Collusion collision

Mar 31, 2023 - 3:02 PM

The “It’s Not My Money(ball)! series was a series born out of the 2022 lockout.

From my perspective, I joined the writing staff here at True Blue LA, only to be (temporarily) sidelined by billionaires running the sport claiming poverty. I handled the situation with the customary grace and dignity that I have become known for. Anyway, anyone who spent any time on this website during the lockout knows that the argument that the owners were proffering during the lockout was not worth the paper printed on it.

Originally, I had other essays planned in this series (on the Rays, on the Angels, on the status of the minor leagues), but a funny thing happened: the lockout ended on the 99th day, and labor peace was restored. All the relevant players had to scramble for a bit, I had to reschedule travel to Minnesota, and life returned to normal. After a while, documenting the money problems of the sport fell by the wayside. I mean I write about baseball for fun AND profit.

Suddenly stories about what the Athletics are currently doing to the City of Oakland, or what the Rays are doing to St. Petersburg Montreal Tampa Bay, or how Arte Moreno is leaving just will not leave Anaheim did not seem as pressing on a Dodgers website. I figured that it was more important to focus on issues with the Dodgers, before raking other (deserving) teams over the figurative coals.

But a story caught my eye...then another...and I came to a realization. And so, like a certain music man, I found some trouble. So, we’re back up, and we are going to jump right into it.

A prediction for 2026: The owners have not learned their lesson

At the risk of asking the owners how many times they need to learn this lesson, I am not generally in the business of making predictions, but I will venture out on a limb and make a prediction today:

The owners are going to lock out the players (again) in December 2026 when the current collective bargaining agreement expires.

You may ask why. Well, I blame two “culprits” who frankly have not done anything wrong in a baseball context: Mets owner Steve Cohen and Padres owner Peter Seidler. This essay will primarily focus on Steve Cohen, with a discussion of Peter Seidler occurring next time.

Photo by Denis Poroy/Getty Images

In order to understand why Steve Cohen is to “blame,” we need to rewind back to Christmas 2022, after the Mets’ offseason shopping spree to the tune of $500 million in player commitments not counting the aborted attempt at signing ex-Giant, once-again-Twin, trashcan aficionado Carlos Correa. In case anyone forgot, the 2022 Mets re-signed Brandon Nimmo and Edwin Díaz, before signing Justin Verlander, Kodai Senga, and José Quintana among others.

Now, it is an open question whether the Mets just bought themselves a title. I would argue that it is an open question whether the Mets have even bought themselves a division (Atlanta says hello). But regardless, if you are a Mets fan, you have been eating well this offseason with the team spending riches beyond the dreams of avarice.

Needless to say, the Mets’ spending spree has not gone unnoticed, especially by now-smug Dodger fans who crow that the Mets’ activities are what it truly is like when you try to buy a championship. For their sake, hopefully, they will have some success (god forbid, they win just one game — from what I hear some people get kind of annoyed about that), although we will likely not be hearing a certain overplayed trumpet song this season.

The perils of the word “but”

In order to understand my prediction, we have to go back to around Christmas 2022, one day before Trevor Bauer was reinstated. Bauer’s reinstatement is only relevant to this story (or anything for that matter as he is off to Japan now) for a single reason: his reinstatement knocked what we are about to discuss off the baseball front page.

Evan Drellich of The Athletic wrote an excellent article about the ramifications and grumblings resulting from the spending spree that Steve Cohen’s Mets had untaken in the offseason. Drellich quoted one of Cohen’s former employees who compared Cohen’s approach to acquiring players to how Cohen bought his art: “he just spends whatever it takes.”

Drellich also quoted an anonymous MLB official who said the following:

“Our sport feels broken now. We’ve got somebody with three times the median payroll and has no care whatsoever for the long-term of any of these contracts, in terms of the risk associated with any of them. How exactly does this work? I’m having a hard time wrapping my head around it.”

“I think it’s going to have consequences for him down the road. There’s no collusion. But … there was a reason nobody for years ever went past $300 million. You still have partners, and there’s a system.”

(emphasis added.)

Talk about saying the “quiet part” out loud. If I were counsel for the Players’ Union, I would be seething and ordering my law clerks to get to work. (The union declined to comment.) Usually in any declarative sentence, even in the most positive of circumstances, the word “but” following it is terrible. For example:

• The Dodgers will win the 2023 World Series, but...
• Clayton Kershaw will finally pitch a perfect game with Michael Elizondo in attendance but...
• Eric Stephen will finally have a Hall of Fame vote, but...

See what I mean — the word “but” is no good in this context. Drellich noted the opinion of another “rival executive” regarding the Mets’ spending:

“Our sport feels broken now,” a different rival executive said Wednesday. “We’ve got somebody with three times the median payroll and has no care whatsoever for the long-term of any of these contracts, in terms of the risk associated with any of them. How exactly does this work? I’m having a hard time wrapping my head around it.”

The Old Problem

On February 20, when Commissioner Manfred established the formation of the MLB Economic Reform Commission, he made the following quote and alluded to two problems, one old and one new, in stark contrast to his previous remarks about the Mets’ spending.

The New Problem will be discussed next time. The Old Problem is the same problem that we have been hearing for years:

“When you start thinking about the opportunities in terms of a more national (broadcasting) product, it did lead into a conversation about our disparity issues on the revenue side,” Manfred said. “We have businesses that are literally not similar in terms of the overall revenue that they’re generating. And to the extent that you could find a new distribution model that actually helped on that disparity side, that would be the daily double. So people are having conversations that haven’t been had in baseball, and it’s really been owners talking to owners, which is a good thing.”

(emphasis added.)

