MLB 2023-2024 Offseason

[MU82]

The second issue is downstream, which is that while deferred money could theoretically help smaller market teams - it won't.  I think that if Milwaukee, Tampa, Cleveland, Miami, or Kansas City were adding $680M in deferred comp to their books, the MLB would have a conniption.  Those teams can't reasonably carry that type of liability without materially affecting the value of the franchise and the stability of the ownership group.  As a loose comparison, look at how the Jeter group had to sell off all of Miami's good players after buying the team from Loria because they were so leveraged to come up with the purchase price.  So while deferred money can help small market teams when used sparingly, only the franchises most immune from financial turbulence can actually use it to maintain spending flexibility while signing top players.

This is a reasonable point, Burrow. We'll have to see what this kind of thing ends up meaning long-term.

I think you have to recognize the Dodgers have made a very big bet on Ohtani's health.

Also a good point. I've read quite a few articles on the signing and very few have mentioned that Ohtani's health already has been an issue and could definitely be an issue going forward. It's quite a  bet to place on a pitcher who already has had two major surgeries and who won't pitch in his first season with his new club. Obviously, he's also a great hitter. As you might have heard.

[WhiteTrash]

Yes, people. Capitalism sucks.

Yeh, not really a capitalism/free market issue.

MLB is competing with the NFL, NBA, NHL, Hollywood, Vail Resorts, etc. and not each other.

To be concerned about the competitive balance inside MLB is reasonable for the health of the entire league and far from anti-Capitalism.

[Pakuni]

The second issue is downstream, which is that while deferred money could theoretically help smaller market teams - it won't.  I think that if Milwaukee, Tampa, Cleveland, Miami, or Kansas City were adding $680M in deferred comp to their books, the MLB would have a conniption.  Those teams can't reasonably carry that type of liability without materially affecting the value of the franchise and the stability of the ownership group.  As a loose comparison, look at how the Jeter group had to sell off all of Miami's good players after buying the team from Loria because they were so leveraged to come up with the purchase price.  So while deferred money can help small market teams when used sparingly, only the franchises most immune from financial turbulence can actually use it to maintain spending flexibility while signing top players.

Again, I say this as someone who's not an expert on these matters, but one would think that teams would - for lack of a better term - finance these contracts, and for the financiers there isn't a much safer bet than a professional sports franchise. The value of the team is almost certain to go up, there are guaranteed revenue streams (national TV contract, licensing fees, etc.) and virtually guaranteed streams (ticket sales, local broadcasting) that may fluctuate year-to-year, but won't vanish and are almost certain to rise annually.
I get that MLB wouldn't be thrilled to see a team struggle to pay its creditors, but that would seem an unlikely worst-case scenario.

[wadesworld]

MUBurrow, I'd also add the deferred money is intended to help only those teams going over the cap/into the tax. That is not a situation the small market teams deal with.

This is exactly what I was going to say.  The tax threshold was $233MM last year.  14 teams could've added Ohtani's $70MM/year and not gone over that number.  The teams that would've gone over it (or further over it, for a number already over that) would be the Mets, Yankees, Padres, Phillies, Dodgers, Angels, Blue Jays, Braves, Rangers, Astros, Giants, Cubs, Red Sox, White Sox, Cardinals, and Rockies.  AKA, most of the big market teams.  The teams that wouldn't have gone over would be the Twins, Mariners, Tigers, Brewers, Diamondbacks, Nationals, Royals, Marlins, Guardians, Reds, Pirates, Rays, Orioles, A's.  AKA most of the small market teams.

[Pakuni]

MUBurrow, I'd also add the deferred money is intended to help only those teams going over the cap/into the tax. That is not a situation the small market teams deal with.

While I agree this is a strategy to circumvent the tax and thus reduce revenues to small markets, I think you have to recognize the Dodgers have made a very big bet on Ohtani's health. The "experts" after his injury were guessing on a $300M-$400M deal and the Dodgers went about double. How often does that happen? Tip of the cap for having 'onions'.

MLB could solve this by calculating the figure by average annual value (AAV) of the contract, as they do in the NHL.

