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Is Cardinals ownership cheap?

The Cardinals owner will go where the money is…which just so happens to be the postseason.

Photo by Whitney Curtis/Getty Images

When an ownership group including Bill DeWitt, Jr. purchased the St. Louis Cardinals for $150 million in 1995, the move wasn't universally hailed as a stroke of business shrewdness.

As a St. Louis Post Dispatch article dated January 7, 1996 says:

Is this a good investment? One well-known local businessman and investor tosses out this off-speed projection: "This is not a good, long-term deal." He cited what he considers two big factors working against the Gateway team: Baseball is on a downhill slide, and probably will never fully recover. And the same is true of real estate values in downtown St. Louis.…[Fred Hanser, a member of the new ownership group] said: "I think you could easily say that each member of this group could find a better economic investment than the St. Louis Cardinals.

Fast forward 21 years later to April of 2017, when Forbes estimated the franchise to be worth $1.8 billion, a 1100% return on investment.

In spite of the team statistically being the most successful National League club since the ownership change, DeWitt in particular has been vilified by many fans for caring more about DeWallet than DeWins (please, I beg of you, don't leave this article).

Assessing DeWitt's "cheapness"–or lack thereof–is by nature an imperfect science, as there is no concrete way to label someone as "cheap" or "not cheap". Ultimately, I decided that the best method would be to compare DeWitt's ownership to their 29 peers across Major League Baseball.

The aforementioned Forbes study, which has published annually beginning in 1998, gives us a snapshot of every team's financial state. Teams don't publicly disclose this information, but Forbes' research suffices by putting us in the ballpark of the actual figures. For salary data, I enlisted the help of the invaluable Cot's Baseball Contracts to determine the end of year payroll for every team. My process was simple: I divided the amount of money dedicated to player payroll by the total revenue a team generated.

The points plotted in red represent the Cardinals' numbers for each of the past 10 years; the blue lines are the league average.

Admittedly, this study carries its flaws. Case in point: both trendlines point towards, if anything, owners committing slightly more money to their on-field product in modern times. (This is entirely guesswork, but my theory is that Forbes isn't properly calculating the various sources of revenue that teams profit off, casting a false notion that players are increasingly receiving a larger piece of the pie.) Regardless, the Cardinals don't appear to have a track record of spending significantly less than their competition.

I would be remiss, however, not to address the sudden plummet in payroll-to-revenue ratio following the 2013 season. Even more peculiar is how the Cardinals suddenly jumped from decade-lows to decade-highs in revenue allocated to payroll practically overnight during the 2015-16 offseason.

To understand what exactly happened over the last five years, we need to hop into the time machine and go back to October 2014. The most important thing to know for our purposes is that the Cardinals were raking in cash. Between 2013 and 2015, St. Louis would sell over 10.4 million tickets. Ballpark Village enjoyed its inaugural season in 2014 while MLB Advanced Media was making record payouts to the 30 Major League teams. The Cardinals' raw payroll numbers had remained level (payroll only increased by about $7.8 million between 2011 and 2014) but revenue was spiking like never before.

The Cardinals evidently began spending their newfound money, hiking payroll by 34.4% after 2015 to bring their 2016 mark just below $180 million. So the natural question becomes: Why did the Cardinals wait to start spending?

At the time, the Cardinals possessed a still very productive trio in Yadier Molina, Matt Holliday, and Adam Wainwright. That said, each player had taken a step back from their 2013 performance. As the core who led the club to four consecutive NLCS berths aged deeper into their thirties and the twilights of their respective careers began to approach, it became clear that the team needed to find its next star to supplement the current surrounding talent. The Cardinals had two paths to accomplish this goal:

  1. Develop the next star internally through the farm system
  2. Reach outside of the organization to acquire that star through trade or free agency

Of course, the odds of the first option succeeding changed drastically when Oscar Taveras passed away. While his death had an impact on his loved ones far more heartbreaking than anything having to do with a baseball diamond, the ripple effect of that tragedy on the Cardinals as an organization can't go unstated in this article.

