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Article: MLB Shift Driving Market Realities

major league baseball yu darvish jake arrieta jd martinez eric hosmer
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#41 rdehring

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Posted 03 February 2018 - 11:59 PM

Great article Ted.And even better that front offices are beginning to manage teams like a business.Way too many contracts thrown around to players who don't perform well for significant parts of long-term deals.


#42 Ted Schwerzler

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Posted 04 February 2018 - 12:49 AM

Thanks for all the responses, I think it’s genuinely an interesting talking point. One thing I do want to address regarding a few comments. If you’re suggesting it’s unfair for players to have demands, I can’t agree. Again, they’re millionaires taking billionaires money. Sure, in comparison to our norms, you’ll never be able to wrap your head around it. From a basic economic structure though, that argument is rather baseless. Players deserve to be paid, regardless of how lopsided it looks in regards to societal norms.
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#43 Jham

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Posted 04 February 2018 - 12:57 AM

 

1. Darvish is not an ace. He’s good, but not an ace.
2. The solution to even the imbalanced split between billionaire owners and millionaire players should not be for teams to sign more ridiculous contracts. The solution should be for less money to go from non-millionaire fans to the sport. In other words, cut costs - less public financing, cheaper tickets, cheaper “authentic” jerseys, cheaper beer, etc. I am a political centrist who feels that the ridiculous thing isn’t the lack of nine figure contracts for mediocre players, but that the ridiculous thing is how much money comes out of fans’ pockets to pay for those contracts and the owners’ profits.

This all sounds great, but voluntarily reducing revenue will ultimately destroy the game.You'll attract worse owners.Teams will not have incentive to build beautiful ballparks, provide world class entertainment, or provide safe experiences for players or fans for that matter.  

Ironically, the issue we're talking about is one predicted by evil empire emperor himself, George Steinbrener.When the Twins were being considered for contraction, revenue sharing was being discussed.Steinbrener was furious, and called out the Twins ownership specifically.His issue wasn't even that he'd have to pay money to his competitors so they could sign away his players through luxury tax and revenue sharing.Even he could see that a level playing field would be beneficial to the game.His anger arose from the fact that he would have to pay money to owners who would NOT be required to invest back into their team and improve the balance in the league.In short, the Polads were pocketing the revenue sharing money.Same as they pocket the added profits they promised they'd reinvest from increased team and stadium revenue.

The market between player and owner will balance itself out.The problem is that the market at the ownership level is incredibly slow to react because there is almost no competition.No one is that rich. Public ownership is an idea.Potentially, a team could operate at break even or even at a deficit as long as shareholders allowed.This would force other ownership to have to spend in order to compete.The problem is, that human nature takes over.The desire to make a profit will still be there.Let's say you bought a $5,000 share, and at the end of the season, you could have a $6,000 share plus a $250 dividend, or have your share go down in value (you paid for the team based on profitability, and through payroll, you've made it less profitable) and sign more players/pay your farm system better, etc.Suddenly, you're no better than the Polads.

The other option to achieve your goal of lower fan prices is to expand. You'll spread demand by increasing supply.But that's just another word for watered down.We see that even with implementation of a salary cap.You have no super teams in the NFL.Some might say the Patriots disprove that theory.I disagree.I think the Patriots have taken advantage of the watered down league. Ditto the Cavs and Warriors in the NBA.If players take pay cuts to play for one team, no one can break the bank to compete with them.It's not allowed.We could have 60 MLB teams, and we'd have a lot lower ticket and beer prices.Player salaries would come down.Billionaires would dilute their profits.It may be easier for teams to compete.You'd probably only need 2 really good pitchers and a hand full of average roll players.However, how much of a decline in overall product will people be willing to accept before leaving the sport?If allowed the market would adjust, but not for maximum entertainment value, but rather maximum profitability. 

But since the league can't feasibly grow and shrink with every market change, we may have to just stomach some market inefficiency.In this case, lack of reinvestment by ownership and wage disparity between players (brought about by the artificially low supply of teams and major league roster spots).

