Baker Reports Court Assessment of M's Value


I/O:  Chris Larson's divorce team, arguing low, claims the Mariners are worth only $551 million.  His wife's team, arguing high, claims that they're worth $750 million.

CRUNCH:  Forbes, which had been whistling in the dark, guessed $449 million.  In 1992, the ownership group paid $212 million.  Here is Baker's fine article.


1.  So they tripled the value in 20 years.  You might figure that they're making money had over fist, but not really.  200% in 20 years is not exciting by rich-man standards.  A guy with $100M wants to double it every six or seven years, at the very least.

The rule of 72 applies to investing:  12% increase times 6 years doubles you ... 9% times 8 years ... etc.  And ten percent isn't a lot for guys who have that kind of cash.  Real estate moguls, leveraging their capital, sometimes double or triple their money yearly.

Tripling the value, in 20 years, is strong return but not amazing by the standards these guys go by.


2.  First of all, M's fans should cheerfully concede that Yamauchi-san bought the franchise as a gift to Seattle, not as an investment strategy.  If you had $212 million lying about, there are much better ways (than sports franchise ownership) to leverage it into a 200% increase / 20 years.  


3.  Probably the #1 sports mystery, for me, is why fans and reporters focus on yearly cash flow -- which they routinely call "profit" -- when assessing the viability of a sports team and its budget.

Look.  You had a rental house you bought for $212,000 and now you can sell it for $750,000 -- or you can pull $400,000 cash in a home equity line.

Why would they need to make "capital calls," with owners providing cash directly?  They are in a superb equity position.  Why couldn't they draw on lines of credit, like other MLB teams do?


If your rental has tripled in value, what the deuce do you care, whether your yearly cash flow was +$500 or -$500?  You don't!  And neither do investors.  

And yet, with the rental house going from $212k to $750k, the media talks about nothing other than "Hey, they lost eight hunnerd bucks on the rent payments."

The Mariners have chosen not to increase their payroll to $100M, or $120M, or $140M.  


Realize, too, that the yearly cashflow declared is --- > designed to look real low.  (Every smart businessman does this.)  One time, Curt Schilling told ESPN that Jerry Colangelo walked him through the D-Backs' bottom line and "the reality was better than the public figures, on the order of 10's of millions of dollars a year."


4.  This winter, Zduriencik has stated that the owners --- > are now going to make funds available.  Great.

As we've said before, Lincoln and Armstrong have seemed willing to spend, depending precisely on their level of trust in Gillick, Bavasi, Zduriencik, whoever.


4b.  In sabermetricians' zeal to calculate the $/WAR return on a Prince Fielder or Albert Pujols, they always fail to factor in an ownership's decision to raise payroll for a particular player.

OK, fine:  Pujols is costing you $25M and giving you 5 WAR.  But what if $10M of that was money the club would not have spent, except for Pujols?

The $/WAR calculation is always based on the premise that --- > total payroll is fixed, regardless.  It isn't.  And so the whole house of cards that is $/WAR topples again, victims of its 2-dimensional assumptions.


5.  The key takeaway in these court proceedings, for me, was that --- > both sides seem to acknowledge a Rangers-, Angels-style future for the Mariners.

Larson's lawyer, haggling low, said "Well, halfway to the Rangers."  His wife's lawyer, not buying that, said "Pretty much the Rangers."

We M's fans have been panicking about the AL West TV contracts.  But the Mariners' future strategic picture probably isn't much different.


Hey, they're talking Fielder, they're talking Gonzalez, they're rumored on Darvish, they're connected to Willingham and Cuddyer.  Like, simultaneously.

The CBA worked out, and the farm system looks good, and they're going to get serious.  Better late than never.



Dr D



is breaking news to Boras, or just confirmation of something he already knew in a ballpark sort of way?
will have a minimal impact on negotiations with Boras, or a significant one?


Certainly, a large part of the Seattle market for the last decade has been Japanese interest.  The billion dollar question to me is this - are Japanese fans of Seattle - or of Ichiro?  If Ichiro retires (or leaves for elsewhere) after the 2012 season, what impact does that have on the assessment of the Mariner market and team value?
What does the looming potential loss of the Japanese market (and revenue) have on the front office judgement of what a reasonable payroll is 3-7 years from now?  Is it plausible that management is low balling any bid on Fielder because they would rather save money for a bid on a replacement Japanese icon for Fielder?
Me?  I've got no data on how much money Japan is worth to Seattle.  But, I DO have a lot of data on how many ASG votes Ichiro has gotten - even in pedestrian seasons.  Ichiro has consistently been pushed up significantly by major internet voting from Japan.  And while many American fans are guilty of over-valuing their own talent - there is little data to suggest the Japanese vote has been particularly helpful to American Mariners. 
While I am a UNC alum that follows Seattle -- I somehow think the monetary benefit of Ackley and Seager drawing interest from the Tar Heel state isn't going to be remotely comparable to that of Ichiro and Japan. 


