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Weekend Report: The Brave New World

Belter
on 08/08/2002

 

Sorry for those who didn't want more labor discussions, but something Joe Sheehan said this week got me going, so I felt the urge to write something on the issue. Hopefully by the time next week rolls around, or soon in any case, labor won't be an issue anymore. Sheehan's quote after his column critiquing the Erstad extension: "Yeah, bring on 50% revenue sharing; let's establish a system where this kind of decision making is profitable." Those are the type of get-a-reaction, glib sound bytes that annoy me to no end. How about "Yeah, bring 50% revenue sharing and take 30 million a year from the Yankees." At least my quote is factually accurate; Joe's is not. Anaheim would bring in roughly 4.5 million more with this revenue sharing plan than with none. Last year the Angels received 9.5 million in revenue sharing. If you take a minute to digest everything you can't help but wonder how you got from 20-50% sharing and a team gets less money. The truth is that the old formula is more complicated then just adding up local TV and radio contracts. There appears to be some sort of stadium allowance, and other such things.

So in a real sense, I don't have that great of an idea how much difference on revenues this would have for teams. By simple initial estimations, totaling up local revenues and then dividing them would have only small effects on the revenue totals for most teams. If a more complicated formula persists, it's hard to say with any certainty, except that in the end I doubt that over the present system things will change much. If the Expos were moved, I doubt any team would gain much more than five million new dollars under revenue sharing. The major effect is going to be on the Yankees, bringing them back to the pack. My guess is that even absent a luxury tax, the Yankees payroll will fall towards 100 million, combined with a salary floor which is also hard to pin down to an exact figure. The spread on team salaries will be much better than the current one. Based strictly on the shared revenue figures I came up with, plus the national TV contract, the first logical place for a floor would be 35 million dollars. This really would affect no one other then Tampa, who would have to spend some money (likely on Randy Winn) to make up for the loss of Wilson Alvarez's contract. 45 million seemed like the next bench mark, with six teams having to spend more money next year then they otherwise might. The following analysis assumes that floor.

Pirates analysis - The Pirates were only three million under the salary floor for last year, and would have little difficulty reaching 45 million in players' salaries for next year. Their biggest money goes to Giles, Kendall, Meares, and Young, all of whom are still under contract next year. Kendall's and Giles's contracts will both be somewhat more expensive next year, potentially making up the gap all by themselves. Additionally, Aramis Ramirez is due a 2.5 million dollar raise. Kip Wells, Jack Wilson, and Craig Wilson could all be targets for long terms contracts. Market impact: nil

Marlins analysis - The Marlins were also only three million under the cap last year. While Dealing Floyd and Dempster helped save some cash for next year (particularly for the arbitration eligible Dempster), Florida still faces a parade of young faces who are in arbitration and will command raises. They will have little problem reaching the floor. Their ability to ink a large number of these players may serve to slightly boost the market price by preventing the Marlins from releasing some of these players. Market impact: **

Padres analysis - The Padres were also only slightly under the floor by 3.5 million dollars. Unlike the previous two clubs, though, they figure to have a lot of salary to make up. Ray Lankford and Bobby Jones both are done after this year, freeing up twelve million dollars for next year. But wait, they've got their three stars in long term deals. Hoffman will get a three million dollar raise next year. Klesko gets only a few hundred thousand more, but depending on the structure Nevin also gets a big boost, at least three million more and as much as 4.5 million more. Being conservative, the Padres have nine million dollars to spend, and I don't see anyone worth spending it on. Towers is a very shrewd GM and it's a good bet he'll spend the money wisely; I don't think he'd waste money on mediocrity, still having the money to spend on a marquee free agent gives them a big impact. Market impact: ****

Twins analysis - The Twins were a fair bit under the floor this year by five million, but they will have no problems meeting it next year. There's already talk that Jacque Jones will be cut as an arbitration-eligible player to save money as they go for a contract extension of Torii Hunter and some other players. Raises to Milton, Mays, and Reed total four million immediately. Koskie gets another million. Jones has done alright, but they should still cut him and sign Torii while having plenty of playing time for cheap and effective Kielty, Mohr, and Cuddyear. Market impact: nil

