Archive for Business

Streaming Local Games at $20 per Month a Reality for Some

For some time now, Major League Baseball teams have depended on major revenues from local regional sports networks (RSNs), entities which themselves have depended on cable providers paying high per-subscriber fees to put those networks on the standard-cable tier. This relationship has long prevented fans from watching their local team without paying for a bulky and often expensive cable subscription. MLB.TV blacks out local games to accommodate the relationship and the revenue that comes with it. While it is not full-scale a la carte, Sling TV’s recent announcement that they will carry FOX Sports RSNs on their new offering for $20 per month is a major win for consumers and a way for MLB to keep their product relevant to those who do not subscribe to traditional cable — frequently a younger demographic that MLB desires.

MLB.TV is a very good product that streams out-of-market games. The announcement last fall that in-market streaming would be available to cable subscribers represented a small step for fans who increasingly consume the game digitally. What was missing, however — and has been missing for years — is a digital option to watch local games without also having to subscribe to a local cable provider. We’re certainly not all the way there, but the newest offering from Sling TV is a big step in the right direction, and a very good compromise for those who do not want to pay for traditional cable.

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Belt, Giants Avert Risk with Six-Year Extension

Contract extensions during arbitration seasons aren’t terribly common, especially when a player is just two seasons from free agency. Since Elvis Andrus signed his eight year, $120 million extension in 2013, there have been just three contract extensions handed to players who’ve recorded similar service time. One winter ago, Giancarlo Stanton signed his 13 year, $325 million deal. And over the last few months, the San Francisco Giants are the only club to take part in such an agreement. In November, the Giants signed Brandon Crawford to a six-year extension worth $75 million, and this past weekend they doubled down on their infield, signing Brandon Belt to a similar six-year extension for $79 million. While these extensions are uncommon, Belt and the Giants have achieved a reasonable common ground.

Without the new contract, Belt would have been eligible for free agency after the 2017 season heading into his age-30 season. That would have been Belt’s one big chance at a major contract. His new deal with the Giants will pay him $79 million over six years, which includes the roughly $6 million he was already expected to make this season. Now Belt won’t hit free agency until after his age-33 season, likely precluding him from signing a mega-contract given his age.

Signing a huge contract was actually never a certainty for Belt — with or without the present extension. Power pays and Belt has yet to hit more than 18 home runs in a season — although the raw power numbers are mitigated by San Francisco’s AT&T Park. Belt has recorded just 23 of his 64 career home runs at home, and San Francisco’s park factor indicates that it is the toughest park in which to hit home runs by a pretty wide margin. It isn’t that Belt lacks power; indeed, his .185 ISO since 2011 is among the top-third of all batters regardless of park. He has roughly the same amount of extra base hits at home (98) compared to the road (99), but when he is out of San Francisco a lot more balls leave the yard.

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Pirates Bet on Gregory Polanco with Contract Extension

If you made it to Opening Day and wondered why there hadn’t been a greater number of contract extensions signed this spring, you weren’t alone. Just a few days ago, Dave Cameron wondered that very thing, noting that Kolten Wong was the only player to sign an extension, opting for the promise of guaranteed money rather than betting on the arbitration process and hitting free agency. Over the weekend the number of recent extensions doubled, or increased by one, as Gregory Polanco and the Pirates came to terms on a contract extension worth $35 million over five years — with two team options for another $25 million total — according to Ken Rosenthal after Jeff Passan first reported the deal. Polanco only has one year of service time, and with the extension not kicking in until next year so this contract has the potential to buy out three free-agent seasons, but given Polanco’s lack of production thus far, the team is making a bet that Polanco will be better than what he has shown.

The past few springs have seen quite a few contract extensions, and this year is certainly a down year in that regard. Here are position-player extensions from the past few years, including Polanco and Wong. The statistics included here are those produced during the player’s last season prior to the extension.

