Youthful stars, economic slump stack up against free agents
Published November 24, 2008
There were many surprises on the diamond this year. Foremost among them was the meteoric rise of the youthful Tampa Bay Rays and their $43.8 million payroll.
Part of the Rays’ success story is easy to tell. Years of misery leading to high draft picks. Good scouting, clever trades and proficient player development under the leadership of Stuart Sternberg, Matt Silverman and Andrew Friedman. And, of course, a healthy dose of good luck.
In the recent past, when a small-market, low-payroll club has risen to the top, it has not stayed there. Young players become arbitration eligible and are traded off or become free agents and are lost in the open market. Big-market clubs have swallowed up the talent and been better able to maintain their competitive dominance.
But the common large-market strategy of building a team with proven, older players is less reliable today than in the past. Older players are more subject to injury, and without steroids and amphetamines to keep their bodies going over the long season, older players’ skills and durability diminish more rapidly.
Testament of youth
If the value of youth still needed proof, David Price’s sterling postseason performance provides Exhibit 1. The rookie, with only eight major league games under his belt, blew away Boston’s vaunted hitters.
Amphetamines have been boosting the energy level of older players for five decades. Steroids have been assisting their recovery from injury and building muscle mass for two decades.
With a widely effective new anti-doping policy, the output from aging stars will diminish, as will the competitive advantage reaped by big-market teams that snatch up these players.
The increasing value of youth has been noticed across baseball. Combine this with the country’s financial crisis and economic downtown, and we are looking at a dreary market this winter for free agents.
Historically, sports have been largely insulated from economic downturns. Fans need their sports for distraction.
But, in the old days, baseball tickets cost a relative pittance. Since the gentrification of ballparks, beginning with Camden Yards in 1992, ticket prices have soared as teams have catered increasingly to high-income clientele and corporations.
Multiyear television contracts have also provided insurance. Baseball’s current national TV deals deliver $771 million annually through 2013.
The economy and baseball
Despite the cushion of the television contracts, the U.S. economic situation will have a significant impact on baseball:
• Attendance and ticket prices will drop.
• Sponsorships and signage will fall.
• Premium-seating and catering revenue will decrease.
How far? We don’t know yet, just as neither Ben Bernanke nor Hank Paulson knows how long or how deep the recession will be. But the heightened uncertainty will cause owners to be more cautious in the players’ market.
The downturn notwithstanding, uber agent Scott Boras is exhorting team owners to be confident and aggressive. This advice must sound familiar to Alex Rodriguez, who Boras temporarily convinced last November to turn away from the Yankees.
And also to Manny Ramirez, who Boras persuaded to become a free agent after the 2008 season and not have the Red Sox exercise their option at $20 million for next year. (Boras also would benefit by getting his percentage of a new contract, rather than getting nothing from an exercised option in a contract that was negotiated by a previous agent.)
The Yankees will need to fill their new $1.3 billion facility or their massive investment may go the way of Lehman Brothers. To be sure, the team has more than $80 million of expiring players’ contracts.
The Yankees will be selectively aggressive, but, like the Mets, they will be looking for pitching above all else. Manny is not likely to be a good fit. And being aggressive in this winter’s market may look like Sarah Palin’s appearance on “Saturday Night Live.”
So, Boras may be in for another disappointment. He appears to be looking for a five- or six-year deal, at $25 million to $30 million annually, for Manny. In this economy, that appears to be a long shot.
The smart bet is that the players’ market will be soft this offseason. And the best days of the small city franchises, aided by appreciable revenue sharing, may lie ahead.
Andrew Zimbalist is the Robert A. Woods professor of economics at Smith College. He frequently consults in and writes about the sports industry.