Mariners Sign Kevin Millwood

January 22, 2012 · Filed Under Mariners · 50 Comments 

The Mariners have been rumored to have interest in Kevin Millwood for a month or so now, and today, news has come out that he has agreed to terms with the team on a minor league contract with an invite to spring training. It’s not at all uncommon for teams to bring in veteran guys to hang out in Arizona so the team can evaluate whether they have anything left to add – the team just did that very thing with Aaron Heilman, for example – but that’s probably not how we should look at this deal. Barring injury, I’d say Millwood has a very good chance to make the team as a starter out of spring training.

The M’s have been talking about wanting a Major League veteran for the rotation all winter. Right now, the 2-3-4 spots in the rotation are being filled by Jason Vargas, Hisashi Iwakuma, and probably Hector Noesi, so the middle of the rotation is two rookies and a guy with a decent history of health problems. Yes, Vargas has thrown 400 innings over the last two years, so perhaps the perception of him as a five inning guy shouldn’t be there anymore, but there’s no question that he’s still viewed with some skepticism due to his second half fades the last couple of years.

With those three penciled in for rotation spots, it was always unlikely that the team would hand the fifth starter’s job to another youngster, whether that was Blake Beavan, Charlie Furbush, Danny Hultzen, or James Paxton (the latter two could certainly benefit from a few months in the minors, and people screaming that this move “blocks them” should realize that Millwood will not present any kind of obstacle to their promotion once they prove they’re big league ready). Eric Wedge just wasn’t going to be comfortable breaking camp with Felix followed by four guys with limited track records in the big leagues, so it was always likely that the team was going to add an older guy to the mix. Enter Millwood.

At 37, he’s been around the block a bunch. Wedge and Willis know him from his time in Cleveland. And, if there’s one thing you can say about Millwood, it’s that he’s always been a guy you could count on to rack up innings. Before last season (when he spent the first few months on the sidelines waiting for someone to give him a job), he’d thrown 150+ innings every year since 2005. Declining stuff has meant that the quality of those innings have gone from being good to just okay, but even at his worst, he’s never posted xFIP higher than 4.86, and he was actually pretty good in limited time with the Rockies last year.

From 2009-2011, he posted the following line:

7.5% BB%, 15.2% K%, 40.1% GB%, 11.5% HR/FB, .294 BABIP, 98 ERA-, 107 FIP-, 105 xFIP-

He’s basically been a pretty generic MLB starter, posting a walk rate right around league average and a strikeout rate just a tick below that. His ERA has been slightly better than his peripherals would suggest, even with the inflated home run rate, but all three of the minus stats (remember, 100 is average, and like with ERA, lower is better) put him right around the average-ish starter mark. Any basic projection of his 2012 performance will start with that performance and then take a bit off to account for the fact that he is getting older, but even at 37, Millwood’s still a useful fifth starter in the big leagues – if he stays healthy and throws 150 innings, he’s probably something like a +1 win pitcher next year.

On its face, it’s hard to argue with bringing in a useful veteran who adds pitching depth at a minimal cost and reduces the amount of apprehension on the coaching staff. Bringing in Millwood simply gives the Mariners more options, not less, and provides them with some security in case Iwakuma’s shoulder is still an issue or Noesi proves not to be ready to step right into a big league rotation. Depth is nice, and when it comes to pitchers, you can never have enough guys capable of taking the hill and throwing strikes.

That said, Millwood doesn’t really represent any kind of significant upgrade for the team. While Blake Beavan’s ERA wasn’t supported by his underlying performance, he offers the same basic throw-strikes-and-hope-it-turns-out-okay skillset as Millwood does. Swapping out Beavan for Millwood is basically a lateral move, and while it’s nice to have two of these guys in case of emergency, the team isn’t appreciably better with Millwood in the rotation than they would have been with Beavan.

And that’s kind of the sticking point about this move for me. As I talked about in my recap of the Montero-Pineda swap, I was fine with the concept of trading pitching for hitting in order to take advantage of the deflated market for free agent starters right now. Spending the remaining money in the budget to upgrade the offense wasn’t going to be easy, but with guys like Edwin Jackson sitting around hoping someone shows some interest in him eventually, using that cash to replace Pineda with a quality starting pitcher wouldn’t be too terribly hard.

