Nationals Baseball: Just a friendly reminder

Friday, November 07, 2014

Just a friendly reminder

Yesterday Svrluga posted about the inherent risks of multi-year 100 million plus pitcher contracts. We can take a deeper look at it some other day, but the base truth can't be denied. There is a lot of variability in multi-year deals especially for pitchers.

But the variability is all in the years, the money should be basically ignored. Or at the very least fans should not simply give in to the "money bucket" way of thinking.

The "money bucket" is the term I use for the idea that there is a single source of known limited funds available to run the baseball team. Once that source is used up, once all the money in the bucket is spent, that's it. So if you use 20 million to sign a pitcher, that's money that doesn't go to other players. Worse yet, the bucket is usually seen as the source of funds for all baseball operations. So that 20 million is money that also can't go to managers, statisticians, minor leaguers, international scouting, etc.

Owners love this way of thinking because it allows them to treat running a baseball team as any other business, ensuring yearly profitibility. SABR guys fall in line too because when it comes to team construction a spending limit is necessary for their to be a problem to solve. (What's the solution to getting a better team if you have unlimited funds? See : the Yankees. You spend as much money as you can) But fans, regular Joes, they buy into it, too. They shouldn't.

Why? For several very good reasons. The biggest one is that the profitability of a sports team is less about day to day operations and more about increasing franchise value. The potential yearly losses pale in comparison to the payout in the end. Anyone purchasing into a sports league knows this.  Running a team to avoid yearly overruns is for most teams, like adding that cherry on top of the sundae. It's an extra few million a year when in 20 years they expect to get paid out in the hundreds of millions.

Along with understanding the above comes the understanding that most owners are incredibly wealthy. They have the money to burn on investments that are yearly money losers (think of taxes on undeveloped land). You may argue that that is not how they became wealthy but owning a sports franchise should not be seen like running any other business. Stop it!

Then of course there is the reporting of revenue. When the teams report how much money they make, and from there how much money they have to spend, it behooves them to underreport as much as possible and thus set up the players to expect smaller chunks. This is not tin foil stuff, it's common.  Teams say that national broadcasts on TV stations they own don't count as "local broadcast revenue". They say that the parking money - well that's money raised by their incredibly profitable parking company completely separate from this baseball team you talk of. Money is moved around to make the team look as least profitable as possible.
I admit, the idea every team can spend a ton isn't true 100% of the time. There are some teams that can run into financial issues. If they don't own their stadium or the parking around it. If their national following is non-existant and their local fanbase a joke. If say... they play in Tampa. Hypothetically. But these teams are the exception, not the rule. And I'm not saying there isn't an upper limit on the amount of money teams can spend, but I guarantee you it's not at the levels we see now.

Also let's avoid the trap of considering on the field baseball value all a player brings to the team. It's easy to do. "He made 5 million last year and was "worth" 4.5 million in wins" But what about the merchandise he may sell? The games that he helps win that drive attendance up, which means possibly more concession money, more ad money, more parking money? What if that guy helped you get into the playoffs? What about the extra funds from a handful of more sold out games? It's one thing to say an player isn't worth X dollars on the field. It's another thing to say a player isn't worth X dollars in total. Trust me, that's factored into these contracts as well even if it can't be reported on a stats page.

So sign ZNN, Desmond and Fister, right? Well... you still want to make smart deals because of roster composition and tendencies to favor veterans and the like. In DC you've seen what just throwing money around with little thought can do by watching the Redskins. But really the thing is... the above is a dream, a dream where you wake up and your team spends money like it should. It's not going to happen in reality because the impetus to spend is weak.

Let me explain. Sure spending less it makes it difficult to compete on some level over the regular season against the tiny number of teams that do spend like that. But you can still get into the playoffs as long as there aren't two teams like that in your division (and now that the Red Sox are scaling back there aren't) and once in the playoffs spending like a madman doesn't afford you a big enough advantge. Plus there is enough variability that even spending a ton of money doesn't guarantee anything in the regular season.  Players fail out of nowhere and get injured. Spending money is just increasing odds of wins, not giving them to you. You spend a lot more for a little return.

So what's the point of all this? The point of all this is the more we let owners off the hook, the more they feel empowered to spend less. Things get worse, your odds decrease, and you just buy into it. You have to make noise. Yell, kick, scream and remind the owners you know they could be giving you a better team. It's not that they can't sign, it's that they choose not to. That whatever their plan is of trying to win the most by spending the least, it better work or else there will be hell to pay (well, as much hell as a bunch of fans can make). That's the point.


Anonymous said...

Everyone tries to say we either sign desmond or zimm. IMO, The debate should be over zimm or stras. Everyone says we need to save money to sign stras and harp. But a team cannot commit money to two big time pitchers (one position since they both can't pitch on the same day). desmond should be signed, and since zimm has established himself as a better pitcher than stras you sign him too. And yes, I would let stras walk. Better than letting your best pitcher walk.

Side note: fister isn't worth the contract he'll get. he left too many pitches up last year and throwing high 80's doesn't leave you too many places to miss.

Jay said...

Thank you. Thank you. Thank you.

It has been widely reported that the Lerners are the wealthiest owners in baseball. Let me repeat - wealthier than the Dodgers, Red Sox, Yankees ... you get the idea. No one forced the Lerners to give up the hard earned money to buy a sports team. Also remember they can juggle numbers just as Harper mentioned, and losing money on the Nats isn't necessarily a bad thing for them. It's a tax write off if nothing else.

Anyway, the thought that they can't "afford" to sign certain players is ludicrous. Also, the Washington football team is not the best example. First, there is a salary cap - big difference. Second, he has bad people making personnel decisions and they have been bad for years (decades?) - see example Vinny Cerrato. Third, the owner is an idiot. He claims he is a fan and just wants to win. But that is only if he is heavily involved in all decisions - including who starts at QB. See George Steinbrenner in the 80's.

