Baseball for the Thinking Fan

Login | Register | Feedback

btf_logo

News

All News | Prime News

Old-School Newsstand


Contributors

Jim Furtado
Founder & Publisher
Repoz
Editor - Baseball Primer

Syndicate

Economics Newsbeat

Tuesday, August 26, 2014

Posnanski: Money money money

 

You probably know that one of Bud Selig’s big objectives as commissioner of baseball was to even the playing field – that is, to give the small-market teams a chance to contend… Funny thing: Here at the end of his tenure, baseball is closer to Selig’s nirvana than perhaps ever before. As Brian McPherson writes in the Providence Journal, the correlation between money spent and winning is at its lowest point in a long, long time. McPherson writes that the correlation right now between wins and money is actually smaller than the correlation between wins and alphabetical order.

Why is this a funny thing?

Because, I believe the reason for whatever actual effect we are seeing is pretty directly tied to the steroid years that Selig has been running away from for more than a decade… I have a theory – one that directly relates to my belief that many baseball teams are doing something that is monumentally stupid. I’m referring to the huge, long-term deals that they are giving players – deals that last until the players are in their mid-to-late 30s, and sometimes even carries them into their 40s. These contracts are a death trap, a suicide rap, and while there are exceptions to every rule, there are never more than a few exceptions…  in the late 1990s and early 2000s… we suddenly started seeing 35-year olds performing at very high levels… My guess is that this seemingly reasonable conclusion that baseball players had started to beat the aging process was, in fact, quite unreasonable and it is probably the biggest factor in these massive, sprawling and utterly doomed long-term contracts… Baseball owners’ and GM’s madness for big money contracts to aging players has, in its own way, evened the game more than anything else Selig or any other commissioner has done.

The District Attorney Posted: August 26, 2014 at 03:15 PM | 26 comment(s)
  Beats: bud selig, economics, joe posnanski

Tuesday, June 17, 2014

Contextualizing The Jon Singleton Extension – MLB Trade Rumors

Here’s a great look at the Singleton extension.

If anything, perhaps, the Singleton extension really marks the latest instance of a general trend away from formulaic contractual models. His deal opens new doors, especially, for players who did not have the opportunity to capture downside protection at their point of entry into the professional ranks, at which time they immediately become subject to the limitations of the reserve clause (as expressed in the collectively bargained Basic Agreement). There are potentially other, yet more creative options as well, such as private insurance (assuming it could be had by a prospect at a reasonable rate) or even public investment. But all players and teams will not pursue such a path; indeed, several of Singleton’s teammates (and others) have declined the opportunity, while some (if not most) clubs will remain largely uninterested in making such early commitments.

History teaches us that, even at his relatively exalted place in the eyes of the game as a top-100 prospect, Singleton was not assured of cashing in on his talent until he decided to forego the chance of becoming the next Fielder. That he chose to do so should have relatively minimal impact on those other players who have the means and desire to bear the inherent risk of transitioning from top prospect to established major league player.

Jim Furtado Posted: June 17, 2014 at 06:44 AM | 7 comment(s)
  Beats: astros, contract extensions, contracts, economics, jon singleton

Thursday, June 05, 2014

The Economist: A singularly team-friendly deal

The magazine’s sports blog argues that human-capital contracts are the solution to the imbalance in bargaining leverage demonstrated by Jon Singleton’s team-friendly deal.

If players like Mr Singleton are willing to offer such generous deals to their employers to lock in a few million, presumably they would give outside investors similarly advantageous terms. With today’s low interest rates, a well-heeled speculator could surely have achieved an expected return far above the market average by giving Mr Singleton a few million dollars, even accounting for the high risk premium associated with the future cash flows of a player with no experience in MLB. Investors could do even better by buying a portfolio of young players, balancing out their individual risks just as insurers do while still pocketing the same profit. The lack of correlation between baseball players’ performances and the gyrations of financial markets is a further selling point.


 

 

BBTF Partner

Support BBTF

donate

Thanks to
Andere Richtingen
for his generous support.

Bookmarks

You must be logged in to view your Bookmarks.

Hot Topics

NewsblogIndians Sign Russell Branyan
(6 - 8:08pm, Aug 29)
Last: Crispix reaches boiling point with lackluster play

NewsblogOT: Politics, August 2014: DNC criticizes Christie’s economic record with baseball video
(6222 - 8:07pm, Aug 29)
Last: Mefisto

NewsblogFG (Sullivan): Alex Gordon, UZR, and Bad Left Field Defense
(17 - 8:01pm, Aug 29)
Last: cardsfanboy

NewsblogRockies' Troy Tulowitzki bent on playing shortstop: "I will retire before I move"
(7 - 7:57pm, Aug 29)
Last: Gold Star - just Gold Star

NewsblogJesus Montero gets heckled by Mariners cross checker during rehab stint
(43 - 7:47pm, Aug 29)
Last: God

NewsblogMets call up Dilson Herrera, have "talked about" d'Arnaud to LF
(48 - 7:39pm, Aug 29)
Last: The District Attorney

NewsblogRobothal: Tension growing between Astros' manager, GM
(16 - 7:39pm, Aug 29)
Last: AROM

NewsblogJonny Venters Tears UCL, Facing Third Tommy John Surgery
(17 - 7:30pm, Aug 29)
Last: McCoy

NewsblogPosnanski: Alex Gordon and the M-V-P chants
(59 - 7:24pm, Aug 29)
Last: TomH

NewsblogOT: The Soccer Thread August, 2014
(798 - 7:05pm, Aug 29)
Last: CWS Keith plans to boo your show at the Apollo

NewsblogRon Roenicke rips into home-plate umpire
(14 - 6:50pm, Aug 29)
Last: Harveys Wallbangers

NewsblogPrimer Dugout (and link of the day) 8-29-2014
(23 - 6:48pm, Aug 29)
Last: Eric J can SABER all he wants to

NewsblogWatch a Japanese baseball player try to hit a 186 mph fastball (Video)
(14 - 6:25pm, Aug 29)
Last: cardsfanboy

NewsblogBusiness Week: Houston Astros' Jeff Luhnow Lets Data Reign
(7 - 6:19pm, Aug 29)
Last: cardsfanboy

NewsblogOT: Monthly NBA Thread - August 2014
(375 - 5:51pm, Aug 29)
Last: Crispix reaches boiling point with lackluster play

Page rendered in 0.9973 seconds
55 querie(s) executed