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Economics

320 MEELEON DOLLARS

Megabucks.

For Giancarlo Stanton. Seriously.

Categories
Economics

And The Award For Self-Referential Bargaining Gambit Of The Year

Cano “loves the money,” because the guys that don’t play baseball don’t.

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Economics

Marvin Miller, 1917-2012

The New York Times obituary about Marvin Miller, the man who may have had the greatest impact ever on the game.

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Economics

Ludicrous: Ruth Jersey Fetches $4.4M

In 1920, Babe Ruth wore a Yankee jersey at some point that someone was smart enough to stick in a museum.  The jersey went to auction, and the memorabilia company lelands.com had the idea to pay $4,415,658 for it so they could sell it again later.  What the hell, why not.

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Economics

Lost Angeles

Selig takes control of the Dodgers.

Pirates fans ask, “WTF?!”

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Economics Miscellany The Media

Big Media

Head over to Marketwatch, as an old YFSF supporter, Sam Mamudi, has taken over the task of sports business reporting for that site. Sam's first piece looks at WAR, actual wins, and payroll expenditures.

We're really happy for Sam, even if he does root for a certain team from the Bronx (and also Manchester). Congrats!

 

Categories
Economics General Baseball General Red Sox General Yankees

Hank Steinbrenner, TEA Partier?

We don't delve much into politics here — so many more important things to fight about, right? — but Hank Steinbrenner co-mingled baseball and the politics of economics in his discussion of revenue sharing, piggybacking somewhat on similar comments from the Red Sox ownership group:

"At some point, if you don't want to worry about teams in minor markets, don't put teams in minor markets, or don't leave teams in minor markets if they're truly minor," Steinbrenner said. "Socialism, communism, whatever you want to call it, is never the answer."

This of course sounds very much like typical right-wing hyperbole about taxation. MLB has a taxation system, whereby the wealthiest — i.e., those who can most afford it — pay extra, and those funds help out the most disadvantaged in the system. Sound familiar? It should; it's the basis for the progressive taxation system, the one that has been in place in the United States since the implementation of personal income taxes 100 years ago.

Sounds like Hank believes he's been Taxed Enough Already. 

[It should be noted Steinbrenner is making a different argument than one made by Henry, who has criticized the system on the grounds that small-market teams are taking advantage of it by pocketing the money. Steinbrenner seems to be criticizing the basis of the system itself.]

But even if Steinbrenner is right that this system is "socialism [or] communism," The New Republic's Jonathan Chait argues simply: So what?

Of course, if you define a system of sharing revenue between every franchise and forcing them to compete on the basis of managerial skill rather than raw economic power as "socialism," then of course socialism can work. It works in other sports franchises. But clearly owners who are long on economic power and short on brainpower will oppose a system like that. Why force yourself to out-scout the Milwaukee Brewers when you can spend them into the ground?

This of course is the secret to both the Yankees' and the Red Sox' success under the revenue sharing system: They have competent front offices that make few mistakes, and they have enough money to paper over the few mistakes they do make. 

I think Chait is mostly right that the arguments of big-market teams like the Sox and Yanks are more born from a desire to keep as much of their money as possible (as opposed to some altruistic desire to better the game of baseball), but he goes too far when he describes the Yankees' revenue stream as "an idiot-proof racket." As any Yankee fan of the 1980s (or Mets fan in the 2000s) can probably attest, even incredibly wealthy teams need competent leadership to capitalize on their advantages.

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Economics General Baseball General Red Sox

That’s Why They Play the Games

ESPN noted over the weekend that the Red Sox were the biggest spenders of the 2009-10 offseason. No surprise there, of course. They also noted, however, that only three times since 1990, and just once since 2000, has the biggest spender of a given offseason won the World Series the very next year.

