For the past week, team equipment trucks have been motoring to Arizona and Florida. Spring training begins in about a week.
But about half of the Top 50 free agents remain unsigned. And the prospects of mega-deal long term contracts are fading fast.
The new free agent dogma is actually the renewal of the old ownership system. Way back, teams used to be owned by individuals or families. The baseball club was their sole business. They operated it like a mom and pop store. If they could get by cutting corners (player salaries) to make a profit, they made a profit first.
Small market clubs still operate under that guide line. Low attendance, small fan base, and lower local television deals means these clubs are under financial pressure against signing a player to a large contract. But under the CBA and baseball rules, all the small market teams have enhanced revenue sharing from the league, and extra draft picks to acquire "cheap" young talent to remain "competitive."
General managers now covet draft picks because they can retain a player for six years (three in arbitration) at a relative small cost. The farm system is now the most important aspect of the operations. If you can draft and develop talent consistently, your team can be frugal, competitive and profitable.
In order to do so, teams now "tank" more often to obtain higher "can't miss" prospects. It is okay to tank if you have very little fans to complain (see, Marlins.)
You have now about one-third (1/3) of MLB clubs at the bottom in salary budgets, many whom have little desire but to tank to acquire top ten draft picks.
You have the top four spenders, big market clubs, who are at the luxury cap limit of $206 million. These previously annual big spenders do not want to go over the salary cap because of the financial and draft penalties. To take on a salary like Harper's $30 million/year $300 million total, it could cost a team over the cap as much as another $300 million in penalties over that ten year period. To avoid that, the team would have to off-set or cut $30 million a year for the duration of the contract (which some GMs would classify as three veteran players or four quality relief pitchers in value.)
The rest of the clubs position themselves to spend $100 to $150 million per year. If their division is weak, like the AL Central, they could be in contention most of the season (thus validating their "plan" to their fans). Fair weather fans might return so everybody is happy. But with an average starting pitcher making $10 million, a team could have almost one-third of their payroll in a rotation. That leaves an average salary of $4 million for every other player on the roster. That is why prospects being paid the league minimum ($555,000) are so important as they free up money to sign or retain veteran players (second tier).
Player agents may be late to recognize this new paradigm being the old system before steroid fueled free agency. Teams now have the MBAs, computer geeks and stat analysts crunching big data to find that players over 30 in the non-steroid era are not as valuable or productive going forward. So many teams have been burned by long term, dead money contracts to be gun-shy about signing another player demanding even more money.
It seems that Harper's foray (or folly) into free agent basically ended when he rejected the Nationals pre-free agency extension of $300 million/30 years. Machado has not formally rejected the White Sox $175 million offer, but it seems no one else has topped it. The Phils said they would spend "stupid money," and if that was the case Harper and/or Machado would have had last month a press conference in Philadelphia. Agents must be frustrated by the "take it or leave it" offers from teams (who are giving their best contract first without being pushed and pulled by other teams or the agent.) Free agency is no longer a live auction between teams. It is more like a Priceline value search.
Showing posts with label moneyball. Show all posts
Showing posts with label moneyball. Show all posts
February 6, 2019
April 15, 2014
ALTERNATIVE B.S.
This whole season is wrapped up in a one large basket of B.S.
There was an internet report that the Cubs are close to settling with the roof top owners on the team's new signage demands. In truth, there was nothing to settle. The Cubs and the roof top owners have an existing settlement contract. It was the Cubs who want to unilaterally change it. And it is the Cubs who used the roof top owners demands to "abide by" the existing contract as an excuse NOT to start any renovation of Wrigley Field. The two items are unrelated so this is merely team B.S.
