SBD/Issue 102/Franchises

Expected Target Field Revenues Allowing Twins To Boost Payroll

New Revenue From Target Field Results In
Busy Offseason For Twins
Revenue from Target Field is funding the Twins' "unprecedented spending spree, which likely culminated" with the team's signing last Thursday of 2B Orlando Hudson to a one-year, $5M contract, according to John Shipley of the ST. PAUL PIONEER PRESS. Four offseason acquisitions, which account for $19M in new payroll, have "helped raise the Twins' payroll to the neighborhood" of $96M, roughly $30M more than their '09 Opening Day payroll. Twins GM Bill Smith said the team's ownership has "always been pretty well committed to spending a significant percentage of revenue on payroll, and that hasn't changed." Smith added, "Fortunately, with the move from the Metrodome to Target Field, we have some additional revenues -- and believe me, we've tapped well into that revenue stream." Smith said Twins President Dave St. Peter and Owner Jim Pohlad gave him the "go-ahead to pursue" the increase in payroll (ST. PAUL PIONEER PRESS, 2/7). However, Smith hinted that the Twins "have reached their payroll limit." Smith: "I think we're getting toward the upper extremes of where we can be" (Minneapolis STAR TRIBUNE, 2/6).

STICKING TO THEIR PHILOSOPHY: In St. Paul, Kelsie Smith writes the Pohlad family has "long subscribed to the same payroll philosophy -- that 50[%] of the team's revenue equals the ballclub's payroll budget." Payroll for the upcoming season has "jumped so significantly because the team expects revenues in 2010 to grow correspondingly," and Jim Pohlad said that "that's really all it is." Pohlad: "We're going to try to put the best team on the field in the most prudent financial way." Meanwhile, the Twins "historically have shied away from deferred payments in contracts," and Pohlad "made a point to say that the organization doesn't want to change now" as the team continues contract negotiations with C Joe Mauer. Pohlad: "You're just kidding yourself (with deferred payments). Eventually, you have to worry about it, and at that point, it affects your current operation" (ST. PAUL PIONEER PRESS, 2/9). When asked "how long can the team sustain payrolls above" $90M, Pohlad said, "It's all a function of our revenue. We try to keep (the payroll) within 50 percent of our revenue range. So model-wise, it would indicate that it's sustainable." Pohlad added, "We're not going to spend the money just to spend the money, though. It wouldn't hurt if it dropped below [$90M], in my opinion, occasionally." Meanwhile, St. Peter noted that the team's season-ticket base has "risen from 11,000 full-season equivalents last year to more than 19,500 this year" (Minneapolis STAR TRIBUNE, 2/9).

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