Hot Stove Thinking – Yankees edition

This post began in my head as a mixed brew of confused reactions to the Yankees signing Jacoby Ellsbury away from the Red Sox. Like all posts these days,  I left it to  percolate as I worked on 2013’s biggest proposal deadline. Friday was final production and if all went well, printing. Friday sneered and hit me with a left hook. Cano to the Mariners? Inconceivable. The pot exploded. The proposal was extended (again). I collapsed exhausted. As my brain shut down, Twitter slapped me. Hard. Carlos Beltran to the Yankees.

10 hours of sleep, a pot of coffee, and a whole bunch of reading later, I’m ready to make some sense of my impressions. To make sense of any baseball signing, you have to step back and review assumptions about the market. This is not your grandfather’s market, in which Catfish Hunter pioneered free agency itself (1974). This is not your father’s market, in which Bobby Bonilla ($5/29M in 1992) and Barry Bonds (6/$44M in 1993) broke the Pirates’ backs for 20 years by signing elsewhere. If you adjust for today’s dollar, the Giants just agreed to pay Hunter Pence (5/$90M) more than they paid Bonds for what turned out to be the best years of his career (pre-BALCO).

The excellent Pittsburgh Tribune/Pirates beat writer, Travis Sawchik, offers this stunning metric as a descriptor of today’s market:

In 2003, players received 63 percent of revenue, the top mark in recent history according to the Sports Business Journal. Major league players’ share of revenue declined throughout the decade, reaching 42 percent in 2012. For comparison, NFL, NHL and NBA have salary caps but guarantee players about 50 percent of revenues.

That should freeze the casual fan in his or her tracks and the contents of the office water cooler along with it. In 2003, one of the finest LHP of a generation (Tom Glavine), still in his prime, signed a three year deal worth $35M. 10 years later, $12M/yr gets you a fading Tim Hudson, or a reclamation project like Scott Kazmir. $10M gets you Scott Feldman. $8M gets you Phil Hughes. If you hold a club friendly option, it gets you James Shields ($12M) or Jon Lester ($13M), but on the open market, pitchers of Glavine’s caliber go for at least $20M/yr. To the casual fan, the numbers keep going up, so those greedy, entitled players must be getting more and more of the pie. Instead, they’re getting less and less.

Sawchik suggests that there is a baseline shift in production, with a wave of young stars getting playing time and putting up big numbers before they accumulate the magic six years of service time. Without rampant PED usage to elongate older players’ peak periods, enabling them to keep signing big contracts into their late 30s, owners can keep more of the pie. This theory has some merit, but there is a long tradition of ball players from Mantle and Ott to Griffey and A-Rod breaking in young and putting up big. I’m more intrigued by the trend of smart franchises buying out their young stars’ initial years of free agency before they arrive, as the Rays did with Longoria and the Pirates with McCutchen. The club gets a huge discount and the player achieves financial security, with a good chance of signing a much larger deal in their early 30s if their health holds up.

Less evident to the casual fan is the real reason for the sudden plunge in the owner/player revenue split. Spending continues to increase steadily, but revenue is booming. As Wendy Thurm wrote for Fangraphs last month, MLB just signed a pair of national TV contracts with ESPN and FOX that put an extra $750M per year into MLB’s Central Fund:

That’s $1.5 billion in national TV revenue per season that will go into MLB’s Central Fund, or $750 million more than under the contracts that just expired. MLB can spend money from the Central Fund in a variety of ways, but it’s been assumed in the reporting that the league will distribute the TV money to the teams. If so, each team will receive $25 million more in national TV revenue in 2014 through 2021 than they did in 2013.

We don’t know how teams will actually spend that money – Jeffrey Loria will probably pocket it, and at least a few teams will claim that it’s going to defray the raw deal they’re getting from the city for parking and other infrastructure. You can be damn sure they won’t use it to pay for their own stadium renovations or as seed money for the next new stadium. That’s what taxpayers are for. But you can move the money around however you like. At the end of the day, you can argue that FOX and ESPN just paid for Robinson Cano and Josh Hamilton and Zack Greinke and Prince Fielder. The Reds can give Joey Votto the rest of his money up front and have plenty left over. And that’s why the Yankees are no longer the Yankees. 10 years ago, they could pay whatever they wanted because they had the YES empire and there were at most 5 other teams who could pretend to compete.  In 2014, between national TV revenue and a flurry of lucrative local contracts, the buying power of the rest of the league has caught up.

Don’t get me wrong. The Yankees are still at the top. They’re only talking $189M because one year under the luxury tax threshold is a huge cash windfall in the years that follow, and with A-Rod suspended they have plenty of cap room anyway. But there are a dozen other teams up there with them. It’s not about “haves” and “have-nots” any more. It’s about the rich and the very rich, with 10 year guaranteed contracts as the great equalizer.

All of that to set up my thoughts on Ellsbury, Cano, and Beltran – one paragraph each.

Ellsbury: I love the elite package of speed, defense, OBP skills, and occasional power. I don’t love that he’s averaged 96 games in four seasons and played hurt for some of those. Peter Gammons insists those were fluke injuries. If he’s right and if the Yankees get even 125 games per season, this is a good deal. Dave Cameron thinks it’s a great deal, based on the aging patterns and slow decline of speedy outfielders. If Gammons is wrong and injuries claim huge chunks of playing time (or worse yet erode his skills at an abnormal pace), I’ll wish he was still in Boston. As the Yankees learned this year, nothing is worse than having a bunch of eight figure salaries glued to the DL.

Cano: I spent twenty minutes listening to a coworker (Yankees fan) tell me how lazy and entitled Cano is, how he never hustles or dives for grounders or runs them out, and how it’s good riddance. I could not agree less. Cano has excellent defensive metrics, routinely makes plays tough plays look routine, and has a general fluidity and efficiency of movement that belies his true level of effort. He’s probably going to be one of the ten best hitters in the AL for at least five more years, and that’s before you factor in his position.  I really didn’t think the Yankees would dream of letting him go. He’s the last home grown star they’ve got. You can’t hire mercenaries to be the face of your franchise. All of that plus the Yankees deep pockets seemed like more than enough to offset the risk posed by the aging curve. But I think I was letting the fantasy baseball concept of positional scarcity sway me more than perhaps it should. If the Yankees replace a 5 win second baseman with a 2 win second baseman (using WAR) and make up the difference in the outfield while retaining flexibility through shorter contracts, isn’t that a good business decision? Yes, Cano is still perfectly healthy and showing no signs of decline (unlike Pujols or Hamilton). Yes, the Yankees are in a position to rebound and contend in 2014 and would get immediate value from two or three more peak years. But I’d rather reverse this miserable trend of having half the payroll consumed by players past their prime.

Beltran: Overpaying for 10 years is crippling. Going three instead of two isn’t so bad. I feel like (I imagine) a rich guy feels when he buys his daughter a sports car for her 19th birthday instead of sending her to college in a gently used Camry. Love makes you spend, and I love Carlos Beltran. I wish I’d seen him in pinstripes as a younger man, because he is one of the most criminally underrated players of his generation. I hope that regular “off” days at DH keeps him fresh enough to hit like he did in St. Louis, at least for another 250 games. Gary Sheffield had an excellent twilight run in New York, but the more recent comp would be the far less talented Raul Ibanez. I’m pretty sure that you could sever one of Beltran’s hamstrings and he’d still acquit himself better with a glove than Ibanez. This is one of those deals where I accept the risk on paper but don’t allow it to mute my enthusiasm.