The Mariners could theoretically still make a run at a guy like Jackson, but this signing makes that a lot less likely, I’d imagine. My guess is that the team will be content to go to spring training with a projected starting rotation of Felix-Vargas-Iwakuma-Millwood and then one of the young pitchers (with Noesi probably having a leg up at the moment), with the losers of the Beavan/Furbush/Noesi battle headed to the bullpen. They wouldn’t have signed Millwood had they intended to just displace him with another free agent starter, and I don’t see the team being overly motivated to completely shut off the collection of young arms from competition in spring training.

So, the question once again comes back to “now what?” Assuming Millwood gets $1 or $2 million in salary if he makes the team, the organization has a currently projected payroll in the low-$80 million range right now. That’s a good $10-$15 million below what they’ve been running in prior years, and I can’t see the team actually deciding to slash payroll this winter, especially with so many fans having hyped themselves up into hoping the team gets Prince Fielder. It’s just tough to imagine that they would have publicly displayed any interest in Fielder if Plan B was just going to be to spend no money whatsoever and fill out the roster with a bunch of low cost guys that the average fan has never heard of.

So, if we assume that this move means that they’re not going to pursue a guy like Jackson to upgrade the rotation, then it’s not exactly clear what else the team would do to upgrade the roster before spring training begins. They don’t really have a roster spot for another LF/DH type, so the only way to fit another bat onto the team would be to jettison Miguel Olivo and go with Jaso/Montero as the catching platoon, and I find it hard to believe the Mariners are really ready to make that kind of commitment.

So, when the question is “now what?”, I don’t really know what the answer is. They theoretically still have money to spend, but they’re running out of roster spots to hand out to guys who would represent a substantial upgrade of any kind. At this point, the only thing I can see the team still doing is swapping out Chone Figgins for a better third baseman (such as Mark Reynolds), because beyond that, any other upgrades might have to come from some kind of rabbit-out-of-the-hat trade that none of us see coming.

Like with every other move they’ve made this off-season, Millwood’s a nice role player at a good price. These guys make sense and give the roster needed depth, but I can’t imagine that the team is really going to say that they’re good with all of their transactions representing that kind of move. Even while I’ve advocated for a spread-the-money around plan in lieu of throwing a huge contract at Prince Fielder, I’ve advocated for acquisitions that would offer the hope of bringing in players who could be everyday guys both now and in the future.

Millwood is not that. Sherrill is not that. Iwakuma and Jaso might be, but both come with significant question marks. Montero can be that, but he cost the team a similarly useful piece in order to get him, so that was more of a lateral move than an upgrade. Noesi could be that, except signing Millwood now makes it somewhat less likely that he’ll make the team as a starter on Opening Day.

Jack Z has done a nice job of acquiring players who should help ensure that the team won’t suck as badly as they did last year, but he hasn’t really done anything yet this winter that pushes the organizational talent base forward in a substantial way. Given that the Mariners should still have some money to spend, they shouldn’t be content to call Millwood the final off-season acquisition and just go to camp with the roster they have now. They can and should do better. There’s nothing wrong with signing Kevin Millwood, but this can’t be the last move. There still has to be something else. And now that the something else probably isn’t another starting pitcher, I’m just not sure what other options the team has left.

Time to pull off another move that no one saw coming, Jack, because right now, this team isn’t going to win back enough fans to make the 2012 season a success.

DH Candidates

October 8, 2010 · Filed Under Mariners · 86 Comments 

I decided to save the second-baseman-we-could-trade for a larger post next week, since there will be some crossover with guys who could fill the backup SS/utility infielder role. If the Mariners don’t like any of the cheap free agent second baseman, it’s likely they may look to the trade market to fill both of the 2B and UT holes, and they’ll be buying from the same market, so we’ll just look at that all at once.

So, today, we focus on the boppers. The Mariners are probably going to make a run at some kind of offensive upgrade this winter, and as we’ve discussed, DH is really the only line-up spot where they can do that. Especially if they go with cheap stop-gaps at second base and in the rotation, they’ll have some money to spend on a guy who can hit the ball over the wall. The problem will be that, as a pretty obvious rebuilding team, they’re not going to be very high on the list of destinations for many free agents, especially the older guys who are looking to land with a contender and have already made a lot of money. Jim Thome would probably love hitting in Safeco Field, but I doubt he wants to spend his age 41 season on a team that will be projected to finish in the cellar by just about everyone.

And, by nature, most DHs are older. It’s a position generally stocked by guys at the end of their careers who can’t play the field anymore. So, that presents another dilemma – should the team really be spending a decent amount of its budget on a guy who is on his last legs? Yes, the offense needs improving, but if the team isn’t going to win the World Series next year, they probably shouldn’t spend $7 or $8 million on a guy in his late-30s anyway, as that money would have to come from the pool that could potentially be invested into players who would actually be productive in 2012 and beyond.