[4everwarriors]

Mark is worth roughly $700 million per google. Ideally I'd like for him to liquidate all his assets and go out and get Ohtani...not much to ask really.

Wrong, Marky bought the team in 2005 for $225 mil. It has been valued as recently as this Fall at $1.6 bil. Part with the shekels, hey?

[WhiteTrash]

MLB could solve this by calculating the figure by average annual value (AAV) of the contract, as they do in the NHL.

Very true. The NFL too?

I thought the Bronco's got caught deferring some of Elway's contract (it was like $1M, not $680M). I could be wrong.

[JWags85]

This is a reasonable point, Burrow. We'll have to see what this kind of thing ends up meaning long-term.

Also a good point. I've read quite a few articles on the signing and very few have mentioned that Ohtani's health already has been an issue and could definitely be an issue going forward. It's quite a  bet to place on a pitcher who already has had two major surgeries and who won't pitch in his first season with his new club. Obviously, he's also a great hitter. As you might have heard.

I mean, you take the pitching aspect out of it, and you have an MVP caliber hitter.  Aaron Judge signed for $40MM a year last year over 9 years and is 2 years older than Ohtani.  Ohtani has outpaced Judge in most non-HR categories, strikes out less, and hits more line drives (aka extra base hits). 

I think then you add the deferred payment aspect and the pitching premium (even with injury risk) becomes a fairly reasonable number.

The right elbow is a concern for sure, but I'd note that in the time between his last significant elbow injury (2019-2020), he averaged over 25 starts a season (and was on pace for another 28ish start season in 2023) and was fairly durable, so its not like he's totally a glass arm, especially if he gets a year off.

[MUBurrow]

MLB could solve this by calculating the figure by average annual value (AAV) of the contract, as they do in the NHL.

Yup that's it, and I would add that the value of deferred money in the contract shouldn't be reduced for the time value of money.  If the team and player want to defer a bunch of the money, that is between them and God, but it isn't good to let teams load up their books with future payroll obligations for competitive balance benefits today.

Tim Dierks at MLBTR argues the other side here - https://www.mlbtraderumors.com/2023/12/why-shohei-ohtanis-contract-structure-is-not-a-luxury-tax-dodge.html - but I don't find it persuasive.  His point centers around the fact that the time value of money is real, and while I don't disagree, I don't think that's the end of the argument.  A pro sports league is a closed economic universe, and is able to value its contracts for competitive balance purposes however it wishes.  Just because a bird in the hand is worth two in the bush doesn't mean a league can't internally value a deal for two birds in the bush at two birds.  The idea that baseball had a problem with the Yankees signing Judge through his age 44 season to stretch the luxury cap timeline, but not deferring 97% of a $700M deal and discounting for future value is... a position. 

[GB Warrior]

There's way too much discourse on Ohtani and not enough on the Brewers signing of Joe Ross

[MU82]

I mean, you take the pitching aspect out of it, and you have an MVP caliber hitter.  Aaron Judge signed for $40MM a year last year over 9 years and is 2 years older than Ohtani.  Ohtani has outpaced Judge in most non-HR categories, strikes out less, and hits more line drives (aka extra base hits). 

I think then you add the deferred payment aspect and the pitching premium (even with injury risk) becomes a fairly reasonable number.

The right elbow is a concern for sure, but I'd note that in the time between his last significant elbow injury (2019-2020), he averaged over 25 starts a season (and was on pace for another 28ish start season in 2023) and was fairly durable, so its not like he's totally a glass arm, especially if he gets a year off.

Also reasonable. Ohtani is the most valuable, most uniquely gifted athlete in MLB and he deserved to be paid that way. I have no problem with the contract. I love watching him play, and I hope he can get back on the mound in 2025.

[4everwarriors]

There's way too much discourse on Ohtani and not enough on the Brewers signing of Joe Ross
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Yeah Ross (who?) makes 2.5%/year of Ohtani's haul and is on a 1 year contract, hey?

[Jockey]

Yeh, not really a capitalism/free market issue.