The Cubs continue to throw around the "burden" of ownership of spending $500 million of their own, private money, into the Wrigley Field rehab project. But his martyrdom is also B.S. because the actual Wrigley Field repairs is a small fraction of the total project cost which includes an entire block across the street from Wrigley Field (with a hotel, health club, parking lot and commercial space). Outside the ball park is the most expensive part of the project. And the cry of being beat up by the city and neighbors is another excuse, considering the city gave the owners a large real estate tax break for the Wrigley repairs and green lighted a zoning variation to build a highly dense commercial development in the middle of a residential neighborhood.
The business executives and owners kept telling us that the team needs new revenue streams in order to be competitive. It cites the "bad" contract deals for local broadcast rights. But those contracts were known and accepted by the Ricketts during the purchase; and the same "smart" Tribune executives who structured those deals are still working for Ricketts. It is another excuse to defer away from the bad team creating bad ratings which is tanking Cub advertising revenues. The idea that the Cubs are "trapped" in bad TV deals until 2020 is weak considering the Tribune was able to field season after season of high payroll teams prior to the sale.
The story line continues to be that the young front office talent (Epstein and Hoyer) know what they are doing; they are the boy geniuses of baseball. Ricketts said they could win 83 games in their sleep. So why have the Cubs not come close to winning 83 games the past few seasons? Their Boston greatness has to be tempered by the fact that the Red Sox organization was already built up by Epstein's predecessor, and that the Red Sox ownership gave Theo a blank check to win. Here, in Chicago, there is no blank check. The baseball team is not a priority, but only a tenant at Wrigley Field's entertainment complex.
So it is really hard to watch the Cubs this season with all this B.S. surrounding the club. Unless you are a farmer with a million acres, the amount of manure generated by the team is monumental.
October 20, 2013
CHARMED REASONING
When Tom Ricketts and his family bought the Cubs, he had the grand assumption that the Cubs drew 3 million fans whether the team won or lost. The place was always packed with a diverse fan base. First, there were the older traditional baseball fans who brought friends and family to the park to pass on the game to the next generations. Second, there were the corporate suite companies who used season tickets to wine and dine customers or vendors. Third, there were the young North Avenue beach crowd who found that one could soak up the sun, beers and babes in the bleachers rather than ruining some cargo shorts on a lake beach.
There were two consistent factors for the Tribune's late era success: the marketing of the historic charm of Wrigley Field and the free flowing tavern atmosphere in the stands.
Win or lose, the people had a good time or good experience.
But then, the financial collapse threw the economy into a deep recession. Such an economic event changed the reasoning that people would come to Wrigley win or lose. Corporations immediately cut back on travel and entertainment budgets, including sporting events. The free spending young bleacher crowd suddenly found themselves laid off and back living with their parents, unable to afford the party lifestyle around Wrigley. The seniors on fixed income saw their investment returns dry up when interest rates were artificially dropped to zero return. Large out-of-town group bus sales dropped off with the spike in gasoline prices and the new cost of living with real inflation in the grocery aisles.
The average American and average business had to circle their wallets to really budget their resources. Luxury items such as sporting events had to take a back seat to paying mortgages, credit card bills, or school expenses. Many people found their nest eggs, their home equity, vanish. They topped out on the debt limits. They found themselves working paycheck to paycheck. Small business owners also felt the hit of late payments, slowing orders and bankruptcy.
Ricketts bought the Cubs at a premium price during the final stages of a inflated financial bubble. His highly leveraged purchase still continues to drain resources from Cub operations. The Cubs payroll has declined under his ownership because he said it was "unsustainable."
So in this current economic environment, Ricketts has an ambitious plan to renovate Wrigley Field. He says he needs to "save" the old 100 year old landmark as part of his $300-500 million project. The Tribune deferred most of the required maintenance at Wrigley for decades. The park does need serious attention. But the boa constrictor wrapped around the Save Wrigley marketing campaign is the Ricketts family's real estate develop in and around Wrigley Field.
If one goes back and reads a year's worth of Crain's Chicago Business, or the newspapers local business sections, you will find that various businesses continue to have a difficult time in the Chicago metro area. Long established restaurants and bars have closed. Downtown hotel construction came to a halt with the decline of convention tourism. Several hotels went into foreclosure/bankruptcy reorganization. Service businesses like fitness clubs have high overhead costs and transient clientele. The general consensus is now is not a great time to start a new business from scratch.
