The Cleveland Indians and the Burden of Financial Proof

Next week, the Dolan family, owners of the Cleveland Indians, are being honored with a lifetime achievement award at the Greater Cleveland Sports Awards. The criteria for determining the winner of that particular prize is vague; it usually goes to a retired player. The Dolans are the only ownership group to have won it.

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The Cincinnati Reds are a proud franchise in the midst of a tough run. A small market team in one of the league’s smallest cities, they’ve posted a losing record in each of the past six years. They haven’t won a playoff series in 30. TV ratings are solid — nothing attracts more eyeballs on a summer night in Cincinnati than Reds baseball — but fans haven’t had much to cheer lately. Franchise icon Joey Votto appears to be playing out the string. The Reds, even in a mediocre division, were buried in fourth place last season.

The Cleveland Indians are also a proud franchise, and they’re on a splendid run. They too are a small market team in one of the league’s smallest cities. But they’ve been plucky. The Tribe have notched seven consecutive winning seasons, and were a game away from a championship back in 2016. TV ratings are robust, the second-highest in all of baseball. Promising young players line the roster and shortstop Francisco Lindor is one of the game’s precious few superstars. The Indians missed the playoffs last season, but were relevant into the season’s final week and entered the winter with plenty of talent on hand.

So far this winter, Cincinnati has spent $100 million on Mike Moustakas, Wade Miley, and Shogo Akiyama. Cleveland has spent less than $10 million and dealt Corey Kluber for a reliever and an extra outfielder.

Cincinnati’s side is easy enough to explain. You can quibble with the money they’ve spent here and there — $64 million for the early-30s, second baseman version of Moustakas is something no one saw coming four months ago — but this is what ambition looks like. In a division seemingly up for grabs, the Reds are betting that their decent third order metrics, in-season upgrades from last year, and free agent help this winter can push them into October. It’s a daring offseason from a club that has traditionally played it safe, and it’s emblematic of the moves that have made this free agency period so much more interesting and enjoyable than the last two.

The Reds make a useful foil for their Ohio neighbor. At times, it seems as if the Indians are run by a real life Rachel Phelps. The team’s tepid recruitment cycle didn’t come out of nowhere, as the front office publicly mulled moving star players last winter as well. Kluber and Trevor Bauer were on the block, and it wasn’t until spring training that Cleveland finally confirmed they wouldn’t deal their aces.

Bauer and Kluber are gone now, but that hasn’t slowed the rumors surrounding the team’s star players. Lindor has clearly been shopped, with a new rumor emerging every other week. Grim as it is — it’s so hard and so rare to develop a Francisco Lindor — fans were warned. When asked about Lindor’s future with the club, Paul Dolan told everyone to enjoy him while they can: “We control him for three more years. Enjoy him and then we’ll see what happens.”

There’s at least an argument to be made about moving Lindor. A trade package for a player of his caliber would be massive, and with only two years left before he hits free agency, Cleveland is approaching a point where the potential returns will dwindle substantially by the month. Should they start slowly, a trade makes competitive sense.

But the logic of trading stars right as they’re about to get expensive seemingly knows no bounds. To wit, if there’s a painful argument to be made for dealing Lindor, then the same must be true for Mike Clevinger. Rumors should always be taken with a pinch of salt, but it’s been surreal to hear his name included in trade discussions at all. He’s at least a No. 2 starter, a 4.5 WAR pitcher in 125 innings last year, and a guy who has demonstrated he can work deep in games. He’s still young too, just now reaching arbitration. In most orgs, he’d be a building block, not on the block. But here we are.

At best there’s a cynical sort of logic at play: From coaxing a Cy Young caliber season out of Bauer to developing Shane Bieber and Clevinger into far better pitchers than anyone saw coming, the Indians have proven time and again that they can spin straw into gold on the mound. If this is endlessly repeatable, the thinking goes, isn’t there some value in shipping established arms for steady bats or enticing prospects?

Perhaps you can argue the case. But there’s also plenty of value in trying to win the AL Central. That division, even with Minnesota and a revamped Chicago White Sox to contend with, figures to be the most winnable division in the American League. Remember, the Indians won 93 games last year and return most of their best players; this was a team positioned to compete. There’s no competitive reason not to spend now.

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When you have a roster on the cusp of making the playoffs, particularly if you’re a small market team that traditionally wins and loses in cycles, you’re generally in buy-now mode. The only way to justify a different posture would be if you’re actually losing money, or if you’re at a grave risk of doing so. (The idea that billionaire owners shouldn’t mind a dip into the red for the sake of the civic treasures they steward, particularly given the astronomical values they stand to recoup if they ever sell, is a compelling one to me personally, but let’s table that for now.)

This is where matters get a little more complicated. We don’t actually know the financial state of the Indians. We don’t know how much money they’re making, what the true value of the franchise is, or whether extraneous variables are dictating how the baseball team is run. We do have a few tools that allow us to take some guesses, though.

