The cost of an ace
On Friday afternoon I
I've since been persuaded that Santana's demands are higher, although not dramatically so. Let's extend the contract by a year, and the salary by another 15 percent. After all, Santana is more than 15 percent better than Zito by any measure. That would be a seven-year contract for $161 million, the highest aggregate value of any pitcher ever, and a cool 35 percent bump over the total value of Zito's contract, signed just shy of a year ago.
Now, that sounds like a massive jump. A 35 percent increase at the top of the pay scale is the kind of thing that will set teeth gnashing throughout the game, causing GMs, owners, and league officials to predict the imminent demise of competitive balance, possible franchise insolvency and the inevitable collapse of the league, perhaps even American society itself.
This year, however, that kind of increase might be about right. It's heresy in some circles, but Johan Santana may well be worth $23 million a year. Let's go to the available analysis of Santana's marginal value,
Now, with Santana having had another productive -- and more importantly, healthy -- season, we can expect that his 2008-12 projections will be similarly positive. We can also expect that the value of a win (the rock on which the MORP projections are based) will climb by at least eight percent, and possibly more. If Santana's four-year projection is stagnant and we account for inflation, he'd be worth about $90 million from 2008 through '11, or $22.5 million per season, which is pretty close to the $23 million I mentioned above. That kind of deal isn't overpaying: it's market value.
Back away from Santana for a second and look at the free-agent contracts agreed to so far this offseason. Almost all of them have come in higher, some a lot higher, than was anticipated even at the end of the season. We shake our heads at a $90 million
Think about what we're likely to see this week in Nashville, whether Santana reaches agreement on a new contract or not.
We're in a new world. The baseball industry is growing revenues at such a pace that each new offseason is a market completely detached from the previous one. I actually
A few weeks ago
Now, I'm not sure what that number should be, but just to pull one data point, the NFL's Collective Bargaining Agreement, negotiated by the weakest union in sports, allots 53 percent of revenue for players. Let's knock a few points off and suggest that in a perfect world, the players would take home 50 percent of revenues, and that the labor market should more or less move toward that number. (Prior to the 2002 CBA that instituted aggressive revenue sharing and mechanisms to curb spending, players were approaching 60 percent of revenues.) The difference between the 2007 Opening Day payroll mark and 50 percent of revenues is $540 million.
The teams have $540 million burning a hole in their pocket. They're going to spend it, because that's what teams do, and if they can't use it to buy
The most valuable properties in baseball are true superstars. They cannot be replaced at any price, and as more teams realize this and prevent theirs from hitting the market --
Some thought we got there in 1978, of course. They were wrong. As revenues increase and every team in baseball is able retain its very best players, however, the caliber of each free-agent pool will continue to decrease. The players who hit the market will all have flaws, all be bad buys, all be money sinks. Maybe this winter isn't the turning point, but the trends are clear, and a future in which good free-agent buys are not just rare, they're nonexistent.