But the Ricketts redevelopment plan incorporates all of those risky ventures: new restaurants, new bars, a new hotel, a new fitness club, new retail stores. Does it make a lot of sense to flood the Lakeview neighborhood with so many new business operations?
The idea that the redevelopment tied to the charm of Wrigley Field will generate new revenue for everyone is a myth. The Ricketts and the existing businesses are all competing for the same fan dollar. With more than 600,000 fans not showing up for games in the last two season, there are actually less fan dollars coming into the neighborhood.
Another factor that is not discussed often is that the actual changes in Wrigley Field itself may in fact ruin the charm of the ball park. Traditionalists and landmark preservationists liked that Wrigley did not have an electronic jumbotrons or large advertising signs that modern parks have plastered in their outfields. If that part of the fan base dislikes what Wrigley will become, they will stay home. Those were the type of fans who came to the game, win or lose, just to be part of the Wrigley heritage.
Ricketts reason for spending hundreds of millions of dollars is to create new revenue sources. You have to spend money to make money. However, most of these new revenue sources will not help the baseball team. The Cubs franchise is merely a sideline observer to the family's business glasnost.
The same failed reasoning that the Cubs always sell out can be applied to the redevelopment tied to the old charm of Wrigley Field. If one dramatically changes Wrigley Field, for some there will be no reason to come to games.
There were two consistent factors for the Tribune's late era success: the marketing of the historic charm of Wrigley Field and the free flowing tavern atmosphere in the stands.
Win or lose, the people had a good time or good experience.
But then, the financial collapse threw the economy into a deep recession. Such an economic event changed the reasoning that people would come to Wrigley win or lose. Corporations immediately cut back on travel and entertainment budgets, including sporting events. The free spending young bleacher crowd suddenly found themselves laid off and back living with their parents, unable to afford the party lifestyle around Wrigley. The seniors on fixed income saw their investment returns dry up when interest rates were artificially dropped to zero return. Large out-of-town group bus sales dropped off with the spike in gasoline prices and the new cost of living with real inflation in the grocery aisles.
The average American and average business had to circle their wallets to really budget their resources. Luxury items such as sporting events had to take a back seat to paying mortgages, credit card bills, or school expenses. Many people found their nest eggs, their home equity, vanish. They topped out on the debt limits. They found themselves working paycheck to paycheck. Small business owners also felt the hit of late payments, slowing orders and bankruptcy.
Ricketts bought the Cubs at a premium price during the final stages of a inflated financial bubble. His highly leveraged purchase still continues to drain resources from Cub operations. The Cubs payroll has declined under his ownership because he said it was "unsustainable."
So in this current economic environment, Ricketts has an ambitious plan to renovate Wrigley Field. He says he needs to "save" the old 100 year old landmark as part of his $300-500 million project. The Tribune deferred most of the required maintenance at Wrigley for decades. The park does need serious attention. But the boa constrictor wrapped around the Save Wrigley marketing campaign is the Ricketts family's real estate develop in and around Wrigley Field.
If one goes back and reads a year's worth of Crain's Chicago Business, or the newspapers local business sections, you will find that various businesses continue to have a difficult time in the Chicago metro area. Long established restaurants and bars have closed. Downtown hotel construction came to a halt with the decline of convention tourism. Several hotels went into foreclosure/bankruptcy reorganization. Service businesses like fitness clubs have high overhead costs and transient clientele. The general consensus is now is not a great time to start a new business from scratch.
But the Ricketts redevelopment plan incorporates all of those risky ventures: new restaurants, new bars, a new hotel, a new fitness club, new retail stores. Does it make a lot of sense to flood the Lakeview neighborhood with so many new business operations?
