Something has been steadily happening over the past few seasons which is slowly catching on and, I think, will soon explode across the MLB. These occurrences— which I will refer to in the singular from now on— are going to dramatically shift our thinking in the salary structure of individual teams and across the league as a whole.
Mid-market teams and mid-level players are going to seem a whole lot richer.
Take the first of my three test cases: Boone Logan. Boone Logan has decent stats, a pretty good track record, and is left handed. These properties were always going to conspire to make him millions over his career, even if he is a glorified LOOGY. Boone Logan does NOT seem like a 16.5 Million-over-three-year player. Especially for the Rockies, who currently employ quality left-hander (and fellow Lipscomb Bison) Rex Brothers.
Do you see what I mean yet? Boone Logan making $16.5 Million a year? The Colorado Rockies spending $16.5 Million dollars on a middle reliever?
My second test case is Joaquin Benoit, a quality late inning reliever who has “closer” on his permanent record along with a long track record of success. Normally, he’d be in line for a sizable contract— even at the ripe old age of 38. MLBTR reports, however, that he has come to a deal with the San Diego Padres. THE PADRES? The same club which has been debating whether or not to trade Chase Headley because he had one really, really good season and might be paid fairly? The same Padres who haven’t won the NL west since I was a freshman in college? What the heck are they doing investing in a 38-year-old closer? Isn’t this the kind of thing the Yankees or Red Sox or Mets would do?
My third test case is more familiar to Angels fans: the ever-steady, ever-average Jason Vargas, owner of a shiny-new 32-Million dollar pact with the Kansas City Royals. Now, this deal makes slightly more sense than the previously discussed deals, since he will pitch more innings in year one of his deal than the others will over the life of their contracts. And, as it turns out, the Royals have a thing for very average pitchers: Jeremy Guthrie, Bruce Chen, Gil Meche… heck, even “How did I get the nickname Big Game again?” James Shields is a pretty “average” staff ace. To top it off, this deal is cleverly structured to make the average annual value 8 Million dollars, which is important for luxury tax reasons.
But, come on: 32 million dollars for Jason Vargas? And the ROYALS structuring a contract to fit under the luxury tax? When are the Royals going to sniff the luxury tax? Also how? And why?
Welcome to the dawn of a new era, ladies and gentlemen. This is the era of the MLB’s mega-dollar money gun*.
There are a number of factors at work here. First off, the brand new revenue streams available to teams of just about any size. We are familiar with the Angels $3 Billion dollar TV deal, but other teams are also taking advantage. The Rangers also have a $3 Billion dollar deal coming down the pike. The Astros have a $1.5 Billion dollar deal of their very own. The Mariners are set to make $2 Billion over the next 20 years. For the fellow English majors out there, that $200 Million a year. Even with operating costs and taxes and revenue sharing, that’s a lot of dough. And with a nice uptick of $20-25 Million in revenue sharing dollars for non-major market teams, it’s safe to say that most teams are doing all right financially, even before ticket sales (still a huge chunk of their revenue), concessions, and advertisements.
And to what do we owe this influx of cash? Tivo and Netflix. Seriously, live sports are the only thing people watch live anymore, hence the huge amount in ad money tossed at them.
Now, of course, there is still a sizable gap between the haves and have-nots. But the difference is starting to mean less. First off— the Luxury tax, which teams are trying to avoid like the plague. And by teams I mean “the Yankees,” which seems very strange indeed but is actually “The New Normal” (HT Rany Jazayerli; I Love Grantland). Even a one year dip to reset the luxury tax increases would save them $50 Million or so.
But even without that financial albatross around their necks, big market teams have less direction in which to spray their cash. Teams of all markets are locking up young superstars (or even young solid-regulars) earlier and (relatively) cheaper than ever before. The absolutely insane draft slotting restrictions instituted in the recent Collective Bargaining Agreement means that teams can actually draft the best player available— or at least draft the third best player and use that savings to improve their haul across the whole draft. Even the new Agreement between MLB and Nippon Professional Baseball means that the previously huge posting fees will be less of a dividing wall and more of a minor speed bump for small market teams who want to splurge and get a big name free agent— which, as we know, they can do now.
The Dodgers are an example of a team that is using their huge economic advantage and utilizing the few avenues available to them to flex their cash-muscles. They are putting a huge amount of cash into international free agency, the last bastion of free-market spending left for teams wanting young talent. They are paying the luxury tax and spending lavishly on players who may or may not be performing commensurate to all that cash. They are using trades to acquire expensive talent in order to save their draft picks. While the system is designed to punish teams like this, the Dodgers don’t care. They will be able sell off their usable assets, sink below the tax line, restock their system and reset their spending capabilities in a matter of a few years. Teams are ALWAYS looking to unload over-priced talent, and if you can just produce a few major leaguers a year from your farm system to supplement the likes of Hanley Ramirez and company, you can bottom out and return to competing in relatively short order.
Let me add one more example to the three offered above: Matt Garza. Mr. Garza is a prototypical #3 starter who occasionally pitches a little better than that. If healthy, he’ll give you innings, he’ll give you peripheral stats, and he’ll be a very, very solid pitcher (something Angels fans should know the value of). There are some people who think that $16 Million a year is too much for this sort of player. In a world where the Boone Logans of the world make over $5 Million a year and people merely roll their eyes, sign me up for three Garzas any day of the week.
*Since “mega” is a prefix meaning “million”, this is an accurate description, not a cheesy affectation. Also, BOONE LOGAN? This deal is insane.
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