Athletics analysis - In many ways revenue sharing would come a year too late for the A's, who despite doing the economically prudent thing and not over paying for a one dimensional slugger, at first have suffered to the extent that their WS shot may be over. They may yet recover, but the loss of one of the game's five best hitters has been very hard on the offense. And in many ways it seems that the A's have spent most of their talent chits already, but I wouldn't count out A's General Manager, Billy Beane. On the surface the A's look to make a big splash, being six million under the floor and being able to erase Justice's seven million from the books, but those long term contracts are starting to roost with a number of players due moderate raises here and there. Plus, Koch is arbitration-eligible and will most certainly be retained at a high price. Beane will almost certainly have money left to spend, but if there is one person who won't drive up the price of a mediocre player, it's Beane. Market impact: * (on the basis of keeping Koch off the market)

Expos analysis (assuming they are still around, which is likely given a peaceful settlement to the labor war) - With all the movement, my best estimate of the Expos position salary-wise places them nine million under the floor. Half of that is already gone to raises for Vlad, Vidro, and Colon. Vasquez must be arby eligible and will almost certainly get a nice raise there. Of note is the fact that next year is Vlad's last under his current contract. Any new owner will likely try and extend it, which may pump up his salary even more. Still, the Expos will probably have a nice little bit of cash to spend and a new owner in DC will probably throw even more money around to impress people. Because of that, I think they Expos will have a big market impact next year regardless on any revenue sharing, still I rate them at ***.

D-Rays - Already a huge ten million under the floor, they get even more relief because Wilson Alvarez is finally gone, and no one else is due a large raise. Their first order of business would probably be to extend contracts to Randy Winn and Tanyon Sturtze, but this will scarcely put a dent in their budget leaving them about fifteen million to spend. It's unlikely a marquee free agent will go there, leaving them to throw bushels of dollars at mediocrity. Market impact: *****

Brewers - Of the teams over the floor, the Brewers are the only ones who would fall under the floor next year without new spending. It's hard to say who the Brewers would spend a fairly good sized contract on, but the odds are pretty good it will be a waste of money. I-rod at ten million? David Bell at five million? Market impact: ***

I apologize for the lack of cohesion in this week's article, as it was rushed due to family illness. I just want to finish up with some random thoughts. One, the Yankees main effect on payroll inflation has been to prop up the prices of mid-level players. This is something Baseball Prosepctus is constantly harping about. Being able to cart around a multitude of overpriced veterans has had a bigger impact then their occasional forays into the FA market. The may overspend for mediocrities, but unlike Hicks, they don't overspend on top shelf guys. Two, somewhat quietly last year, everyone realized the futility of spending like the Yankees. As a result most of the large market teams really held back last year. This trend may or may not continue with increased revenue sharing. Three, the biggest effect that pooled revenue will have is to bring the Yankees within shouting distance of everyone else. They could still spend more than anyone else, but at least they can't spend way more then everyone and be ridiculously profitable. Once contraction is out officially, the Expos will be in DC overnight. The improvement in their local revenue outlook will probably free as much as one million more for every other team, plus the profit realized from the sale.

Among all of their narrow-minded grousing, the Baseball Prospectus writers have failed to see any positives from revenue sharing. If there is some sort of moderately meaningful cap to help prevent "Pohlading", there will be two important effects. One, as noted above in the analysis, both the A's and the Twins stand to gain a lot with a larger pool. This is money that should enable them to keep their teams together and competitive. The Padres aren't at that level yet, but they are close too. The other positive is that if the salary floor is attached to revenues directly, the players have a large incentive to work towards improving those revenue streams. A profit sharing type arrangement - I can't imagine that would be bad in any way.

The biggest threat to revenue sharing is not "Pohlading" though. It's AOL and Tribune Co. Currently those teams are able to easily divert TV revenue to their parent company by accepting below market value for broadcast rights. With 50% revenue sharing the incentive to do more of this is huge. It's likely that the practice would spread to other media owned teams as well, torpedoing the whole arrangement. It occurs to me that the best solution to the problem maybe to pass the collective bargaining agreement with wording that makes it easy to sue those owners to recover the lost revenue. And as a bonus, the Players Union will be backing the majority of the owners!

Player of the Week

Man, I felt so dirty looking through the last week's performances. I mean I was desperate enough that I actually looked at Lenny Harris' line for the week! It got worse when I realized he had the most RBI and second most hits for the week. The best we can do for a whole week is five hits! Luckily, no, we were saved from "the Weapon" by none other than Eric Young! Lest you think I've gone insane, he did collect seven hits this week with a double, two RBIs, and two SB.

 




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