Recent Posts

How BAMTech Could Help Buoy 2018 Pirates Payroll

The MLB Advanced Media center.

If you’ve been reading TPOP for more than one hot minute, you’ll know that I’m of the belief that the Pirates should make an earnest run at the playoffs in 2018 by boosting payroll to a level commensurate to their generated revenues. I’ve long held to the notion that the Pirates are underfunding payroll by $15-20M, based on revenues estimates that we’ve done and validated by Forbes. For instance, Forbes estimated that 2016 revenues were in the $260M range, yet 2017’s Opening Day payroll was just $95.8M. That’s only 36.8% of revenue dedicated to payroll. The typical rule of thumb used to be 50%, but that’s been trending downward in recent years to the mid-40’s. If you presume 45% of revenue should go to payroll, last year’s total should have been $117M.

I know I could personally think of a bunch of improvements the Pirates could have made with an extra $21M. It’s very easy to say that fans demands are constantly shifting in terms of payroll. Yeah, no kidding. That’s because revenues keep growing, so just saying ‘I want the Pirates to spend X dollars on payroll’ is always going to be relative to what other teams are spending and what a team’s own revenues are. Wanting them to spend $100M means nothing without context to the rest of the league and the Pirates’ balance sheet.

So coming off of a dismal 2017 season that saw fans grow apathetic at the park and with the TV ratings, I’m contending that the Pirates should zag instead of zig and re-invest more money into this team, even though revenues are going to be down. There’s a magic one-time relief fund that the Pirates can use to boost payroll for 2018: BAMTech.

What is BAMTech ? We wrote about it two years ago. It’s essentially a spin-off company from MLB Advanced Media that grew so profitable and prosperous that it formed its own company to handle streaming services for a variety of clients, including HBO Now, The Golf Channel, the NHL, and the WE Network. When the streaming media company was conceived by MLBAM, each MLB team was asked to kick in $4M for the startup costs. One year ago, Disney bought a 33% stake in BAMTech (of which all 30 MLB teams were still owners) for $1 billion. And then this past August, Disney decided to become the majority owner of BAMTech by purchasing an additional 42% for $1.5 billion dollars.

That means that each MLB team is in line to receive a one-time revenue influx of $50M this year. Combined with the roughly $33M from 2016 and that return on investment from the original $4M looks pretty good. Now if you stick with the 45% of revenue to payroll theory, that means that $22.5M could be allocated to 2018’s payroll from the August 2017 purchase alone. That number sure sounds familiar. If it doesn’t, you may want to re-read the first two paragraphs of this article. The one-time boost of cash fits nicely with the narrative I’m weaving that the Pirates should make a valiant effort in 2018 and then re-build if it doesn’t work out. If 2018 is bad, rebuild and you can drop payroll moving forward.

Of course that doesn’t help the looming TV deal coming at the end of 2019 if the Pirates continue to hemorrhage TV viewership and lag at the turnstiles. But for at least 2018’s payroll purposes, the Pirates could finally ‘right-size’ to what they should have been spending these past five seasons.

Nerd engineer by day, nerd writer at night. Kevin is the co-founder of The Point of Pittsburgh. He is the author of Creating Christ, a sci-fi novel available on Amazon.

33 Comments on How BAMTech Could Help Buoy 2018 Pirates Payroll

  1. Henry Kassab // October 25, 2017 at 7:17 AM //

    If in fact the Pirates will have that payroll flexibility, imo, the Pirates most glaring need is third base. I for one feel that we will not see Kang in a Pirate uniform again, thus a play for Moustakas should be a Pirate high priority.

    • Kevin Creagh // October 25, 2017 at 7:38 AM //

      I love Moose Tacos, but he’s probably a $20M/year type of guy. That would put him out of the Pirates’ zone and would gobble up all their theoretical extra money on payroll.

      • Henry Kassab // October 25, 2017 at 8:10 AM //

        I would guess in the neighborhood of $18-20 multi-year would land him. Another option could be Frazier. But if the Pirates are ?all in ? they have to spend on their weakest position.

    • michaelstivic // October 25, 2017 at 8:40 AM //

      Mike Moustakas has had two good years, not consecutively. Has he arrived or is he merely the flavor of the moment? The Pirates need a top end starter and two or three reliable bullpen arms. Oh, and for their hitters to be better.

  2. Lee Young // October 25, 2017 at 8:34 AM //

    Let me try to understand this. They get $45 for THIS year. What about next year? So, using the Moustakas suggestion, let’s say that they sign him for 4/$72. That $22.5 mil can take care of THIS year, but what about the next 3 years?

  3. Lee Young // October 25, 2017 at 8:34 AM //

    Let me try to understand this. They get $45 for THIS year. What about next year? So, using the Moustakas suggestion, let’s say that they sign him for 4/$72. That $22.5 mil can take care of THIS year, but what about the next 3 years?