I'd support some form of revenue sharing and luxury tax over a hard cap, but teams would be required to meet a spending threshold in order to obtain funds.I would also make players arbitration eligible immediately.Why fight paying players what they're worth?It's the 6 years of team control that is valuable.This should combat wage disparity.Tanking would be less advantageous.FA contracts would be balanced by lower payroll pools and a larger FA pool (teams offering FA rather than going to arb) but also by the fact that FA would be relatively more valuable because of larger buyer pools and internal options having less payroll advantage.You'd get truer values for both FA and for younger players.  

Finally, I'd give teams and players the option of buying out arb years while players are in the farm system.IE, young players often need more money when they're getting started.Then have more money than they need once established.If you want 3 years of league min. salary, with no arb options (current system) you have to buy those years out before the players debuts.  
 

Edited by Jham, 04 February 2018 - 01:00 AM.

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#44 Vanimal46

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Posted 04 February 2018 - 12:59 AM

It's unfortunate. Both sides need to give. And to truly fix it, the "give" needs to be radical. Much like many of you have suggested. If anyone has been part of negotiations, you know that when you lose something you value, it's rare you get it back in a contract again. I agree with so many great points everyone is making, but I smell a strike because I don't think the owners or the players have the balls to radicalize the system. It's waaaaaaaaaaayyyyy to lucrative for the owners right now. They have all the money, and they'll hold much of the power. The players union better get creative.


Yep, something radical needs to happen. Otherwise these conversations will be common occurrence during the winter.

Scott Boras would be a great face for the MLBPA. A hard nosed negotiator with decades of experience dealing with owners. That'd be a creative solution if you can convince him to leave his lucrative paying job.
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#45 Blackjack

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Posted 04 February 2018 - 05:42 AM

 

Jealous much?I'm guessing you want to be paid what you're worth.

 

Not really, I already have a new Silverado but I know a lot of people that will never be able to get a new truck and when i hear about these millionaires whining about not getting a few extra million, I'm not sympathetic. 

 

Go ahead and go on strike, see how man 'jealous' fans really are sympathetic to millionaire players squabbling with billionaire owners.


#46 Mr. Brooks

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Posted 04 February 2018 - 06:23 AM

Not really, I already have a new Silverado but I know a lot of people that will never be able to get a new truck and when i hear about these millionaires whining about not getting a few extra million, I'm not sympathetic.

Go ahead and go on strike, see how man 'jealous' fans really are sympathetic to millionaire players squabbling with billionaire owners.


Couldn't it just as easily be construed as billionaire owners whining that their employees want more of their billions?

It's all relative. People making minimum wage mopping the floor at burger king, driving a 20 year old beater might say the same thing about you "whining" about the price of a vehicle they could never afford.
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#47 NCtwinsfan

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Posted 04 February 2018 - 06:40 AM

If I am going to be ok with players demanding to get their maximum market value, I think I ought to be ok with owners also trying to make as much money as possible. Most people seem to be out to make as much money as possible, and have that right in our society today. To me it should not matter if it is the on field product, or the owner/management behind the scenes. Musicians and actors need producers to get paid, athletes need owners to get paid. I don't see it as the owners making money off of players, it is the owners making money from the fans, and giving a portion of that to the players. Fans make the owners rich based on how much they are willing to spend.

 

I get that owners are the ones making the most money, they often seem distant and cold, and don't really seem to do much beyond being professionally wealthy, and it is the actors, singers, and athletes who are the face of our entertainment, and the ones we root for. But that is how our system works, and fans are the ones who give their money for entertainment. And we give that money to ownership. It seems to me in my simple view of things, it isthe fan's money making owners very wealthy, who in turn are making the athletes very wealthy. I don't particularly care for the system, I don't like paying $200 for a family to go to a game, $12 for a beer, and $100 for a shirt with another persons name on it, and so I don't. (I listen to the radio, or watch the games on MLB.TV with the free subscription my mobile carrier gives me - advertisers paying on my behalf) But if I am willing to do that, and if I think players should be free to seek maximum dollars, I don't see why owners should not be allowed to as well.

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#48 twinssporto

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Posted 04 February 2018 - 07:03 AM

 

It's easy to gripe about how much the players make but there's no reason the owners should get a huge payoff either. Nobody complains how much money Tom Hanks or Paul McCartney has made and the players are entertainers just like them. The reality is that we fans contribute huge sums to the sport and the players are the reason we do that. Hence, the players should get most of the dough.

If you follow that logic all the way through then let the players pool their money together and buy out all the owners.  Now the ballplayers own the teams.  Not likely to happen...

