A theory of tanking for the Giants

[msgkings322]

Or rather, going full rebuild.

The only real argument against doing a total teardown is that supposedly the team will lose too much in revenue with lower attendance during that 3 year or so time of massive losses.

But let's do the math. Let's say in the sucky years you draw 12,000 fewer per home game. Call it 1,000,000 less over the year. Let's say each of those averages $100 of spending (ticket, grub, merch). So that's $100 mil of lost income.

But the team payroll presumably will be much lower over that stretch. It's $200 mil now right? Wouldn't that be close to $100 mil lower? Isn't it financially close to a non-issue for the owners?

And that's without any revenue sharing which I don't know the details on.

So where am I wrong? I don't see a financial reason not to tank Astros-style.

 

[LHG]

Or rather, going full rebuild.

The only real argument against doing a total teardown is that supposedly the team will lose too much in revenue with lower attendance during that 3 year or so time of massive losses.

But let's do the math. Let's say in the sucky years you draw 12,000 fewer per home game. Call it 1,000,000 less over the year. Let's say each of those averages $100 of spending (ticket, grub, merch). So that's $100 mil of lost income.

But the team payroll presumably will be much lower over that stretch. It's $200 mil now right? Wouldn't that be close to $100 mil lower? Isn't it financially close to a non-issue for the owners?

And that's without any revenue sharing which I don't know the details on.

So where am I wrong? I don't see a financial reason not to tank Astros-style.

Good question. I had also wondered if the team doing the whole try to be competitive every year but not really competitive trick wouldn't even out the numbers anyway. What I mean by that is, suppose it takes 3 years of massive losses, like you mentioned, to do a full rebuild and the ownership is losing about $150 million per year. Outside of the lower cost of payroll, what if the team loses about $50 million a year as the team continues to wallow in mediocrity. If it takes the team another 7 years to be competitive again on the current plan, versus maybe 5 years on a full rebuild, I wonder how big of a difference it would be for the ownership in what they lost. Add payroll in, where the team will most likely carry a bloated roster for a few years of the 7 year plan of "continuous competitiveness", I really wonder if a full rebuild would be better economically.

 

[calsnowskier]

I don’t think gate is the only variable here. I think general ad sales becomes an issue. With the Warriors being the Warriors (and moving in next door) and the Niners on the rise, there is real competition for the ad bucks right now. Going full-suck could take the Giants out of water-cooler discussion, and that could be disastrous.

 

[Stokes1931]

I don’t think gate is the only variable here. I think general ad sales becomes an issue. With the Warriors being the Warriors (and moving in next door) and the Niners on the rise, there is real competition for the ad bucks right now. Going full-suck could take the Giants out of water-cooler discussion, and that could be disastrous.

But they have 3 WS championships in this decade......

 

[msgkings322]

I don’t think gate is the only variable here. I think general ad sales becomes an issue. With the Warriors being the Warriors (and moving in next door) and the Niners on the rise, there is real competition for the ad bucks right now. Going full-suck could take the Giants out of water-cooler discussion, and that could be disastrous.

Well that can be quantified too, right? I mean, it's not another $100 mil/yr, maybe an additional $20 mil? And it's temporary, the buzz is back when they rebuild and start being real factors to win rings again...

I would like to see the numbers, I bet it's not that bad. The Giants aren't Tampa or San Diego or Oakland or whatever, they have a long time presence here, recent championships, a top 3 ballpark, etc. They will always have a reasonable baseline of attendance and revenue.

 

[SFGRTB]

But they have 3 WS championships in this decade......

So do the Warriors, who will soon have a shiny new building with some huge sponsorships and suites that need to be filled.

Compare the two teams in the national light. You have the Giants, who were the hot buy basically from 2000 well into the 2010s within the Bay Area, but nationally still weren't as respected as the Yankee$, Red $ox and dodgers. They had their moments obviously (Bonds homerun chases, '10, '12, '14) but nationally didn't have an overwhelming impact.

