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	<title>Milwaukee &#187; GM David Stearns</title>
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		<title>Spending Expectations</title>
		<link>http://milwaukee.locals.baseballprospectus.com/2018/10/31/spending-expectations/</link>
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		<pubDate>Wed, 31 Oct 2018 11:50:01 +0000</pubDate>
		<dc:creator><![CDATA[Nicholas Zettel]]></dc:creator>
				<category><![CDATA[Articles]]></category>
		<category><![CDATA[2018 Brewers]]></category>
		<category><![CDATA[2019 Brewers]]></category>
		<category><![CDATA[Brewers free agency]]></category>
		<category><![CDATA[Brewers offseason analysis]]></category>
		<category><![CDATA[Brewers payroll projections]]></category>
		<category><![CDATA[Brewers profits]]></category>
		<category><![CDATA[Brewers revenue projections]]></category>
		<category><![CDATA[GM David Stearns]]></category>

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		<description><![CDATA[The Brewers enter the 2019 season in relatively uncharted territory. Their three year progression in operating revenue, estimated by Forbes (prior to interest, taxes, depreciation, amortization), totaled approximately $150 million entering the season and exhibited fantastic growth prior to a 200,000 person spike in attendance and a deep playoff run. Given spending on the Carolina [&#8230;]]]></description>
				<content:encoded><![CDATA[<p>The Brewers enter the 2019 season in relatively uncharted territory. Their three year progression in operating revenue, estimated by Forbes (prior to interest, taxes, depreciation, amortization), totaled approximately $150 million entering the season and exhibited fantastic growth prior to a 200,000 person spike in attendance and a <em>deep</em> playoff run. Given spending on the Carolina Mudcats purchase and the Arizona Spring Training development, it is clear that the club was leveraging their strengths by investing in capital projects, which is a perfectly reasonable thing for a baseball club to do (as infuriating as it is for baseball fans to see their club rake in profits and invest off the field, that&#8217;s what one would expect the club to do from a shareholder&#8217;s standpoint).</p>
<p><em><strong>Related Reading:</strong></em><br />
<a href="http://milwaukee.locals.baseballprospectus.com/2016/05/23/counterbuilding-trading-drafting/">Counterbuilding: Trading and Drafting</a><br />
<a href="http://milwaukee.locals.baseballprospectus.com/2018/04/13/the-successful-rebuild/">The Successful Rebuild</a></p>
<p><em>Better yet</em>, depending on how one views revenue expectations from the 2018 season, the Brewers likely increased their share of labor spending to approximately 40 percent, based on publicly available information and various trend forecasts (from conservative to aggressive). All of this precludes the <a href="https://mlb.nbcsports.com/2017/12/15/each-owner-will-get-at-least-50-million-in-early-2018-from-he-sale-of-bamtech/">MLB Advanced Media money</a>, which undoubtedly gives the Brewers ownership group more cash to leverage for both capital and labor projects.</p>
<table border="" width="" cellspacing="0" cellpadding="0">
<tbody>
<tr bgcolor="#EDF1F3">
<th align="center">Year (all $M)</th>
<th align="center">Revenue</th>
<th align="center">Operating Income Estimates / Projections</th>
<th align="center">Minimum Revenue</th>
<th align="center">Sustained Growth</th>
<th align="center">Maximum Revenue</th>
<th align="center">Year-End Payroll</th>
<th align="center">Maximum Payroll</th>
<th align="center">Labor</th>
</tr>
<tr>
<td align="center">2015</td>
<td align="center">$234</td>
<td align="center">$27</td>
<td align="center">n.a.</td>
<td align="center">n.a.</td>
<td align="center">n.a.</td>
<td align="center">$98</td>
<td align="center">n.a.</td>
<td align="center">42%</td>
</tr>
<tr>
<td align="center">2016</td>
<td align="center">$239</td>
<td align="center">$58</td>
<td align="center">n.a.</td>
<td align="center">n.a.</td>
<td align="center">n.a.</td>
<td align="center">$72</td>
<td align="center">n.a.</td>
