What is particularly interesting about the Brewers’ overall franchise valuation leap, which sees the club crack the $1 billion mark, is that Forbes viewed the club as one of the most dramatic one-year franchise value changes in MLB:

The progression of estimated operating income over the last four years appears to be consistent with Forbes‘ assessment of the Brewers as one of the largest growing franchises in the MLB:

Additionally, Rob Mains scrutinized the Forbes analysis at Baseball Prospectus, adding long-term analytics such as Compound Average Growth Rate. In Mains’s estimation, the Brewers leap from their standing as a bottom third organization (in terms of overall franchise value) into the solid middle tier of the league in terms of their consistent annual return. Mains estimates that Attanasio’s group could have spent approximately $16 million in additional revenue each year of ownership and still maintained an 8 percent return on investment. Coming from a 1,055-1,064 (.498) tenure as owner one wonders whether $224 million could have found a useful place in Brewers blue.

Rebuilding as Capital Expansion
While most Brewers fans view the rebuilding efforts of the club as a baseball operation, leaving debates to the details of whether or not the club should have “tanked” or whether they went far enough in stripping down the MLB roster, the rebuilding efforts can also be viewed as a capital expansion for the club. Witness the Miller Park renovations entering 2017, the 2017 purchase of the Carolina Mudcats (and alleged rumors about further minor league ownership talks), and the upgrade of their Arizona facilities as three key examples of capital expansion for the ownership group. What is most interesting about these purchases and renovations is that they need not represent uses of the operating revenue listed above; through the magic of debt finance, the Brewers can leverage their position of financial strength and arrange partnerships or loans (or both) that allow them to continue their stream of fantastic revenue flows and increase those flows (by adding minor league teams, improved facilities, and better concessions at Miller Park).

It is worth questioning how Forbes considered these elements of the club in assessing franchise value. Given the Brewers’ control of the Carolina Mudcats (and presumably more routes to depreciation and other financial benefits) and additional streams of revenue in Arizona and Milwaukee alike, the growth figures already exhibited by the club could be on the “low end” of the club’s valuation. Would anyone be surprised if Mark Attanasio and his ownership group sold the Brewers for $1.3 billion or more? The Miami Marlins were able to fetch a 28 percent increase over their Forbes valuation in an awful financial situation, which leaves one wonder whether even a $1.3 billion price is low for the Brewers.

The rebuild is an unmitigated success for Mark Attanasio’s ownership group. Since GM David Stearns did go quite far in stripping the club’s roster, the Brewers have opened a five year contention window with precious few guaranteed contracts on the books. According to Cot’s Contracts, the highest collection of guaranteed contracts that Milwaukee is obligated to pay from 2019-2023 is around $66 million (entering next season). Granted, a set of contract extensions (10 years / $200 million for Orlando Arcia, please!) signed during the 2018 season could increase the long-term contractual burden for Milwaukee, but the point is, it is not a necessity. Stearns has shown an ability to shrewdly acquire low cost talent (Manny Pina, Jonathan Villar, Keon Broxton, Oliver Drake, Junior Guerra, even [arguably] Chase Anderson), and a preference for turning “big” money into smaller money even when it’s not necessary to improve the club (witness the Jett Bandy for Martin Maldonado trade). It would be interesting to know the extent to which Attanasio and Stearns discuss the financials of the team; one wonders whether Stearns is an explicit member of the Attanasio ownership expansion efforts, or an unwitting participant (in which case I certainly hope Stearns asks for his fair cut, soon). Perhaps the former case explains why Stearns’s contract details were never released.

Where does Attanasio go from here? It is difficult to argue that Attanasio needs to spend simply for the sake of spending. For one, even in this offseason’s depressed market, there were some highly praised players that signed poor contracts (see Lance Lynn, whose $19 million three-year surplus value turned into a one-year, $12 million contract, or Alex Cobb, who spun $14 million surplus value into a $57 million contract). It is difficult to argue that either pitcher would have markedly improved the Brewers for their given prices. Contrary to popular belief, both are bad contracts. In terms of the big contracts handed to Yu Darvish and Jake Arrieta, one can question their strengths, but it cannot be argued that the Brewers did not have room to sign either ace; Milwaukee’s opening day payroll of $91 million is currently operating at approximately 75 percent of their realistic payroll ceiling. Of course, the Brewers ownership group has no mandate to spend money on the field, certainly not under the Manfred regime.