So, we’re basically throwing out guys who might be on their last contract. They’ll probably want to play elsewhere anyway, and it doesn’t make sense for the M’s to use a lot of resources on a guy who may not be an active player in 12 months. We’re also going to eliminate all right-handed hitters from the search, because bringing in a bat-first guy who will get killed by Safeco doesn’t really accomplish anything. Oh, and as we mentioned in the last piece, the organization probably can’t afford to have the DH be only a DH if they’re going to carry Milton Bradley – they’ll need him to be able to fake it, at least, at first base or in left field, to give them necessary roster flexibility.

Using those filters, we can say goodbye to the following possibilities, for the most part: Jason Giambi, Troy Glaus, Paul Konerko, David Ortiz, Jim Thome, Magglio Ordonez, Vladimir Guerrero, Johnny Damon, Manny Ramirez

Suddenly, a deep group of available hitters looks a lot smaller. Let’s take a look at some of the possibilities.

Adam Dunn, Free Agent

Let’s just get this one out of the way – he’s the longest of long shots to fill this spot. He’s stated his distaste for DH’ing before, and if he had his druthers, he’d stay in the National League. He’s said the right things about being open to being a DH, as his agent certainly wants him too have as many bidders as possible, but it’s not something that he really wants to do, and odds are pretty good that he’s not going to want to do it for a last place team. Given that teams like the White Sox are known to be going after him, there’s little chance that he’ll end up signing a contract in the team’s budget anyway. He’s available, and he fits the mold of what the team is looking for in some ways, but he’s probably not going to be the guy they end up with.

Prince Fielder, Milwaukee

I threw water on these rumors a few weeks ago, arguing that his $15+ million salary in 2010 and desire for a huge, long term extension priced him out of the Mariners plans. However, after I wrote that post, I had a couple of people in the game tell me that they think the Brewers will be aggressive in trying to move Fielder this winter, and that they’ll work with teams who might not be able to afford him to get them into the bidding. It sounds like they realize that there won’t be a huge market for Fielder this winter if they don’t create one, so while they’re not going to pick up any of his 2011 salary, they might be amenable to taking back some salary in a deal that got them the pitching they were looking for. I’d still say its a longshot, but the odds might be a couple of points higher than I thought they were when I wrote that post.

Carlos Pena, Free Agent

Once a guy who figured to be way out of the team’s price range, Pena’s ridiculously bad September (.122/.258/.232) and ugly showing against Cliff Lee could be driving his price down significantly. He has the kind of offensive skillset that the Mariners would like – patience, power, and relative youth – but he’s also a pretty decent defender at first base, and it’s unlikely that he would want to relegate himself to being a DH at this point in his career. The M’s could offer him a chance to split time at first with Justin Smoak, but that’s probably not going to be that enticing either. I’d expect Pena to land with a club that needs a first baseman, and right now, that’s not the Mariners.

Aubrey Huff, Free Agent

Huff is the walking definition of an enigma. His wOBA by year since 2004: .365, .315, .346, .337, .387, .297, .388. There’s a couple of really bad years, a couple of mediocre years, and a couple of great years in there. And that was during his prime. Now, headed for age 34, he’s probably on the downside of his career, except that he just had the best season of his life. He upped his walk rate by 50 percent without striking out any more than he did in 2009, and the left-handed power is still there. He’s young enough that a multi-year contract isn’t out of the question, but would the Mariners want to take commit several years to a guy who was below replacement level in 2009? I’d imagine the Giants will probably try to re-sign him as well, so they’d have to outbid a winning team where he’s comfortable in order to get him. He’s an option, but there are hurdles here.

Lance Berkman, Free Agent

If the Mariners are going to sign an older guy, this would be the one I’d be the most in favor of. Yes, he’ll be 35 next year and struggled with the Yankees, but he’s still got some good baseball left in him. A switch-hitter with one of the most patient approaches in MLB, the question is how his power will hold up as he ages. He had trouble driving the ball this year after a wrist injury, but that shouldn’t linger into 2010. Prior to this year, he’d posted a wOBA of .383 or higher in every single season of his career, since his brief debut in 1999. He’s a legitimate offensive force, and he’s still mobile enough to play first base when necessary.

