PTI: Third Base for 1H-2012 (6 - Wright)

Q Spectator:  David Wright and Andre Ethier are trade targets.

PTI Jemanji:  Both names that, as fans, we'd love to see the M's get involved with  ... whether they would be good moves in the cold light of reality is another question.  One we'd love to debate :- )

Here, just quickly, Bud Hot Seat style:

WRIGHT PRO:  You are talking about a 29-year-old player who has posted 7.1 and 8.9 WAR (!) seasons.  In 2007-08, Wright was as valuable then, as Jose Bautista, Albert Pujols and Alex Rodriguez are now.  Maybe more.  Possible buy low.

WRIGHT CON:  Presents a Sexson-like situation ... as Sexson's shoulder was before he got here, so Wright's back injury would be for any team taking him in for 2012.

If the doctors cleared him, then oh yeah.


ETHIER PRO:  Proven LH production (in contradistinction to the speculation around Trayvon, Wells etc).  Likely untapped potential.  Sabermetrics indicates some possible MVP-candidate seasons in him going forward.

ETHIER CON:  Can you even deal with the Dodgers this offseason?  ... also, could be showing Eric Davis-type fragility at age 28, not in terms of games per year but in terms of power-sapping leg injuries.


Q DaddyO:  Does the recent revelation about Chris Larson's financial situation mean they're less likely to spend money?

PTI Jemanji:  Granted, I don't run in the financial circles these guys do...


Generally, the Mariners as a company can borrow against their (huge) equity.

It's like you own a condo worth $800,000 and you only owe $200,000.  The bank will cheerfully lend you $300,000 more on that condo, and it won't affect your personal accounts -- you can even pay the new mortgage with the borrowed funds, temporarily (granted, that's super aggressive).

The Mariners as a company have no cash flow problems -- and as a company they can spend a lot more if they're so inclined.

The decisions that a Boeing CEO makes, for Boeing, are disconnected from his own savings account.  He's a shareholder, fine, but that only means he wants the company to do well.


Larson's preference for a super-tidy P&L sheet at Seattle Mariners Co. has little to do with his own private finances.  The report on Larson's financial travails should, in a vacuum, not affect the Seattle Mariners' financial operations.  Larson is never going to have to shore up the Seattle Mariners with his personal cash.  That's not the way it works.

The Mariners run nice yearly cash flows.  Most teams don't (and don't have to: profit comes from equity and the sale of the club).  The big positive cash flows are an indulgence on their part.



Of course, borrowing money to inflate payroll would require a completely different business model than the team has operated under with this ownership. The Mariners model, for better or worse, is to fund payroll through ongoing revenue generation. They squirrel away the accounting profits when they get them and use them to offset accounting losses when they occur. You don't typically see new business models adopted without a big turnover in the offices of the C-level execs.
That's why Geoff has focused on the capital call option. Unless there are very large accounting supluses available to subsidize payroll for the next couple of years, which I doubt, they are either going to reduce payroll or issue a capital call to ownership to fund the operation. They have only issued one capital call in the history of this ownership group, so while there is precedent, it's not exactly a track record.
I think this series of reporting on ownership may be Geoff's finest. This ownership group's financial losses during the great recession, their collective motivation for owning the team and the overall structure of the board will likely damper any enthusiasm to dump money into the Mariners. If I were a betting man, I would lay odds on payroll going down in 2012 - not up.


If I've got a $700,000 house with a $100,000 mortgage and I refi the mortgage to $114,000, is that even borrowing money?  We're into semantics.  
Everybody else with a $700k house has a $550k mortgage.  Compared to my peers I can pull a lot of equity and still be in an equity position far better than the industry norm.
The fact that the Mariners would choose a 'capital call' rather than a refi from 20% LTV into 25% LTV is a comment on just how sweet they like their balance sheet to look.
Do the Indians do that?  Do the Brewers push their equity and LTV to the prettiest possible point by issuing capital calls?
Who does that, issue capital calls with an LTV* like the Mariners have?


There are a couple of reasons why the payroll won't go down but instead could go up.
1. The big whigs have long been criticized for being cheap and Lincoln and Armstrong are extremely sensitive to it. They have already cut the payroll to about the minimum that is tolerable by the public and if they go any further there will be a backlash that they absolutely fear.
2. Their reliance on current revenue is a big reason why they need to turn things around quickly. Attendance keeps dropping and will continue to do so as long as this team continues struggle. And the lower it goes the harder it will be and the longer it will take to get fans back to Safeco. Another mediocre or bad season will simply mean more money lost because of falling gate reciepts. If they make a splash in the winter so that there is real buzz heading into the new season, and if the team performs well, then the attendance will rebound and they will be in a much stronger financial position than if they treat 2012 as another rebuilding year.


You have these two principles ... (1) Business models / styles don't often change until the execs turn over, and ... (2) The M's gross sales (in terms of tix) are down 40% over the last 10 years...
Am sure that Grizzly would agree:  the 60-something execs will re-think IF they believe that matters are bad enough ...
There came a time when Blockbuster execs re-thought, though it was a bit late for them.  Boeing has strategies in place in which the company does not sell airplanes 50 years from now.
DESPITE ATTENDANCE BEING OFF 40%, THE MARINERS ARE STILL 8th of 14 AL TEAMS and the question is whether this is still within Lincoln's and Armstrong's comfort zones.

Add comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd><p><br>
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.


  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.
  • Web page addresses and e-mail addresses turn into links automatically.