Additionally, there’s a legitimate sense that so long as the MLB operates without true revenue sharing across markets (a la the National Football League), a club like Milwaukee is arguably better off with a flexible payroll. Given that even the Brewers’ strongest realistic 2018 payroll was two or three elite contracts below the MLB luxury tax threshold, there is no way that Milwaukee can seriously maintain a set of high roller commitments like their closest division rival to the south. In fact, if the Brewers maxed out their realistic payroll between $115 to $120 million in 2018, twenty MLB teams would still have higher opening day payrolls; adding in MLB Advanced Media Revenue and assuming a wild $140 to $150 million figure would barely crack the top ten. The reality is that anyone complaining that Brewers ownership is uncommitted to winning because of their low payroll would have the same material facts even if the Brewers paid their highest realistic payroll entering the season.

In a strange way, $91 million feels just right for this club, and not simply because that figure represents a 15 percent increase over the 2017 year-end payroll.

The Brewers are stuck in a strange place as an organization. Financially, Milwaukee is as solvent and successful as ever, positioning the team as a true “grower” within the MLB. Yet, even given the robust MLB revenue landscape, the Brewers are working with relative scraps. Still, it is difficult to see the club undergo a rebuilding process and endure losing seasons while racking up fantastic operating revenue positions, expanding capital spending, and continuing to spend below their most realistic payroll ceiling. There is no happy middle ground here for the Brewers: they scrapped an MLB roster to shift labor costs away from the big league roster and toward the minor league rosters, which also effectively drained revenue from the players and tilted it toward ownership. But, that’s what ownership does, and even within this environment, Attanasio cannot claim to have a *rich* club. One can only hope that this swirling set of circumstances for the small-but-growing franchise corresponds with winning on the field.

Photo Credit: Benny Sieu, USA Today Sports Images

Disciples of Uecker || Top 50 Prospects: Advanced Arms (Dec. 15, 2015)

Nicholas Zettel (@SpectiveWax), a frequent flier around these parts, brings us the scouting reports for some of the deeper cuts on the Brewers top pitching prospects list in the high minors. Of particular note is Josh Hader, who was really turned heads after being acquired from Houston in the Carlos Gomez/Mike Fiers trade in July. The southpaw had a 2.79 ERA after moving to the Brewers’ organization, striking out 32.9 percent of the batters he faced. He particularly shined at the Arizona Fall League, allowing just a single run in 16 innings, and he could turn out to be quite the steal for Milwaukee.

MLB Daily Dish || Brewers owner Mark Attanasio writes open letter to fans  (Dec. 17, 2015)

Our own Michael Bradburn (@MWBII), here writing with SB Nation’s MLB Daily Dish, talks a bit about the open letter Mark Attanasio wrote Brewers fans this week. Of interest is Attanasio publicly acknowledging the rebuild, something that I don’t believe he’s done previously and is generally not done by teams, especially owners. There has always been a sense among the Brewers blogoshpere that Attanasio would be unwilling to endure a full rebuild, which might hamper his new general manager’s attempts to steer the ballclub in his chosen direction. At least for the time being, however, it appears that David Stearns has full control of the ship.

Wisconsin Timber Rattlers || Frosty Microbrews: A lot of baseball in Erickson’s life (Dec. 16, 2015)

Now writing with the Brewers’ Low-A affiliate’s official website, Kyle Lobner (@BrewFrostyMug) delivers the final piece in a four-part series about the past and future Timber Rattlers who participated in the Instructional League camp this fall. This one focuses on T-Rats manager Matt Erickson, who has been Wisconsin’s manager for five years. Players covered in the series include intriguing prospects Trent Clark, Jake Gatewood and Malik Collymore. Links to those additional pieces can be found within Kyle’s piece linked to above.