MLB is competing with the NFL, NBA, NHL, Hollywood, Vail Resorts, etc. and not each other.

I disagree.

[Herman Cain]

Havent followed baseball since the early 90s when the strike happened . Before that enjoyed The Tigers .

This Shohei Otani contract caught my attention so I checked him out. First thing that caught my eye is he has a very cute small spaniel dog (a Kooikerhondje). Seems like a good guy so will be rooting for him to get his arm healthy again. Enjoy the whole modern day Babe Ruth aspect of his story.

[Jockey]

I don't follow Jai Alai at all, but I think the rackets are really, really cute. I'll be rooting for all the guys and gals who use them.

[MU82]

Havent followed baseball since the early 90s when the strike happened .

It wasn't a strike, it was a lockout.

The owners locked out the players, canceled the World Series, and didn't remove the locks until the following season.

[MU Fan in Connecticut]

I don't follow Jai Alai at all, but I think the rackets are really, really cute. I'll be rooting for all the guys and gals who use them.

A cesta!

[Lennys Tap]

Dodgers trade for Glasgow, will sign him to an extension.

[MU82]

From Yahoo Sports:

49 years ago today, an arbitrator ruled that Jim "Catfish" Hunter's contract with the A's had been violated. As a result, he was free to sign with any team, making him MLB's first free agent, Jeff writes.

‌By the numbers: Hunter, the reigning Cy Young winner coming off three straight World Series titles, signed a five-year contract with the Yankees worth a then-record $3.25 million... slightly less than the $700 million deal Shohei Ohtani signed this week.

I was a kid back then, and I remember hearing a lot of proclamations about this being the first step to the death of baseball.

[tower912]

It was.  It will just take another few decades.

[wadesworld]

Havent followed baseball since the early 90s when the strike happened . Before that enjoyed The Tigers .

This Shohei Otani contract caught my attention so I checked him out. First thing that caught my eye is he has a very cute small spaniel dog (a Kooikerhondje). Seems like a good guy so will be rooting for him to get his arm healthy again. Enjoy the whole modern day Babe Ruth aspect of his story.

Surprised you weren't in the negotiation room with Shohei.

[4everwarriors]

Nah, dat wood bea Reako, hey?

[Uncle Rico]

Nah, dat wood bea Reako, hey?

I was there.  We showed him the Kobe video and it was a done deal. Lots of MLB teams use me to help close deals.  Herm was probably busy on campus with recruits

[Herman Cain]

Havent followed baseball since the early 90s when the strike happened . Before that enjoyed The Tigers .

This Shohei Otani contract caught my attention so I checked him out. First thing that caught my eye is he has a very cute small spaniel dog (a Kooikerhondje). Seems like a good guy so will be rooting for him to get his arm healthy again. Enjoy the whole modern day Babe Ruth aspect of his story.

Who's a Lucky Dog? (Hint: His Owner Just Signed a $700-Million Contract) https://www.wsj.com/sports/baseball/shohei-ohtani-dog-decoy-700-million-nederlandse-kooikerhondje-2528fc37?st=kkbbyz43oaydo5m&reflink=article_imessage_share

[Jockey]

The Wall Street Journal reported Monday that Amazon is in discussions with Diamond Sports Group, the broadcaster that oversees Bally Sports Wisconsin and similar regional sports networks (RSNs), to develop a multi-year streaming partnership.

An agreement would eventually allow Amazon to serve as the streaming home for the games covered by those networks and could also allow Diamond to stave off liquidation, thus enabling continued broadcasts from Bally Sports Wisconsin in the current cable and satellite locations.

Diamond entered bankruptcy in March and, as part of a complicated bankruptcy process, has been negotiating with teams and creditors to stay in the business. Bally Sports Wisconsin carries nearly all Brewers games and a sizable chunk of Bucks games.

It's unclear if any arrangement is close to finalization or how much Amazon will be investing. Any new arrangement, which would need approval from a bankruptcy judge, would presumably mean games streaming on Amazon instead of the Bally Sports Wisconsin app available to customers in market.