The problem will be location. He negotiated a full no-trade clause into his contract with the Astros because he’s a Texas guy who values being close to his home. There was some talk that he was planning on going back to the Astros this winter, but they did trade for Brett Wallace and have talked about moving Carlos Lee to first base, so that might not be an option. The Rangers, however, have a gaping hole at first base and will have money to spend this winter, so if they show interest, Berkman probably won’t choose Seattle. If the Rangers pass, for whatever reason, he could be a really good fit though. His numbers and age will keep him from getting a huge paycheck, so he’ll be in the M’s range in terms of salary, and he could reasonably be a good hitter for several more years. The key would be convincing him to sign here – if they could do that, he’d be a good guy to target.

Luke Scott, Baltimore

A guy I’ve been advocating for quite a while, the M’s probably missed their chance to acquire the O’s slugger. Given how well he finished the 2010 season, Baltimore will be inclined to keep their best hitter, even as a second year arbitration eligible guy. They can afford to give him a raise to the $6 or $7 million range, so they don’t need to trade him this winter. Odds are they’ll keep him for the start of 2011, let him crush some more home runs in the first few months of the season and shop him around this summer at the deadline.

Hideki Matsui, Free Agent

Now we start to get into the pool of guys who just aren’t all that great, and don’t represent the kind of upgrade that the team is looking for, and would generally just be a waste of money. I’d throw Adam LaRoche, Lyle Overbay, and Russ Branyan into this mix as well. They’re all average at best players with some real limitations, and if the Mariners were just going to go with a guy who would be a decent-but-not-great hitter, I’d rather see them give an unproven kid a shot. I just don’t see much point in paying money to have any of these guys around for one year. They won’t make the team that much better, and there’s basically no upside with any of them. Pass.

Brad Hawpe, Free Agent

If the team can’t get any of their higher priced targets to come here, Hawpe could be an interesting flyer. After years of productive offense (along with putrid defense) in Colorado, he just fell apart this year, hitting .245/.338/.419. For an epically bad defender, that’s just not going to cut it, and that’s why he got released this summer. He didn’t hit after catching on in Tampa Bay either, so he’ll be looking for any team that is willing to give him a chance to get his career back on track this winter. He’s not in the position to be choosy, and if the Mariners offered him a low base salary with incentives and a chance for 600 plate appearances, it would probably be the best offer he’d get all winter.

He’s not an elite hitter, but it seems unlikely that all of his offensive skills evaporated at age 31. Interestingly, he’s not a classic pull-power lefty, as only 40 percent of his career home runs have been hit to right field. He’s shown power to all fields before, and while his numbers are inflated by Coors Field, there are reasons to think that he could be a good hitter again. He’d come with more risk and less upside than a guy like Berkman, but he’d be significantly cheaper and is more likely to sign here. He wouldn’t be my top candidate, but I’d make sure he knew I was interested before he took a deal from someone else.

Dan Johnson, Tampa Bay

I threw his name out there a couple of weeks as the kind of guy that I’d like to see the Mariners give a shot to, though he’s basically a stand-in representation for any number of older minor league sluggers who haven’t gotten a real shot at a full-time job. The M’s basically went this route with Russ Branyan a couple of years ago and it worked well, but I get the sense that they might not be willing to do so again. The team is willing to admit that they’re rebuilding only to a point, and they’ve repeatedly avoided going with a full fledged young roster that would lead to low expectations and lower attendance. The casual fan is going to be looking for some kind of big offensive acquisition this winter, and Dan Johnson won’t be what they’re looking for.

While I think there’s a baseball argument to be made for using the position to try to find a guy who might be here for several years at a low cost, there’s also a legitimate business argument to be made that the team needs to put a decent product on the field next year or risk alienating a portion of the fan base that can be hard to win back. A few years ago, I probably would have dismissed that reasoning, but declining attendance is a legitimate concern, especially since the team continues to tie payroll to number of people who come to the games. With jobs on the line and some angry customers to appease, hesitation in going with another “trust me on this one” type of guy is valid. Besides, Tampa Bay won’t want to just give Johnson away, so you’d have to give up some kind of asset to take that risk in the first place. I can see why spending money on a bigger name guy is more appealing.

That’s not an exhaustive list, as there are other guys who could become available throughout the winter, but hopefully it gives you some idea of what the team will be looking at this winter. There’s a couple of guys in the high rent district that they can’t afford, a couple of middle age guys who might be fits if they wanted to play in Seattle, and some low cost flyers that the team might have to settle for if they can’t land a bigger name.