The idea that the redevelopment tied to the charm of Wrigley Field will generate new revenue for everyone is a myth. The Ricketts and the existing businesses are all competing for the same fan dollar. With more than 600,000 fans not showing up for games in the last two season, there are actually less fan dollars coming into the neighborhood.
Another factor that is not discussed often is that the actual changes in Wrigley Field itself may in fact ruin the charm of the ball park. Traditionalists and landmark preservationists liked that Wrigley did not have an electronic jumbotrons or large advertising signs that modern parks have plastered in their outfields. If that part of the fan base dislikes what Wrigley will become, they will stay home. Those were the type of fans who came to the game, win or lose, just to be part of the Wrigley heritage.
Ricketts reason for spending hundreds of millions of dollars is to create new revenue sources. You have to spend money to make money. However, most of these new revenue sources will not help the baseball team. The Cubs franchise is merely a sideline observer to the family's business glasnost.
The same failed reasoning that the Cubs always sell out can be applied to the redevelopment tied to the old charm of Wrigley Field. If one dramatically changes Wrigley Field, for some there will be no reason to come to games.
August 19, 2013
JUDGMENT ON THEO
“ Statistics are no substitute for judgment.
”
— Henry Clay
The Chicago honeymoon for the Boy Genius from Boston may be wearing thin.
Recently, there has been a web debate on whether Theo Epstein's grand plan is all that grand.
Recall first, that the move of signing Epstein was heralded as a massive stroke of good fortune. Epstein had piloted the Red Sox to two World Series championships. He was a moneyballer, a stat man, a planner and a winner. He could do no wrong.
But one has to realize that the "core" of the Red Sox championships were not Esptein's work, but that of the previous general manager, Dan Duquette. But as is often the case, the man in charge when good things happens gets the glory. It is also interesting to note that after Esptein left, the Red Sox went through an ugly swoon with snarky bitterness most often reserved for pitched divorce battles.
The Cubs were a muddling middle of the pack pretender rather than contender when Epstein came to town. Even though owner Tom Ricketts kept saying the team was only one or two players away from a championship, those one or two players never materialized. Instead, Epstein nuked to whole roster to create his vision of rebuilding: high OBP hitters, good defenders, and a mass quantity of pitching prospects.
Then the CBA changed which hurt Epstein's Boston Way. In Boston, he was allowed to overspend on free agents and June draft choices because ownership wanted to win over and over again. No longer could he draft a first round talent with signability issues in the 12th round and pay him first round bonus money. The hard bonus pool cap narrowed the ability to overpay for talent in later rounds.
Further, the new CBA put in place for the first time a cap on international player bonus pool money. No longer could a team go out and buy all the talent in the Dominican.
After two years of operations, people are now seeing what the front office has been doing:
1. Play the numbers game. Draft as many pitchers as possible. Get as many total prospects by draft and trades to fill your system with new talent. Then, as statistics bear out, maybe three to five percent of all those prospects will pan out. In a system of a 100 players, maybe 3 to 5 will be impact players.
This is a pure mathematician's formula.
2. Use the major league roster as a livestock pen for trade bait. The Cubs have been signing injured-rehabbing free agents who need to work their way back onto a major league roster. The Cubs roster is built as a Class AAAA team. The majority of players on the roster have little future with the Cubs. They are role players, journeymen and questionable arms who may blossom into valuable assets at the trade deadline. Scott Feldman is a prime example of this gambit working; Scott Baker is a prime example when this gambit fails.
3. The front office does not care about winning games now, it is all "about the process." The series of actions taken today is motivated to get as high a draft choice as possible next June (which affects the amateur draft bonus pool figure) and come in low enough in the standings to have a larger than average international bonus pool budget. This year, the Cubs overspent their draft budget by more than $500,000 (to incur some tax penalties). However, what got some fans to think hard about the process was the international signings. At first glance people thought the Cubs found a "loophole" to overspend on international free agents - - - acquire international bonus slot money from other teams by trade. The Cubs got some extra money from Houston and Baltimore, but then had to give some back in the Marmol trade to LA. Then things stalled on the money acquisition trade. Perhaps other teams caught wind of this game, or decided that they would rather keep their slots and not allow other competitors "overspend" their budgets. Whatever the case, it now appears that the Cubs painted themselves into a corner.