Brew Crew Ball || Brewers Free Agent Targets: Justin Morneau (Dec. 17, 2015)

Myself and the rest of Brew Crew Ball have been covering a multitude of veteran first-base options, an area of need that Stearns has specifically addressed. Now, in the wake of the surprising trade of Rogers, it seems a near certainty that the Brewers will make a move to sign someone to cover first base. The idea of Will Middlebrooks playing 140 games at first isn’t overly appetizing, after all. With the club having seemingly abandoned the tried-and-false “just stick bad shortstops over there” technique, Kyle Lesniewski (@brewerfan28) explored a very interesting option this week in former Twin, Pirate, and Rockie Justin Morneau. The soon-to-be 35-year-old, who has had major struggles staying on the field the past couple of seasons, could present the Brewers with the biggest high-risk, high-reward option.

But the Brewers do not necessarily operate on a small-market scale. Their television revenue and market size suggest that they should be in the same payroll range as the Rays, Pirates, and Padres. Each of those three teams plays in smaller markets, with poor local television deals and carrying small payrolls. However, the Brewers—despite all the negatives mentioned above—have worked in an entirely different manner.

From 2008 (the organization’s first 90-win season since 1992) until 2014, Milwaukee ranked somewhere between thirteenth and eighteenth in annual payroll. For comparison, similarly-sized markets such as Kansas City (31st in American media-market size) and San Diego (28th) came nowhere close to such middle-of-the-pack consistency. The Royals have ranked as high as 18th just once since 2000 (the earliest for which Cot’s Contracts has records), and the Padres have been no higher than 23rd since 2006.

This higher payroll has not been accompanied by an increase in revenue. Their broadcast deal is one of baseball’s smallest, and since it is signed through 2020, there is no particular external reason they should be able to spend so much more on players than teams of a similar stature.

There is, though, a clear internal explanation. Owner Mark Attanasio has shown a remarkable willingness to spend money in situations that other owners will not, and this has been a huge boon to the Brewers. He shelled out the money to sign Ryan Braun to a massive extension early in the 2011 season that was, at the time, the second-largest contract ever given to an outfielder, he spent sizeable chunks of money on veteran free agents such as Jeff Suppan and Kyle Lohse, and he took on significant short-term payroll when trading for CC Sabathia and Zack Greinke.

Of course, not all of his acquisitions have worked out. Some, like Sabathia, were unquestioned successes. Others, like Matt Garza, have been less successful. However, it seems unfair to pin those failings on Attanasio despite the fact that he is undeniably involved and active. He has avoided making the same mistakes as other owners who are now seen as meddlers—for instance, he does not have a reputation for going over his general manager’s head to sign overpriced veterans. Instead, he has made his resources available to the front office to use as they see fit.

Attanasio himself has talked about his spending philosophy. And while it would be foolish to take every owner’s word as a gospel truth, Attanasio has supported his words with his actions, which leads me to believe that his quotes have some value.

His most interesting comments have been about his team’s lack of budget. In two different 2014 interviews—with Fox’s Ken Rosenthal and Fox Sports Wisconsin’s Andrew Gruman—Attanasio explained how his ownership style has transformed over time from having a very strict budget to allowing for more flexibility for unplanned adjustments necessary to make a playoff push. This has undoubtedly helped the Brewers. The acquisition of Zack Greinke prior to the 2011 season, for example, helped push the team to the NLCS that same year.

Attanasio’s comments do have a common thread—he repeatedly speaks about his team as an investment and as an investment opportunity. He is therefore unlikely to act the same way Mike Ilitch of Detroit does and pour unseemly amounts of money into his team. Instead, he will spend when he deems it wise. But, unlike many of the other small market owners, he has in fact shown a willingness to spend. The Brewers are in a significantly better place than many of their counterparts simply because of Attanasio. They cannot carry the $250 million payroll of the Dodgers and Yankees, but the Brewers’ owner has shown a clear willingness to reach the middle of the pack. This will serve Milwaukee well in the future, when their young talent reaches the big leagues and they need to sign additional players to augment their roster.