Roster Construction Theory

October 12, 2009 · Filed Under Mariners · 30 Comments 

Before you ask, yes, the off-season plan post is coming. Patience.

Today, I want to spend a few minutes talking about a little bit of theory of roster construction that kind of gets lost when we begin to discuss the positives and negatives of certain moves. The concept is that of the escalating value of wins – is a four-win player more valuable than a pair of two-win players? Most people would say yes, and they base their conclusions on transactions around a paradigm that reflects that belief.

There is some real logic behind the theory. Regardless of resources, every team has to fill 25 roster spots. If you have a significant financial advantage, you don’t get to buy more players – you still only get to go into each game with 25 guys. So, in order to maximize competitive advantage, rich teams try to consolidate as much value as possible into the spots on a team that mean the most – the nine everyday players, three or four starting pitchers, and a couple of late-inning relievers. These 14 or 15 roster spots take up a bulk of the payroll, and the quality of a team is generally decided based on how much value you can cram into those 14 or 15 spots.

With a limit on how many good players you can have, the way for one team to beat another is to maximize value from those players. That constraint then serves to inflate the value of premium players. If you have a six win player at the same position your opponent has a three win player, he can’t make the two teams equal again by just adding a three win player, because those six wins cost him two roster spots. Your six win player and open roster spot is still a better arrangement for win maximization than his pair of three win players.

There’s also a scarcity of real premium players in baseball. There are perhaps a dozen or so guys who could be expected to put up six win seasons on a regular basis, so if you have one of them, the odds that your opponent also has one go down as well. Without a true superstar, you simply can’t build a roster that has as much upper-end potential. Even if you were able to fill out all 15 important roster spots with above average players and avoid any glaring holes in the 10 role player spots, you’d still be looking at a ceiling of something like 95 wins.

So, based on that, it should be fairly obvious that premium players are exponentially more valuable than combinations of lesser players, even with equal total win values, right?

Not necessarily. The potential upside is certainly higher, but value is not just derived by best case outcomes. In reality, value comes from the expected return and the inherent risk of not receiving that value. If you’ve ever invested in the market, you’ve certainly been told about the value of diversification, and how the best way to build wealth is to spread your investments around in order to avoid losing too much due to the failure of any one asset. The value of diversification is true in baseball as well, and works against the increasing value of wins for premium players.

Just as the upside of a team that has consolidated value into premium players is higher, so is the downside. If you have one six win player who hits the disabled list or suffers a significant drop in performance, you can lose the entirety of that value in a single blow. Ask the New York Mets about how quickly a few injuries can destroy a season – they lost double digit wins off their roster when Jose Reyes and Carlos Beltran missed huge chunks of the season this year. The fact that the Mets had two players of that quality was one of the main reasons the team was expected to be a force in the NL, despite some glaring problems with the rest of the roster. However, when they lost those guys, they took a massive hit from which they weren’t able to recover.

Premium players offer both more reward and more risk. For many people, they look at the increased reward and conclude that star players are more valuable, but they do not also account for the increased risk as well. Major League teams do, however.

The linearity of the value of wins is one that has been studied quite a bit by folks like Tom Tango (Mariner employee, noted statistical wizard). Over time, we simply do not see evidence that teams have been more willing to pay premium prices for premium players. Instead, teams have paid for wins on a linear scale at the current market rate. If you are a one win player in free agency, you’ve generally received the market rate for wins. If you’re a two win player, you’ve received double the market rate. Three wins, triple the market rate, etc…

Major League teams have looked the increased risks and rewards of consolidating value into a single player and decided that they’re basically an even trade-off. When faced with a choice of how much to pay for one six win player or two three win players, the dollar values are generally equal. The premium players get one tangible payoff that non-premium players do not, and that’s contract length.

The best players get really long deals – anywhere from six to ten years. Good but not great players get paid on the same linear scale, just for three or four years instead. In order to secure the rights to a premium player, teams are willing to give out longer guaranteed contracts, but not go significantly over the market rate in terms of wins added. If you’re a five win player, you’re going to get $20-$25 million per season, and all you’re really fighting for in negotiations is guaranteed years and perhaps some perks like a no-trade clause.

That teams see the risk/reward trade-off as mostly equal is interesting. I don’t think most fans do. You’ll remember that the people who liked the Erik Bedard trade from the M’s perspective were also those who were critical of the J.J. Putz deal – in both situations, they sided with the team that consolidated their value into the “best player” in the deal. There’s an old fantasy baseball cliche that you’ll still hear repeated from time to time – the team that gets the best guy wins the deal.

