Thursday, November 08, 2007

Spend it on what, exactly?

Commenter Pete Toms, who has a great blog of his own, brought up some interesting points about the Devil Rays' situation, particularly in terms of exactly how the Devil Rays are spending their not-hard-earned revenue sharing lucre. He referenced a recent post on the also-excellent The Sports Economist that discussed the absolute abortion that is the current revenue-sharing system in baseball. Essentially, the ownership group for the Devil Rays have pocketed eight digits' worth of other teams' largesse while dropping the team's overall payroll between 2006 and 2007. Correctly, the authors of TSE see this not as a failing of the Devil Rays, per se, but more a failing of the system that attempts to redistribute wealth among the already insanely wealthy.

I'll not cop to economics as a personal area of expertise, but as an avowed libertarian I can confess to an intense loathing of corporate welfare, which is exactly what MLB's revenue-sharing system is. It will be a cold day in hell before you can make me feel bad for the owner(s) of a baseball team, who entered into their situation fully cognizant of the situation before them. In the case of the Devil Rays, they knew that the Trop would be the stadium, the AL East would be the division, and the Tampa area would be that from which they hoped to cull fans. Before the contracts were signed. I feel as bad for the Devil Rays as I do a man who spends his last $5 on a trifecta; you weren't worried about losing money when you had your eyes on the potential windfall, so don't come bitching to me after it doesn't work out.

But here's my question: Why should the Rays spend that money on payroll (which would mean spending it on free agents)? As I've detailed before, most high-priced free agent contracts are a bloodbath for the teams involved, and in today's market high-priced deals are being shuttled toward some patently mediocre players, particularly if they ply their trade with a single limb. The message inherent in revenue sharing is that small-market teams, instead of being prudent, should start dumping money into the same kind of dumb contracts the Yankees have made famous in recent years.

(Aside: I will concede this about payroll restrictions, or a lack thereof: The Yankees have been able to retain their best homegrown players once the arb-eligible/free agent years hit, which is a HUGE advantage. If Carlos Beltran came up with the Yankees instead of the Royals, he would still be employed by his original team today. This is the one area in which big-market teams have a decided advantage over their small-market counterparts. However, this doesn't mean that the Yankees are automatically winners in the game of life, either. First, you have to develop the talent, and then you have to properly assess the value of that talent once it reaches arb-eligible/free agent status. Yes, it's an advantage to have Jeter come through the system and then keep him once the big bucks are his for the taking, but if Jeter came up for the Pirates, a savvy GM could have gotten a king's ransom for him in a trade as well. In fact, it's entirely possible that a team would be better off trading a Jeter when he's approaching free agency than spending the money to keep him, provided the return in a trade is good enough. This is the situation faced by the Padres (Peavy) and Twins (Santana), for instance. While the fans of those respective teams would assuredly like it if management would/could lock each up in long-term deals, it's probably a bad idea for both teams. And not just because they don't have the money. But, I'll leave it there, in an effort to not have a longer aside that the post in which its contained.)

If I'm the owner of the Devil Rays, I would probably do the same thing the non-imaginary ones are doing as we speak. The marginal value of any free agent on the market isn't anywhere close to what would be paid to any of the individual players, particularly when one considers that a long-term contract for a veteran would probably serve to block a top prospect. The Rays are wise to plan for 2009 as the year everything comes together, because by that time they'll be fielding a team that could bring a prospect evaluator to tears, and almost all of those guys will have enough major league experience to justify high expectations. Anything the Rays do between now and then on the free agent market, with the possible exception of locking up Carlos Peña (provided they can do so reasonably, both in terms of dollars and years), is probably going to undermine their potential for success. In the meantime, anyone stupid enough to fork over millions of dollars, without attached strings, deserves to be robbed.

As for Pete's second contention, I will recite it here before dealing with it:

The D Rays, Jays ( woe is me ) & O's are at the biggest competitive disadvantage in MLB, playing nearly 1/4 of their games against the Evil Empires. I am an embittered Jays' fan who thinks it's bullshit.

