Major League Baseball's Economy 2.0 (Follow Up)


This is the first of two brief follow up posts (I was going to label them "Part II's" but they really aren't thorough enough to qualify...).

I wrote about the shifting economy in Major League Baseball and how deals are shifting towards younger players with longer, more reasonable deals. ESPN's Buster Olney (one of the reason's I'm a paid Insider subscriber) had a terrific article today. Olney opened by reinforcing my premise:

... Everything that happens seems to reinforce two essential hypotheses. No. 1: You almost never realize anything close to equal return in signing veteran players to long-term contracts. No. 2: The perceived value of young players keeps rising and rising and rising.

And then he added insights that I never could:

The industry trend, as we have seen, has been toward player development, toward drafting and shaping young players and eschewing big-money deals, and nothing that has happened this year has changed that. Some executives already have come to strongly believe the following:

• By the end of Miguel Cabrera's contract with Detroit, his $152.3 million deal will be viewed as a major mistake. • Over the duration of [Johan] Santana's contract, he will not be the kind of pitcher that the Mets paid for.

A couple things that strike me about this:

1) I love the use of the word "industry". That's what it is. And the dollars are large enough to support it.

2) Neither Cabrera's nor Santana's contracts were widely second-guessed in the off-seasons... in fact, many analysts lauded the deals.

3) The "collision course" between big veteran deals and youth extensions has happened seemingly instantly. The result is likely a very different trade deadline (now a few weeks away) and off-season free agency. Players like CC Sabathia and Mark Texiera turned down monster contracts in the hopes of getting $200m plus this off-season... those deals likely won't happen and may be well off.

All of this, in my opinion, is good for the baseball. Keeping an open-'marketplace' in tact, baseball is going to see small market teams effectively compete and to build for long-term success. Meanwhile, if the economic standards indeed shifts, there will be major consequences for striking major deals that don't work... which is a good thing.