Then you have the Warriors who basically since 2015, but even perhaps a bit sooner, not only became nationally revered (or despised), they are globally recognized. They are the face of basketball. If it comes down to it and someone has to decide for one or the other, it's going to be the Warriors.

It's also eyeballs on the TV and sponsorships there. The Giants' TV revenue is directly tied to how well the network performs, it's not a flat rate annual check like most deals.

Now the Giants aren't all of a sudden going to turn into the A's and frankly I could care less how much money the team makes because it's just millions of more dollars in the billionaire's pocket. But these factors are definitely on the mind of 'the board' and the fact that they're so against a full teardown suggests the outlook wouldn't be pretty monetarily.

 

[SFGRTB]

Or rather, going full rebuild.

The only real argument against doing a total teardown is that supposedly the team will lose too much in revenue with lower attendance during that 3 year or so time of massive losses.

But let's do the math. Let's say in the sucky years you draw 12,000 fewer per home game. Call it 1,000,000 less over the year. Let's say each of those averages $100 of spending (ticket, grub, merch). So that's $100 mil of lost income.

But the team payroll presumably will be much lower over that stretch. It's $200 mil now right? Wouldn't that be close to $100 mil lower? Isn't it financially close to a non-issue for the owners?

And that's without any revenue sharing which I don't know the details on.

So where am I wrong? I don't see a financial reason not to tank Astros-style.

Well, the other real argument is if they fail and have to do it over again and turn into the Pirates or Royals for a decade.

 

[LHG]

Well, the other real argument is if they fail and have to do it over again and turn into the Pirates or Royals for a decade.

Or, going the current route, they become the Mariners and miss the playoffs for 15+ years.

 

[LHG]

So do the Warriors, who will soon have a shiny new building with some huge sponsorships and suites that need to be filled.

Compare the two teams in the national light. You have the Giants, who were the hot buy basically from 2000 well into the 2010s within the Bay Area, but nationally still weren't as respected as the Yankee$, Red $ox and dodgers. They had their moments obviously (Bonds homerun chases, '10, '12, '14) but nationally didn't have an overwhelming impact.

Then you have the Warriors who basically since 2015, but even perhaps a bit sooner, not only became nationally revered (or despised), they are globally recognized. They are the face of basketball. If it comes down to it and someone has to decide for one or the other, it's going to be the Warriors.

It's also eyeballs on the TV and sponsorships there. The Giants' TV revenue is directly tied to how well the network performs, it's not a flat rate annual check like most deals.

Now the Giants aren't all of a sudden going to turn into the A's and frankly I could care less how much money the team makes because it's just millions of more dollars in the billionaire's pocket. But these factors are definitely on the mind of 'the board' and the fact that they're so against a full teardown suggests the outlook wouldn't be pretty monetarily.

If the commercial revenue is as competitive and cut throat at you and cal make it to be, how does fielding a team like this year do much better than a full tank? Either way, the team is out of the spotlight. It just sounds like, to me, the ownership has quit caring about actually making the playoffs and is trying to go the safest route to making the most possible money. It is a business, so I cannot exactly blame them, but it is still frustrating from a fan's perspective and I'm not even sure it will work for them (for what they are going for).

 

[msgkings322]

Well, the other real argument is if they fail and have to do it over again and turn into the Pirates or Royals for a decade.

Not really, those are small market teams with small market budgets. The Giants somehow managed to survive and thrive without winning a championship for 52 years in SF. The Warriors won't be the Warriors forever, in fact it's quite likely Durant is gone in 2 years (long discussion of this on NBA board). Football windows are short. I don't want to hear the excuse that there are other sports teams in the Bay Area.

Run the team intelligently to win rings. The franchise value will only rise and you won't lose money over the long term with all the money you will make in the good years.

 

[SFGRTB]

If the commercial revenue is as competitive and cut throat at you and cal make it to be, how does fielding a team like this year do much better than a full tank? Either way, the team is out of the spotlight. It just sounds like, to me, the ownership has quit caring about actually making the playoffs and is trying to go the safest route to making the most possible money. It is a business, so I cannot exactly blame them, but it is still frustrating from a fan's perspective and I'm not even sure it will work for them (for what they are going for).