Pre-Arbitration Position Player Contract Extensions
Name Team OBP SLG wRC+ WAR Contract (Year/$M) Service Time
Mike Trout Angels .432 .557 176 10.5 6/144.5 2.070
Matt Carpenter Cardinals .392 .481 146 6.9 6/52.0 2.012
Andrelton Simmons Braves .296 .396 91 4.6 7/58.0 1.125
Starling Marte Pirates .343 .441 122 4.6 6/31.0 1.070
Jason Kipnis Indians .366 .452 129 4.4 6/52.5 2.075
Christian Yelich Marlins .362 .402 117 4.4 7/49.6 1.069
Juan Lagares Mets .321 .382 101 4.0 4/23.0 1.160
Yan Gomes Indians .345 .481 130 3.6 6/23.0 1.083
Adam Eaton White Sox .362 .401 117 3.0 5/23.5 2.030
Paul Goldschmidt Diamondback .359 .490 124 2.9 5/32.0 1.059
Allen Craig Cardinals .354 .522 137 2.7 5/31.0 2.077
Jedd Gyorko Padres .301 .444 111 2.5 5/35.0 1.016
Kolten Wong Cardinals .321 .386 96 2.3 5/25.5 2.042
Gregory Polanco Pirates .320 .381 94 2.3 5/35.0 1.103
Anthony Rizzo Cubs .342 .463 117 1.8 7/41.0 1.040
Blue=2016 extension, Orange=2015 extension

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The Dodgers’ TV Mess Isn’t Over

For two seasons, Time Warner Cable, owners of SportsNet LA, the exclusive local television home of the Los Angeles Dodgers, have failed to get their network into more than half of the cable homes in Los Angeles. With losses mounting (a reported $100 million of them last season), Time Warner has offered a significant cut in prices in hopes of luring DirecTV, Verizon, and Cox into carrying the network for the 2016 season. The Dodgers and the mayor have gotten involved, invoking Vin Scully’s last season in what appears to be a desperate public-relations move to broadcast Dodgers games throughout all of Los Angeles. A closer look at the offer shows that Time Warner is not yet in desperation mode.

Using Dodgers like A.J. Ellis and Joc Pederson in order to curry favor with the fans in this dispute — and attempting to leverage legendary icon Vin Scully’s last season into greater public interest — certainly looks like a plea for help, a final Hail Mary to get the Dodgers on television. Publicizing a 30% price drop, from $4.90 to around $3.50 per subscriber per month, reinforces the perception of desperation that Time Warner has lost and that they are finally ready to give in. That is not the case.

Upon further examination, one finds that the aforementioned discount currently being offered by Time Warner applies only to the 2016 season. DirecTv (and Verizon) would pay $3.50 per month per subscriber in 2016 (around $75 million based on 1.8 million subscribers), but next year would be faced either with paying a higher price for the channel or once again removing it from their lineups. From DirecTv’s perspective, it would be far easier, in terms of customer relations, never to have the channel in the first place as people are more likely to complain, or perhaps even switch carriers, if a channel is taken away.

Jeff Passan called the Time Warner-Dodgers deal an “unmitigated disaster,” and for the most part, he is correct. Time Warner’s loss of $100 million last year on the channel is a big misstep for them, and the company has made big mistakes since launching two years ago. But the channel is also not so far away from being a success.

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Assessing a Potential Adam LaRoche Grievance

Adam LaRoche‘s unexpected retirement announcement on Tuesday – along with the many twists and turns that followed – dominated the baseball headlines last week. To recap, on Wednesday we learned that rather than walking away from the game voluntarily due to a perceived diminution in talent or lack of desire, LaRoche instead elected to retire after being informed by Chicago White Sox Vice President Ken Williams that LaRoche’s son Drake was no longer welcome in the team’s clubhouse (or, at least, was not welcome to accompany LaRoche quite as frequently as he had in 2015). Then on Thursday, reports emerged that the Major League Baseball Players Association was considering whether to file a grievance against the White Sox on LaRoche’s behalf.

