Rangers are flush with cash, but aren’t wild shoppers
12/15/2013 5:16 PM
12/15/2013 9:04 PM
More than 6 million fans have passed through the turnstiles at Rangers Ballpark the past two years, paying more for their seats, more for their beer and $26 for the infamous Boomstick hot dog.
One of the Texas Rangers’ two principal owners is on the Forbes 400 list, with a net worth closing in on $2 billion.
The other, though not on the list, did spend $1 million on a penny last year. A penny.
The franchise they helped purchase for $593 million in 2010 is now valued $1.01 billion, though one industry evaluator believes the Rangers are worth even more than that.
A shiny new TV contract, valued somewhere in the billions, kicks in after next season.
Yet, the theme last week from the Rangers’ war room at the winter meetings was that Shin-Soo Choo and Nelson Cruz are budget-busters at what they believe their market value is.
General manager Jon Daniels drove home the point Thursday just before leaving the Lake Buena Vista, Fla., saying five times in nine minutes that he doesn’t expect any “major” moves the rest of the off-season.
Something isn’t adding up for many fans, who want to win now and believe spending is the way to get there. Daniels has short-term aspirations, obviously, but he is charged with the task of the Rangers’ long-term well-being, too.
“We added one of the few difference-makers on the market, we were able to add some young major-league-ready talent, and we’ve maintained all of our depth,” Daniels said of the Rangers’ off-season moves to date. “That’s important. You need the depth and athleticism and numbers to win now. That’s not just a long-term thing.”
The Rangers aren’t exactly just getting by financially, as Oakland and Tampa Bay are. The Rangers’ 2014 payroll will likely be around $120 million, on the cusp of the top 10 in the game.
They will pay first baseman Prince Fielder, acquired last month, nearly $20 million a year for the next seven years. Third baseman Adrian Beltre makes $16 million a year. Shortstop Elvis Andrus has one more season before he is paid $15 million a year.
“We’re not complaining about money,” Daniels said.
Ownership has never shied away from expenditures that are deemed necessary, like the $51.7 million posting fee shelled out for Yu Darvish in 2011 and the annual trade-deadline acquisitions.
They also foot the bill for the Rangers’ extravagant spending in Latin America, which includes a complex in the Dominican Republic and a deep team of scouts throughout that region.
Davis and Simpson rely on Daniels and his people to decide when to stretch the budget. Daniels is careful to not get tied down to what might be perceived as a bad contract, like the 10-year, $240 million contract the Angels are paying Albert Pujols.
He’ll be making $30 million at age 42. Choo, if he agrees to the seven-year, $153 million deal he is seeking, will be making $22 million at age 39.
“Part of our job is to seek out the right opportunities,” Daniels said. “If we feel strongly about them, make a business case and a baseball case and go from there. They’ve been overwhelmingly supportive over the years. We’re selective when we make that case.”
Running a team doesn’t just mean putting players on the field or stocking the minor leagues. Upgrades have been made to the Ballpark each of the past four off-seasons, and two baseball sources said that ownership has had to make cash payments to satisfy Major League Baseball’s debt-to-capital ratio.
Annual cash calls have helped finance those expenditures. Davis and Simpson, along with Neil Leibman, have used the cash calls to buy out others in an ownership group that numbered 32 in August 2010 but is under 20 today.
Ownership also picked up $160 million of debt when purchasing the club in 2010.
Davis didn’t become a billionaire by mistake, and Simpson is also a savvy businessman. They want to make money on their investment, as do their partners.
Hence, baseball operations don’t have a blank check.
“We have a budget that we operate on,” Daniels said. “Our ownership has stretched at times in the past. All that being said, we have a budget to work under.”
It takes discipline, Daniels said. The Rangers wanted Mike Napoli to return, but a source said they never made an offer to him after deciding to not give out a significant contract to a one-dimensional player with deteriorating hips and a pile of strikeouts.
Choo and Cruz could find their way onto the Rangers’ roster, but not at their current asking price. The Rangers will almost certainly put up the maximum $20 million posting fee for right-hander Masahiro Tanaka, but are bracing to be outspent when it comes to his contract.
Money is coming next year, with when the 20-year TV deal with Fox Sports kicks in. Some say it’s worth $1.6 billion. Others have said more than $3 billion. No one argues that the Rangers will have more money to play with going forward, perhaps, as a source said, $45 million more per year than the current deal pays them.
But don’t expect Daniels or ownership to go too crazy, though.
“When you invest in the wrong contract, there’s a consequence,” Daniels said. “Every team has a budget. These are businesses. Our owners invest a lot of money into the club, probably above and beyond what our revenues call for. We’re just trying to be responsible about that.”
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