It’s just not that simple. Even if Erik Bedard had stayed healthy and pitched well over the last two years, the M’s would have still been big losers on that trade, because they paid a price far beyond what he was actually worth. They overestimated the value of having a star on the roster. The reward wasn’t as large as they thought it was, and they undervalued the inherent risks of tying your cart to one injury prone horse.

Premium players are great. But you have to be careful not to ascribe more value to them than they actually have. Building a team around a few really good players is one way to build a winning team, but it also introduces a higher level of risk than diversifying equal value over the entire roster. One way is not necessarily better or worse than the other. You can win with a core group of stars surrounded by competent role players (the 2009 Cardinals, for instance) or you can with a whole lot of good players and few great ones (the 2009 Angels).

Either way can work, as long as you execute it correctly and value players the right way. You can either bet on a few great players or a bunch of good ones, and both roads can lead to success. The key is correctly discerning how good a player is and what kind of value they really add.

The M’s hit home runs by diversifying last winter, turning one overvalued player into a bunch of undervalued ones. This winter, they might do the exact opposite, turning a collection of decent players into one better player. Just remember that, regardless of what kind of move they make, we still need to judge it on the merits of the individuals involved, and not on some big picture theory that doesn’t hold true. The team that gets the best player doesn’t always win the deal. One six-win player may not be more valuable than a pair of three win players. It all depends on the context.

Silva’s contract, free agency, my general economic pessimism

January 6, 2008 · Filed Under General baseball · 35 Comments 

The Silva contract has brought up again the question of whether any free agent signing is a bargain in a world where free agent contracts are ever-increasing. I’ll call this the Washburn Effect: today’s overpayment is tomorrow’s good deal. One of the arguments I’ve had here with Tom Tango is that his valuation of a contract’s worth is based on a formula that, to vastly oversimplify, goes

year N expected contribution * value of that contribution in the year N market

for each year of the deal. It assumes that salaries will continue to inflate as we’ve seen the last couple of years over the value of every deal, and so it hinges on whether you think that MLB revenues can continue to grow at 10% year over year for the foreseeable future. Many people believe they can, and I disagree with the certainty of those assumptions entirely and to a lesser extent, about what we should expect of the next few years.

I see two things I see stopping that escalation.

First, as we’ve argued many times here with different players, there’s often a similar skillset available for very little money. A team can sign Silva to a massive deal or find a reasonable facsimile on the minor league free agent market for $1m or so. That price isn’t increasing with the price of free agents. At the same time, we’re slowly seeing a replacement of more traditional major league front offices with smarter personnel who understand replacement value. They’re going to take the cheap option. If nothing else, that’s going to reduce the number of bidders for guys like Silva. Certainly, it doesn’t take many to keep the prices high, but even in the next few years we should start seeing the effects — and even ownership groups who don’t get it will start asking difficult questions about why they’re paying so much for so little. Just moving Texas from dumb to smart takes a huge spender on bad FAs (Chan Ho Park!) out of the market.

That may not have a huge effect, though. The larger is economic. Major league sports are entertainment, and while they have a loyal audience, in a larger sense they compete for dollars with movies, concerts, bowling alleys, nights on the town, and so on. And their sales of super-high-revenue luxury suites depends on the local corporate economy.

You can take your economic indicator of choice against MLB payroll or revenue in the post-collusion era and you’ll see they’re pretty tightly bound (I ran payroll against the price of the S&P 500 since 1989 and it came out at .86, which is amazing considering there are labor issues included). The error I see everyone making is that they’re looking at the last couple of years and seeing MLB developing new sources of revenue, especially in the web subscription money, and drawing a straight line out forever.

And that’s where I part ways. We can’t assume the economy’s going to go up, up, up. If it doesn’t, revenues don’t go up and payrolls don’t go up, and the whole model falls apart. I can’t think of any mature entertainment business – really, any major discretionary spending category – that can sustain 10% year over year growth through an economic downturn.

To our current situation specifically — we’re seeing the real estate market decline, severely so in many parts of the country. The immediate fall out’s been in the mortgage markets, affecting liquidity, credit, taking down hedge funds, and a huge increase in the number of foreclosures. Now, whether you think it’s all going to bottom out later this year and be hunky-dory from there out (it won’t) or what, you can already see some effects. People who feel less wealthy cut back on spending, and you can watch Applebee’s and Chili’s and Whateveree’s revenues taking the hit already.

