The Pirates' finances and why it's important to discuss them

I had been holding off posting this until there was a little slow time on the calendar before the start of the season. In the interim, a couple people have jumped in on the topic and joined me. James Santelli wrote this for Pittsburgh Magazine and Pat Lackey, with whom I had a spirited Twitter debate last week when he encouraged people to ignore the financial talk and said he hated discussing it, changed his course and wrote this over at WHYGAVS.)

With the start of the season just days away, we thankfully get meaningful baseball after a brutal winter in Pittsburgh and much of the rest of the country. The Pirates entered spring training with few questions, but there certainly have been storylines. The surprising trade of Travis Snider left open the last bench spot. Andrew Lambo will probably be the guy, but Jaff Decker and even Pedro Florimon made it interesting. Jung Ho Kang has answered none of the questions that he brought with him from South Korea, but remains intriguing. Jeff Locke surprisingly nailed down the fifth starter spot (when I initially wrote this five days ago of course I wrote Vance Worley had it in the bag), but Charlie Morton's struggles have raised major concerns and he was terrible again today. And the bullpen continues to be a question of options vs. waivers vs. potential.

One of the great things about the start of the season is finances take a backseat. At least until the trade deadline. Everyone knows the basic financial landscape in major league baseball is inherently unfair if you believe in the level playing-field which has been created with the salary cap structure in the NFL, NBA and NHL. Major League Baseball operates differently, and that is unlikely to change.

Discussing finances isn't as much fun as watching games, talking about players and first- or second-guessing manager strategy. Nonetheless, it is crucial to understanding the operating framework of any team. Without trying to understand how the Pirates compare to other teams and what their financial picture looks like, there is no context to argue whether they should or shouldn't extend Neil Walker or Andrew McCutchen, bid for Jose Abreu or Kang, trade Snider, try to retain Russell Martin or pursue Max Scherzer.

Last week Forbes came out with their valuation of all 30 teams. The view of Forbes' work varies. Because teams operate privately and don't publish their financial statements, Forbes doesn't have access to every piece of information they would like when putting these valuations together. Consequently some want to dismiss their work altogether, which I find ridiculous. In dismissing Forbes, critics are generally dismissing the conversation. Teams aren't going to provide all the info. Anyone researching the topic has to estimate certain things in order to come up with any type of valuation. If no one estimated anything, there would never be a piece written on the topic.

Having said that, let's take a look at what is available. What are the major sources of revenue for major league teams? National television contracts, local television contracts, MLB streaming media, attendance, concessions, parking, etc. As the links show much of this information is readily available and openly trumpeted by Major League Baseball, which surpassed $9 billion in revenue this past year. Payroll data is also readily available, with the Pirates starting the season again near the bottom of the league. Forbes isn't throwing darts, as some would have you believe.

Knowing this I asked Kurt Badenhausen, one of the Forbes authors, to join me on my show last Monday.

First, though, I encourage you to listen to this monologue from my show on March 26. (Start about five minutes in, It's about ten minutes long and lays out the background and my extended thoughts on the matter.) Key point, Neal Huntington (and his staff) is a modern-day Rumpelstiltskin and deserves an immense amount of credit. He has been able to consistently add pieces to the organization for virtually nothing--Jason Grilli, Vance Worley, John Holdzkom all basically free. Mark Melancon and Travis Snider in great trades. Russell Martin, Francisco Liriano, Edinson Volquez signed to valuable free agent deals. Andrew McCutchen and Starling Marte signed to team-friendly extensions. Not every move has been a success, but the way things are going, when they think about the next statue outside of PNC Park, one of Neal Huntington, with Clint Hurdle at his side, should be in the conversation. (Yea, okay, maybe a little hyperbole there, but you get the point.)

The argument for increasing the payroll is not go out and "sign old, overpriced free agents." That is incredibly lazy and dismissive. Nobody is making that argument. The argument is the Pirates management has done an extraordinarily good job operating with a budget smaller than virtually every other team. Don't you think they would do an even better job, put together an even better team, if they were given more resources to work with? Why is everyone terrified of the Dodgers? Because they hired a GM who has operated successfully on a budget similar to the Pirates' and now he has the keys to Fort Knox.

So, the question is, do the Pirates have the money to operate with a larger payroll? I think that is an emphatic yes. How much more? That's a good question and one worth discussing.

He is my conversation with one of the authors of the Forbes study laying out their methodology and the financial picture. One striking point, from 2003 to 2014 the Pirates' revenues went up approximately $120 million, payroll went up about $20-25 million. I'll let you draw your own conclusions.