... although Baker does not specify at which point the court findings were established.
Negotiations I've been in, have been at a tiny fraction of the Boras level, but ... when a fact like this comes in, it has the function of making things awkward for the party "with his hand in the cookie jar."
The M's don't have to give Fielder a bigger offer, but if (in face-to-face, mano-a-mano debates) they've been working hard the angle that Seattle only has so much money available, then --- > they might have to red-facedly switch over to other arguments.
The argument could easily switch from "Here's the best we can do, Scott, and we're really stretching because we love him so much" to --- > "Okay, fine.  We're just not willing to give him more than 8 years because we worry about his body."
Makes the whole argument less sweet and more bitter when this happens, but the bottom line is still dinero.
If, on the other hand, they've been cordial but distant during the negotiations, not bringing their own limitations into the discussion, then the effect would be minimal IMHO.


... and asked the Fighters to hold off saying anything until the deal is ready to go?
Heh.  ... at least for another day or two, we can dream that the M's are in on Gio / Willingham / etc because they are parlaying a last gift from Yamauchi-san into an All - In.


Looking on the bright side, it means almost certainly that they are out.  Of course, now the Blue Jays show that they have the cash to make a run themselves.

IcebreakerX's picture

M's sign Fielder... Or we're doomed as a second-class baseball town.
I might have to defect soon.

Taro's picture

To soften the blow of Darvish to Texas:
It turns out the Ms CAN opt out of their TV deal in 2015. If they can get competitive within a short time frame, they'll get their Texas/LAA TV deal or more if they open up their own network.
Honestly, 10/$200mil (deferred) to Fielder will look cheap in a couple years once all this new money is in the game. Now might be the best time to invest.


This is getting UGLY.  In one offseason, it's effectively like we traded divisions with Baltimore.
Not a guarantee of failure, but a lot of things will have to break right for our team.  Thank goodness for the second WC.


a policy made to be broken. I guess the questions are what is the relative degree of interest in Fielder now as opposed to Pujols when they first insisted that policy applied, how much did their hopes of landing Darvish dim their interest in both Pujols and Fielder, and now that they have failed to land Darvish, have the new circumstances and a ton of now freed-up uncommitted cash changed their calculations and their policy.
The answers to these questions may prove to be decisive in what looks to have become a Fielder match race rather than a Fielder sweepstakes. With Texas' winning Darvish, it appears the only remaining AL teams bidding for Prince's services are Toronto and Seattle.
Boy, I think Grumpy has hit the nail on the head. Heading into the offseason we had hoped that a Fielder signing would vault us back at least into the discussion of contention. Now it looks like signing Fielder might merely avert becoming totally irrelevant.

Nick's picture

Call it impatience but I'm becoming increasingly irritated with this offseason. I'm also irritated that the rest of baseball doesn't have the M's best interests at heart or else they would not let the the top 2 FA pitchers and the game's best hitter come to our division. C'mon other teams!
And a certain blog in love with $/WAR just continues to beat the "don't worry, this changes nothing for us so lets not overreact (me: how about you just react?) to it" drum.
These two new AL East teams in our division decided to trade in their Risk cards and deploy all 30 of their new armies in Scandinavia, Ukraine, North, South and Western Europe and we're left clinging to Great Britain with our 5 measly armies waiting to be bludgeoned out of existence. But let's stay the course. That's the noble thing to do. Because the "right way to win" certainly does NOT involve such ridiculous moves as raising payroll, or doing whatever it takes to buy Fielder's services. No, the right way is to plan for your 2014-2016 window. I mean 2017-2019, sorry, I got a little too ambitious there for a second.
Please don't let us become irrelevant this offseason, Jack. Please.
Rant over.


These two new AL East teams in our division decided to trade in their Risk cards and deploy all 30 of their new armies in Scandinavia, Ukraine, North, South and Western Europe and we're left clinging to Great Britain with our 5 measly armies waiting to be bludgeoned out of existence.