    • Bob Smizik // October 25, 2017 at 9:30 AM //

      Using your math, $45 million takes care of TWO years, not the one you suggest. Maybe in seasons three and four they can start using some of the revenue they’ve held back for multiple years.

  4. Bob Smizik // October 25, 2017 at 8:38 AM //

    The article makes perfect sense. But Pirates finances don’t always seem to follow perfect sense. Several years ago teams received about $25 million in additional national TV revenue. The expected uptick in Pirates payroll from that revenue source never came.

    • Kevin Creagh // October 25, 2017 at 12:03 PM //

      I think it did, Bob. The new national TV deal saw a +$25M increase to all teams. Assuming (conservatively) 40% of that rev went to payroll, that’s a boost of $10M. Pirates 2014 Opening Day was $71M, 2015 was $90M. Attendance played into this upswing,too, of course.

    • Howard Weiss // October 25, 2017 at 5:25 PM //


  5. I’ve tried to avoid the speculation about what payroll should or could be for just that reason. It’s pure speculation.

    While Kevin’s logic and math make sense, the missing piece for me is what percentage of that newfound cash is being deposited into the general fund by MLB and what is being allocated out to the respective markets.

    If there’s truly $50M available to each team then should we not see a corresponding spike in payroll across all teams? As Kevin points out, teams are doing the opposite and reducing payroll as a percentage of revenue. That seems to indicate teams are investing the money in places other than payroll, a practice the Pirates have claimed for years and has been previously supported by a previous minority partner.

    Can the Pirates increase payroll? I think so but at what price? If the aforementioned reports are to be believed, they would be robbing Peter to pay Paul.

    What does all this mean? It says to me that Mike Moustakas is not going to be a Pittsburgh Pirate in the forseeable future.

  6. If every team in MLB is receiving the same amount for this BAM tech thing I’m not sure what good it will do the Pirates. It would only help if they were the only or one of a few teams receiving the money.

    • Kevin Creagh // October 25, 2017 at 12:10 PM //

      It will definitely help. If you have a house repair budget of $100 and your neighbor has a house repair budget of $150, it doesn’t matter if you both have budgets of $120 and $170 next year. You both need to fix things around the house. Theoretically it plays against you in the market to find services, but there’s a finite number of jobs available every year. People will take your money.

      • The house analogy fits better if you and your neighbor are in competition for the best house. If both of you receive a gift of $100 it doesn’t put you in a better position then your neighbor (unless you are able to spend the $100 better).

      • mark delsignore // October 25, 2017 at 1:46 PM //

        not following your analogy to Steve’s post.
        I agree with Steve as “a high tide raises all boats”.

        Let’s use a real baseball “analogy”.
        If there is a 3B free agent that wants $20MM a year, what would prevent a high dollar team, like the Cubs or Houston use their $45MM to add to making the guy an offer that is way more?

        As Steve said, if the Pirates alone were getting more than others for them to overspend then it is a benefit.

        As it is, this is not a benefit for 2018 for the Pirates.

        • Kevin Creagh // October 25, 2017 at 3:45 PM //

          I’ll disagree. If the Pirates have $20M more to spend theoretically, that could impact whether they retain McCutchen’s $14.5M for 2018 or if they can keep all of Harrison/Cole/etc. It’s for spending externally and retaining people internally, too.

          • mark delsignore // October 25, 2017 at 4:53 PM //

            Keeping McCutch does not make them better
            It keeps them at where they are

            I would argue further that they will need more than $20MM in order to keep them where they are in the future.

            Again, a high tide raises all boats

    • mark delsignore // October 25, 2017 at 1:40 PM //

      Agree Steve
      A high tide raises all ships

  7. Neither Moustakas nor anyone who will command his years/dollars combination will be a Pittsburgh Pirate as long as current ownership is in place. That’s not meant to be a dig on Nutting but rather a fact based on precedence.

    • I think that can be said for the vast majority of teams, Jon, given that a handful of large revenue contending teams should be interested in Moustakas.

      • Agreed Don, but my point was that there is no reason to believe that this regime will ever, EVER make any kind of big splash into free agency – Moustakas or anyone else. Not saying that they can or can’t, should or shouldn’t. Just saying that they won’t.

  8. Bob Stover // October 25, 2017 at 1:18 PM //

    We’ve discussed this issue for the past four months at our former home, Friends of Bob. The details of the purchase haven’t been released by MLB. If your assumption is correct, each team would be entitled to a one-time chunk of money. But what if the purchase has time payments over a few seasons? Are there royalties in addition to purchase money? Many of us are skeptical about the Forbes-Pirates revenue estimates. We all believe that the Pirates not only should, but can afford to bump up salary, we just don’t know by how much.