It’s currently difficult to determine exactly how strong a legal case LaRoche might have against the White Sox because there is still a lot we don’t know about what agreement, if any, LaRoche reached with Chicago regarding the extent to which his son could accompany him to games. For instance, on Friday, White Sox union representative Adam Eaton told the media that LaRoche’s contract with the team did in fact include a provision regarding his son’s access to the clubhouse. Meanwhile, other reports have suggested that any agreement between LaRoche and the team regarding his son was limited to a verbal understanding, and was not embodied in his written contract.

Ultimately, this distinction between a written and verbal agreement is likely to determine whether LaRoche has any real hope of prevailing in a grievance against the White Sox, should he choose to pursue one.

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Designated Hitter is the Highest Paid MLB Position

If you were to examine the spectrum of defensive positions, going from easiest to most difficult, it would probably look something like this: Designated Hitter-First Baseman-Left Field-Right Field-Center Field-Third Base-Second Base-Shortstop-Catcher. Right field and left field are very similar and center field, second base, and third base are also bunched together under the typical spectrum. However, when looking for the positions that pay the most money, the positions that are the easiest to play make the most money. A similar point, in a similar fashion, was made last year at this time, and it remains true. A combination of the free agent system, aging, and the decline that puts the spectrum to use mean first basemen and designated hitters make the most money while shortstops tend to make the least when taking all starters into account.

I took every position player and designated hitter starter from our FanGraphs Depth Charts and put that alongside the salary information from Cot’s Contracts to find an average salary for the 30 starters at every position with the 15 starters at designated hitter. As was the case last year, first base and designated hitter make the most money, although this season, with Albert Pujols moving to designated hitter, first base lost its crown.


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The Teams With the Most Dead Money in MLB

There is an inherent optimism when contracts are signed. The Cleveland Indians believed they were putting themselves over the top three years ago when they signed Nick Swisher and Michael Bourn to four-year deals. The team did not get the production they were hoping for, and after making the Wild Card their first year with the team in 2013, the team has won fewer games the last two seasons, and the Indians agreed to pay money to the Atlanta Braves to get rid of Bourn and Swisher while taking on the contract of Chris Johnson, who they have also jettisoned. As a result, the Indians have a larger percentage of their payroll going to players not playing for them in 2016 than any other Major League Baseball team.

The Indians might have the largest percentage of their payroll devoted to dead money, but they do not have the largest amount in total. The two franchises from Los Angeles both best the Indians. Thirteen of the 30 MLB teams have money going to players not currently on their 40-man roster. The graph below shows those 13 teams, with data collected from Cot’s Contracts.


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Player Salaries: A Mix of Merit and Tenure

Pay scales using merit and tenure seem to be opposites of one another. Under the tenure system, pay rises as more service time accrues; under the merit system, pay is correlated with performance. While two the models might seem at odds, the Major League Baseball Players Association, along with Major League Baseball, have created a bit of a hybrid between the two systems.

Those players without much service time, like Gerrit Cole and Jacob deGrom, have their salaries set for them without regard for their performance, while veteran players like David Price and Jason Heyward are free to receive pay based on their track record and expectation of future performance. While we can debate how fair this system is, particularly for young players, what is more certain is the disparity in pay between players — it is massive.

There will be 750 players on MLB Opening Day rosters, and while we do not yet know the identity of all those players, given the contracts that have been given out, we can get a fairly good idea of the breakdown of salaries and service time of the group as a whole. Looking at all the players with guaranteed contracts and providing minimum salaries to fill out the roster in the same manner I did when projecting 2016 payrolls for all MLB teams, we can get a decent idea of how money is spread out among players.

Taking a broad look at salaries with respect to service time, here is a scatter plot of 2016 salaries and service time.


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The Myth of the Qualifying Offer

The qualifying-offer system has created considerable discussion this offseason. After Dexter Fowler took smaller deal than expected and Ian Desmond ended up receiving only about half the qualifying-offer amount, there has been talk about changing the system in the next Collective Bargaining Agreement. Dave Cameron discussed a sensible solution that could help the system. The issue has been around in the past, but the CBA discussions combined with the sheer number of qualifying offers extended have increased the exposure this year. While it’s pretty well acknowledged that the QO system is designed to dampen free-agent prices, it’s important to recognize what the system is not: a reward for drafting and developing young talent.