There's optimism, there's stick-to-a-tive-ness, unflagging determination, yada yada yada. Then there's blindness. The one is admirable. The other is stupid.
To use another metaphor, the legendary courage among the 100 men at the Alamo was, if legend be correct, admirable. But once there were, what, over 1,000 Mexican troops at the gates with cannons and all hope of timely aid from Sam Houston was lost, the outcome was a foregone conclusion and those inside knew it. They might fight extra smart, extra hard, profit from the best of luck...and only postpone their fate by an hour or so.


It's not the end of the world; starting pitching is the strength of the organization, esp. in the high minors. Darvish would have been a nice add, but we really need bats obviously.
Even if we miss out on Fielder (maybe not a bad thing?... it concerns me a little that 29 other teams seem uninterested in his services), that does not perclude filling holes through the trade market.
We just can't make anymore Fister-like underwhelming trades, and a lot of things have to go right.  The good news is that we could have multiple aces in our rotation next year (Felix, Pineda, Paxton, Hultzen with more on the way shortly in Walker and Campos and possible surprises like Snow). 
Vargas is solid, and may be better post "twist"... maybe even a Bedard-light (I said a lot would have to go right, didn't I?).  We have another high draft choice coming up, which will give us some flexability to trade some of our current shiny prospects for lineup help if necessary.  We can renegotiate our TV deal in 2015. 
We will have to look at other options like Ackley to CF so Seager can play his natural position at 2B to open up 3B for a bat or bringing in a LFer with Carp to DH.  A perverse effect of having so many holes is that there's lots of options to upgrade the offense.

Nick's picture

Good points. I'm most definitely a believer of our system. Call it home town bias but we've got outside credibility, and lots of it, regarding our pitching depth- Mike Newman on Fangraphs likes our chances to become the D'Backs of '01 if our guys pan out.
I believe in Ackley and Seager and Smoak and them and you brought up some interesting possibilities (can Seager transition to CF? I really don't want them throwing in the towel with Ack and his offensive brilliance at 2nd).
And I love Vargas as my #4. I'll go to war with him in the #4 slot any day vs. the other 4's in the league. Which is where he could be, talent-wise (not necessarily where he slots in the rotation) given Felix, Pineda and Hultzen/Paxton.
I was more commenting on the frustration of our rivals making all the big-light, center stage splashes and us working out deals with Gimenez and Luis Rodriguez.
Course, the M's respond by laying their Fielder cards on the table ;-)
Make me eat crow, Z!

Taro's picture

Sigh.. Z being about as obvious as he can get here that ownership isn't going to give a serious offer to Fielder.
A long-term rebuild isn't the end of the world and could actually pan out if done right. Still won't be watching games until I feel we have some sort of a chance.

Anonymous's picture

Sure its not just Z trying to hide his hand from Bores? Z rarely let's us know what he's got on tap before he pulls the trigger.

Taro's picture

Maybe, but given ownership's tendency to put a strict limit on contract offers it doesn't sound like a negotiating ploy:
"There's no question that both those clubs have helped themselves and both were really good as it was," he said. "Now, the Angels get Pujols and [C.J.] Wilson and Texas gets Yu Darvish. But we're not going to deviate from our course. We're a little further away than those clubs. We have a plan in place.
"I really like our pitching at the upper Minor League level and on our Major League staff. We're not going to make any decisions that will hurt our long-term plan. We're doing what we're doing, and when it's the right time, whether now or in the future, we'll do what needs to be done. We're not going to change from that."

Nick's picture

I think you're right. Its this line: "we're a little further away than those clubs." Not a confident quote...


"we're a little further away than those clubs"
And he thinks TIME is going to CLOSE that gap significantly? When once this offseason is tallied they will both be spending about $40 million a year more than we will? And their farm systems are also giving their teams an infusing of talent? Does Jack really think he's THAT much better than their GM's, even when they are sought after destinations and we are one of the armpits of MLB, even when he has hurdles (travel, e.g.) that they don't face?
Of course, he does say "when it's the right time, whether NOW (emphasis mine) or in the future, we'll do what needs to be done." So he very well could just be playing coy with Boras. One would expect that.
We'll have to judge the M's by what they actually do when this offseason is over. But if the plan is just to stay the course, then my attitude is akin to saying to a man walking through a dark railroad tunnel, "That bright light coming at you isn't a flashlight, fella! You'd better change directions PRONTO!"

Nick's picture

I think you're right. Its this line: "we're a little further away than those clubs." Not a confident quote...

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