Pitchers Holding Out, Wise or Not?

[Trov]

As any baseball fan is aware there are two remaining starting pitchers in FA that many thought would get long term big deals.  Snell and Montgomery were both looking for $30 mil plus a season for 5 plus seasons.  Rumors are now that Snell is willing to take the "pillow" contract similar to what CC did with Twins and Bellinger did this year.  The only pitcher that I can think of in past that did similar was Carlos Rondon a couple of years ago with SF, which worked out well for him, and so far not well for Yankees. Montgomery is rumored to still be seeking long term contract of up to seven years.

I have commented that Snell would be a good candidate for a "pillow" contract due to his previous upside of cy young winner, but long history of injuries and overall not consistent seasons.  The problem for Snell is that the few teams that normally would be willing to drop $30 mil a year on a player, and a current need for pitching due to injuries are maxed out in the tax area, Yankees, Astros, and Rangers are the main three right now.  Rumors are Yankees have interest, but a short deal will cost them a ton of money because they cannot extend the money over many years to lower tax burden.  He is still holding strong for the high price and looking to cash in at some point.

Montgomery would not be a good "pillow" contract guy because he is trying to parlay his big second half and playoffs with Rangers to get a huge deal.  However, many teams are not willing to overpay for a guy that has always been a number guy, who had an Ace second half. The problem is, he is 31 and outside of his time with Rangers, he has been a number 2 to number 3 type guy.  He is seeking top pitcher money until he is 38.  Most pitchers start to really fall off age 32 plus, if not sooner.  There is no reason to think he will be any good at age 35 even, let alone 38. 

So both guys are holding out for their big paydays, but no team is biting on their demands.  Snell wanted the big deal, but is willing to take a short term deal for now hoping to have a second big season in a row and then really cash in at age 32? Personally, I think Boras is telling them fantasies and telling them to hold out and the money will come.  In 2018 offseason, a pitcher that I think kind of lines up with Montgomery was a FA.  He had a little bit longer success at MLB level, but was coming off a little bit of a down year, Montgomery is coming off peak second half.  That pitcher was 31 looking to cash in, and no takers.  He held out into late spring and finally signed a 1 year deal hoping to get a bigger contract the next year.  I back fired terrible for him.  That was, Lance Lynn. He came into spring out of shape, upset no one was willing to pay big for him, and had worst season, until last year, of his career. He did bounce back to have 4 very good years until last year where he looks fully done. 

Another pitcher held out the next year, the 2019 free agent year. He was the top relief guy entering age 31 season, showed no signs of faltering.  He was looking to break the closer market, but no takers.  He held out until the draft, so a team would not lose a pick. He signed big three year deal, so paid off for him overall, but not the team. Craig Kimbrel signed with Cubs and had 2 terrible seasons and then finally a good first half in the contract year.  He was traded across town to White Sox, and fell apart down the stretch.  He has signed 1 year deals each of last few years.  He has done fine for himself, but never got the huge pay day.  Yes, he is a relief guy so not full comparison, but history has shown pitchers holding out into spring, or mid-season, has not paid off for the teams. 

The two guys have waited out the market hoping to cash in on a pitching needy teaming, but those teams will know the history that not getting full spring training has resulted in not very good results.  Also, age 31 year pitcher signing long term deals normally does not pay off either. Does Montgomery think teams will buy that his peak year at age 30 will be what to expect for next even 4 years, leaving 3 bad contract years?  Over the past 20 years, there is two pitchers that have been great late into 30's, Scherzer and Verlander. There are a few that surprised the hell out of people by pitching well in late 30's, mainly Charlie Morton comes to mind. Out side of them, most guys are no where close to what they were in young years. 

Personally, I think the more they wait, the worst it will get for them.  They will both try to hold out for max value, but unless a team gets very desperate, I think the value will keep going down for either, because teams will expect less output this year.  Maybe, the pitchers are working out well on own, but unless they do some showcase teams will be worried. 

[nicksaviking]

Yeah, the Twins definitely have had past issues with grabbing players who sign late and missed most or all of training camp. There seems to be a big difference between signing these guys and trading for someone who's already been warming up all spring.

I most certainly wouldn't have much apatite in these players after dealing with Lance Lynn, Chris Archer, Logan Morrison and Kendrys Morales.

[Doctor Gast]

Yeah, they are just hurting themselves. IMO you are right that these 2 pitchers are trying to sell high on their good year w/o a lot to back it up with any consistency & teams aren't buying it. A lot of teams are hurting & those who aren't,  already have their SPs. 

