Newspaper and Internet headlines are written to attract readers’ and viewers’ attention. A recent newspaper headline got my attention:
“Another Ace Bets on Himself, And Wins Big”
The New York Times article, however, delivered less than the headline promised, an unusual practice for the Times. The subject of the article, Jordan Zimmerman, signed a five-year contract with the Detroit Tigers. It is worth $110 million, or $22 million a year.
What gamble did Zimmerman win? A year earlier, the article explained, the Washington Nationals offered Zimmerman $105 million, but he rejected it and opted to be a free agent this year. So how did he win big?
Don’t ask me. After risking an arm injury that could have wrecked his chances of getting a lucrative multi-year contract as a free agent, Zimmerman gained an extra $5 million. That’s a total of $5 million, not $5 million a year.
A year earlier, on the other hand, Max Scherzer, also a pitcher, gambled and really won big. Scherzer reportedly rejected a Detroit offer of $144 million for six years, became a free agent and signed with Washington for seven years and $210 million. That is winning big.
It could be said that Zack Greinke, yet another pitcher, gambled this year and won big, but his was not much of a gamble, given his 2015 season.
Signing with the Los Angeles Dodgers as a free agent for six years and $147 million in December 2012, Greinke had the right to opt out of the contract after the 2015 season and become a free agent.
He opted out, giving up $71 million for the last three years of the contract. Greinke, though, had a 19-3 record and registered a major league-low 1.66 earned run average. He agreed to a new contract Friday with Arizona, a six-year, $206.5 million deal whose average annual value (a.a.v.) of $34,416,667 is the highest in baseball history.
The a.a.v. of Greinke’s contract eclipsed the $31 million average of the seven-year, $217 million contract David Price accepted from Boston only three days earlier.
Talking about gambles, how about San Francisco’s signing of Jeff Samardzija? The 30-year-old right-hander had the worst season of his six-year career, but the Giants have given him a five-year contract for $90 million.
Gambles or not, what does all of this spending mean: $90 million, $110 million, $206.5 million, $217 million? It means that Major League Baseball is awash in money, and the clubs have so much of it they can’t wait to spend it on players they want to retain or players they want to obtain.
Beyond that, it means any owners who thirst for a payroll cap – and there are some – should quickly abandon such a foolish, misguided, perverse notion.
When the owners were conducting a vote last year for a new commissioner to replace Bud Selig, who was retiring after 22 years as commissioner, Jerry Reinsdorf rallied a group of owners to oppose Rob Manfred and support Reinsdorf’s straw man, Tom Werner of the Red Sox.
At least some of the Werner supporters favored a payroll cap, and Reinsdorf especially seemed to be determined yet again to force the players to accept a cap.
Selig had learned from previous failed attempts to give up the payroll cap fight, but Reinsdorf apparently isn’t ready to concede. To understand his perverse thinking, he still blames the 234-day strike in 1994 and ’95 on Donald Fehr, the players’ labor leader at the time.
In the 20 years since, the only thing I can think of is Reinsdorf feels that if Fehr had accepted a cap, there would have been no strike. He presumably doesn’t think that if he and the others owners hadn’t insisted on a cap, there would have been no strike either.
The current collective bargaining agreement expires a year from now, Dec. 1, 2016. Negotiators for the clubs and the players are expected to begin talks during spring training. After eight consecutive work stoppages – five strikes and three lockouts – the last three rounds of negotiations were concluded with new labor agreements and no work stoppages.
None of the principals who will be at the bargaining table agreed to talk about the upcoming talks. Tony Clark, executive director of the union, answered some questions via e-mail through a spokesman, but Dan Halem, the clubs’ chief legal officer and chief negotiator, didn’t return calls made to him on two consecutive days last week.
“He’s away from his desk,” his secretary said on Thursday. “Can he call you?”
On Friday she said, “He’s away from the office today.”
Manfred, who was the clubs’ chief labor executive and negotiator in all of the peace-producing talks, didn’t call either.