Some people believe that the Cubs had verbally committed to several of the top 10 international players before they could officially sign them July 2. The thought is that the Cubs were going to acquire a boatload of cash to cover these verbal commitments but the plan fell short in getting enough slot money from other teams.
The team has signed four players ranked in MLB's Top 30 International Players list, including No. 1 Eloy Jimenez and No. 3 Gleyber Torres. and touted Taiwanese right-handed pitcher Jen-Ho Tseng for a $1.625 million bonus.
With those signings, plus others, the Cubs will face a penalty for exceeding their spending pool by 10 to 15 percent. But president of baseball operations Theo Epstein told Cubs.com they were prepared for that. Because the Cubs had the second-largest amount of pool money -- determined by how the team finished in 2012 -- they wanted to take advantage of their position.
The penalty for surpassing their bonus allotment would be a 100 percent tax on the overage as well as restrictions on 2014-15 spending. Because teams cannot acquire more than 50 percent of their initial international bonus pool, the maximum bonus pool for the Cubs was $6.836 million. With the addition of Tseng, the Cubs have committed $7.895 million to international prospects.
"We budgeted for it with respect to the 100 percent tax," Epstein said. "Next year, we'll spread our money around with some pitching instead of going after the large investments. We like the large investments this year. That [international] market, you're talking $1 million here, $1 million there, and that's the type of thing we can afford," Epstein said. "Right now, we're not in a position to throw around hundreds of millions of dollars in free agency, but we can do it in that [international] market and try to monopolize it as much as we can."
However, besides the 100 percent tax penalty for going over the spending cap, the Cubs are penalized for 2014-2015 by restricting their ability to spend no more than $250,000 on any international player.
The Cubs have justified the penalties going forward because they liked this year's crop of teenagers more than next year's class.
But even some pro-Theo fans began to scratch their heads. The Cubs reasoning for overspending on the foreign player pool makes no sense in the overall rebuilding plan. In fact, it seems counterproductive when one realizes that the Cubs have handcuffed themselves for the next two years in signing any international player because the team signed Tseng, the 18-year-old Taiwanese right-handed pitcher was ranked 29th on MLB.com's Top 30 International Prospects rankings. He was the youngest player named to the Chinese Taipei World Baseball Classic roster. Tseng also was part of the 2012 World Junior Championship, and he played in the 2012 Asian Baseball Championship for the national team for Chinese Taipei. His fastball has hit 95 mph. He sports an above-average fastball, ranging from 89-96 mph, and a real good slider in the mid- to upper-80s, Tseng has been used as a closer and a starter. He also has an above-average changeup, which is unique for a prepster, and a very good curveball.
To put it another way, none of the Cubs top international players signed this season would be attainable under the bonus pool restrictions next season. Why would you take yourself out of next's year international player pool?
A logical conclusion is that the Cubs miscalculated their acquisition of bonus pool money and were trapped into the huge penalties based upon their commitments to these prospects. But the front office would never admit such a mistake. And this would be a major dent in Theo's shiny armor.
In rationalizing the talent signings, Epstein let slip that his free spending days are over when he said "$1 million here, $1 million there, and that's the type of thing we can afford. Right now, we're not in a position to throw around hundreds of millions of dollars in free agency. The gushing oil well for talent acquisition has run dry. Common sense dictates that Ricketts is going to divert all the resources at hand to build his Rickettsland real estate project, so that means no big budget foreign player signings and no premium major league free agent contracts. For those who thought the Cubs would take a run at a Robinson Cano, Jacob Ellsbury, Shin-Soo Choo or a Hunter Pence can forget about it.