Mozeliak and Co. reacted quickly, swinging a deal with the Braves for Jason Heyward, who, by all accounts, was a legitimate six-win player for St. Louis. A byproduct of the Heyward acquisition was that it essentially bought the Cardinals another year to try to develop the next homegrown Pujols or Molina.

That still doesn't fully answer our original question, though. Why did the Cardinals watch from the sidelines as Jon Lester signed with the Cubs and the Nationals snagged Max Scherzer?

The answer lies in the ultimate goal of a front office: to win the World Series. But first, you need to reach the postseason to have a chance to win the championship. As you have probably heard myself along with other writers say countless times before, the playoffs are inherently random. When the Athletics pulled off a blockbuster trade for Jason Hammel and Jeff Samardzija–both of whom were pitching very well–in 2015, their odds of winning it all increased by...less than one percent. Why? Oakland already had a 98% chancing of advancing to the playoffs pre-megadeal.

More importantly for owners, the sole act of reaching the postseason pays enormous financial dividends. In a study conducted by The Fields of Green, a sports blog run by the University of Southern California, it was determined that two MLB teams with identical regular season records would have revenues differing by about 25% if one made the playoffs and the other missed. The bottom line is that owners will reap all sorts of rewards if they can add that extra win or two that nudges them into the playoffs. After that, there isn't much financial incentive to break the bank.

With Heyward onboard, FanGraphs placed the Cardinals' preseason playoff odds at 71.1%, the third highest in all of baseball. Meanwhile, the Pirates were the only other team in the NL Central to enter 2015 with a postseason probability of at least 45%. From a financial perspective, DeWitt was comfortably positioned to cash out on another trip to the playoffs. Sure enough, the Cardinals tallied 100 wins and their third division crown in as many years.

The outlook on the following season, however, was a bit more murky. The declines of Molina, Holliday, and Wainwright were only accelerated by injuries while key players like Heyward and John Lackey were set to hit free agency.

That's when the Cardinals finally decided to open up the vaults.

St. Louis reportedly offered David Price a $190 million contract; Heyward a deal rumored to be around $200 million. The Cardinals failed to close either bidding war, and the rest is history. Needless to say, their plan to land a star who would lead the club back to the postseason backfired when they struck out on both free agents.

That leaves two reasonable criticisms of ownership for allowing to Cardinals to miss the playoffs in 2016 and 2017:

  1. It wouldn’t have mattered that the Cardinals lost out on Heyward and Price if they hadn’t wasted a golden opportunity in a player like Scherzer the winter before.
  2. It's true that the Cardinals did spend the money they had anticipated giving to Heyward or Price when they redistributed it among players including Mike Leake, Dexter Fowler, and Brett Cecil. They were hoping that these marginal upgrades would push them through and into the postseason, but that obviously hasn’t been the case.

Both lines of thought, especially the former, illustrate what appears to be the DeWitt doctrine of recent years: only spend big when you have a borderline playoff team that stands to gain revenue-wise from making such a move.

Considering how wildly unpredictable a short playoff series is, the effects of this ownership approach on a team's championship odds are only significant with, ironically enough, fringe playoff clubs. Take the 2016 Cardinals, who fell just one win shy of the postseason. Had complacency not steered St. Louis away from Lester and Scherzer in the 2014-15 offseason, it becomes virtually impossible to envision that team on the outside looking in.

When a contending team does consider its playoff hopes to be in jeopardy but for whatever reason comes up short in its attempts to land a Heyward or Price (or even a Giancarlo Stanton), it can scramble to redirect that money towards a few secondary pieces. While these moves may be perfectly fine in a vacuum, they can easily lead a team down the path of blah blah blah...a need to consolidate assets...the same old spiel we've been reciting for the past few years now.

That takes us back to the original question that kickstarted this entire article: Is Bill DeWitt, Jr. cheap? As much as I would like to report back with a clear-cut, black and white answer, the issue at hand isn’t quite that simple.

On the one hand, Bill DeWitt, Jr. and fans are both motivated to win and Cardinals ownership is committed to fielding a competitive team year in and year out. On the other hand, it is impossible to ignore the financial motivations behind winning. In the end, it doesn’t matter as long as the Cardinals are winning, and that’s been the real problem the last two seasons despite the increases in spending.