Sox Salary Strategy Debunked

[C.Rector]

While the following article does not deal directly with the White Sox, it does deal with the salary strategy that the Sox have been using, one that originated with the Cleveland Indians of the 1990's.

 

 

From:

 

http://twinstakes.bonnes.com/members/jbonn...33;OpenDocument

 

 

Ohio Scams

by John Bonnes

01/06/2004

 

The Twins also told Greenberg they have no interest right now in discussing a multiyear contract for Johan Santana.

- Star-Tribune, December 15, 2003

-------------------------

 

When a philosophy is universally embraced by sportswriters, baseball management and players' agents, one can be pretty sure that it's pure bunk.

 

Such is the case with the universal acceptance of the Cleveland plan. As the Cleveland Indians were opening a new stadium in the mid 90's, they were blessed with a farm system the produced players like Kenny Lofton, Carlos Baerga, Albert Belle and Jim Thome. They also started running away with the AL Central on a regular basis and became a model franchise for all of baseball.

 

But Cleveland management and baseball writers didn't talk about the causes which were really responsible for the Indians resurgence toward relevance - namely, having a load of good young cheap players develop simultaneously and a new taxpayer funded stadium that brought in boatloads of revenue to maintain a higher payroll. Instead, not too surprisingly, they liked to talk about what smart business people they were for "locking up" good young ballplayers at a reduced price for the security of a long term, guaranteed contract. It's as if the John Hart and the Cleveland Indians weren't satisfied with dominating the AL Central for the duration of the 1990's, so they devised a myth to ensure they would have a shot over the next 20 years.

 

It was the kind of philosophy that general managers all over baseball could embrace. It made sense. It was something that could make them look both proactive and fiscally responsible during those annoying meetings with the owner. It played well to the fans. Plus, it took care of those nasty arbitration headaches for years at a time. And so now, whenever a teams signs a contract with their own player prior to free agency, everyone - management, players reps and sportswriters - points to the Cleveland plan as the only proof necessary to show that their management is on top of things.

 

More often than not, it's bunk. That's because the devil is in the details, and most fans don't want to pay attention to the details, especially when they involve math. The trick isn't to sign a popular young player to a long-term guaranteed deal. All young players, popular or not, want long-term guaranteed deals. The trick is to sign a popular young player to a long-term guaranteed deal considerably below their anticipated market value, and that's the kind of research and math that makes many sportswriters' brains hurt.

 

For a long-term deal to be beneficial for a major league team, they need to get significant concessions in salary for taking on the risk of signing a young player, because giving a young player a long term guaranteed deal is a risk, and a big risk at that. Young players get hurt, especially young pitchers. Young players can feel the pressure of trying to live up to a multi-million dollar price tag and fail spectacularly. Young players - hell, young people - are easily distracted, especially when success comes too fast. And if any of these things happen - ANY of these things - it becomes questionable if a player will live up to his expectations (and expected salary) over the life of the contract.

 

The Twins have learned this the hard way. Let's review the list of young players that the Twins have given guaranteed deals while they still owned their rights: Cristian Guzman, Corey Koskie, Eric Milton, Joe Mays, Torii Hunter and Jacque Jones. The Twins have been burned badly on the lethargic Guzman, and the injured Milton and Mays. In addition, Hunter's development stalled last year and Jones is being shopped as trade bait to take his salary off the books. The only clear cut victory out of that group was Koskie, and even then it was rumored that the Twins might not pick up his option this year. You can reasonably state that the Twins have wasted nearly $20 million in salary alone between just Mays and Milton, and the $30+ million they still have committed to Mays and Hunter is looking questionable.

 

So not wanting to talk about a long term deal with Santana isn't necessarily a sign that the Twins don't want Santana around long-term or that they don't believe in him. It just means that they're willing to pay the freight to keep the risk of a dropoff on his side of the fence. They aren't going to lose him. The Twins will pay approximately $2.5 million this year to Santana in his first year of arbitration and will have the option of continuing to pay his market value for 2005 and 2006 if he stays healthy and productive. That's a pretty reasonable position to take with a 24-year-old arm that's never been used as a starter for a full year in the majors and had offseason surgery for chips in its elbow.

 

And it's a pretty reasonable position to take when dealing with most young players. Ten years ago, small market teams were sold a bill of goods by one of their own just as the source was transforming itself into a major revenue producer. Given the right kind of trade-off (like significant cost savings for a lifetime of security) that kind of deal still makes sense. But the teams that have the lowest payrolls are also the teams for which that risk is the most significant. And they're also the teams for which the Cleveland plan makes the least amount of sense.

-------------------------

 

That "if everyone believe is it's probably bunk" thing pretty much applies to the whole Pete Rose confession as well. And his worthiness for being entered in the Hall of Fame has NOTHING to do with how sorry you think he really is.

 

Of course he bet on baseball. And of course he's sorry. What's remarkable about this isn't that he finally came clean or apologized. What's remarkable is that he didn't do so over ten years ago when he was caught. What's remarkable is that he's somehow turned the unremarkable attitudes of honesty and contrition into a bargaining chip by withholding them for so long.

[DBAHO]

They're absolutely crazy if they let Santana go in da future just because of sum bad history with guaranteed contracts. He's got da best stuff on that team.

[SuperSteve]

Can someone summarize it. If not I will have to read it tomm...too late to read whole think now.

[baggio202]

what i got out of it was that the twins now owe so much money to players that didnt develop and now arnt worth what they are getting paid that they cant afford to tie up santana long term...i think the author is saying use this plan sparingly with only your best prospects..dont do it with every young player you have..

[Rex Hudler]

Using Mark Buehrle for example.........

 

That signing Mark to a 3-year deal was a bad move, IF the amount they gave him was not significantly less than what he would likely get at market value if they went year to year with him.

 

The concept of locking up young players (ones not yet eligible for free agency) in long-term contracts the way the Twins did with Mays, Milton, Guzman, etc. and the way the Indians did with Lofton, Thome, etc. is only good if the team realizes a savings over year-to-year market value due to the risk of young players not living up to expectations.

[YASNY]

There ya go. It's not just KW that gets burned on some long term contracts. It happens all over baseball. Some work out, some don't. The big difference is that teams like the Yankees can afford 3 or 4 major mistakes while other teams can't afford to have even one blow up on them.