But even by spending what money was at hand this year, does not mean that it was money well spent. The foreign players may have limited stats which equate to a large upside ceiling, but they are more likely to fail than succeed compared to American high school and college players. There are so many intangibles to consider when selecting baseball talent beyond pure statistics. That is why the best scouts still rely upon their gut instincts and experience when reviewing prospects.
People are coming around to the viewpoint that Theo's plan is to have a mountain of statistical prospects with the hope that minor league instructors can somehow mine a few golden nuggets in the next five years.
— Henry Clay
The Chicago honeymoon for the Boy Genius from Boston may be wearing thin.
Recently, there has been a web debate on whether Theo Epstein's grand plan is all that grand.
Recall first, that the move of signing Epstein was heralded as a massive stroke of good fortune. Epstein had piloted the Red Sox to two World Series championships. He was a moneyballer, a stat man, a planner and a winner. He could do no wrong.
But one has to realize that the "core" of the Red Sox championships were not Esptein's work, but that of the previous general manager, Dan Duquette. But as is often the case, the man in charge when good things happens gets the glory. It is also interesting to note that after Esptein left, the Red Sox went through an ugly swoon with snarky bitterness most often reserved for pitched divorce battles.
The Cubs were a muddling middle of the pack pretender rather than contender when Epstein came to town. Even though owner Tom Ricketts kept saying the team was only one or two players away from a championship, those one or two players never materialized. Instead, Epstein nuked to whole roster to create his vision of rebuilding: high OBP hitters, good defenders, and a mass quantity of pitching prospects.
Then the CBA changed which hurt Epstein's Boston Way. In Boston, he was allowed to overspend on free agents and June draft choices because ownership wanted to win over and over again. No longer could he draft a first round talent with signability issues in the 12th round and pay him first round bonus money. The hard bonus pool cap narrowed the ability to overpay for talent in later rounds.
Further, the new CBA put in place for the first time a cap on international player bonus pool money. No longer could a team go out and buy all the talent in the Dominican.
After two years of operations, people are now seeing what the front office has been doing:
1. Play the numbers game. Draft as many pitchers as possible. Get as many total prospects by draft and trades to fill your system with new talent. Then, as statistics bear out, maybe three to five percent of all those prospects will pan out. In a system of a 100 players, maybe 3 to 5 will be impact players.
This is a pure mathematician's formula.
2. Use the major league roster as a livestock pen for trade bait. The Cubs have been signing injured-rehabbing free agents who need to work their way back onto a major league roster. The Cubs roster is built as a Class AAAA team. The majority of players on the roster have little future with the Cubs. They are role players, journeymen and questionable arms who may blossom into valuable assets at the trade deadline. Scott Feldman is a prime example of this gambit working; Scott Baker is a prime example when this gambit fails.
3. The front office does not care about winning games now, it is all "about the process." The series of actions taken today is motivated to get as high a draft choice as possible next June (which affects the amateur draft bonus pool figure) and come in low enough in the standings to have a larger than average international bonus pool budget. This year, the Cubs overspent their draft budget by more than $500,000 (to incur some tax penalties). However, what got some fans to think hard about the process was the international signings. At first glance people thought the Cubs found a "loophole" to overspend on international free agents - - - acquire international bonus slot money from other teams by trade. The Cubs got some extra money from Houston and Baltimore, but then had to give some back in the Marmol trade to LA. Then things stalled on the money acquisition trade. Perhaps other teams caught wind of this game, or decided that they would rather keep their slots and not allow other competitors "overspend" their budgets. Whatever the case, it now appears that the Cubs painted themselves into a corner.
Some people believe that the Cubs had verbally committed to several of the top 10 international players before they could officially sign them July 2. The thought is that the Cubs were going to acquire a boatload of cash to cover these verbal commitments but the plan fell short in getting enough slot money from other teams.