A record 20 players were extended qualifying offers this offseason — this after, 34 offers total were made over the first three years of the system. If nothing else, the sheer quantity of offers led to three acceptances — by Colby Rasmus, Matt Wieters, and Brett Anderson — the first year in which any player had accepted an offer.

In a dreamy view of Major League Baseball, the qualifying offer helps those teams which have experienced success both drafting and developing players, but which also lack the requisite funds to prevent homegrown players from departing by way of free agency. A benevolent qualifying-offer system gifts those teams with draft picks so that they can further develop talent to help their club.

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Projected Opening-Day Payrolls for All 30 MLB Teams

While a few more moves will certainly occur here and there before the start of the season, team payrolls for the 2016 campaign are taking shape. After adding in the Baltimore Orioles’ signing of Pedro Alvarez, we have a pretty good idea of how the Opening Day payrolls will appear. Much of the offseason has been spent discussing the qualifying offer and “tanking,” but those issues are related to the larger issue of team spending. Revenue and payroll have been growing, but based on the team payrolls, it looks like the growth we saw over the past few years slowed down this offseason.

To determine Opening Day payrolls, I took the raw data from Cot’s contracts and added in minimum salaries to reach the 25-man total needed to field a team. Dead money paid to other teams was included. Over the next month, as players hit the disabled list or veterans with minor-league contracts earn their way onto rosters and get guaranteed deals above the minimum, the team payrolls will likely rise by a small amount, perhaps a few million dollars per team, but will not change the overall outlook by team.

Below is the current Opening Day payroll information for every team. To nobody’s surprise, the Dodgers lead the way.


Update: The Minnesota Twins have not been contracted and are included in the chart.

Also not a surprise: the Tampa Bay Rays bring up the rear. The average payroll right now is $128 million, and the median is right up there at $126 million. However, right after that median, there’s a major dropoff. The Chicago White Sox come in at $125 million, but after them, there is more than a $20 million drop to the Colorado Rockies. The top-four teams have a higher combined payroll than the bottom-ten teams combined, but that tier above $120 million speaks somewhat to the Royals’ success and the second wild card. Teams who might project for 75-80 wins can make a move or two and put themselves in contention for the playoffs, where anything can happen.

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Sal Perez and Awarding Contract Extensions Out of Fairness

Earlier this week, Salvador Perez and the Kansas City Royals agreed on a second contract extension. In terms of financial need or justification for the Royals, there weren’t any compelling reasons for the Royals to sign Perez to another extension when his previous contract kept Perez under control through the 2019 season. Even with no extensions, Perez would not have been a free agent until after this season. In his analysis of the deal, Jeff Sullivan focused on the human element of the deal and being fair to Perez. Ken Rosenthal wondered if this would start a trend and named a few other players who might benefit from teams deciding to be a bit more fair. Perez is certainly not the first player to sign a very team-friendly deal, but he is also not the first player to be awarded a second deal despite having a number of years still left on his first contract.

In Rosenthal’s piece, he acknowledges that Perez was a “special case,” noting that the Royals catcher had recorded just 158 plate appearances at the time he signed the contract. That lack of experience led to a very low guarantee and the three team options that would have prevented Perez from reaching free agency for another four seasons. While acknowledging both the lack of need and the recognition of fairness, Rosenthal suggested six other players who might fit the same bill as Perez, although perhaps on a smaller scale given their larger guarantees: Paul Goldschmidt, Anthony Rizzo, Jose Altuve, Chris Sale, Madison Bumgarner and Chris Archer.

On the whole, these types of extensions save massive amounts of money for teams, but we can take a look at the contracts Rosenthal discusses and compare them to Perez’s to see if they are actually close. The first few columns of the table below should be self-explanatory, but the last column, FA Surplus Value, might not be. To calculate the surplus value, I took current projections, applied standard aging curves, set the cost of a win at $8 million for this year along with 5% increases in years thereafter and compared the value of the projected production to the cost for free agent years only. For the players below, their arbitration salaries have also been at a discount, so if you want to include those values, feel free to add on another 20% or so (whichever number you feel like) to capture that discount as well.

