Friday, November 7, 2008

Offseason Spending

With the season ending just over one week ago, Major League Baseball has already made some big announcement regarding its future with incoming President, Barack Obama's taxation plans. The taxation plan will tax higher incomes at an additional 4.5%, which makes a big difference on the millions of dollars that will be negotiated during the offseason on premiere players such as Manny Ramirez, CC Sabathia and Mark Texiera to name a few of the best available. Agents are already discussing the value of receiving signing bonuses at the beginning of the contract to beat out the 2009 tax plan. A move that could save a player anywhere from a couple thousand dollars to a couple hundred thousand. In addition to the projected tax increases effect, MLB commissioner Bud Selig warned General Managers this past week at the GM Meeting to be mindful of the state of the economy. It seems as though there are going to be some competing ideas about what is going to be spent this offseason.

Available Players by Position:
C: Rod Barajas, TOR; Henry Blanco, CHC; Johnny Estrada, WAS; option-Toby Hall, CHW; Adam Melhuse, TEX; option-Mike Redmond, MIN; Ivan Rodriguez, NYY; David Ross, BOS; Javier Valentin, CIN; Jason Varitek, BOS; Vance Wilson, DET; option-Gregg Zaun, TOR.

1B: Rich Aurillia, SF; Ben Broussard, NYY; Nomar Garciaparra, LAD; Jason Giambi, NYY; Wes Helms, PHI; Kevin Millar, BAL; Richie Sexson, NYY; Mark Teixeira, LAA; Frank Thomas, OAK; Daryle Ward, CHC

2B: Ray Durham, MIL; Marcus Giles, COL; Mark Grudzielanek, KC; Orlando Hudson, ARI; Jeff Kent, LAD; Felipe Lopez, STL; D'Angelo Jimenez, STL; Pablo Ozuma, LAD; Nick Punto, MIN; Jose Valentin, NYM; Jose Vidro, SEA.

3B: Casey Blake, LAD; option-Hank Blalock, TEX; Joe Crede, CWS; Morgan Ensberg, NYY; Greg Norton, ATL.

SS: Orlando Cabrera, CWS; Alex Cintron, BAL; Alex Cora, BOS; Craig Counsell, MIL; Adam Everett, MIN; Rafael Furcal, LAD; Cesar Izturis, STL; Ramon Martinez, LAD; Edgar Renteria, DET; Juan Uribe, CWS.

OF: Bobby Abreu, NYY; Moises Alou, NYM; option-Garrett Anderson, LAA; Rocco Baldelli, TB; Willie Bloomquist, SEA; Emil Brown, OAK; Pat Burrell, PHI; Endy Chavez, NYM; Adam Dunn, ARI; Jim Edmonds, CHC; Cliff Floyd, TB; option-Brian Giles, SD; Ken Griffey Jr., CHW; Raul Ibanez, SEA; Jaque Jones, FLA; Mark Kotsay, BOS; Rob Mackowiak, WAS; Kevin Mench, TOR; option-Jason Michaels, CLE; Craig Monroe, MIN; Jay Payton, BAL; Scott Podsednik, COL; Manny Ramirez, LAD; Juan Rivera, LAA: Rondell White, MIN.

SP: Kris Benson, PHI; A.J. Burnett, TOR; Paul Byrd, BOS; Ryan Dempster, CHC; Jon Garland, LAA; Tom Glavine, ATL; Mike Hampton, ATL; Orlando Hernandez, NYM; Jason Jennings, TEX; Randy Johnson, ARI; Esteban Loaiza, CHW; Braden Looper, STL; Derek Lowe, LAD; Pedro Martinez, NYM; Mike Mussina, NYY; Jamie Moyer, PHI; Mark Mulder, STL; Carl Pavano, NYY; Brad Penny, LAD; Odalis Perez, WAS; Oliver Perez, NYM; Andy Pettitte, NYY; Mark Prior, SD; Horacio Ramirez, CHW; C.C. Sabathia, MIL; Ben Sheets, MIL; option-John Smoltz, ATL; Julian Tavarez, ATL; Steve Trachsel, BAL; Brett Tomko, SD; Claudio Vargas, MIL; Randy Wolf, HOU.

RP: Jeremy Affeldt, CIN; Tony Armas Jr., PIT; Luis Ayala, WAS; Joe Beimel, LAD; Joe Borowski, CLE; Juan Cruz, ARI; Alan Embree, OAK; Scott Eyre, CHC; Kyle Farnsworth, DET; Casey Fossum, DET; Aaron Fultz, CLE; option-Tom Gordon, PHI; LaTroy Hawkins, HOU; Mark Hendrickson, LAD; Bobby Howry, CHC; Steve Kline, SF; Damaso Marte, NYY; Tom Martin, COL; Julio Mateo, PHI; Guillermo Mota, MIL; Will Ohman, CHC; Darren Oliver, LAA; John Parrish, SEA; Chris Reitsma, SEA; Dennys Reyes, MIN; Juan Rincon, CLE; Brian Shouse, MIL; Rafael Soriano, ATL; Jorge Sosa, NYM; Mike Stanton, CIN; Derrick Turnbow, MIL; Oscar Villarreal, ATL; David Weathers, CIN; Dave Williams, NYM; Matt Wise, NYM.

CP: Brian Fuentes, COL; Trevor Hoffman, SD; Jason Isringhausen, STL; Brandon Lyon, ARI; Francisco Rodriguez, LAA; option-Salomon Torres, MIL; Kerry Wood, CHC.
Note: Italics indicate players that I project to receive a minimum of $10M/per year.

As you will notice there are a lot of big names and big contracts that are coming from this group of free agents, perhaps the greatest class of talent since 2000 when Alex Rodriguez, Manny Ramirez, Mike Hampton, Mike Mussina and Darren Dreifort received noteworthy contracts, some that turned out well (Despite "Manny being Manny," Ramirez has been part of one of the most feared 3-4 combinations in the history of baseball and has won two World Series rings as a result, Mussina and Rodriguez have posted excellent numbers and raked in serious dollars) and others that have gone down as some of the worst in the history of baseball (Mike Hampton's time in Colorado was more than forgettable and the last two years of his contract that earned him near $35M, earned the Braves about 15 starts and Darren Dreifort, who started 26 games and appeared in 60 as a reliever during the remainder of his 5-year, $55M contract).

Already, it may be easy to forecast that the 2008-2009 offseason will give teams similar success with Scott Boras, agent for Manny Ramirez (42 years old at the end of the contract), reportedly looking for a six-year contract at $25M per year. If that kind of money is eventually given to a guy that would be 42 at the end of the contract, I may just turn to the NHL (no...never).

In all seriousness though, the NHL does have an excellent new team payroll system that requires teams and players to share team revenues. Player salaries cannot bulge to more than 54% of team revenue from the previous year, effectively creating a salary cap that is dependent on league success. Major League Baseball GM's and owners need to be mindful of this percentage as well as fans and corporate sponsors may become less willing to spend money to be in the stadium given the current economic crisis in the United States.

It will be a very interesting offseason as teams like the Yankees, Braves having as much as $80M in salaries coming off the books this year. Other large-market teams like the Dodgers, Mets and Red Sox promise to be contenders as well, driving up the market price on the elite and mid-range players. The way that money is spent in the next few months may be record-breaking as well as back-breaking for the future economic success of Major League Baseball.

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