Of course the most recent example is very recent indeed: the 2009 Yankees. And of the past 11 World Series winners, four have been among the 10 biggest-spending teams of the previous offseason, and all of them except the 2001 Diamondbacks were in the top half of baseball's offseason spenders — including the third-ranked 2007 Red Sox, who splurged on Julio Lugo, J.D. Drew and Daisuke Matsuzaka the previous winter.

It should go without saying that there's all sorts of problems with this kind of analysis. Many times, one big free agent signing is enough to put a team on top of the pile, and it obviously takes more than one player to have a winning ballclub (just ask the Texas Rangers, who made the right move by signing Alex Rodriguez to a megadeal then counteracted it by pretty much wasting the rest of their money). And without seeing the raw data, we don't know how close the top-ranked teams were to the second- or third- or even 10th-ranked teams.

Finally, the piece doesn't consider how the top-ranked teams actually fared in the subsequent regular and postseason (were the 2001 Yankees, who lost the World Series by one run, the No. 1 spending team the previous offseason? It's possible, given their big signing of Mike Mussina, and if so, can that really count as a failure?)

We're certainly not making plans for the Duck Boat parade just yet, but all things considered, it'll take a lot to convince us the Red Sox — under this management team — are better off not being the top-spending team in a given offseason.

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Economics General Red Sox General Yankees

Death and…

MLB announced luxury tax payments this week, and the Sox and Yankees were the only two teams contributing for 2010. The Sox contributed $1.5M based on about $177M in payroll and health expenses (22.5% on the $7M in money over $170M), while the Yankees paid $18M (40% on the $46M in money over $170M). So the team's payrolls played out like this, in total dollars:

  • Red Sox – $178.5M
  • Yankees – $234M

The Red Sox were hit by the tax for the first time since 2007. The Yankees reduced their tax burden from 2009 by a hefty margin but still managed to outspend the Sox by the GDP of Kiribati.

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Economics General Baseball

Be Careful What You Wish For, Part Deux

Cliff Lee, per Nick's piece below about his move to the Phillies, actually left money on the table to be where he wanted. In professional sports terms, this is quite the anomaly, and also something of a big surprise. "Mystery teams" tend not to materialize, or to be figments of Scott Boras' imagination. But Philadelphia really does seem to have swooped in and convinced Lee to play for them. Or Lee, loving Philly, convinced them to make an offer.

Of course, joining a stunning rotation with a clear line to the World Series doesn't hurt, and Lee looks to be taking his talents to the baseball version of South Beach. The Phillies are daunting, but we can't help but think that we'd rather the Sox have more of a chance to make the World Series than die a painful death at the hands of their archrivals in an ALCS, and if it comes down to a Phillies/Sox World Series (should we be so lucky for our team to make it that far), we'll be thrilled – though not as thrilled as a Pirates/Sox series. We got our wish, to an extent, and we're pretty happy about it, no matter what might happen next November.

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Economics General Baseball General Red Sox General Yankees

Be Careful What You Wish For

Red Sox fans who think that it would be swell for the Yankees to sign Cliff Lee for a gob of money over several years since it will hamstring them down the road should do it twice. The fact is that the Yankees can absorb a couple (or three, maybe four) bad years at the tail end of the deal, no matter what they pay him. They have only a few commitments past 2015 (albeit big ones), but in the short term Lee and Sabathia are a fearsome duo, and that doesn't include Hughes with AJ Burnett as a fourth or fifth starter. If the tandem lefties lead them to a Series or two and a championship that will be at the expense of the Sox, something us SFs should reject.

Count me as one Sox fan who wants Lee as far away from the AL East as is humanly possible. I just don't see "overpaying" for Cliff Lee keeping the Yankees from fixing that problem in 2015 when (and if) it might arise. I am just not interested in finding out how bad a 7/160M deal is for the Yankees books in 2016.

Go to Texas, Cliff. PLEASE.

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Economics General Yankees

How Equal?

So when we all look at contract offers we don't really ever look at them as accountants. But an offer in Texas is not the same as an offer in Ohio is not the same as an offer in New York. Cursory readings of tax rates shows the following (and I am no CPA, and may have botched this reading, but whatever, it's kind of fun).