On a long enough timeline the survival rate for everyone drops to zero.


#49 beckmt

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Posted 04 February 2018 - 07:19 AM

 

The trouble with front offices now getting "sensible" about the returns on free agent contracts is it takes money out of the overpaid end of the system that won't go back into the underpaid end of the system. If this is going to continue, players need to reach free agency quicker so their peak seasons earn them more equitable pay.

Then you might as well go back to 16 major league teams, most of the other 14 will be no more than farm systems most years.

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#50 Mr. Brooks

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Posted 04 February 2018 - 07:21 AM

If I am going to be ok with players demanding to get their maximum market value, I think I ought to be ok with owners also trying to make as much money as possible. Most people seem to be out to make as much money as possible, and have that right in our society today. To me it should not matter if it is the on field product, or the owner/management behind the scenes. Musicians and actors need producers to get paid, athletes need owners to get paid. I don't see it as the owners making money off of players, it is the owners making money from the fans, and giving a portion of that to the players. Fans make the owners rich based on how much they are willing to spend.

I get that owners are the ones making the most money, they often seem distant and cold, and don't really seem to do much beyond being professionally wealthy, and it is the actors, singers, and athletes who are the face of our entertainment, and the ones we root for. But that is how our system works, and fans are the ones who give their money for entertainment. And we give that money to ownership. It seems to me in my simple view of things, it is the fan's money making owners very wealthy, who in turn are making the athletes very wealthy. I don't particularly care for the system, I don't like paying $200 for a family to go to a game, $12 for a beer, and $100 for a shirt with another persons name on it, and so I don't. (I listen to the radio, or watch the games on MLB.TV with the free subscription my mobile carrier gives me - advertisers paying on my behalf) But if I am willing to do that, and if I think players should be free to seek maximum dollars, I don't see why owners should not be allowed to as well.


The owners should be able to do that. So should the players. That's what bargaining is for.
People complaining about millionaire players wanting more only seem to agree with half of that though, and I don't understand it.

If the market can bear more, they'll get more. If it can't, they won't. There is really no need to bash them for trying to get the most earning potential as they can (you're not, but I assume you were responding to me, and I was responding to those who were).

People, I'd hope, attempt the same in every career. When it's a middle class worker, it's mostly seen as righteous.
When it's millionaires people call them crybabies, and mock their ability to feed their family. And it's not just any millionaire. I don't think people react the same way if it's a surgeon or software executive.
But, most of us played sports at some point. So, some say "it's just a game! What obscene money!"
Ok, sure, in that sense, they don't really contribute much to society, compared to a doctor or even a banker. But, neither do the owners.
And, it's not the players, or the owners fault that they are making millions and billions off a game. It's the fans. There is demand. That is how business works for the most part. If people stopped giving their money, the prices would have to go down to attract customers, then salary and profits would go down.

I just don't get the resentment. It's one thing to resent obscene profits for things we need. Food, healthcare, housing, whatever. Nobody needs baseball. Who cares how much they make? Just eliminate yourself from the demand if it annoys you (again, not you specifically).

Nobody should be disrespected for trying to get their fair share of the profits.
To someone making just above minimum wage mopping floors, the bank president making 250k seems obscene. But that guy, if he tries to leverage a raise, is probably just seeing more profits coming into the bank, he's likely not being greedy.
And, to someone making pennies in a third world sweatshop, they probably think it's pathetic that the guy making 8 bucks an hour mopping floors is complaining.
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#51 twinssporto

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Posted 04 February 2018 - 07:21 AM

 

The trouble with front offices now getting "sensible" about the returns on free agent contracts is it takes money out of the overpaid end of the system that won't go back into the underpaid end of the system. If this is going to continue, players need to reach free agency quicker so their peak seasons earn them more equitable pay.

 

 

I agree the front offices are getting more "sensible" and they are taking money out of the overpaid end of the system.  However, I don't agree that it won't go back into the system.  What's wrong with managing your cash wisely?  Why do the Yankees and the other big market teams always do so well?  They use their cash reserves to sign free-agents instead of trading away their farm prospects to build a team.

 

If the Twins new FO can make consistent and wise FA choices (i.e., not signing Darvish to a 7 year deal) they should be in a good position going forward to offer early extensions to their younger guys before reaching free agency (Buxton) and also have the cash reserves to jump on a good FA player when the opportunity presents itself.  