I’m no economist, but if national real estate values are headed back to 2000 levels, however slowly, it’s going to be painful and tough, and between people spending less and the banking industry trying to ride the whole thing out, baseball’s revenues won’t be going up 10% year over year the whole time.

And if that doesn’t happen, today’s overpriced contract becomes tomorrow’s overpriced contract.

I don’t think the economy’s going to do well over the next couple of years. Now, you’re free to disagree, but none of us can know for certain the direction it’ll take. Maybe we’ll all be happily serving new robot overlords in a money-free economy by the time Silva’s contract expires. If it does, and salaries stagnate, today’s free agent mistakes are still going to look bad. If the free agent market gets more rational, they look even worse.

Arguing that Silva’s deal is okay because the market’s going to continue to go up forever is at least making a set of assumptions that aren’t tenable, and certainly aren’t knowable with that degree of confidence. Washburn’s contract may look decent now, in the same way getting into a house in a booming market in 2004 might have. That doesn’t mean that deal didn’t involve risk — or that you’d be right to not take that risk again in 2007.

December 10, 2003 · Filed Under Mariners · Comments Off on  

There’s been some confusion about my posts here about what the Mariners are saying and what they mean, what the exact meaning of “budget” and “payroll” are, and whether the M’s are really lying or just shifting their words around. So I’d like to go into detail on where exactly the issues are, on my particular disputes with the Mariners.

Part of the problem is that the local press and the Mariners have used both interchangeably at times. But we’ll get to that.

The Mariners Opening Day payroll was $86.9 m, as commonly defined as “salaries plus pro-rated signing bonuses.” Even as early as November 2002, Howard Lincoln was pushing the team’s payroll, saying “We’re actually up $2 million to $92 million.”

The big piece I’m going to focus on this April 4th article by Bob Finnegan in the Seattle Times, where he puts out the team’s view (he is not alone in this, though, there are other references to this breakdown). First, though, a note about how payroll v. budget gets confused: “With reliever Giovanni Carrara signing for some $400,000 plus incentives, the Mariners pushed their payroll to $95.85 million, well beyond their original budget of $92 million.”

But you’ll see that this magical $96m figure isn’t true payroll in any sense. But onwards. The article includes includes a handy chart, which I’ll clip down a little:

Mariners’ 2003 payroll

Player, Salary

Kazu Sasaki $8.5 million


Ichiro $6 million ($3M base)

Edgar Martinez $6 million ($4M base)


Gil Meche $375,000

Willie Bloomquist $300,000

Julio Mateo $300,000

Total salaries: $88.25 million

Buyouts: $2.1 million

Contingencies: $2.5 million

Pro-rated signing bonuses: $3.0 million

Total: $95.85 million

Ignore, for a minute, that there are discrepancies here compared to commonly-available salary information, and assume these are all correct. I’ll come back to the differences in a minute.

Please note already that you can’t count M’s payroll as $92m. You have a couple of choices:

Commonly-calculated: $87 to $88m

Payroll including buyouts, signing bonuses for salary cap purposes: $93.35 (using M’s math from above)

Wacky Math M’s Payroll including Contingency Funds: $95.85m

We can see the Mariners count contingencies and buyouts against “payroll” even as the bonuses for Ichiro and Martinez are included in their salary numbers there. This makes this hard to compare already: they stick that $5m (and more) into salary, and pull the $3m in signing bonuses out as if they’re not salary.

There’s my big argument – that’s $5m+ to the Mariners when they argue straight, strict, common-definition payroll: they would say that salaries plus rated signing bonuses came to $91.25m or thereabouts, when everyone else would (and did) calculate the team’s number as much lower, at about $87m. This is the basic deception I get worked up about: at every turn, the Mariners talked about their payroll as being $92m, and got everyone else to do it – Finnegan only a month later tosses it off casually while comparing them to the Devil Rays:

Tampa Bay has now dropped five players from its Opening Day team, including four pitchers. What is left is a $14 million payroll (Seattle’s is more than $92 million), with only a handful of players making more than minimum salary, including all the pitchers.

Here he’s comparing Tampa Bay’s low, normally-calculated payroll against the M’s inflated include-everything payroll (which still again, doesn’t equal $92m)

Now on the buyouts – the CBA counts buyouts against payroll (this is Article XXIII, 5(b)) (though they’re to be counted as ‘signing bonuses’ that’s just terminology). So for the moment, I’ll figure they indeed spent $2.1m on buyouts, and call that good.

