Save now, pay later
Posted on March 5, 2008
Filed Under Contracts, Spring Training | 1 Comment
It’s times like these that I wish I could be a baseball GM for a day. As you probably have heard by now, some of the game’s top young players have been making headlines lately by whining about their contract renewals.
Red Sox closer Jonathan Papelbon, Brewers first baseman Prince Fielder, Phillies ace Cole Hamels and Orioles outfielder Nick Markakis don’t have enough service time to file for arbitration yet. They must accept whatever salary their clubs want to pay them, which can be as “little” as the league minimum of $390,000.
If it was up to me, that is exactly what I would pay them: the minimum.
There is little-to-no upside in paying one penny more than you have to, because once the tables are turned, the players are not likely to reciprocate the kindness. Case in point: Ryan Howard took the Phillies to arbitration this year and won a $10 million salary. Last year, the Phillies renewed Howard at $900,000, setting a record for a player with “1-plus” years of service time. All they got for kicking in that extra half-million was a kick in the teeth.
But Howard did exactly what you and I and most anybody would do in that situation: He had the hammer and he used it.
Teams would be wise to do the same when they have the chance. Once players get into the arbitration process (usually in years 3 through 6), their salaries begin to rise exponentially, win or lose — this year management won six of the eight cases that went to the arbitrators but still had to absorb a 120 percent increase for the 110 players who filed for arbitration. If the owners really wanted to lower salaries for all players, they would just make all players free agents every year, an original Charlie O’Finley idea detailed brilliantly in The Lords of the Realm. (I just noticed David Pinto at Baseball Musings has a great take on this topic as it relates to the contract renewals.)
For all the grief the Florida Marlins get for how they run their business, they do get one thing right: They use their hammer.
In 2006, Miguel Cabrera’s final pre-arbitration season, the Marlins renewed his contract for $472,000. Cabrera is a comparable talent to Howard, if not better, but Florida’s front office knew that when it came time to sign Cabrera to a longterm contract, only a top dollar offer would get it done. This spring the Fish renewed superstar shortstop Hanley Ramirez at $439,000, only a $37,000 raise from last year. Ramirez will be eligible for arbitration in 2009 and will be in position to win a salary approaching eight figures, so they might as well save money now while they have the chance.
Perhaps with the new stadium deal nearly wrapped up, the Marlins will be willing to offer Ramirez a longterm deal after this season in hopes of buying out his arbitration years and one or two free-agent years at a slight discount. It’s the type of deal that benefits both sides and makes the fans want to buy more officially licensed merchandise (see: David Wright, Jose Reyes).
But that is a question that can wait until next year. For now, the Marlins are wise to behave exactly as these other clubs have done with their young stars: Let them eat cake.
Comments
One Response to “Save now, pay later”
Leave a Reply
[...] jake wrote a fantastic post today on “Save now, pay later”Here’s ONLY a quick extractIn 2006, Miguel Cabrera’s final pre-arbitration season, the Marlins renewed his contract for $472000. Cabrera is a comparable talent to Howard, if not better, but Florida’s front office knew that when it came time to sign Cabrera to a … [...]