There is the lie again — that the owners are poor and that there is such a thing as a small-market team. Once again, I have to bring out the chart, which might be slightly out of date as to the luxury tax, owner net worth, and team valuation but underscores a larger point: any owner that has had their team for more than five years should have an asset that has significantly appreciated in value.

Granted, if you are Bruce Sherman in Miami — there’s always someone who gets in on the bubble at the worst possible time, then no owner should be crying poverty. If the teams indeed are broke or in financial peril, there is one thing that they can do to shut the players (and me) up: open their books for public accounting.

In fact, it was quite noteworthy when Orioles chairman John Angelos, likely in a fit of pique after whining about being asked about the financial health of the team (and the ongoing role of the Angelos with Orioles and Baltimore) on Martin Luther King Day, offered to let Paul Gessler and other journalists see the actual books of the Orioles. Spoiler alert: shockingly, the Orioles’ books were not opened as Angelos never set up that follow-up meeting to do so. If you believe that an owner would willingly open his books, you will likely believe me when I tell you that your shoes are untied.

As Atlanta is the only team in the United States with its books open (because the team is owned by a publicly traded entity) we only have 1/30th of the picture of baseball’s finances. It is publicly known that Liberty Media, the public entity that owns Atlanta, collected almost $600 million in team revenue last year. However, the team’s operating income before debt and amortization (OIBDA) was less than the 2021 season, down over $30 million. Per MLBTradeRumors, Liberty Media reported an operating loss of $15 million in 2022 after reporting a profit of $20 million in 2021. I am not an accountant so I do not have a reaction to these figures.

However, it is important to note that these figures do not include revenue from The Battery Atlanta, the mixed-use development complex adjacent to Truist Park. Liberty Media reported $28 million in “additional net operating income” and $53 million in total revenue related to The Battery. This series has thoroughly discussed the trend of Owners becoming commercial landowners here, here, and here.

This segue highlights something that the Owners should be talking about: teams are not trying to field a competitive team and have been not trying to field a competitive team for years. The following tweet showing the lowest team payrolls in 2023 is an embarrassment for the league.

And if those figures were not bad enough, on March 23, Forbes reported that two of those teams in the bottom five were in the top-5 of generated profits in 2022: Oakland and Baltimore. Granted, we do not have access to anyone’s books so it would likely be wise to take these figures with a grain of salt, but considering how non-competitive Oakland was last season and likely will be this season, the fact that John Fisher is likely making money hand over fist is a bit nauseating.

It is long been known that the Rays have been put together with glue, bubble gum, and pluck and are still competitive. It has never been my position that all teams need to spend like the Mets, Padres, and Dodgers. It has never been my position that all teams need to overspend on middling talent. But when a disgraced pitcher, now playing in Japan, would make up over half to a third of a team’s active payroll, something is seriously wrong with that team’s payroll.

Improvements to rosters could conceivably be made for relatively minor investment prior to player signings. Recently, while discussing his annual ranking of farm systems in baseball (with the Dodgers in the top spot), Keith Law of The Athletic had the following to say about the subject (paywalled):

“[The Dodgers] are the model franchise right now when it comes to scouting and player development. They draft exceptionally well, they do have good pro scouts and use them well as part of their process, they have a strong international group, and I don’t think any team improves players as consistently as they do. And all that stuff I just mentioned? ANY team could do it. That’s not a budget issue. It’s a drop in the proverbial bucket compared to any MLB team payroll. The Rays do it too, and they couldn’t be further from the Dodgers in top-line revenue. If you handed me the reins of any MLB team right now, the first thing I’d do is staff up in those areas. Hiring scouts and player [development] folks is cheap and offers a strong [return on investment] if you just find one or two more players per year to help the big-league club. (No slight against R&D folks, but most teams have staffed that up already.)”

(emphasis added.)

It is hardly a coincidence that Andrew Friedman is the link that connects both the Dodgers and the Rays. But if you look at the hires, stemming from Friedman, who have gone elsewhere in the league, you can notice the same (figurative) DNA in Atlanta and San Francisco. While the results have varied, no one generally contests that Atlanta, Tampa Bay, San Francisco, and Los Angeles are trying to win.

But frankly, as there are a not insignificant number of teams not even trying at this point...and haven’t been trying for a while, this statement should not be news to anyone. Recently, Reds president Phil “Where you gonna go?” Castellini said the quiet part out loud (again). At the annual Rosie Reds luncheon, a fan organization that has been meeting since the 1960s to boost fan attendance at Reds games, Castellini stated that the Castellini family was running the Reds like a “non-profit.”

As usual with Castellini, his comments actually got worse as Castellini presented a slide show that argued that there was “a 75% increased of teams out of contention by opening day.” Castellini argued that, on average, 14 teams were out of contention at the start of play.

As if to demonstrate how the Reds are badly run, one bit of trivia. I would like you to guess the fourth-highest player on the Reds at the start of play in 2023. I bet most fans could identify that Joey Votto is a Red (first, $25 million), Mike Moustakas was a Red (second, $22 million), and Jonathan India is a Red (pre-arbitration), but beyond those three, forget it.

Would you believe it if I said 53-year-old, 2016 Hall of Fame inductee Ken Griffey Jr (fourth, $3,593,750)? In 2022, Griffey was the sixth highest-paid Red on the team. Deferred money, it’s great if you can get it...eventually.

In any event, one would think that the owners would focus on the fact that teams just are not trying and for the good of the sport trying to fix that status of affairs. That person would be wrong. To quote Buster Olney (in remarks not related to the Castellinis and to queue up the segue for next time):

On February 19, the Owners created an Economic Reform Committee. We will delve into it next time as well as shine a light on the one owner whose actions totally make the existence of the Committee entirely unnecessary: Padres’ owner Peter Sidler.