The team has signed four players ranked in MLB's Top 30 International Players list, including No. 1 Eloy Jimenez and No. 3 Gleyber Torres. and touted Taiwanese right-handed pitcher Jen-Ho Tseng for a $1.625 million bonus.
With those signings, plus others, the Cubs will face a penalty for exceeding their spending pool by 10 to 15 percent. But president of baseball operations Theo Epstein told Cubs.com they were prepared for that. Because the Cubs had the second-largest amount of pool money -- determined by how the team finished in 2012 -- they wanted to take advantage of their position.
The penalty for surpassing their bonus allotment would be a 100 percent tax on the overage as well as restrictions on 2014-15 spending. Because teams cannot acquire more than 50 percent of their initial international bonus pool, the maximum bonus pool for the Cubs was $6.836 million. With the addition of Tseng, the Cubs have committed $7.895 million to international prospects.
"We budgeted for it with respect to the 100 percent tax," Epstein said. "Next year, we'll spread our money around with some pitching instead of going after the large investments. We like the large investments this year. That [international] market, you're talking $1 million here, $1 million there, and that's the type of thing we can afford," Epstein said. "Right now, we're not in a position to throw around hundreds of millions of dollars in free agency, but we can do it in that [international] market and try to monopolize it as much as we can."
However, besides the 100 percent tax penalty for going over the spending cap, the Cubs are penalized for 2014-2015 by restricting their ability to spend no more than $250,000 on any international player.
The Cubs have justified the penalties going forward because they liked this year's crop of teenagers more than next year's class.
But even some pro-Theo fans began to scratch their heads. The Cubs reasoning for overspending on the foreign player pool makes no sense in the overall rebuilding plan. In fact, it seems counterproductive when one realizes that the Cubs have handcuffed themselves for the next two years in signing any international player because the team signed Tseng, the 18-year-old Taiwanese right-handed pitcher was ranked 29th on MLB.com's Top 30 International Prospects rankings. He was the youngest player named to the Chinese Taipei World Baseball Classic roster. Tseng also was part of the 2012 World Junior Championship, and he played in the 2012 Asian Baseball Championship for the national team for Chinese Taipei. His fastball has hit 95 mph. He sports an above-average fastball, ranging from 89-96 mph, and a real good slider in the mid- to upper-80s, Tseng has been used as a closer and a starter. He also has an above-average changeup, which is unique for a prepster, and a very good curveball.
To put it another way, none of the Cubs top international players signed this season would be attainable under the bonus pool restrictions next season. Why would you take yourself out of next's year international player pool?
A logical conclusion is that the Cubs miscalculated their acquisition of bonus pool money and were trapped into the huge penalties based upon their commitments to these prospects. But the front office would never admit such a mistake. And this would be a major dent in Theo's shiny armor.
In rationalizing the talent signings, Epstein let slip that his free spending days are over when he said "$1 million here, $1 million there, and that's the type of thing we can afford. Right now, we're not in a position to throw around hundreds of millions of dollars in free agency. The gushing oil well for talent acquisition has run dry. Common sense dictates that Ricketts is going to divert all the resources at hand to build his Rickettsland real estate project, so that means no big budget foreign player signings and no premium major league free agent contracts. For those who thought the Cubs would take a run at a Robinson Cano, Jacob Ellsbury, Shin-Soo Choo or a Hunter Pence can forget about it.
But even by spending what money was at hand this year, does not mean that it was money well spent. The foreign players may have limited stats which equate to a large upside ceiling, but they are more likely to fail than succeed compared to American high school and college players. There are so many intangibles to consider when selecting baseball talent beyond pure statistics. That is why the best scouts still rely upon their gut instincts and experience when reviewing prospects.
People are coming around to the viewpoint that Theo's plan is to have a mountain of statistical prospects with the hope that minor league instructors can somehow mine a few golden nuggets in the next five years.
July 8, 2013
MONEY BALLED
Cubs broadcaster Len Kasper wrote a column for the Daily Herald. In it, he states that the Cubs front office recent transactions moves the club closer to a World Series.