Because the majority of people (filthy casuals) still love the names PENCE, and BUMGARNER, and CRAWFORD, and BELT, and MCCUTCHEN etc.

If those names aren't around anymore, those people don't care. Sure, baseball sucks right now, but the majority of the season they were 'in-it' (again, from a casual perspective) with familiar faces and people cared.

I'm with you, from a hardcore fan's perspective (which is anybody posting here) it sucks because it's so obviously detrimental to the team to stay course on this mediocre path.

 

[msgkings322]

If the commercial revenue is as competitive and cut throat at you and cal make it to be, how does fielding a team like this year do much better than a full tank? Either way, the team is out of the spotlight. It just sounds like, to me, the ownership has quit caring about actually making the playoffs and is trying to go the safest route to making the most possible money. It is a business, so I cannot exactly blame them, but it is still frustrating from a fan's perspective and I'm not even sure it will work for them (for what they are going for).

They are being penny wise and pound foolish if they truly think this way.

 

[SFGRTB]

Not really, those are small market teams with small market budgets. The Giants somehow managed to survive and thrive without winning a championship for 52 years in SF. The Warriors won't be the Warriors forever, in fact it's quite likely Durant is gone in 2 years (long discussion of this on NBA board). Football windows are short. I don't want to hear the excuse that there are other sports teams in the Bay Area.

Run the team intelligently to win rings. The franchise value will only rise and you won't lose money over the long term with all the money you will make in the good years.

I'm just saying you can pay all the money in the world and it still might not work. There's no real 'right way' to do it. The way the Astros, Nationals and Cubs did it (which I'm for) still isn't a guarantee.

The Giants barley survived SF. If it wasn't for Bonds, they wouldn't have. They ain't going anywhere now and the only reason I bring up other teams is because of the bottom line, which I, nor anyone else, should care about but is unfortunately the reality with sports teams.

 

[msgkings322]

Because the majority of people (filthy casuals) still love the names PENCE, and BUMGARNER, and CRAWFORD, and BELT, and MCCUTCHEN etc.

If those names aren't around anymore, those people don't care. Sure, baseball sucks right now, but the majority of the season they were 'in-it' (again, from a casual perspective) with familiar faces and people cared.

I'm with you, from a hardcore fan's perspective (which is anybody posting here) it sucks because it's so obviously detrimental to the team to stay course on this mediocre path.

None of those people were household names to the casual fans at one point. There will be a new crop of names people want to see if they build it right.

 

[SFGRTB]

None of those people were household names to the casual fans at one point. There will be a new crop of names people want to see if they build it right.

I'm not necessarily disagreeing with you. I want them to fully rebuild as well. Just playing devils advocate here.

The Giants would rather introduce the new crop of names with familiar faces instead of rolling the dice on 12 newbies at once.

 

[msgkings322]

I'm just saying you can pay all the money in the world and it still might not work. There's no real 'right way' to do it. The way the Astros, Nationals and Cubs did it (which I'm for) still isn't a guarantee.

The Giants barley survived SF. If it wasn't for Bonds, they wouldn't have. They ain't going anywhere now and the only reason I bring up other teams is because of the bottom line, which I, nor anyone else, should care about but is unfortunately the reality with sports teams.

I hear you, all good points. All I'm saying is, financially speaking trying to 'do it right' won't cost the owners noticeably more than just doing it the same way they have the last few years.

 

[calsnowskier]

None of those people were household names to the casual fans at one point. There will be a new crop of names people want to see if they build it right.

But right now they are cash cows. They need to utilize these assets from a PnL standpoint.