Bargain Contract Extensions
Player Years Left (w options) Dollars Left (w options) FA before Contract FA after Contract FA Surplus Value
Sale 4 $47.25 M 2016 2019 $118.2 M
Rizzo 6 $59.0 M 2018 2021 $104.1 M
Bumgarner 4 45.25 M 2016 2019 $84.9 M
Goldschmidt 4 $40.0 M 2017 2019 $68.5 M
Perez 4 $16.75 M 2016 2019 $67.0 M
Altuve 4 $20.5 M 2017 2019 $49.9 M
Archer 6 $45.25 M 2019 2021 $45.9 M

Rosenthal did a very good job identifying the super-team-friendly contracts. Perez falls right in the middle of those contracts in terms of surplus value, but what makes his case different is the very low salary-level in relation to the other players — this, even if his options had been picked up. The top-four players on that list are massive bargains, but at least they will be paid around $10 million or more per year — double that of Perez. Altuve is in nearly the same boat as Perez in terms of salary, but he gave up just two years of free agency, which limits the surplus value.

Looking back through MLB Trade Rumors’ extension tracker, I identified players who were locked up to a second extension while still possessing multiple years on their first one. The idea: to find some sort of precedent for the Perez contract, or perhaps something closer to the situations of Sale, Bumgarner, Goldschmidt and Rizzo. Certain names come to mind immediately when considering players who’ve received a second extension while still playing on the first. Miguel Cabrera, for example. And Ryan Howard. These are classic cases of a team mistakenly extending players before they’d have to, but neither case is really similar to Perez’.

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MLB Suspends Aroldis Chapman, Sets Important Precedent

When Major League Baseball and the Major League Baseball Players Association agreed to terms on a new domestic violence, sexual assault, and child abuse policy last August, it was clear that the first few cases to arise under the new agreement would take on heightened importance. As I noted at the time, under the agreement MLB and the union agreed that any past suspension — or lack thereof — for an act of domestic violence would not serve as a precedent in any future cases arising under the new policy. Instead, the initial suspensions handed out by Commissioner Manfred under the agreement would establish a new baseline against which the fairness of any future punishment would be judged.

As a result, Tuesday’s news that MLB had officially suspended Aroldis Chapman for the first 30 games of the 2016 season established a significant milestone, marking the first case in which a player has been suspended without pay under baseball’s new domestic violence agreement. This is all the more noteworthy considering that Chapman was never actually charged for the incident that led to his suspension. Although baseball’s new policy clearly permits MLB to punish players in cases that do not result in criminal prosecution, it wasn’t clear to what extent the league would be willing to suspend someone for an incident that did not result in the player being charged with a crime.

Further, because Chapman declared shortly after his suspension was announced on Tuesday that he would not be appealing the punishment, MLB has avoided the possibility that the 30-game suspension could be overturned by an arbitrator, creating an immediate precedent for future cases.

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The Atlanta Braves and the Importance of the Local Market

Determining profits and losses for baseball franchises is a speculative task. When teams say they’re losing money, we can take them at their word or ignore them. They don’t open their books, so how much money teams make or lose is subject to factors outside of publicly available knowledge — and, therefore, equally subject to a lot of potential “massaging” on the part of the teams themselves.

That state of affairs might change slightly in the near future, however. Liberty Media, owners of the Atlanta Braves — as well as a majority stake in Sirius XM and a substantial stake in Live Nation Entertainment — are planning to offer stock in their separate divisions. As a result, they’ll have to provide more information to the public on the Braves’ operations. The Braves are claiming losses over the past few years, although in a cash sense, those losses are a bit deceiving, and the team is set to make money this season after slashing payroll.