On a long enough timeline the survival rate for everyone drops to zero.


#52 beckmt

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Posted 04 February 2018 - 07:28 AM

The only way you can justify letting players reach FA earlier is with a hard salary cap and total revenue sharing.The Yankees make more off of their local radio/tv contracts them most clubs make a year in total revenue.You need to balance the system.

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#53 Mr. Brooks

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Posted 04 February 2018 - 07:52 AM

The only way you can justify letting players reach FA earlier is with a hard salary cap and total revenue sharing. The Yankees make more off of their local radio/tv contracts them most clubs make a year in total revenue. You need to balance the system.


I still don't think it works in baseball. Unlike the NFL, where guys play right after being drafted, the investment of milb development is a huge part of baseball. Teams would have little chance of recouping that investment.
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#54 NCtwinsfan

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Posted 04 February 2018 - 08:06 AM

 

The owners should be able to do that. So should the players. That's what bargaining is for.
People complaining about millionaire players wanting more only seem to agree with half of that though, and I don't understand it.

If the market can bear more, they'll get more. If it can't, they won't. There is really no need to bash them for trying to get the most earning potential as they can (you're not, but I assume you were responding to me, and I was responding to those who were).

People, I'd hope, attempt the same in every career. When it's a middle class worker, it's mostly seen as righteous.
When it's millionaires people call them crybabies, and mock their ability to feed their family. And it's not just any millionaire. I don't think people react the same way if it's a surgeon or software executive.
But, most of us played sports at some point. So, some say "it's just a game! What obscene money!"
Ok, sure, in that sense, they don't really contribute much to society, compared to a doctor or even a banker. But, neither do the owners.
And, it's not the players, or the owners fault that they are making millions and billions off a game. It's the fans. There is demand. That is how business works for the most part. If people stopped giving their money, the prices would have to go down to attract customers, then salary and profits would go down.

I just don't get the resentment. It's one thing to resent obscene profits for things we need. Food, healthcare, housing, whatever. Nobody needs baseball. Who cares how much they make? Just eliminate yourself from the demand if it annoys you (again, not you specifically).

Nobody should be disrespected for trying to get their fair share of the profits.
To someone making just above minimum wage mopping floors, the bank president making 250k seems obscene. But that guy, if he tries to leverage a raise, is probably just seeing more profits coming into the bank, he's likely not being greedy.
And, to someone making pennies in a third world sweatshop, they probably think it's pathetic that the guy making 8 bucks an hour mopping floors is complaining.

 

I was not responding to you, or anyone in particular, just throwing my own thoughts out there. I agree with your post above. We should not be disrespecting people who are using a system to it's full potential, especially if we are supporting that system. In some cases, we don't always have much of a choice. But I agree, with baseball, we do have a choice because we don't need it.


#55 The Wise One

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Posted 04 February 2018 - 08:40 AM

One year contracts for free agents. They will get paid what they are worth every year that they play. If you want to start free agency after the current arbitration system starts, great. To balance out the "team investment" argument give the current team right to match the contract offered to the free agent


#56 Nine of twelve

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Posted 04 February 2018 - 08:54 AM

Sports income is different from income from other forms of entertainment. For example, sports gets much more (involuntary) taxpayer support.

But the public money that goes to sports is a very small percentage of the overall revenue, and it's mostly for infrastructure, in other words stadiums. I think it's OK for taxpayers to contribute some of the money for stadiums because having viable professional sports contributes to the overall liveability and vibrancy of a large metropolitan area.

#57 Nine of twelve

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Posted 04 February 2018 - 08:58 AM

The trouble with front offices now getting "sensible" about the returns on free agent contracts is it takes money out of the overpaid end of the system that won't go back into the underpaid end of the system. If this is going to continue, players need to reach free agency quicker so their peak seasons earn them more equitable pay.

It's not so much the timetable for free agency as it is the salary schedule. The minimum salary could be made more equitable with a significant increase in the minimum salary for low seniority players with arbitration eligiblity beginning in year two.
Edited to add:
Reading shimrod's post I agree in principle with performance-related payouts if there is a fair and accurate way to evaluate performance. However, how one quantifies a player's contribution to his team's performance is a subject that is much debated among sabrmetricians and others. And if you factor in the significant money that would be riding on that it becomes even more challenging to define. Nevertheless, I think it's possible that something like that could be woven into a CBA with conscientious statisticians involved on both sides of the negotiations.

