Thursday, July 31, 2014

Category: Free Agency


Taking Sides: Players vs. Owners

February 19th, 2011 | 2 comments »

As I read dozens of columns, blogs and tweets on Albert Pujols this week, I was struck by the number of people who think Pujols is being greedy or should take a “hometown discount” to stay with the Cardinals. I’ve always said I admire players like John Smoltz and Chipper Jones who either took less or restructured their contract to stay with the Braves. I like the idea of players staying with one team their entire career. Not like the days of the reserve clause where they were forced to stay, but when they love a team and a city so much they choose to stay.

All that being said, I don’t think any player should feel obligated to give a team a “hometown discount” just because he’s played there a long time. That brings us to Pujols. National writers and commentators seem to have come to consensus that what he’s asking for ($30 million/year for 10 years) isn’t outrageous in today’s market. However, I’ve been shocked by the number of everyday fans who are disgusted that he turned down what was reportedly up to a $210 million offer over 10 years from the Cardinals.

I thought about it and tweeted out the following:

Fans tend to side with owners because they hear player salaries in the media every single day. What if they heard owner revenue every day?

I firmly believe that fans take the owners side because they hear figures like $21 million per year and think, “Wow, that’s more than I’ll make in my entire lifetime. Who needs that much money? And he’s going to turn it down?!”

First, I think if you heard owner revenue numbers every single day and compared that figure to what they’re putting into payroll and other team expenses, you’d feel differently.

Second, it’s all relative. If Pujols had taken the Cardinals offer, he would have been making less than Ryan Howard and A-Rod. The bottom line is that he’s a better player than either of them and deserves to be making more per year.

I had a follower on Twitter (you can follow me @SportsBizMiss) engage with me after the tweet I shared above. He said perhaps if player salaries were lower it would be more affordable for fans to go to games. Really? No one can really believe that just because owners are paying less they’re going to make attending games cheaper. Have you ever seen a big slash in ticket prices following a decrease in payroll for any team in professional sports? I don’t think so. Every dollar the owners save is likely going right back into their pocket.

I asked this follower if two other guys with his same job title were making more than him but he was producing better work, would he be cool with that? He said probably not, but that it’s different because these guys are making hundreds of millions of dollars.

I’m sorry, but that does not make it different. Let’s say this follower makes $75k and his coworkers make $100k. Don’t you think the guy down the block making $25k feels roughly the same way about them as this follower does about baseball players?

Owners got salaries to where they are, not players. All a player can do is ask for the money, the owners don’t have to give it to him. I don’t think any owner has ever paid more than he thought a guy could be worth to him. No owner thinks, “Gee, that guy looks great in our uniform. He’s not going to win us games or put fans in the stands, but what the heck, give him what he wants!”

So, here we are with arguably the best player in baseball right now asking to be paid more than other guys who he’s out-performed. Why doesn’t he deserve that?

Mark my words, Pujols is worth $300 million over 10 years to someone.

UPDATE: Several followers on Twitter pointed out that it’s really the fans who are to blame for rising player salaries, because it’s their money that goes to pay these guys. That’s true, whether it’s directly from ticket and merchandise sales or indirectly through advertising and tv dollars thrown at teams in order to get to fans. So, if you want to complain about player salaries, I hope you’re not buying tickets or licensed merchandise or watching games on television. Doing those things would be the equivalent of enabling an alcoholic.

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The Pujols Ultimatum

February 17th, 2011 | 2 comments »

I was thinking about the variety of topics I’ve discussed on Twitter in the last 24 hours – NFL labor issues, friendship, marriage ultimatums, who’s going to win the World Series and Albert Pujols – when it occurred to me that two of those topics are analogous. Pujols gave the Cardinals an ultimatum: sign me by February 16th or we’re done.

By now you’ve heard that Pujols gave the Cardinals until yesterday to get a deal done. Word is they made an offer right after the beginning of the year and while they’ve had talks since then, they have not made another offer. So, Pujols has said he’ll transition to playing mode and not discuss again until the offseason. In my opinion, this means he won’t be in a Cardinals uniform next year. If they were willing to ante up, they would have. (On a side note, I’m not sure it’s a good business move for the General Manager if their payroll remains at $100-110 million. They can’t afford for him to be a quarter to nearly one-third of their total payroll. That being said, the ownership is crazy if they think it’s good business to let him go.)