There was a time, not all that long ago, that almost all Atlanta Braves games were broadcast nationally on TBS. The cable network, owned ostensibly by the same person who owned the Braves, Ted Turner, used the Braves to get publicity for his cable network, and the Braves were able to reach a broader base of fans. In the middle of the Braves’ great run of success, Time Warner bought Turner’s broadcasting company and the Braves, and the new owners continued to put Braves games on TBS. Changes to this once symbiotic partnership, however, brought an end to TBS’s almost daily Braves telecasts and saw the team enter one of the worst television contracts of the last few decades.

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Blake Snell and Extending a Player Without Service Time

You can probably be forgiven if you heard about a possible Blake Snell contract extension and your first reaction was to wonder, “Who?” Snell has never pitched in a major-league baseball game. He is not one of the top-ten prospects in baseball. Rather, he’s made just 21 starts above Class-A, has produced a walk rate above 10% in every year of the minors, and (perhaps as a result of playing in the Tampa Bay Rays organization) is generally unknown to the masses. However, Snell is one of the top-20 prospects in baseball, his walk rate has moved down as he’s moved up the minor-league ladder, he struck out more than 30% of batters last season, and he allowed just 21 runs in 134 innings last season (1.41 ERA). He’s also likely to see the majors this season, and the Rays have had talks with Snell about a contract extension.

Contract extensions for players with no service time are incredibly rare. The last one was Jon Singleton in June 2014, and prior to Singleton, Evan Longoria‘s contract extension in April 2008 — which was not announced until after a week in the majors — was the closest comparison. The Rays are not strangers to similar deals. Matt Moore is in the final guaranteed year of his contract that he signed after pitching just 9.1 innings back in the 2011 regular season. They also approached Melvin Upton as a teenager, but were unsuccessful in reaching an agreement. Since 2010, there have only been four contract extensions for players with under one year of service time and the Rays are responsible for two of them in Moore and Chris Archer. (Singleton and Salvador Perez are the others.)

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Extending Older Free-Agents-to-Be Like Adrian Beltre

There are rumors that Adrian Beltre, a potential free agent next winter, might sign a contract extension with the Rangers this spring, potentially taking him to the end of his career. Jose Bautista in is a slightly similar situation with the Blue Jays. Dave Cameron discussed the potential of signing him to a contract extension one year out. Edwin Encarnacion and Carlos Gomez are also among those veteran players who have previously signed contract extensions but who are eligible for free agency after the 2016 season. Those players could conceivably sign extensions before hitting the free-agent market. If they do, how will the contract look? Will the signing team extract any extra value from signing it? Or is it distinctly an advantage for the player?

On Friday, we looked at players who were bought out before taking their very first crack at free agency — players who signed their first extension just before reaching their free-agent years. Generally speaking, teams paid free-agent prices for those players and received typical free-agent results.

I wondered if the same form would hold true for more veteran players who have already received an extension somewhere along the line or had even already participated in free agency. On the one had, such players are older and thus more prone to decline earlier on in the contract. On the other, the signing teams would already have familiarity with these players and these players might be better given the previous investment, perhaps mitigating the influence of any age-related decline.

Much like I did on Friday, I consulted MLB Trade Rumors and looked for players who signed an extension within a year of free agency. This time, I considered only players who had amassed at least six years of service time, indicating that he’d already signed a previous free-agent contract — either that, or at least signed an extension that bought out a certain number of free-agent seasons. For the most part, these players had been made a priority by their current team or a previous one and their current team decided to make a significant investment in their future and convince them to skip the allure of free agency.

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The Benefit of Extending a Free-Agent-to-Be

Teams are constantly trying to sign young players to contract extensions, buying out both the remainder of the player’s cost-controlled seasons and then years of free agency after that. Doing so provides great benefits to the team, chiefly by allowing them to avoid the expenses of the free-agent market.

Not every player is offered or signs that type of extension, however. Some players choose to avoid extensions altogether, hoping for the big free-agent payoff as soon as possible. Other players might develop later and miss the window for an extension. Still others might lack the requisite talent to attract a deal. In every case, the player in question moves on, and that’s the end of it.