[Parfigliano]

36 minutes ago, nicksaviking said:

Yeah, the Twins definitely have had past issues with grabbing players who sign late and missed most or all of training camp. There seems to be a big difference between signing these guys and trading for someone who's already been warming up all spring.

I most certainly wouldn't have much apatite in these players after dealing with Lance Lynn, Chris Archer, Logan Morrison and Kendrys Morales.

After the Twins Kendrys Morales put up an 821 OPS in 2 years in KC.  760 OPS for 2 years in TOR.  For whatever reason his brief time with TC he stunk.

[nicksaviking]

36 minutes ago, Doctor Gast said:

Yeah, they are just hurting themselves. IMO you are right that these 2 pitchers are trying to sell high on their good year w/o a lot to back it up with any consistency & teams aren't buying it. A lot of teams are hurting & those who aren't,  already have their SPs. 

I never had interest in Snell, but I mean I get it from the players' perspective, especially pitchers. They typically don't get paid what they are worth during the initial contract. This is their last chance to cash in on what they should have already been paid. Teams are now wiser though about paying for future production instead of past production. Which is smart by the teams, but the system is pretty broken for the players.

[Trov]

17 minutes ago, nicksaviking said:

I never had interest in Snell, but I mean I get it from the players' perspective, especially pitchers. They typically don't get paid what they are worth during the initial contract. This is their last chance to cash in on what they should have already been paid. Teams are now wiser though about paying for future production instead of past production. Which is smart by the teams, but the system is pretty broken for the players.

They system is fully broke for pitchers right now.  I agree, they get 1 contract to really cash in, unless did great in early years for nice arb numbers.  Montgomery has earned 20 mil and Snell 51 mil. Snell won a Cy Young at 25 so that helped him a ton.  Both should be getting paid, but both are huge risks for long term deals.  

One in like ten pitchers that sign long term deals are worth much past first season or two. Many get hurt missing a couple of seasons, or many parts of seasons, and many also just drop off in effectiveness. Pitchers get used up, burned out, and then only a few get to really cash in.  These two seem to be trying to draw a line, but teams clearly willing to go with others and not pay their asking price. 

[MMMordabito]

FSB

[Doctor Gast]

34 minutes ago, nicksaviking said:

I never had interest in Snell, but I mean I get it from the players' perspective, especially pitchers. They typically don't get paid what they are worth during the initial contract. This is their last chance to cash in on what they should have already been paid. Teams are now wiser though about paying for future production instead of past production. Which is smart by the teams, but the system is pretty broken for the players.

The system is really broken with all emphasis on velo & stuff, most pitchers will be shot by the time they arrive at FA. Especially if they have any kind of extension. They will never get their pay day.

[bean5302]

Snell and Montgomery massively overplayed their hands by trying to demand 7-9 year contracts up to $290MM. Snell had a 5-6 year $150MM offer from the Yankees and he turned it down. At that point, there was still plenty of season left, and it should have been obvious where the marketplace was at.

I'm not sure what they're thinking at this point, but their value has probably bottomed out at this point.

[laloesch]

45 minutes ago, nicksaviking said:

I never had interest in Snell, but I mean I get it from the players' perspective, especially pitchers. They typically don't get paid what they are worth during the initial contract. This is their last chance to cash in on what they should have already been paid. Teams are now wiser though about paying for future production instead of past production. Which is smart by the teams, but the system is pretty broken for the players.

I don't know if I'd call it broken considering that most pitchers get at minimum 10 times the yearly average salary ($59k), most Americans earn.  Their pre-arbitration years are low but after that the gap explodes.  If anything, I'd call it the unfortunate of the most fortunate.

[laloesch]

3 minutes ago, bean5302 said:

Snell and Montgomery massively overplayed their hands by trying to demand 7-9 year contracts up to $290MM. Snell had a 5-6 year $150MM offer from the Yankees and he turned it down. At that point, there was still plenty of season left, and it should have been obvious where the marketplace was at.

I'm not sure what they're thinking at this point, but their value has probably bottomed out at this point.

Imagine turning down 5-6 years of pitching for 150 million?   

[bean5302]

7 minutes ago, laloesch said:

Imagine turning down 5-6 years of pitching for 150 million?   

Imagine somebody making minimum wage breaking their back at a warehouse turning down $100k for a remote job tapping out words on a keyboard in a comfy office chair.

It's certainly fun to dream about having the talent to be paid like that, but for the players, it's about being paid fairly for the value they provide relative to their peers. :)

[nicksaviking]

1 hour ago, bean5302 said:

Imagine somebody making minimum wage breaking their back at a warehouse turning down $100k for a remote job tapping out words on a keyboard in a comfy office chair.