<td align="center">30%</td>
</tr>
<tr>
<td align="center">2017</td>
<td align="center">$255</td>
<td align="center">$67</td>
<td align="center">n.a.</td>
<td align="center">n.a.</td>
<td align="center">n.a.</td>
<td align="center">$79</td>
<td align="center">n.a.</td>
<td align="center">31%</td>
</tr>
<tr>
<td align="center">2018</td>
<td align="center">Not published</td>
<td align="center">$54</td>
<td align="center">$260</td>
<td align="center">$272</td>
<td align="center">$291</td>
<td align="center">$110</td>
<td align="center">n.a.</td>
<td align="center">42%</td>
</tr>
<tr>
<td align="center">2019</td>
<td align="center">Not published</td>
<td align="center">$55</td>
<td align="center">$266</td>
<td align="center">$290</td>
<td align="center">$310</td>
<td align="center">$112</td>
<td align="center">$123</td>
<td align="center">42%</td>
</tr>
<tr>
<td align="center">2020</td>
<td align="center">Not published</td>
<td align="center">$57</td>
<td align="center">$271</td>
<td align="center">$310</td>
<td align="center">$330</td>
<td align="center">$115</td>
<td align="center">$131</td>
<td align="center">42%</td>
</tr>
<tr>
<td align="center">2021</td>
<td align="center">Not published</td>
<td align="center">$58</td>
<td align="center">$277</td>
<td align="center">$330</td>
<td align="center">$350</td>
<td align="center">$117</td>
<td align="center">$139</td>
<td align="center">42%</td>
</tr>
<tr>
<td align="center">2022</td>
<td align="center">Not published</td>
<td align="center">$59</td>
<td align="center">$283</td>
<td align="center">$353</td>
<td align="center">$373</td>
<td align="center">$120</td>
<td align="center">$148</td>
<td align="center">42%</td>
</tr>
<tr>
<td align="center">2023</td>
<td align="center">Not published</td>
<td align="center">$60</td>
<td align="center">$289</td>
<td align="center">$376</td>
<td align="center">$396</td>
<td align="center">$122</td>
<td align="center">$158</td>
<td align="center">42%</td>
</tr>
</tbody>
</table>
<p>[quick rant]Brewers, increase minor league pay! Pay your minor leaguers a living wage across all systems![/quick rant]</p>
<p>Of course, one of the difficult aspects of navigating the 2018-2019 offseason is that in order to increase the labor share of the club, Milwaukee actually had to go out and sign some players. So <a href="http://milwaukee.locals.baseballprospectus.com/2018/01/23/signing-free-agents/">some previously rosy payroll estimates</a> may be pushed back a few years (click that link if you&#8217;d like payroll analysis with Lewis Brinson arbitration horizon estimates): but this is a good thing, because the Brewers <em>are</em> in better shape with Lorenzo Cain and Christian Yelich patrolling the outfield, and they&#8217;re also in better shape with clearer salary arbitration pictures for Corey Knebel, Travis Shaw, and even Jonathan Schoop.</p>
<p>The trouble is, without assuming that the Brewers will allocate full playoff revenue, and an increasing share of overall revenue, to the MLB payroll, the 2018-2019 offseason might look a little boring if the club simply renews each and every one of their arbitration eligible players. Here&#8217;s how this group looks, with Cot&#8217;s Baseball Contracts estimates:</p>
<table border="" width="" cellspacing="0" cellpadding="0">
<tbody>
<tr bgcolor="#EDF1F3">
<th align="center">Player</th>
<th align="center">Estimate ($M)</th>
<th align="center">Arbitration Year</th>
</tr>
<tr>
<td align="center">Schoop Jonathan</td>
<td align="center">$11</td>
<td align="center">A3</td>
</tr>
<tr>
<td align="center">Knebel Corey</td>
<td align="center">$6</td>
<td align="center">A2</td>
</tr>
<tr>
<td align="center">Shaw Travis</td>
<td align="center">$5</td>
<td align="center">A1</td>
</tr>
<tr>
<td align="center">Vogt Stephen</td>
<td align="center">$4</td>
<td align="center">A3</td>
</tr>
<tr>
<td align="center">Nelson Jimmy</td>
<td align="center">$4</td>
<td align="center">A2</td>
</tr>
<tr>
<td align="center">Perez Hernan</td>
<td align="center">$3</td>
<td align="center">A2</td>
</tr>
<tr>
<td align="center">Davies Zach</td>
<td align="center">$3</td>
<td align="center">A1</td>
