Definitely, there’ll be a correction. I don’t agree the correction will come right away. Because of higher revenue streams, I’m not convinced the correction will correct below this year’s values (disregarding the truly stupid Matthews/Pierre/Meche deals for the moment). I bought my house for $300K. It’s “worth” about $100K as far as I’m concerned. It will correct in the next two years down to about $400K from a high of $490 or so.

+ Miguel Tejada had the three best years of his career at 28, 29, and 30 after signing his big contract. That’s highly unusual. +

Agreed. He was an MVP before the contract, so I had assumed he hadn’t raised his game as much as he actually has. Off-topic, I wonder if the A’s park was particularly poorly suited to him? I generally expect shortstops and 3B’s to peak early, not late.

+ No, [The Sexson deal] is that bad. +

I will take your word for this. I never expected anything nearly as good as Mr. Sexson’s 140 OPS+ in 2005 (I thought he’d be injured, to be honest). I would have thought a hitter who rakes in a ballpark where most fail to do so would potentially be worth more. I seem to have fallen for the famous Glenn Davis fallacy.

This is a sore point with me because I think the M’s should have been rebuilding last year or the year before, and not kept trying to sign a few free agents and rely on hope that something miraculous would happen. If they had gutted out a few rebuilding years we might be in a lot more hopeful position now. There is always a way to squint at your team and see it as not that far off from competitive, but I think you’re a lot better off doing the hard work assembling a good team and not hoping for miracles.

It’s not the same number for each team in baseball, but each team has a practical limit for how much money they are going to spend in any given season. Thanks to the new revenue streams, a lot of teams had a bunch of extra cap space this year and they were itching to spend it.

If you’re hell bent on spending up to your limit, the smart teams are the ones spending that extra money on short-term deals that don’t hamper their flexibility or on long-term deals to legitimately premium talent (Matsuzaka). The bad teams have committed a bunch of long-term money to players who figure to be replacement level in two or three years and aren’t that much above replacement level now. Soon enough, they’ll be looking to shed those contracts and start the process of blindly snapping up whatever free agents are available whenever they have some money to spend.

It’s all more transparent in the NBA, because everyone knows where the spending limit for each team is set, but that’s the analogy that I see here.

Miguel Tejada had the three best years of his career at 28, 29, and 30 after signing his big contract. That’s highly unusual. If you’re counting on a free agent to play better than they ever have before, it’s a sure sign that you don’t know what you’re doing.

While it’s highly unusual for a player to have his three best years after signing a large contract, I don’t think it should have been unexpected in the case of a player like Tejada. 28, 29, and 30 are peak years. If a player that good becomes available at 27 (or younger), the risk of overpaying is much less than it is for the vast majority of “big name” FA’s, who tend to be in their thirties.

Now for the real question: How related are a player’s value and their price? Obviously, it varies. Some players are underpaid (many players in their first six years are vastly underpaid relative to their value) while others are overpaid. For teams on a fixed budget, the key to success in baseball is finding ways to underpay players, which is what has made the A’s so successful. This is why players in their first six years are so precious. There are other ways to underpay players. For example, one could wait until there is a relatively small pool of funds for GM’s to spend and purchase free agents at that time, which, I believe, is what the authors of the site are suggesting. Purchasing free agents when the pool of funds is large (as it is this year) makes it likely the team will overpay.

The gaining acceptance of non-baseball men into influential positions in baseball operations departments. Despite Moneyball’s flaws, we can probably thank Michael Lewis for opening the eyes of many owners to a new way of running their organization. The St. Louis Cardinals owner, for instance, read the book, demanded implementation of some of the Moneyballistic ideas, and the old school Cardinals went out and hired Jeff Luhnow straight out of corporate America, and he has instituted all kinds of changes to the way the Cardinals draft, scout, and evaluate players.

The new wave of GM candidates are guys like Chris Antonetti who have law or business degrees and little or no professional baseball experience.

From Jon Daniels to Josh Byrnes and Andrew Friedman, we’re seeing more organizations shift away from experience and going towards academic education.

It’s not going to happen overnight, but baseball owners are businessmen, and they’re getting on the train of established business principles. “Trust my scouting instincts” isn’t going to pass as a reason to give out a $100 million contract for much longer.

Surely the biggest reason that this bubble will never last is because players are so cheap for their first 6 years, and owners will realise that it’s far more efficient to use essentially free young players than ludicrously overpriced veterans?
The people giving out these contracts are going to get fired in large part due to these contracts. Eventually, major league teams will stop hiring people like Jim Hendry.

Dave, while I agree with all the underlying sentiments, I have to ask – what makes you think it will ever change? Free Agency is not exacly new – it’s been around for three-plus decades now. A couple of generations of Front Offices have come and gone, and we still see the big contracts. What is new that will change the FA market?

Sure. We’re making all these statements under the assumption that the Mariners aren’t going to start spending $150 million on player payroll next year. Considering their track record and public statements, that’s a pretty safe bet.

But you also have to consider the budgets of all MLB teams. You can’t just state that the market will correct because the M’s have a budget that they’ve capped at $90 million or so. If the other 27 teams decide to increase their budgets by 20%, you will see a corresponding jump in salaries (simply because the pool of free agents is limited and fixed in size).

You also can’t apply macroeconomics to a microeconomic situation. The impact of the economy at large has little to do with the economic situation as it applies to baseball ownership. In baseball you have 28 individually owned entities. At any given point in time a single entity can deviate from the norm and affect the entire market (see Tom Hicks). Even if the decision is “stupid” it affects the rest of the market. The Mike Hampton deal set the bar for later contracts. The A-rod deal (while never surpassed) again raised the bar for future free agent deals.

The only time MLB owners have managed to hold salaries down for any length of time was when they colluded. Without collusion, they just can’t stop themselves (collectively or individually) from spending more each year. Even with a form of collusion in place for the draft, you still get teams offering value outside their slot to make sure they get the players they want.