  9. Daquido Bazzini // October 25, 2017 at 2:41 PM //

    One can elevate the level of intelligence involved in the Pirates making financial decisions, but it always turns out the same…..Cheap.
    I’m convinced that the only hope for the Pirates is for Thomas Tull to somehow wrangle the franchise away from Bob Nutting via an outrageous offer.
    Will it happen?
    Most likely not.
    But one can never say never.

    In the meantime, MLB is seeing upper level team salary success as much as ever.
    The dreaded Dodgers (by far the highest team salary in MLB) are blasting through the playoffs.
    Even Cleveland (whose payroll was at least $20 mil more than the Pirates) was ousted early.
    It’s a no win situation for those that follow a Nutting led franchise.
    Though still very unhappy about it, I’ve learned to live with it.
    Pittsburgh has two of the best run franchises in sports (Penguins & Steelers) and one of the worst (Pirates).
    There will be minimal change barring a Nutting decision to cash out.

    • Bob Stover // October 25, 2017 at 3:20 PM //


      A few more years of global warming, mild winters and disappointing revenues up on the mountain at Seven Springs could entice even the Nutting family to sell while the selling is good.

    • mark delsignore // October 25, 2017 at 4:27 PM //


      I think you would agree that in addition to the financial aspects and “low” payroll to which you refer, young, cheap talent is necessary and is present on teams like the two you mention – LA DOdgers and CLeveland. In addition I would add Houston and the Cubs to this list as well as two other examples.

      These teams are spending $140MM plus (way plus in LA’s case) AND they have some young (cheap) talent that have been drafted/traded for and developed that complement the proven talent that costs bigger money.

      To me, it is a realistic payroll in this day and age AND the development of younger (cheaper) talent.

  10. It doesn’t matter if Nutting came into a billion extra dollars. Payroll will never rise even to the middle of the pack. He has shown us who he is, time and again over the last decade. Hoping that he might change his ways is a fool’s errand. Even more so now with attendance and tv ratings down.

    I guess hope springs eternal for a lot of the folks here.

    • Bob Stover // October 26, 2017 at 10:49 AM //

      In a way, what you are suggesting is nonsensical. If Nutting is all about the money, why would he embark on a new season doomed to fail, further depressing attendance and t.v. ratings, and having a potentially huge negative impact on the new local rights deal he hopes to negotiate for 2019 and going forward? Bob Nutting may be tight-fisted, but he’s not self-destructive.

      • Nutting has never shown a willingness to spend up to mlb average, even when times are good. Do you honestly expect him to start spending now? Now that is nonsensical.

        • Bob Stover // October 27, 2017 at 1:30 PM //

          I do not expect him to change anything generally, but yes I do expect a change for this year and next, or until he gets what he wants in his new local rights deal. It would cost him far more over the next 20-25 years if he does not.

  11. Amarillo Fats // October 26, 2017 at 11:31 PM //

    Joe Girardi. 10 years as Yankee manager. 910-710. An average of 91-71 every year. Think about that. A world championship, several playoff berths, and getting to the ALCS at least a year ahead of schedule….and fired.
    Because some owners want to win. Like the Nats. Like the Cubs, who fired their pitching and hitting coaches.
    But the Pirates? Keep ol’ Sleepy Hurdle and Yes-Man Huntington ad nauseum….as long as they keep answering, “Yes, SIR! Whatever you want, SIR!”

    • Bob Stover // October 27, 2017 at 1:28 PM //

      Goes a little too far in its scope. There are two kinds of organizations with a lot of turnover in managers/coaches; 1) the truly awful teams that never seem to get better, and 2) elite organizations who expect to win and hold someone accountable when that doesn’t happen. i.e. Dodgers, Cardinals Cubs, Yankees, Red Sox, Nats, Phillies, Giants, Rangers, Angels among pretty well run teams. Perennial losers with frequent changes include the Mets, Marlins, Braves, O’s, etc. Then there’s everybody else. They don’t have the money to compete and they don’t expect miracles from their GM’s and Managers.

  12. Gene Snyder // October 27, 2017 at 1:03 PM //

    Blah, Blah, Blah. I agree Kevin, the Pirates are not far off from serious contention, but your entire analysis is based on the false premise that given enough resources, the Nutting group will spend more. There is absolutely nothing in their history (which BTW goes back way before they claimed to take control in 2008) that suggests that they have any interest in committing the necessary resources to field a winning club. If they did, they would have already picked up McCutcheon’s 2018 option, and publically committed to not trading his right prior to the start of the season.

    Much of the problem rests with guys like me, who bitch and moan, but continue to buy tickets. I believe they have finally pushed me over the edge. I’m close to the Ohio line and can make a few trips up to Cleveland to get my baseball fix.

Comments are closed.