Spending money smartly is much different. But keep in mind that sometimes you have to be flexible. Imagine if the Nats had signed Jeremy Affeldt last off season and had him (and the Giants didn't). Rizzo didn't want to spend the money on a lefty reliever. I say sign all 3 Znn, Fister, and Desmond. Desmond is the first SS to win 3 silver sluggers in a row since Barry Larkin - whole career with same team.

cass said...

The Lerners used to be the wealthiest owners in baseball. In all of American sports, I believe. But now that title goes to the Dodgers.

I still keep on saying to sign Zimmermann, Desmond, Strasburg, and Harper. Along with Rendon, this is your core. You do not have to choose among them. Sign them all.

We give the Lerners plenty of money and we give it to them so we can see these players compete for championships. We have paid a lot of money for all those $10 beers. Spend it.

These are solid talents. Maybe one will go bad due to injuries, but there's really no better way to spend the money.

I'll also note that fans will enjoy these players winning championships more than other players doing so. We know them. We've watched them for years.

Just listen to the reception that Drew Storen got upon returning to his role as closer and you will see the difference. Soriano never had that.

JE34 said...

I love the 'sign them all' concept. It's almost like being a throwback team - like the 70's-80's Dodgers who had the same infield for 9 years. Of course, it's much easier to say when I'm not writing the checks. But there's something to be said about continuity, and the way sustained excellence keeps the seats filled.

Since we're playing with other people's money, does anyone know how the Nats figure into the Lerner's total net worth? Quick search shows that Ted Lerner is worth $4B by himself. I think we should sharpen our "what's another $10M to you" arguments with some hard data.

And yes, Desmond won 3 silver sluggers in a row, which says a lot about the poor state of hitting by shortstops. Imagine if he were a smart hitter. Imagine if he could hit behind runners and didn't strike out a million times a year, overswinging so much that he looks like he'll break the bat over his left shoulder. I really think Desi has Jeter-level talent. I wish there were a coach available to get it out of him.

Donald said...

I think what owners and GMs should worry about isn't the money alone. I totally agree that they could afford Znn, Desi, Fister, Stras, Harper, etc. and if they all play well, it's fine. The risk is being stuck with dead weight on the roster down the road.

We all want the Nats to spend like the Dodgers and run a $200m payroll. That's fine as long as you are paying great players and they are winning. But you can't move those salaries once they start regressing. Then you end up with 4-5 BJ Upton's or Ryan Howard's on the roster and a sub .500 team.

The Dodgers of today are the Phillies of tomorrow.

Zimmerman11 said...

Thank you Harper.

I have said I am going to reserve final judgement until the TV Rights situation plays out... it hurts their bargaining position obviously if they DONT cry poverty when it comes time to sign some of their bigger free agents...

But the panel arbitrated a fair increase in the rights fee... even if it will be tied up in the courts for awhile yet... its time for the Lerners to stop pretending they're not raking it in... and keep the team intact.

It would have hurt LaRoche's market if the team had picked up their end of his option... and he's sure to get multiple years elsewhere, to start... so he was a luxury, and an expensive one, but letting number 1 type starting pitchers go is not acceptable, and neither is letting Desmond walk unless they have a plan to improve the team when they replace him. (Don't know how you do that).

The Lerners' "beyond tapped out" remark was a joke, and a transparent attempt at public negotiation over MASN money... But if players start leaving over an extra year here or there, then the people who DO show up to the park, need to be showing up wearing shirts emblazoned with that slogan!!!


JWLumley said...

Great article Harper. You make many excellent points about the economics of baseball. The owners have money and crying poor mouth should never be accepted by fans outside of Tampa and Oakland. The Nats should re-sign all three.

Also, with regards to the 2B question (really the biggest question for the Nats) I'm likely Lowrie more and more, especially after reading a couple of scouts--including KLaw--who think that a move to 2B could even help him to stay healthier.

Gr8day4Bsbll said...

As long as the Nats continue to draw well, and sell lots of merchandise, and make money hand over fist for the Lerners -- DESPITE not making it out of the first round of the playoffs ever -- there will be little incentive for the Lerners to spend anything more than they are right now. They have a VERY lucrative business on their hands without having to worry about "over"paying anyone just to give the Nats a better chance of winning. After all, the fans will keep coming, and paying, and buying, and watching, regardless of how they do on the field -- just ask the stupid SnyderSkins and the Rockin' The Red Caps...

Which I suppose is Harper's point -- until we kick and scream and stop buying and paying and watching, the Lerners won't change their spending habits and we'll be forever saddled with teams that win regular season titles but can't bring home the tin cups...and the Lerners are just fine with that, since they're putting more money into the bank every day...

But so help me, I just CAN'T stop watching, or buying...I'm a Nats/baseball fan after all, which is PRECISELY what the Lerners are banking on...

blovy8 said...

You'd rest easier if you stopped calling them owners and started calling them corporations.

blovy8 said...

No, kicking and screaming don't do anything, because, really if the Nats spend as much as the Giants, how can you make a reasonable argument that they're cheap to the masses? If fans act with their pocketbooks and don't show up they'll threaten to move the team, contract a few clubs, etc. it's not like they don't have ways to manipulate the discussion. This is a market that's already lost two baseball teams.

JWLumley said...

@Gr8day The Lerners did not get to be that wealthy by being people who like losing. Most people with that much money, especially those who made it in real estate are even more competitive than the players they employ. Your logic is not logical especially when you consider that in baseball, unlike other sports, there typically isn't that much difference between a 1st place team and a last place team.

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