</tr>
<tr>
<td align="center">Kratz Erik</td>
<td align="center">$2</td>
<td align="center">A3</td>
</tr>
<tr>
<td align="center">Cedeno Xavier</td>
<td align="center">$2</td>
<td align="center">A3</td>
</tr>
<tr>
<td align="center">Santana Domingo</td>
<td align="center">$2</td>
<td align="center">A1</td>
</tr>
<tr>
<td align="center">Pina Manny</td>
<td align="center">$2</td>
<td align="center">A1</td>
</tr>
<tr>
<td align="center">Jennings Dan</td>
<td align="center">$1</td>
<td align="center">A4</td>
</tr>
<tr>
<td align="center">Saladino Tyler</td>
<td align="center">$1</td>
<td align="center">A1</td>
</tr>
<tr>
<td align="center">Total</td>
<td align="center">$44</td>
<td align="center">13 players</td>
</tr>
</tbody>
</table>
<p>Without major revenue growth, and considering a similar distribution of revenue to labor, this is how the Brewers payroll freedom might project:</p>
<table border="" width="" cellspacing="0" cellpadding="0">
<tbody>
<tr bgcolor="#EDF1F3">
<th align="center">Salary (all $M)</th>
<th align="center">2019</th>
<th align="center">2020</th>
<th align="center">2021</th>
<th align="center">2022</th>
<th align="center">2023</th>
</tr>
<tr>
<td align="center"><strong>Guaranteed Contracts</strong></td>
<td align="center"><strong>$66</strong></td>
<td align="center"><strong>$47</strong></td>
<td align="center"><strong>$35</strong></td>
<td align="center"><strong>$19</strong></td>
<td align="center"><strong>$0</strong></td>
</tr>
<tr>
<td align="center">Revenue</td>
<td align="center">$266</td>
<td align="center">$271</td>
<td align="center">$277</td>
<td align="center">$283</td>
<td align="center">$289</td>
</tr>
<tr>
<td align="center">Operating Redistributed</td>
<td align="center">$5</td>
<td align="center">$6</td>
<td align="center">$6</td>
<td align="center">$6</td>
<td align="center">$6</td>
</tr>
<tr>
<td align="center">MLBAM Redistributed</td>
<td align="center">$3</td>
<td align="center">$3</td>
<td align="center">$3</td>
<td align="center">$3</td>
<td align="center">$3</td>
</tr>
<tr bgcolor="#EDF1F3">
<td align="center">Payroll Space</td>
<td align="center">$49</td>
<td align="center">$71</td>
<td align="center">$85</td>
<td align="center">$103</td>
<td align="center">$125</td>
</tr>
<tr>
<td align="center">Maximum Space</td>
<td align="center">$76</td>
<td align="center">$103</td>
<td align="center">$123</td>
<td align="center">$148</td>
<td align="center">$176</td>
</tr>
</tbody>
</table>
<p>It is evident that on the most conservative estimates, the Brewers cannot keep each arbitration eligible player <em>and</em> sign additional impact free agents. This raises questions about how the Brewers will employ trade and non-tender (basically releasing an arbitration-eligible player for free) strategies to maximize space, while also raising questions about how lucrative the playoffs were, where that MLBAM money will kick in, and how the club will (or did) allocate profits from 2016-2017.</p>
<p>For if the most rosy scenario plays out, the Brewers could keep a substantially larger portion of arbitration eligible players, and continue to add impact talent on the open market. Thus, there is room across the roster for GM David Stearns to wheel and deal. This is a great time for counterbuilding, which basically means making trades that run contrary to the assumed roster building strategy of the team. If a rebuilding team is expected to trade MLB salary for prospects, and a win-now trade reverses that by bundling prospects for MLB salary, those positions can be mixed in contrarian fashion to help maximize roster resources. Given that the Brewers have the opportunity to develop numerous players at the MLB level in 2019, some (seemingly) head-scratching trades would be a great way to free up additional salary in order to bolster the prospects with gambles on more proven producers.</p>
<p>Stearns developed a contending club so quickly by trading for MLB assets in his first offseason; now the GM can ironically continue to maintain the health of his MLB roster forecast by shedding some salaries for prospects or depth moves. Given the strengths of the 2018 club, this could be just the strategy necessary to improve around the margins, develop top prospects, and land one big ticket free agent.</p>