And remember, the Astros/Cubs strategy is not a guarantee of contention. How long has San Diego and Pittsburgh been picking at the top of the draft with absolutely zero success? The Giants were successful in 10-14 because they hit big 3 years in a row with a high pick (Timmeh/Bum/Posey) and they bottled every piece of lightning in the world in ‘10. Huff had a career season x10; Burrell was pure gold from the dumpster; Ross went CRAZY in the playoffs; Durty pitched at Ace-like levels; etc etc etc.

I, as a fan with zero financial stake, would like to see the tear down because I believe, in a vacuum, that is the best way to build a winner. But that is dangerous. It absolutely has short term financial costs (loss of revenue) and the danger of affecting the reputation of the product. They would be opening the door for advertiser X to build a relationship with the Dubs and they could potentially lose advertiser X for good because of this. You can’t take a break in a highly competitive market such as this.

 

[LHG]

I hear you, all good points. All I'm saying is, financially speaking trying to 'do it right' won't cost the owners noticeably more than just doing it the same way they have the last few years.

Didn't tanking start not by doing a reset on the team but due to financial pressures? Teams realized that they needed to cut back to do better financially and found out that if they focused on developing quality players that it actually worked to create a good team. It was only after a few times that teams were successful that other jumped on board.

 

[LHG]

But right now they are cash cows. They need to utilize these assets from a PnL standpoint.

And remember, the Astros/Cubs strategy is not a guarantee of contention. How long has San Diego and Pittsburgh been picking at the top of the draft with absolutely zero success? The Giants were successful in 10-14 because they hit big 3 years in a row with a high pick (Timmeh/Bum/Posey) and they bottled every piece of lightning in the world in ‘10. Huff had a career season x10; Burrell was pure gold from the dumpster; Ross went CRAZY in the playoffs; Durty pitched at Ace-like levels; etc etc etc.

I, as a fan with zero financial stake, would like to see the tear down because I believe, in a vacuum, that is the best way to build a winner. But that is dangerous. It absolutely has short term financial costs (loss of revenue) and the danger of affecting the reputation of the product. They would be opening the door for advertiser X to build a relationship with the Dubs and they could potentially lose advertiser X for good because of this. You can’t take a break in a highly competitive market such as this.

Yes, tanking is dangerous. It hasn't worked for a few teams. Going the route the Giants are going is dangerous too. There have been teams that have tried to keep the name recognition players past their sell by date and it backfired. Fans still tuned out to the team. I'm sure they have a lot of smart bean counters in the organization that has looked at the two different scenarios, studied what past teams have done and determined that this route is not at financially risky as a full re-build, but seeing how the organization I work with operates, the financial people are completely disconnected from the operations side and have no idea what their decisions will do to operations. I've seen where the CFO wants to make cuts to an athletics program and the CFO doesn't understand how it will negatively affect the product on the fields. Because the CFO has no concept of that impact, the CFO cannot do a true projection of the cuts will actually make the financial picture of the organization worse, creating a bigger problem rather than fixing a smaller problem. I know that may be an apples to oranges comparison, I just hope that isn't what is happening in SF.

 

[SFGRTB]

But right now they are cash cows. They need to utilize these assets from a PnL standpoint.

And remember, the Astros/Cubs strategy is not a guarantee of contention. How long has San Diego and Pittsburgh been picking at the top of the draft with absolutely zero success? The Giants were successful in 10-14 because they hit big 3 years in a row with a high pick (Timmeh/Bum/Posey) and they bottled every piece of lightning in the world in ‘10. Huff had a career season x10; Burrell was pure gold from the dumpster; Ross went CRAZY in the playoffs; Durty pitched at Ace-like levels; etc etc etc.

I, as a fan with zero financial stake, would like to see the tear down because I believe, in a vacuum, that is the best way to build a winner. But that is dangerous. It absolutely has short term financial costs (loss of revenue) and the danger of affecting the reputation of the product. They would be opening the door for advertiser X to build a relationship with the Dubs and they could potentially lose advertiser X for good because of this. You can’t take a break in a highly competitive market such as this.

Exactly this. Sports are more corporate than ever, especially in the major markets. And like most corporations, it's us who get screwed over