What’s really interesting to me, however, is how much this situation is like a girl giving a guy an ultimatum when it comes to marriage. She’s done wasting time having the same old conversations about the future over and over. In that situation, I think the girl figures the guy already knows what he’s going to do, so she’s giving him that extra shove so she can know for sure and get on with her life.

I think that’s what Pujols just did. He saw no point in dragging this out through the season only to arrive at the same ending. So, he set a deadline. He asked the Cardinals if they wanted to spend the rest of his (baseball) life together, and they essentially said, “What we have is great. We want to continue to be with you, but we just can’t give you what you want.”

Instead of marrying him, the Cardinals agreed they could continue to live together and act like they’re married. They’ll promise to cook him dinner evey night and take out the trash, but they just can’t commit to marriage.

So Pujols will continue to live with them until they finish out the current lease, all the while eyeing other potential suitors. He’s the most eligible bachelor in town, so he’ll find someone new. Someone who can’t wait to marry him and be with him for the rest of his (baseball) life.

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Is Scott Boras the Most Influential Man in Baseball?

January 8th, 2010 | 2 comments »

The following is a post from June 27, 2007, originally appearing on Chop ‘n Change, about Scott Boras’ impact on baseball.  Essentially, not much has changed since then.  What has changed, however, is how I view player salaries.  As such, I have added a couple of footnotes to revise my opinions.  So, what do you think?  Is Scott Boras the most influential man in baseball?  Leave your comments! 

Though it pains me to ask, I often wonder if Scott Boras is the most influential man in baseball.  Not just today, but in the past couple of decades.  Players like Alex Rodriquez have him to thank for their unprecedented, multi-million, multi-year contracts.  Use the search terms “Scott Boras is Satan” on Yahoo! or Google and you’ll find a host of baseball fans equating Boras with the man down under.  If he’s not the most influential man in baseball, he certainly is the most hated.

As a fan, I’ve spent the past decade or so hating Scott Boras.  I blamed everything that was wrong with the game on him and the players’ union.  In reality, the pendulum has simply swung from one extreme to the other.1 Let me begin with a history lesson.  In the beginning, the owners literally owned the players, in every literal sense of the term.  Owners could unilaterally decide when to trade or sign a player and how much to raise his salary (subject to very little limitation).  The reserve clause, in its inaugural form, allowed clubs to reserve only five players.  However, it wasn’t long before the reserve clause was an integral part of every player contract.  Owners convinced players that the reserve clause was essential to preserve what’s been called “competitive balance” in baseball.  The idea of competitive balance was best stated by sports economist Simon Rottenberg, who said, “But in baseball no team can be successful unless its competitors also survive and prosper sufficiently so that the differences sin the quality of play among teams is not ‘too great’.”  In fact, as late as the 1950s, baseball players testified in Congressional hearings that the reserve clause was vital to the preservation of baseball.  And it wasn’t just any average player testifying, it was players like Ted Williams and Stan Musial.  