Edited by Nine of twelve, 04 February 2018 - 09:28 AM.

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#58 Nine of twelve

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Posted 04 February 2018 - 09:08 AM

Not really, I already have a new Silverado but I know a lot of people that will never be able to get a new truck and when i hear about these millionaires whining about not getting a few extra million, I'm not sympathetic. 
 
Go ahead and go on strike, see how man 'jealous' fans really are sympathetic to millionaire players squabbling with billionaire owners.

You are entitled to feel the way you do as long as you heap even more disdain on the owners. They are the ones who control the money that we spend on baseball.

#59 Rosterman

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Posted 04 February 2018 - 09:19 AM

You try to build teams around a stable of players AND a winning format. Sometimes those prospects may take 3-4 years to develop, and then they are on the cusp of walking away. You gamble and extend them early. It's more cost effective than tying them up later in free agency, but still a gamble.

 

You sign a free agent. A gun for hire who is only as good as the player behind them. Short-term, you get the Jack Morris sensation who may create the msot memorable moment in history. Or you may get one of many, who languish on the roster eating up dollars. Happens to your own (Ryan Howard, Joe Mauer) as well as giving contracts to guys outside. At least when you give a longterm contract to a homebody, you are, in a sense, rewarding them for play they have done at a discount, so to speak.

 

$20-25-30 million a year. At what point is it senseless that one player takes up a huge percentage of ALL your payroll. Are players worth 10% of a team's payroll? If they are and you payroll is south of $125 million, then you are relying on the hit-and-miss of prospects and pre-free-agency folks. If you can afford to eat a big contract for a season or two, then you are paying a luxury tax on top of that big contract.

 

Capping payrolls is somewhat wonderful, but you still have teams spending twice as much as some other teams a season...consistently. The teams are finding creative ways to pass off big contracts with a cash payment to select teams to take aging vets off their hands. The Dodgers may not want to pay a luxury tax, but they did get rid of Kemp and his salary along with a contribution from their books. Yes, they are eating a contract, and the money is not beneficial to the team receiving Kemp (as they have to pay him). In a round-about way, the owners are figuring out how to play the system. And they are also balking at the loss in international bonus money or draft positions (another area where players are vastly overpaid on paper talent).

 

I shake my hed at the initial demands of this free agent marketplace. I look at the big four in the world of starting pitchers and don't see it. Hosmer and Martinez? I don't see huge time commitments. At some point, the contract of a David Ortiz that keeps rolling over from year-to-year seems a wonderful luxury, especially to a franchise player compared to that gun-for-hire.

 

Yet the equation is thrown out of whack. Middle relief, guys who setup and pitch in 40-50 games, are getting more money than imagined...closer money, in some ways.People that were jettisoned by teams in the past because those teams didn't want to pay the piper (Twins alone: Swarzak, Neshek, Duensing, Kintzler).

 

And it is also about roster space. Is there space on EVERY roster to handle 2-3 veterans in spite of prospects that YOU want to keep and develop? Are the free agents better/worse than the backup fodder you could remove from your 40-man, and at what price, and at what need for playing time.

 

Will it get better before it gets worse? Will more and more prospects come up and be eaten and disappear before they have free agency, rather than players hanging onto careers and multi-million paychecks forever?

 

 

 

 

Joel Thingvall
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rosterman at www.twinscards.com


#60 adorduan

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Posted 04 February 2018 - 11:08 AM

 

That all sounds great in a perfect world... There is a demand for those tickets, authentic jerseys, and beer, and people will keep paying for them.

 

Revenue will continue to grow by the millions every year. Players currently are controlled for 6 seasons until they can explore FA for the first time, which is generally their age 31-32 season. GMs and Amateur GMs around the internet agree not to pay for their decline years.

 

At the end of the day, aren't we just padding the pockets of the 1%? 

 

I'd rather the players that provide us fans entertainment get that money... We just need to find a way for the players to get that money when they're providing the most value to a team. 

Well, you could buy a team and spend 100% of the profits on player salaries.Good luck with that.




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