There’s a final scenario, however — one in which the club and player both possess an interest in reaching an extension but, for whatever reason, are unable to agree on the terms until the player’s final season of team control. In this case, a team isn’t buying out team-control years, only free-agent ones. And that changes the calculus a little bit. Because, while it’s possible the team might be receiving something of a discount from free agency, the odds of these deals working out for the team are not great.

Contracts for pending free agents (how I’ll refer to these players in their last year of team control) aren’t common. Players who’ve reached the brink of free agency have a major incentive to play out the year and see what the market provides. Having been unable to reach a deal for years, the odds that a player and his club will have a change of heart are low. This is particularly true for players who have never signed a contract extension and are heading into their sixth (or, because of service-time manipulation, seventh) year in the majors, and are now faced with their first chance at free agency.

Despite their rarity, there are a few examples of these contracts for pending free agents every season. Last year, for example, Rick Porcello signed a five-year deal with the Red Sox, while Clayton Kershaw and Brett Gardner have also signed similar contracts in the past couple years.

Looking at contracts from late-2007 through 2013, we can see how those deals have worked out for the teams that have signed them. Using MLB Trade Rumors’ extension tracker I looked for players with between five and six years of service time who were pending free agents and then signed contracts buying out at least two years of free agency. Those deals needed to be at least half-completed by this season to provide a decent idea on the deal’s outcome. In all, I found 26 such contracts. To determine value, I used $8 million per win for this season, and to approximate past and future years, adjusted by $250,000 per season. For contracts still active in 2016, I used the FanGraphs Depth Charts projection for the player, and if there were any years after 2016, I decreased the 2016 projection by half a win per year.

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Teams Saved $500 Million by Locking Up Players Early

There is an inherent risk/reward dynamic for both team and player when it comes to locking up young players to guaranteed contracts past their arbitration years. Without a guaranteed contract, teams can go year to year with players through the arbitration process and, in the event of player injury or decline in performance, the team can drop the player without consequence. However, once that same player reaches six years of service time, he is free to choose any team he prefers, often at an expensive price.

For the player, going year to year naturally exposes him to a possible loss in future compensation due to the risk of injury or a decline in performance. That said, by going year to year, the player essentially bets on himself during the arbitration process and reaches free agency at the earliest possible time — and with the benefit of a potentially large payday.

Where these two interests meet, teams and players reach agreements early in careers to buy out the player’s remaining arbitration years and some years of free agency. A team’s ability to absorb risk in handing out contracts is much greater than the player’s risk in turning the contract down, and the savings are generally much greater for the team.

From the winter of 2008 through the summer of 2011, teams and players agreed to 53 contracts both (a) at a point before the player in question had recorded four years of service time and (b) in which the contract featured no guaranteed money beyond 2016. Among those players, there are some bargains and some duds. By examining only the free-agent years for which clubs paid ahead of time, we can calculate rough approximation of how much money teams saved or lost by locking up players early in their careers.

While there are some players who might have been non-tendered during the arbitration process — therefore costing teams a bit more money than they would have going year to year — there are also players who would have earned considerably more during the arbitration process than their contracts provided. When teams sign players to these type of contracts, the major win for the team comes in free agent seasons, and the major concession by the players are those same years. As a result, the analysis below will focus on those years.

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MLB Owners’ Next Big Potential Moneymaker

Major League Baseball is a profitable enterprise, and (not surprisingly) MLB owners tend to benefit from that profitability, generally through revenues directly related to operating those franchises. However, MLB owners have also profited from ventures only partially related to MLB ownership, as well. They’ve made money owning television stations that also happen to air the games of teams they own. Owners are also in the process of spinning off the non-baseball related arm of MLBAM for billions. Notably, MLB owners have begun capitalizing on another revenue stream: developing the land near their teams’ ballparks.

When the Atlanta Braves announced they were leaving a 20-year-old Atlanta-based stadium for a new one out in the suburbs of Cobb County, it took many by surprise. Cobb County made an appealling offer to the Braves, and one of the Braves’ promises was a $400 million mixed-used land development surrounding the stadium. While this has some likely benefits for Cobb County, it has the potential to be very beneficial for the Braves, as well — and it was one of their reasons for leaving Atlanta.