Pete's is not an uncommon refrain for fans of the lesser-endowed AL East teams, and the last decade has done little to convince anyone that it's anything but unfair. I'm not sure I had pubic hair the last time the Yankees weren't in the playoffs, and the Red Sox aren't far behind. If weren't going to define the term "competitive disadvantage" to mean "constantly has to play two of the best teams in MLB," then the plight of the O's, Jays and Rays surely fits the bill.

However, as far as the Jays and O's go, I've got absolutely zero sympathy (the Rays, as an expansion team, are not really the same as the other two, so we'll leave them out [also, the Rays are going to make the playoffs by 2009, mark my words]).

In the case of the O's, their fate has been sealed by some of the worst management seen in baseball the last decade, in spite of advantages in terms of ballpark, market and payroll that more than half the teams in the majors would offer a metaphorical left nut for. Baltimore spent more than $93 million in 2007 to field a team that would have struggled to place third in any division in baseball, mainly because most of that $93 million went to shitty baseball players. I would compare the O's to the Dodgers if it weren't for the latter's farm system, which ranks as one of the best in baseball (even if the current GM would rather get sodomized than actually clear the way for any of his top prospects). The O's have everything that a team needs to compete for the playoffs annually except a functioning brain in the front office and a non-self-immolating owner.

The Jays are a little bit of a different story, because the SkyDome Rogers Centre is a titanic piece of concrete shit, Torontonians prefer almost anything to baseball, and the currency conversion situation has historically put them at a disadvantage (Canadian currency in, American currency out). HOWEVA, I again place the blame on the front office, which has consistently botched the job when it comes to understanding what needs to be done. The previous Ash regime was a relic of the Gillick years, when the Jays ran up massive debt to buy playoff/WS appearances, and the Riccardi years have been even harder to swallow, particularly when one considers Riccardi's pedigree as a Billy Beane disciple. In fact, the day I renounced my allegiance to the Jays — which will be regained by the team of my youth when Riccardi is fired and Chris Antonetti is hired — was when Riccardi publicly stated that he needed more money to compete with the big boys. No, J.P., what you need is a willingness to not spend money on horrible contracts, like those given to B.J. Ryan, A.J. Burnett, Vernon Wells, John McDonald and now Matt Stairs. The Jays probably could have won as many games last season for $20+ million less, which bothers me more than the fact that they didn't just win more games. The reason Canada's last man standing isn't cracking the top two positions in the AL East anytime soon is because they abandoned what was once one of the best scouting and development programs in baseball and convinced themselves that the Lyle Overbays of the world are the key to success.

I don't mean to paint the situation as one in which perfect management for either the O's or Jays would mean that the Yankees or Red Sox's effect would be negated. As our legal system proves on a regular basis, wealth means you can get away with more mistakes than the common folk, and that's the situation for the current pole sitters. But it would be a better argument for both of the "poorer" teams if they didn't spend so much time shooting themselves in the foot.

And that's all I gots to say about that shit, at least for tonight; I got a Vegas trip to pack for. Thanks to Pete (shout out to Ottawa!) for giving me some good stuff to chew on; everyone should really read his blog, which is much more thoughtful than ours.


Pete Toms said...

Diesel, thanks for the kind words.

Now on to matters' baseball.

I share your dislike of Revenue Sharing not because of political ideology but because I question if it provides us with the highest quality product possible. I'm not really - actually not at all ( anybody heard of Andrew Keen? ) - qualified to make that judgement though. But while we're on the subject, did you see this comment not so long ago by one of The Sports Econmists? "If competitive balance is not necessary for the survival of a sports league, aren’t the rules designed to promote balance just an attempt by owners to take money away from players?"

