Why might the Pirates be dumping salary?

Over the past couple weeks, with the suspicious handling of Freddy Sanchez and the rumors swirling around the Adam LaRoche trade (I’ll get to both of these things in a bit), it’s getting harder and harder to not at least address the question of whether or not the Pirates are making these moves to dump salary. It’s easy to assume that they are and that it’s happening because Bob Nutting is a skinflint owner who’s always cut costs, but that ignores much of the work done since Nutting booted Kevin McClatchy, Dave Littlefield, and much of their front office in 2007.

We know the Pirates have spent millions on their facility in the Dominican, that they spent close to $10 million on the draft last year, and that they at least seem willing to do so this year (though we won’t know for sure for about three weeks how this draft pans out). They’ve been cutting salary from the big league team, but so far only in deals that have been made to restock the farm system. The Nate McLouth and Nyjer Morgan trades certainly can’t be viewed as salary dumps by rational people. Fans may not be crazy about the return on the Bay trade at the moment, but I think the same can be said for that move as well.

This post is a long one, so follow along after the jump for the rest of it .

In the past two weeks or so, however, the Pirates have been acting like a club that can’t afford certain players because of salary. They’ve indicated that Freddy Sanchez won’t be around in 2010 because of his $8 million option that’s almost sure to vest. That’s a lot of money for Sanchez, sure, but without Adam LaRoche and McLouth on the books, plus the likely removal of Ian Snell from the payroll and the inevitable removal or down-sizing of Jack Wilson’s salary, the team could almost certainly keep Sanchez with his option without raising the 2010 payroll, even with the raises due to some players through arbitration. Even if Sanchez’s value on the open market is closer to what the team offered him last week, Sanchez isn’t on the open market and he’s good enough that while the team would be overpaying him at $8 million next year, it wouldn’t be a drastic overpayment. Plus, it’s only for one year it wouldn’t cripple the club long-term.

Huntington should be dealing from that option as bargaining point, I don’t have to make this deal because I can keep him around next year. Instead, it’s likely being used against him in negotiations, You have to make this deal because you’re not going to pay him next year. I also think it’s strange that no one seems willing to pick up Freddy’s option, but that’s an entirely different post about collusion that I’m not going to get into here. Then again, maybe that’s because teams know Huntington’s up against it with Sanchez’s salary next year and they’re looking to rake him over the coals.

There’s also the Peter Gammons report that the Pirates turned down a better offer for LaRoche because the Red Sox were the only team willing to pay his whole salary. That whole thing sounds like bunk to me and I think the explanation offered by the team to Dejan Kovacevic this morning sounds logical; someone else offered a deal involving a big leaguer for LaRoche and the Pirates turned it down. That would likely be perceived as a “better offer” than two long-shot prospects, but it’s just not what the Pirates need right now, unless someone was stupidly offering a young big league player with some real potential.

Still, Gammons seems to be operating from the assumption the Pirates are dumping salary and it sort of feels like people that have more access to the club have some information that we don’t. Now, granted, it’s hard to make a judgement on this sort of thing until the inevitable Sanchez deal goes down, but there are some red flags showing up here. The handling of the Sanchez certainly seems a little fishy, the handling of the LaRoche trade may have been, and there are also some behind-the-scene rumblings that ticket prices may be going up next year.

Yes, that’s a link to Smizik. And while I don’t always agree with him, he’s taking a much more complete look at this team now that he’s a blogger than he ever seemed to do as a columnist and I’ve been impressed with some of his work lately. Perhaps that’s because no one is telling him what to write now, or because we have access to a wider range of his thoughts now that he writes more than a few columns a week, but the fact remains that Bob Smizik’s blog is usually worth a read, and I mean that. Back to the main plot.

If Nutting were simply looking to cut salary and pocket money, there would be no new academy in the Dominican, there would be no Pedro Alvarez or Robbie Grossman or Quinton Miller, and LaRoche, Sanchez, and Jack Wilson would have been long gone before this year started for a pittance with the Pirates paying some of their salary simply to avoid paying all of it.

Adding all this together, it wouldn’t surprise me to hear that the Pirates are getting absolutely hammered on the books this year. In Smizik’s piece, he makes the generalization that attendance “is roughly the same as last year, which means revenues are probably close to being the same.” I’m not sure I agree. Last year the Pirates averaged about 19,600 fans a game. This year they’re averaging approximately 700-800 fewer tickets a game this year. When all the math is said and done, they’re on pace for about 100,000 60,000 fewer fans over the year. That probably comes to somewhere around  $1.5-2.5 a million dollars or so in lost revenue from ticket sales alone

The rest of this is all speculation on my part, but Smizik’s guess is only counting tickets sold. It sure seems possible to me that the actual number of people through the turnstiles this year is much, much lower than last year. Couple the bad economy with a bad team and some unpopular trades and I bet we’re looking at a much higher no-show rate in 2009. Every fan that doesn’t walk through the turnstiles doesn’t pay to park, doesn’t pay for food, merch, or beer. That’s a huge profit loss there, and it applies both to 60,000 fans that aren’t in the park because they didn’t buy tickets and however many more fans that bought a ticket but didn’t show up for the games.

Factor in that attendance will almost certainly drop in the second half when the Steelers start camp and the two most popular Pirates are no longer in black and gold. Then, consider lost sponsors like GM, who’ve backed out because of the economy or their own financial struggles. And don’t forget that the Yankees aren’t paying the luxury tax this year because they’re opening a new stadium. Or that the Pirates have offered some ridiculous ticket promotions this year, which is part of the reason why attendance isn’t falling, and those promotions cost them revenue on the tickets. Then, add in the fact that the team has to be anticipating ticket sales will drop again next year without McLouth, Wilson, or Sanchez around and an 18th losing season stares them in the face.

I’m guessing that the team’s revenue stream is drying up pretty quickly this year. If they are in fact looking to dump salary (and it’s important that I’m not really accusing them of that at the moment, I don’t think we can know for certain until August 1st), that’s probably the reason why.

Editor’s note: Holy cow, how did you guys make it through this post on the first pass? There was some terribly impenetrable grammer in there. This is why writing long blog posts from work while reading Cell articles is a bad idea. If you see anything that’s changed, it’s just me cleaning the language up a bit and hopefully making it more digestible.

Pat Lackey

About Pat Lackey

In 2005, I started a WHYGAVS instead of working on organic chemistry homework. Many years later, I've written about baseball and the Pirates for a number of sites all across the internet, but WHYGAVS is still my home. I still haven't finished that O-Chem homework, though.