Halem’s failure to call, which has become routine, reminded me of the position of Ray Grebey during the 1981 strike. Stung by an article I wrote about his militant tactics at General Electric, Grebey refused to talk to me and thought I would be unable to write articles about the negotiations if he didn’t talk to me.
But Marvin Miller, the players’ labor leader, kept talking to me, and I kept writing. Management officials noticed what was becoming one-sided coverage and Lee MacPhail, the American League president and a member of the owners’ negotiating committee, called me and told me if I had any questions I should call him.
Although the two sides have not begun talking at the bargaining table for the next agreement, some issues have already arisen. The biggest seems to be the portion of MLB revenue the players are getting. Without a payroll cap, the two sides have no agreement on the division of revenue.
Recently, however, union critics have said the players’ share has been falling significantly. At the general managers meetings last month the outspoken agent Scott Boras told reporters that owners were getting an increasing share of industry revenue. Most recently, Boras said, the owners got 57 percent, the players 43 percent.
Responding, Tony Clark said:
“Despite what you may have read or heard at any given time, the quote-unquote ‘player share’ is as close to 50-50 as it has been in a long time.
“From top to bottom, the industry is indeed doing well, and whether you’re on the players’ side or you’re on management’s side, we’ve been able to collectively move forward in a positive fashion.”
Clark did not offer percentages to counter Boras’ claim, but under the labor agreement, the union receives detailed financial reports and projections from all 30 clubs so Clark is more familiar with MLB revenue than Boras or any other critic or economist.
MLB does not disclose revenue data, neither do individual clubs. That leaves a lot to guesswork and often understated or overstated estimates.
Comparisons with revenue practices in other sports can also be wildly misstated. When critics refer to 50-50 division of revenue in other sports, they do not define revenue. They are usually not talking about gross revenue but specifically defined revenue. That makes a difference in what the actual splits are.
Despite the union’s steadfast opposition to a payroll cap, for years it has agreed to a luxury-tax system that includes a payroll threshold beyond which clubs must pay a tax. Some critics view the threshold as a cap because most teams avoid it so they don’t have to pay the tax.
The threshold has been $189 million the past two years and will be $189 million again next year. Four teams exceeded it this year – Dodgers (a record $43.7 million), Yankees ($26 million), Red Sox ($1.87 million), Giants ($1.33 million).
I asked Clark if the union would seek an increase in the threshold in the 2016 talks.
“Heading into a bargaining year,” he replied, “all I can say here is that one should assume that all terms and provisions of the basic agreement are/will be subject to negotiations, including all those that have the potential to impact player movement and compensation.”
Lest anyone doubt that teams have money to spend, consider the Diamondbacks, who opened the 2015 season with a $91.5 million payroll, making them one of only seven teams with sub-$100 million payrolls.
No money to spend? They are the team that signed Greinke to the highest per-year contract in baseball history. Prior to Greinke’s $206.5 million deal, the largest previous contract given by the Diamondbacks was the six-year, $68.5 million deal given to Yasmany Tomas, a Cuban free-agent outfielder, last off-season.
BASEBALL’S NEW MONEY MAN
When George Steinbrenner was alive and running the New York Yankees in a lavishly spending manner, he would often complain that other owners unfairly maligned him for signing players to exorbitant contracts and raising the salary bar for all teams.
Occasionally his complaints were justified because other teams were the contract culprits. Steinbrenner, though, never shook off his reputation.
Steinbrenner is no longer with us, but salaries are still soaring. They are soaring to heights that maybe even Steinbrenner couldn’t have imagined. As it turns out, there is a new Steinbrenner in town and it’s not just one town.
As president, chief executive officer and general manager of the Detroit Tigers, Dave Dombrowski signed Miguel Cabrera in March 2014 to an eight-year, $248 million contract extension. The average annual value of the contract, $31 million, was the highest in baseball history.
Last week David Price matched that a.a.v. when he signed a seven-year, $217 million contract with the Boston Red Sox. Who signed the pitcher to that contract? The Red Sox president of baseball operations, a fellow named Dombrowski.
A few days later another player eclipsed that all-time high, and Zack Greinke’s $34,416,667-per-year contract didn’t have Dombrowski’s signature.