Bucking the trend of pro teams seeking stadiums and arenas closer to the city center, the Braves’ new facility will be part of a 60-acre development near Cobb Galleria mall. Plant compared it to new ballparks in Cincinnati, San Diego and Houston, as well as L.A. Live, which hosts the NBA’s Los Angeles Lakers and Clippers and the NHL’s Kings at Staples Center.

“With our current location, we couldn’t control that process,” Plant said. “This site allows us to do that.”

In Cincinnati, the Reds have their Hall of Fame across the street. In Houston, the Astros took over Union Station. However, the first major attempt to control an entire area of land around the stadium had mixed results. In San Diego, real estate developer JMI, owned by John Moores, the previous owner of the Padres before a messy divorce forced the sale of the team, built up the area around the park, mainly with housing after original plans for more office buildings had to be scrapped due to economic conditions. The area is still in flux, as it was also a potential site for a new stadium for the San Diego Chargers.

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The Uncertain Timetable for Cord-Cutting in Baseball’s Future

Major League Baseball has taken a number of small steps designed to make it easier for consumers to watch baseball, even for consumers in local markets. MLB.TV has been around for years, but for fans wanting to watch local games on mobile devices or through non-cable set-top boxes and devices like Apple TV, Roku, or Chromecast, there had been few advancements. This offseason, however, MLB announced that the Fox-owned Regional Sports Networks (RSNs) would finally provide local games on something other than cable to cable subscribers.

This small step was accompanied by a somewhat forced step in the Garber settlement to offer out-of-town fans the opportunity to purchase single-team packages at a reduced rate. A lesser publicized part of the settlement prevents MLB.TV from raising prices (capped at 3% per year) unless the non-Fox RSNs also offer streaming for local games by the 2017 season, which Commissioner Rob Manfred expects to happen.

These steps, along with burgeoning MLBAM technology and reports that ESPN is losing billions to cord-cutting viewers, have begun to raise more questions about when the sports right bubble might finally burst — when the current cable model might finally be unsustainable — and MLB fans will finally be able to purchase directly the rights to see the games of their local team (or in Iowa and Las Vegas, their six local teams) free from cable and the onerous blackout rules that accompany it. Unfortunately, nobody has an answer.

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How the Mets Could Afford Yoenis Cespedes

New York Mets ownership has come under increased scrutiny over the past few years. Lowering payroll in a gigantic media market and getting entwined in the Bernie Madoff Ponzi scheme will bring that kind of attention. Back at the trading deadline, there were many, including myself, wondering why the Mets were acting like a small-market team in New York. The team quieted many doubters by bringing Yoenis Cespedes at the trade deadline and making the World Series, but due to insurance for David Wright‘s injury and the PED suspension for Jenrry Mejia, the payroll increase was not significant. As a result, calls for the Mets to spend were heard again during the offseason, and again, the Mets have silenced their critics with Yoenis Cespedes.

The Mets’ revenues are driven by many factors, including the massive New York market that affords them a fantastic television deal that nets them around $100 million per year. However, nothing drives revenue like success, and the Mets, despite significant ownership debts and upcoming payments totaling over $60 million related to the Madoff scandal, the Mets were able to raise payroll due to their on-field success in 2015 and the fan response to that success. Team sources have pegged the revenue due to the Mets World Series run at around $45 million, per the New York Post. Fortunately for Mets fans, it appears almost all of that amount is being invested back on the field.

Let’s break it down.

Regular Season Revenue from 2015

Additional revenue from the regular season was not included in the $45 million estimate, but it is helpful to note that, due to the increased number of fans, the Mets did substantially better at the gate in their competitive 2015 season than they did the prior year. In 2014, the Mets drew 2.15 million fans and had an Opening Day payroll below $85 million — both figures down more than 30% from when Citi Field opened in 2009, but within a few-hundred thousand fans of the previous three seasons as the payrolls dropped beginning in 2011.

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