First, public comments from ownership make it sound like the team is broke. “We lose money almost every year, and we’ve lost a lot the last few years,” Dolan said in a conversation with MLB.com’s team reporter Anthony Castrovince last spring. As often happens with Dolan, the conversation swiftly turned to market size: “It’s a larger community issue about population growth and economics. Our fans are just as passionate as fans elsewhere; there just aren’t as many of them. It’s the reality of what’s happened to this community over the last 20 years.”

It’s certainly true that Cleveland is a smaller market than New York and Houston. But it’s also a healthy franchise with plenty going for it right now. Consider, for example, the trajectory of the club’s attendance, per Baseball-Reference:

Cleveland Attendance
Year Fans Rank (AL)
2015 1,388,905 14
2016 1,591,667 13
2017 2,048,138 11
2018 1,926,701 9
2019 1,738,642 9

One wonders whether an underwhelming offseason, after a quick playoff three-and-out, hurt Cleveland at the gate last season. It certainly didn’t affect the team’s TV viewership:

Cleveland TV Ratings
Year TV Rating Rank (MLB)
2015 3.93 14
2016 6.53 5
2017 8.33 1
2018 6.43 3
2019 6.55 2

Those are excellent ratings, clearly. The Indians don’t have the most lucrative TV deal in the game, but their current contract runs just three more seasons, and with these numbers, they should do very well in their upcoming negotiations. But while attendance and TV ratings are up, payroll is down. Way down:

Cleveland Opening Day Payroll
Year Payroll
2015 $87,997,101
2016 $96,304,400
2017 $124,116,166
2018 $134,851,565
2019 $119,575,032
2020 $89,966,666

There’s still time to add to that 2020 figure, of course. But given the lack of noise from Cleveland this winter, and the relative dearth of available talent, it’s hard to imagine the Indians entering the year with a payroll anywhere near what they’ve run in recent seasons.

The consequences of that are very real. The club’s main competitors, the Minnesota Twins, won 101 games last year. Besides Kyle Gibson, they’re bringing just about every contributor back again in 2020. They’ve also added, first in the form of nifty low-dollar deals with Rich Hill and Homer Bailey. And then, earlier this week, they dropped a bigger hammer, signing Josh Donaldson, the best remaining player on the market, to a four-year contract to play third base and anchor the team’s already formidable lineup. Needless to say, the Twins are now heavy favorites to win the Central this year.

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Without knowing exactly why Cleveland’s payroll is declining so precipitously, it’s hard to justify such a substantial cut, particularly given the advantages revenue sharing provides for the comparatively low-revenue clubs. Forty-eight percent of all local revenues are shared equally among the league’s teams, meaning that everyone gets 3.3% of those funds. In 2018, that meant each team took home nearly $120 million, just from that revenue stream (along with another $91 million in national revenues). Those numbers presumably went up this year, as MLB hauled in a record $11 billion in revenue in 2019.

Again, we don’t know what Cleveland’s financial situation is. The Indians aren’t the Green Bay Packers, so that information isn’t shared publicly. It’s possible that the team is in dire straits financially.

But comments about market size just don’t resonate in this environment. Revenues throughout the league are sky high. Attendance in Cleveland is robust, and even better on TV. Revenue sharing ensures that the Indians get a more than proportional share of the league’s incoming cash.

And it’s not like the big market teams have a monopoly on lucrative free agent signings, which shouldn’t be a surprise either, given the aforementioned revenue and how it’s distributed. Take San Diego, which found $300 million under the couch last winter for Manny Machado, just a year after forking over nearly $150 million to Eric Hosmer. Look north to Minneapolis, where the ink isn’t yet dry on Donaldson’s $92 million deal.

Or most damningly, look south, where the Reds ran a payroll on par with Cleveland’s last season and are goosing it further in 2020. If Cincinnati, with its small metro population and mediocre attendance, can justify spending more on the big league club, it’s hard to argue why a comparatively successful franchise with the same geographic and economic constraints can’t splurge as a talented roster nears the end of its contention cycle. And if it can’t, the onus should be on Cleveland’s ownership to say why they can’t or won’t spend like their southern neighbor — and to back their stance with concrete details instead of vague references to market size.

The Dolans owe the fans at least that much. This is a franchise with one of the game’s best and brightest front offices, a veritable player development factory that churns out a new star seemingly every year. And those players are fun too: Who doesn’t like watching Lindor and José Ramírez smile after a big homer, or Clevinger slapping his glove when he rings up a big strikeout?

The second worst thing a baseball owner can do is to squander a good team; the worst is to do so without even persuasively saying why. It’s just not the kind of thing lifetime achievers do.

We hoped you liked reading The Cleveland Indians and the Burden of Financial Proof by Brendan Gawlowski!

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Metsox
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Metsox

Great piece.