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		<title>How the Brewers Are (and Were) Constructed</title>
		<link>http://milwaukee.locals.baseballprospectus.com/2016/11/03/how-the-brewers-are-and-were-constructed/</link>
		<comments>http://milwaukee.locals.baseballprospectus.com/2016/11/03/how-the-brewers-are-and-were-constructed/#comments</comments>
		<pubDate>Thu, 03 Nov 2016 15:32:18 +0000</pubDate>
		<dc:creator><![CDATA[Julien Assouline]]></dc:creator>
				<category><![CDATA[Articles]]></category>
		<category><![CDATA[2016 Brewers analysis]]></category>
		<category><![CDATA[Brewers offseason analysis]]></category>
		<category><![CDATA[Brewers roster construction]]></category>
		<category><![CDATA[GM David Stearns]]></category>
		<category><![CDATA[Hernan Perez]]></category>
		<category><![CDATA[Junior Guerra]]></category>
		<category><![CDATA[Kirk Nieuwenhuis]]></category>

		<guid isPermaLink="false">http://milwaukee.locals.baseballprospectus.com/?p=7264</guid>
		<description><![CDATA[For the past few weeks, our esteemed editor in chief, Nicholas Zettel has been covering a number of trades the Brewers have made over the past year. What Zettel is doing, in part, is looking at how this Brewers team has been constructed. I thought this was an interesting topic, and idea, so decided to [&#8230;]]]></description>
				<content:encoded><![CDATA[<p>For the past few weeks, our esteemed editor in chief, Nicholas Zettel has been covering a number of trades the Brewers have made over the past year. What Zettel is doing, in part, is looking at how this Brewers team has been constructed.</p>
<p>I thought this was an interesting topic, and idea, so decided to tackle it myself, but look at it differently. Zettel is looking at trades, but there are many ways in which players can be acquired.</p>
<p>If we simply look at the 2016 Brewers twelve of the players on that team were acquired through a trade, thirteen were acquired through the draft. In fact, the Brewers got players from many different ways and sources.</p>
<p><a href="http://milwaukee.locals.baseballprospectus.com/wp-content/uploads/sites/6/2016/11/How-were-the-2016-Brewers-Constructed_.png"><img src="http://milwaukee.locals.baseballprospectus.com/wp-content/uploads/sites/6/2016/11/How-were-the-2016-Brewers-Constructed_.png" alt="How were the 2016 Brewers Constructed_" width="650" height="400" class="alignnone size-full wp-image-7266" /></a></p>
<p>I think the most striking part of this graph isn’t that the Brewers mostly constructed their team through the amateur draft, trades, and free agency. These are all common resources for acquiring players. No, the most surprising aspect of this chart is that nine players came from waivers.</p>
<p>Traditionally I don’t, and I think most people don’t, think of teams being constructed through waiver claims. Usually, general managers get touted or criticized for their great trades, their great drafts, or free agent signings.</p>
<p>I mean, just look at Dave Dombrowski. He’s basically made a name for himself through his trades. Other GMs, such as Theo Epstein, get a lot of praise for their draft picks and even their free agent signings. But, you don’t often hear of GMs making shrewd waiver claims. At least, you don’t often hear it in the main stream. But, as the Brewers proved this past offseason, a team can make shrewd moves in the waiver wire, such as claiming Junior Guerra, Hernan Perez, and Kirk Nieuwenhuis, all of whom had an impact on the 2016 roster. Obviously, a number of waiver claims didn’t pan out, and obviously the Brewers were in the perfect position to take chances on these type of players. Therefore, I was interested to see how the Brewers constructed their teams in the past. Did they always consist of these waiver claims, and if not, what were the most common acquisition types?</p>