But contingencies? Who counts money you haven’t spent yet as a contingency? Plus, the M’s said that Garcia’s arbitration win had wiped out their contingency fund, that there was no money there, zero, there would be no acquisitions that cost the team money (and there weren’t) and they probably said that if anything happened like too many players making the All Star team, triggering contract incentives, that all the players would be marched down to the plasma center to sell blood, and their subsequent woozy performance would all be Freddy’s fault.

Plus, the team claimed the contingency budget was $2.5m before Freddy’s arb win. Howard Lincoln said after they lost to Garcia: “”We budget for these things. The contingency fund will cover it, but it (the fund) will be smaller as a result.” After the win though, they still calculated contingencies as the full, once-announced $2.5m.

Say you figure they went back and found that money under the couch cushion. You still can’t count that as money you’re spending. Say I have $1,000 in my checking account and I decide to spend it on a computer. I put one together for $500, and it ends up meeting all my needs, so I don’t spend that last $500. Instead, I spend it on beer. Am I lying if I say I spent $1,000 on my computer? Would the IRS allow me do depreciate a $1,000 computer? That $2.5 million is not payroll money. If you believe everything the team feeds you up to that point, you still have to draw the line there, and then they’ve stopped at $93.35m total payroll expenditure.

You may have thought just there that there are other bonuses not included in that table, that may push it up. And I say, no. The salaries listed in the times are consistently higher than those found at outside sources, and we can only assume that as with Edgar and Ichiro, the difference is because the Times chart includes possible bonuses (Sasaki, for instance, is listed there at $8.5m, but other sources have his salary at $8m, down to Meche, who is $375k v $325k).

And I understand that this is annoying nitpicking, and that few people out there care whether the Mariners are subverting common definitions of terms because it makes them look good – I mean, I must be the only person who cares that by swapping in bonuses into salaries and holding out signing bonuses, they’re tweaking the way we compare their payroll to other teams’ payroll when we go to and look at the salary tables.

Mentions of $92 million payroll in the Seattle Times:

4/16/2003, Larry Stone

7/22/2003, Bob Finnegan, “Payroll already over $92 million”

9/19/2003, Larry Stone , “The A’s, whose $50 million payroll is just over half of Seattle’s $92 million, are baseball’s biggest overachievers”

But! Redemption! Sort of!

On July 22nd, the Associated Press obtained (and released) the luxury-tax figures for teams, and the M’s had – abracadabra – a $92,268,063 payroll. And that was the CBA-calculated one or, as the AP article put it,

Payrolls are based on the average annual values of contracts, $7.6 million per team in benefits, money paid or received in trades and salary owed to released players.

So! Using a definition totally different than the one the M’s put forth, one instead spots the Mariners $7.6m in benefits, the salaries happened to come out to exactly what the team was pushing and the local guys were reporting. Now maybe, you’re thinking, the reporters ran these articles with the $92m and what they really were refering to was the CBA number, even though they’d published articles (like Finnegan’s early one there) that calculated payroll entirely differently. Nope.

When they were reporting, every time they quoted another team’s payroll, they didn’t quote the CBA-calculated figures for other teams: for instance, in the Tampa reference, they compare a pared-down $14m (which should, for CBA purposes, be much higher because it includes buyouts and benefits — $22m, at least) to the M’s $92m. Either the papers consistently compared one method that came up with high numbers to another that came up with low ones – apples to oranges, if you would – or they compared apples to what the team told them was an apple. And how could anyone have known with any certainty what that CBA number would be back in November? Why bother pushing the stories including contingency funds to the papers?

Either way, the papers screwed up hugely. The Mariners came out with a story at the end of last season: their payroll was $92 million, and they stuck to it. I don’t think you can find a quote where Lincoln or Armstrong or Gillick referred to the payroll as the commonly-calculated ~$88-8m, it was always the higher figures. Eventually the figure stuck, and everyone used it, no matter that it didn’t make sense, that it wasn’t what the payroll was, and certainly not what everyone else calculates payroll as. And at best, our local media was lazy in not using the same methods to compare the payrolls of teams, making the Mariners seem far more generous and spendy than they were, and at worst, they were complicit in pushing the team line in doing so.

For the Mariners, the best way to see this is that they wanted to push as high a figure as possible, and people bought it. And while some might argue you can’t blame them for trying, I think that’s wrong. The team can argue they’re investing in the team without confusing people about how much they’re spending, or by playing wacky games with funds they haven’t (and didn’t) actually spend.