The reserve clause, by its very nature, depressed player salaries, however.  This made it only a matter of time before the players would become discontent with the system. Things came to a head in 1970 when Curt Flood challenged the reserve clause after being traded and refusing to report.  There were cases before that, but I won’t belabor the point here (you can read my legal journal artice here if you’re really interested).  Unfortunately, Curt Flood lost his case and the reserve clause remained intact until Andy Messersmith and Dave McNally asserted they had achieved free agency for the 1976 season.  The short version of the story is that player contracts allowed owners to unilaterally renew the contract each year.  Messersmit and McNally both avoided signing their contract for the 1975 season.  Thus, at the end of the 1975 season they asserted that their owner could not renew them for the following season.  The case proceeded to arbitration within MLB instead of to the Supreme Court as in Flood’s case.  Peter Seitz eventually ruled that Messersmith and McNally were indeed free agents and the business of baseball (and the game) was changed forever.2  Fast forward to the present where Scott Boras represents free agents and negotiates for them multi-million dollar, often record-breaking, contracts.  As fans, we hate him because at one point or another we’ve all (except maybe Yankee fans) lost a player we loved because Boras was demanding more money than our team could afford.3 We blame him for the inflated salaries in baseball and for making the game about money and not about playing out of team loyalty or for love of the game.  Rob Dibble has said it before and I’ll say it again: “For Love of the Game” was just a movie.  Yes, there are guys who seem to still value team loyalty or who appear to play for love of the game and not for money.  For the Braves, these have been players like Andruw Jones, Chipper Jones and John Smoltz who have all given hometown discounts to the Braves in the past to facilitate their resigning.  But in the end, we as fans need to realize that baseball players have a far more finite career than the average person, so it makes some sense that they make a lot more money than we do.  When their career ends, either due to an injury or retirement, their earning capacity out in the real world may be very small.  Sure, some of them go on to coaching and broadcasting careers, but that’s only a small percentage of the guys who have played the game.  For those who retire young, they may not have any marketable skills out in the real world and may not have amassed very much during their playing years.  For others, they began the game at such a young age that they lacked the ability to manage their money wisely (although I hear baseball has made strides in this area by providing education and counseling).  There are a whole host of reasons why a baseball player would want to seek to maximize his earnings during his playing years, just like any other average person does in his career.  Instead, we see the multi-million dollar contracts, or we lose our favorite player to another team because our team couldn’t afford him, and we have to find someone to blame.  We blame the player, the union…and we blame Scott Boras. Though my gut feeling is to dislike the guy, I have to admit that he’s simply doing his job.  He’s supposed to be a zealous advocate for his client, and his job is get his client the deal the client wants.  If the client wants the most money he can get, Boras is the man for the job.  He’s a sharp negotiator and great at his job.  You really can’t blame him for that.  Instead, blame the owners who negotiate with him.  If no one would pay the big bucks, Boras wouldn’t be the infamous character he is.  If the owners really thought he was a detriment to the game, they would all refuse to negotiate with him.  Instead, they fork over the big bucks to one of his clients because they believe that player can make them, the owner, more cash.  I guarantee you that in the long run the owner only spends what he thinks he’ll get back in revenue from increased ticket sales, advertising, apparel, etc.  The whole system is unbalanced and sometimes simply unfair.  But it’s the business of baseball as a whole that is to blame, not simply Scott Boras.  In fact, if you read my legal journal article, you’ll see that Boras actually has some interesting ideas that clearly show his regard for the game. So, is Scott Boras the most influential man in baseball?  Ever?  No.  This decade?  Last decade?  Some would certainly say so.  Me, I think George Steinbrenner has a leg up on him, but I’ll leave it at that for now.4

For love of the game,

Kristi

1 I no longer believe that the pendulum has swung to the other extreme (ie, I no longer believe players are overpaid in relation to team value and owner profits).  More on this at another time.

2 This is obviously an overly-simplistic explanation.  The creation of the MLBPA and the appointment of Marvin Miller to lead the group really drove the birth of free agency.  Another interesting thing to note is that Peter Seitz was the deciding vote in the arbitration.  Who cares, you ask?  Peter Seitz representing the NBA player who defeated the NBA reserve clause.  Makes you wonder how MLB ever let that happen.

3 Is that really true? I’m no longer inclined to think so.  I don’t think it’s a matter of our team not being able to afford the player.  Instead, I think owners make decisions about how to allocate their money – not just in terms of the team, but in terms of all of their business ventures.  Will keeping the player increase their sales of tickets or boxes?  Will his salary force the team to pay an additional amount in revenue sharing or luxury tax?  Can the owner make more money using that money to improve land he owns around the stadium?  I no longer believe that any team is “poor.”  No owner has ever lost money when he sells his team.  Instead, team values continue to soar, even for teams that claim they’re operating in the red.  I won’t get into it here, but check the numbers.  You’ll see.

4 I’ve changed my mind here too…I think it’s basically a tie!

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