It's certainly fun to dream about having the talent to be paid like that, but for the players, it's about being paid fairly for the value they provide relative to their peers. :)

And relative to what the owners are making from their work.

[bean5302]

36 minutes ago, nicksaviking said:

And relative to what the owners are making from their work.

So you're saying Correa and Buxton should be writing checks to the Pohlad family, right?

[Parfigliano]

I bet 6 yrs/150 mil is looking pretty good to Snell now and better and better with each passing day.

[wabene]

Baseball's labor structure is uniquely messed up for the players, but it sure gives us baseball junkies plenty to mull over. The greed and overall inflation in all pro sports doesn't do the average fan any favors either. The equity the Pohlads have gained is simply ridiculous. This is during a time when savings accounts don't accrue any interest at all. With corporate sponsorship, broadcast and advertising revenue slipping, maybe the market will reset somewhat. Beers under $10? A guy can only dream. 

[bean5302]

3 hours ago, wabene said:

Baseball's labor structure is uniquely messed up for the players, but it sure gives us baseball junkies plenty to mull over. The greed and overall inflation in all pro sports doesn't do the average fan any favors either. The equity the Pohlads have gained is simply ridiculous. This is during a time when savings accounts don't accrue any interest at all. With corporate sponsorship, broadcast and advertising revenue slipping, maybe the market will reset somewhat. Beers under $10? A guy can only dream. 

The Twins' value has increased at about 8.9% on a cumulative average annual rate since being purchased by Pohlad for $45MM total in 1984 to $1.39B today. It sounds like a huge gain, but it's less than the rate they'd have earned investing all their money in the S&P 500 (the most common Stock Index Portfolio). Fans rabidly demand higher payrolls and increased investment from owners in the pursuit of a World Series Championship, but at the same time, complain beer is expensive (me included), and the franchise has likely posted negative operating income 3 of the past 4 years (lost money).

Savings accounts rose to 8% in the 80s before dropping back to 5% in the 90s. They tanked as the mortgage security market collapsed for good reason. Banks can only invest money in a very few ways in an extremely highly regulated industry. Mortgages. Government Bonds. After that, things get awfully complicated and financially risky for a bank. Aside from that, savings accounts are a horrible, horrible investment. They're similar to a money market account. Designed to securely hold value, not increase in value like a traditional investment. They feature poor returns because the money is so liquid. Aggressive liquidity rules means banks have to be careful to invest savings account deposits in short term, highly liquid assets which have poor returns. Thus, savings accounts also have poor returns.

When MLB fans stop buying beer, prices of beer will decrease, etc. The Twins cannot dictate to the MLB market what fair pricing will look like.

In regard to the players; they chose this structure. There are plenty of other structures the MLBPA could have agreed to the owners would have been happy with. The MLBPA has focused on delivering maximum compensation to elite and veteran players while minimizing compensation to younger or less talented players. In 2022, the top 1% of incomes was $800k, and the top 0.1% was of American incomes was at $2.8MM. The average MLB player is among the highest income earners on Earth. There are players who are worth more than owners. Some principal owners have a total net worth as low as $400MM. Shoehei Ohtani just signed a $700MM contract. The vast majority of players who reach the MLB level are drafted in the first 10 rounds and receive 6-7 figure signing bonuses at age 17-21.

Owners and players are in the same category. Ultra wealthy. Keoni Cavaco's signing bonus was $4MM. That's a working lifetime of $100k per year average salary.
 

[Road trip]

54 minutes ago, bean5302 said:

 incomes was $800k, and the top 0.1% was of American incomes was at $2.8MM. The average MLB player is among the highest income earners on Earth. There are players who are worth more than owners. Some principal owners have a total net worth as low as $400MM. Shoehei Ohtani just signed a $700MM contract. The vast majority of players who reach the MLB level are drafted in the first 10 rounds and receive 6-7 figure signing bonuses at age 17-21.

 

Overall an excellent post on a complex topic.  My only quibble would be the bolded part.  There are very few if any players worth as much as the poorest owners (Ohtani is an outlier, nearly double the second largest contract, and he doesn't technically have most of that wealth yet... it is expected earnings).  The Marlins are currently ranked as the least valuable MLB franchise, for a total of 1 billion dollars.  The top 10 principal owners are all worth multiple billions of dollars.

But your overall points stand and are good ones.  Both MLB players and owners do very well financially, and prices for everything from tickets to ballpark beers will remain high because the market customers (fans) are quite willing to pay the prices being charged.