<p>To do this, I scraped data from <a href="http://www.baseball-reference.com/teams/MIL/2016.shtml">baseball reference</a>. An important note to point out is that this is not players that are acquired yearly. This data is the yearly number of Brewers players on a roster and their transaction type. This is not the yearly transactions. For example, in the first chart, Ryan Braun was on the roster and he was acquired via the amateur draft. He is also counted in 2015, 2014, 2013, and so on as an amateur draft data point. Another example: Hernan Perez signed a minor league contract to remain in Milwaukee for 2016, but he is counted as a waiver claim because that is how the Brewers originally acquired him.</p>
<p>First, let’s look at the overall values since 1970.</p>
<p><a href="http://milwaukee.locals.baseballprospectus.com/wp-content/uploads/sites/6/2016/11/Average-Number-of-Brewers-Players-Acquired-by-Transaction-Type-1970-2016.png"><img src="http://milwaukee.locals.baseballprospectus.com/wp-content/uploads/sites/6/2016/11/Average-Number-of-Brewers-Players-Acquired-by-Transaction-Type-1970-2016.png" alt="Average Number of Brewers Players Acquired by Transaction Type 1970-2016" width="650" height="400" class="alignnone size-full wp-image-7268" /></a></p>
<p>Most Brewers teams are constructed through trades, draft picks, and free agency. That’s not a huge surprise. The biggest difference between this chart, and the last one, however, is the waiver claims. In fact, on average, a Brewers team will usually only have around 1.7 players who were acquired from waivers. That’s a stark difference from the nine players who played for the Brewers in 2016 who came from waiver claims.</p>
<p>Therefore, I decided to look at how this information was trending.</p>
<p><a href="http://milwaukee.locals.baseballprospectus.com/wp-content/uploads/sites/6/2016/11/How-the-Brewers-Are-Creating-Their-Teams-is-Changing.png"><img src="http://milwaukee.locals.baseballprospectus.com/wp-content/uploads/sites/6/2016/11/How-the-Brewers-Are-Creating-Their-Teams-is-Changing.png" alt="How the Brewers Are Creating Their Teams is Changing" width="800" height="500" class="alignnone size-full wp-image-7269" /></a></p>
<p>This explains a lot. In 1970 and 1971, the vast majority of the players on the Brewers roster came from trades. More so than any other transaction type. But, as the franchise grew and changed, so has its ways of creating a team.</p>
<p>In the late 80s, and mid-90s, the draft mostly dominated how the Brewers were created, and free agent signings were also on the rise. Waiver claims, however, barely happened, if at all during those times. Instead, they’ve been more frequent since the start of the 21st century, at least for the Brewers, and there’s been a drastic uptick over the past few years.</p>
<p>I think, in part, this is due to the rebuild, and the new approach of GM David Stearns. Stearns, over the 2015-2016 offseason, made a number of shrewd and calculated player acquisition moves. He focused on getting players that are of very low risk but that could end up being high-reward.</p>
<p>Some of these acquisitions were obviously made through trades and low-risk signings, but a number of them were also made through waiver claims.</p>
<p>But, Stearns has only been in office for one season, and the four categories have been converging on each other for a few years now. Mainly, it seems that the Brewers are becoming more diverse in how they are creating their teams. Not just relying on trades or the draft.</p>
<p>This is important because it means that they are becoming more open and creative in their team constructing.</p>
<p>Building a team, and a good one, is obviously a challenging endeavor. There are many ways to do it, but if a team is only looking at one way of acquiring players, then that can be problematic. It means that you can become too dependent on a specific strategy, and less open to ulterior ways of accumulating good assets. Waiver claims, and other lesser known forms of player acquisition, usually aren’t all that sexy. They are not very popular, and most of the time we don’t even know the players that are being picked. But, these are good low risks to take for teams.</p>
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