I agree with you entirely that retaining the elite talent that clubs develop is essential to long term success. The clubs are increasingly coming to the same conclusion and that is the reason there is so little, if any ( although I think Silva is a better pitcher than many credit him ) top shelf pitching talent on the market this offseason. The brilliant Maury Brown is of the same mind. He recently wrote: "...clubs are wrapping up contracts more often now – signing players to extensions, which in turn lowers the number of players in the free agency pool....What has happened over the years is a case of viewing free agency as an inefficient avenue in which to build contenders." I can't find the piece but on the same theme, I'm certain I read recently that clubs spent $470? million ( 400 something ) this season locking up big time potential FA's like Zambrano & Buerhle before they hit the open market. I thought it notable this past Rule IV draft that a number of teams spent amounts equal to the Yanks - further evidence that teams are changing their strategies re. how they spend their money. From Jim Callis @ BA: "The Yankees aggressively signed players in last year's draft, and did so again, spending $7,432,500 in the first 10 rounds. But the Orioles ($7,672,500) and Nationals ($7,619,300) outspent them there, and the Tigers ($7,305,000), Devil Rays ($7,172,000) and Giants ($7,027,000) came close." I'll admit though to not doing my homework vis a vis $$$ being spent on International signings, increasingly important with more of the labor coming from outside the US. I also wonder if the money has finally gotten so stupidly big that agents & players are doling out the "home town discount", signing before testing the open market. I.E. Can the Vernon Wells' of the world command more $$$ as free agents? Maybe, but when the money gets that big, do they care? What did Marvin Miller say? Something along the lines of make them all FA's after every season and their value would diminish, limiting the supply inflates the value. The owners are figuring it out.

I agree again that the Evil Empires don't dominate the AL East solely because of their markets. Obviously, they're superior in player development, Chamberlain, Kennedy, Hughes, Cano, Cabrera / Pedroia, Ellsbury, Papelbon, Lester, Bucholz ( I'm probably missing a few ). The Empires ( the Mets are soon to or maybe already have joined their ranks ) also don't get enough credit for being at the forefront of new ideas in generating $$$. George Steinbrenner was at the front of the RSN curve with YES and John Henry's FSG is proving a big success. Perhaps the Yanks are being forced to focus on player development because luxury taxes are prohibiting them from being as active in the FA market as they have been. Or perhaps Cashman realizes that player development is the key to long term success.

As for the O's, ok I admit it, they have screwed it up in a great market. They've had some recent tough luck developing pitchers ( but get in line ) Loewen, Ray, Penn. But yes, their player development is lacking in development and they learned a very expensive lesson last offseason - middle relief is the most unpredictable commodity in the industry. Camden Yards alone isn't the draw that it once was - the O's cashed in early on the retro ballpark - but Angelos is making a fortune off MASN ( helped greatly by Selig in the Nats territorial dispute ). We'll see what Angelos does with all the loot.

As for the Jays, yes I'm on the record, the Rogers Centre is awful and that ain't changin. The value of the Cdn dollar has been a big problem for a number of seasons but this year the Cdn dollar has surpassed the US dollar in value. ( Not long ago 1 Cdn dollar was worth about 67 cents US ) The Jays for years received a currency equalization subsidy from MLB but that is no longer necessary. Unquestionably this a huge boost to the Jays bottom line and there have been comments in the Toronto media that the Jays should be plowing the windfall into payroll. Off topic but the increase in value of the "loonie" is the principal reason that the salary cap has increased in the NHL. The problem is that the weakest NHL markets, i.e. southern US, are seeing payroll increases ( the cap floor goes up as well ) but their revenues are flat because so little revenue is shared in the NHL because there is no big pot of National TV dough to divvy up. ( But I digress ). I'm also on the record of criticizing Ricciardi's draft record ( it's a sport unto itself amongst Jays' fans ). Initially JP followed the Moneyball script, focusing on college players ( unlike his predecessors Gillick & Ash who had great success drafting high ceiling toolsy high school players ) with little success. Ricciardi has recently deviated from the script and tellingly Travis Snider - a high school pick - is the best Jays prospect in years. As for Gillick racking up big debt during his reign, I haven't read that before. In fact I always thought business was boffo when the Jays were drawing 4 million per year to the Skydome.

I get your point, if the Jays, O's and D Rays are smart enough and lucky enough they can make the playoffs ( and certainly one of them has to eventually ). I'd still rather take my chances as a Jay fan in any other division, particularly in the inferior NL where you can be Central champion with 83 wins, get hot for a month and win the World Series.

M.M. said...

Where are you staying in Vegas? What are you planning on playing?