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The Recession, Obama, and the MLB Off-Season Collide PDF Print E-mail
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Written by Maury Brown   
Thursday, 06 November 2008 16:15
MLB and the Recession

Before we get started, if you are a member of the Yankees, Mets, Dodgers, Red Sox, Cubs, or any other high revenue making club, this article may not pertain to you. Well, that's not entirely true, it does concern you, only insofar as you're going to be referenced a lot here.

Yes, we're officially into the off-season, which means free agent signings and trades. And yes, we're officially in a ressecion, and have a new president coming into power to boot.

The latter impacts the former this off-season -- a year in which big business has nearly been pounded into submission, and with that the rest of the economy has spiraled downward, as well. Throw that into the pot, toss in a healthy dash of "clubs have been doing more with internally developed players than free agents," and it makes for an interesting, rarely seen environment this year.

To start with, Commissioner Selig has -- not once, but twice -- mentioned to owners, and now GMs, that fiscal responsibility in the wake of the financial market crash needs to be kept in mind. Selig told the owners not to get "cocky" with ticket prices, and in a conference call during the GMs meeting this week, urged clubs to use restraint in free agency deals.

As mentioned at the beginning, that line of thinking is probably more geared toward teams in markets like Cleveland, San Diego, and Seattle rather than the Yankees, Mets, or Dodgers.

With the Yankees and Mets both opening new stadiums in 2009, they will see an increase in revenues. The Mets have already sold out all of their $500,000 suites in the new Citi Field, and the Yankees will open a stadium replete with a steakhouse and other top-notch amenities, all of which yield revenues to play with.

So, while Scott Boras is on-record as saying that the world of MLB is "myopic,"  in other words, impervious to minding the realities of the economy when a much-desired free agent comes walking by, the reality this off-season is likely to be about the big-revenue markets which can maintain or grow revenues through the bad times. In a nutshell, we can expect the big money teams to get the prime cuts in this year's free agent market, even more so than is usually the case.

Here are some predictions about the landscape during baseball's upcoming "silly season":

  • Watch for contract agreements to be reached, but take longer to be finalized.
  • Look for the value of "tier 2" free agents to go up as clubs with constrained pocketbooks pass on the likes of Manny Rameriz and C.C. Sabathia, knowing full well that those big revenue clubs have more muscle than they do this off-season.
  • Trades will be up, as they were last season, as teams seek ways of constructing their rosters which are less costly than the FA market.
  • Look for deals that have a higher level of signing bonus in the mix. With president-elect Obama's plan to increase taxes for those making more than $250,000 in order to give those making under $200,000 a tax break, agents and GMs will be working to dodge the taxman before Obama takes office on Jan. 20.
  • Look for clubs with low-to-mid revenues to offer up long-term deals through arbitration eligibility and early free agency with young talent. As we've seen already with the likes of Evan Longoria and Troy Tulowitzki, clubs are willing to gamble upfront with the hope of big, cost-controlled rewards in the future.
  • And lastly, while I am uncertain as to how it will play out, it would seem logical that arbitration filings will be impacted in some fashion. The question is, will figures be closer or further apart between the players and clubs when the figures are filed?

One thing is certain, it should be a different off-season than we are accustomed to seeing. Actually, it is already. Look for extensive reports from The Biz of Baseball as we head to this year's Winter Meetings in Las Vegas.


Maury Brown

Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is contributor to Baseball Prospectus, and is available as a freelance writer.

Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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