million, they could expect to sell 320,000 tickets per game. That's not a typo. Capacity at Yankee stadium is 57k and they average only 53k per game.

Pirates fans should be lauded for such support considering the team has stunk for 15 years.

Other things to consider:

* The Yankee's YES network brings in close to $400 in revenues per year
* The new stadium will add a minimum of $100 million annually
* Rent for the new stadium will drop from $10 million per year to $10 (not a typo)
* Top 10 teams in merchandising (2007)
    NY Yankees 25.4%
    Boston Red Sox 8.2%
    Chicago Cubs 6.7%
    St. Louis Cardinals 6.2%
    Los Angeles Dodgers 5.8%
    Chicago White Sox 5.7%
    Detroit Tigers 5.6%
    New York Mets 4.6%
    Atlanta Braves 4.3%
    Philadelphia Phillies 3.1%

So what does all this mean? Well to me it means that the Yankees have the luxury of making mistakes and not having to worry about their affect on the ability to do business. A Burnitz kills the Pirates, he's just a write-off for the Yankees. It should be relatively easy to field a contender when the only limit is the availability of signable players.

Now I'm not letting the Pirates off of the hook either. They've been incredibly mismanaged and I do believe that a properly managed team can compete in this market so I don't jump on the woe is me revenue sharing bandwagon.

BUT.............the owners are in business to make money, anyone who begrudges them that lives in the wrong country. The amount of money Steinbrenner takes out of the Yanks, whether it be directly or indirectly, is astronomically more than the Nutballs take from the Pirates but nobody is screaming for his head in NYC. Why, because he has the resources to field contenders on a yearly basis, money be damned. At best the Pirates will be able to make runs every few years, pinching pennies the whole way.


Thank you for your input. Reading the posts from the Yankee fans on the ESPN boards would have you believing that every other team in baseball could spend as much as the Yankees do simply if their owners cared about their fans and wanted to win as badly as the Steinbrenners do.

I still hope that if our current course of action works out for the best and we do have a competitive team in the future, that we pay our nucleus whatever it takes to remain here, and not become something like the Oakland A's. For instance, if Pedro Alvarez turns out to hit like the next Manny Ramierez, I hope ownership would be willing to pay him whatever he wants, but I doubt it.

It sucks being so dedicated to a team that has to do its business in the climate that MLB is currently run. We as Pittsburghers will probably get to witness about 15 years of Sidney Crosby and Evegeni Malkin playing in this town, Ben Roethisberger will probably retire a Steeler in 2018, and the Pirates might be able to get 4 years worth of Pedro Alvarez.

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 Post subject: Re: Where is our luxury tax money actually going?
PostPosted: Tue Nov 18, 2008 5:28 pm 
The last year or so, it MIGHT be going into the minor league system. That doesn't explain where it's gone for the previous decade or so. I'd like to see the rule adjusted so that luxury tax money has to go into the major league roster.


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