Federal Tax Rate on income over $373,615: 35%

New York State Taxes on income over $500,000: 8.97%

New York City Personal Income Taxes, married filing jointly: $3,071 plus 3.648% of income over $90,000 

—–

Texas State Taxes on income: None

Crudely, the Yankees have to do a lot better than the Rangers with the base dollars or salary structure (Lee will play half his games in NYC and therefore be taxed accordingly, along with games in other cities that would be taxed per their local rates) just to have an equivalent offer, it seems. Here's hoping Lee has a tax accountant on staff.

Categories
Economics General Red Sox General Yankees

Poker Face

If the Sox offered Derek four years and $80M, would he take it?  Would the Yankees match it?  What would a big offer from the Sox do to the negotiations, would an offer be a simple mechanism for the Sox to get the Yankees to outlay more money than they prefer?

It would be, quite obviously, a horrid move for the Sox from a personnel standpoint. So I am not advocating such an offer.  But I think the fact that the Sox aren't making offers (at least not publicly leaked offers!) to Jeter indicates, quite clearly, that the idea that the Sox just bid willy-nilly on players to make the Yankees pay more for them (or vice versa) is fan and media induced fantasy. Because if there were ever a time to do it, it would be now.

 

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Economics General Baseball

Save It.

Daniel Bard might be the best bard to work his magic from a pen since William Shakespeare, but there is no proof he is a closer the caliber of Papelbon. He might throw like Nolan Ryan, but close games like Ken Ryan. You just don't know.

That's why lights-out closers like Papelbon and Nathan are one of the most undervalued commodities in modern baseball.

Chris Gasper at the Globe pokes a beehive. Can this last line possibly be true, what with Mariano Rivera and Francisco Rodriguez both making as much money as they do?  Hell, Bobby Jenks has 4.09 years of service and is making over $7M, while Dustin Pedroia's new-ish backloaded contract pays him merely $3.75M. Jonathan Papelbon himself, with only 4.06 years of service is outearning Victor Martinez (6.1 years of service) $9.3M to $7.7M. He goes on to compare relievers to starters, but fails to acknowledge the simple idea that innings have value, regardless of context. He then goes on to offer this whopper:

Arguably, the biggest reason the Yankees have won five world titles in Rivera's 15 seasons is Rivera.

Now, we love Mariano, even as a Sox fan. And we pretty obviously know how great a player he is.  But is he the "biggest" reason the Yankees won those five world series? Would Yankee fans even make this claim? Really, who PUT Rivera in the position to close any of the games he did close? This claim of Gasper's seems really silly.

Curious to know the thoughts from readership.

Categories
Economics General Red Sox

Maybe They Need a Summit?

David Pinto flags an interesting note from Craig Calcaterra, who flags an interesting WEEI.com story about the Sox' recent decisions about player contracts and pre-existing injuries.

To sum up: Henry’s bad experience with an insurance company has caused him to (1) take a hard line on pre-existing conditions; and (2) demand large deductibles. In light of this, it would seem that in the case of the Red Sox anything an insurance company could do would be redundant. … 

The Red Sox try to force the player to insure the contract. If they keep this up, I would think the union would come down on them, as player contracts are supposed to be guaranteed. The players, however, might benefit in the long run to insuring their own contracts through giving up money for pre-existing conditions. Any money a team pays to insure a contract is money the team doesn’t use to pay players. So the players could demand higher salaries in exchange for covering the cost of a pre-existing condition.

Categories
Ballparks Economics General Yankees

If You Demolish It, They Will Come (eventually)

Heritage Park, to be built on the grounds of the soon-to-be-demolished Yankee Stadium, is delayed, and the community isn't pleased. We were hoping there was some way to pin this on Hank Steinbrenner, but it looks like this one is on the City Parks Department and the EDC.