Kasper is one of those expanded stats guys. He likes to talk about the sabermetrics of a player or a situation, especially on lazy Sunday afternoon broadcasts. He believes that Epstein-Hoyer front office is using the principles of sabermetrics and Moneyball philosophy of Billy Beane, Oakland's successful GM, to build a winning organization. Beane found a way to analyze player performance by new metrics such as OPS, OBP and situational performance measures. Beane realized that you do not need a line up of HR, RBI and high BA players in order to produce runs. (Which had historic precedent before with the Go-Go- White Sox in the 1950s).
Kasper writes that "But, for the millionth time, "Moneyball" was not about on-base percentage. Or computers taking over for scouts. It was about exploiting market inefficiencies. Again, repeat after me: It was about EXPLOITING … MARKET … INEFFICIENCIES."
What Oakland did and continues to do is to find players that fit into their run production system. Players that have consistent performance traits who when put in the right situation have an opportunity to perform well. A player who can coax a walk and steal a base is just as valuable as a .300 hitter making contact for a double. That is not a market "inefficiency" but scouting players to fit specific roles on the ball club.
This was the first year that teams could "trade" international salary pool money. Kasper believes the Cubs strategy of trading for more bonus money was a genius move. He believes the Cubs were the first team to target pool money in trades to give them an edge on other teams in signing young, raw players from other countries. Except, that observation misses the point.
In prior years, teams could spend an unlimited amount of money to sign international free agents. The Cubs overspent tens of millions of dollars on international players, including Jorge Soler and the bust, Geraldo Concepcion. However, other teams such as the White Sox, spent little on foreign players by comparison. But an objective view of current rosters shows the White Sox have more impact foreign players on their roster (especially in pitching) than the Cubs.
Further, the Cubs are not "exploiting" the situation when the rules clearly state clubs can trade bonus money. What the Cubs are actually doing is overspending for foreign players which in the long run inflates the cost for talent for every club. The Cubs may have to scramble to find more IFA bonus money to sign the number one prospect for $2.8 million (to avoid a penalty tax and future signing restrictions). The Cubs did not corner the market in talent, but may have cornered themselves in a budget and future signing sinkhole by overspending this year.
And the Cubs also overspent on the amateur draft. The team has overspent on lower round draft choices which now has impacted on whether the team can sign No. 1 pick Kris Bryant. Currently, the Cubs do not have enough bonus pool space to sign Bryant at even the recommended slot price. Bryant's agent wants more than the slot value. If the Cubs sign Bryant, the team will incur a financial penalty. If the Cubs don't sign Bryant, the team will incur more substantial penalties including potential loss of future first round pick. Again, this compulsive overspending on prospects is not gaming the system but creating one's own budget inefficiencies.
And Kasper buys into the myth that spending big money on a player means that player will be great in the future. "Because it accelerates the essential process of adding a large quantity of young players to a system that badly needs it, which in turn should push championship-caliber talent to the big leagues on a yearly basis," Kasper states. Except, that is not true.
Less than two percent of the international players signed this year will have any impact on a major league roster. High school players drafted by teams have less than a one percent chance to have an impact on a major league roster.
Spending bonus money does not equate at all to actually finding and developing baseball players. Old time scouts would tell you that there are things that they could observe that do not show up on a stat sheet. Things like whether the prospect positions himself correctly in the field; whether he understands the game situation; whether he is anticipating the play on the next pitch; whether he makes the correct baseball IQ play in the field (hitting the cut off man, taking an extra base, etc.) Also, whether a prospect has the demeanor to play at more competitive levels. The raw stats like height, weight, 40 yard dash, mph on fastball are only starting points. Like at the pro football combine, people get caught up with number of bench reps or vertical leaps. But the wise general managers come back to a simple question after seeing all that data: "can the kid play football?"
Oakland has developed a long line of baseball players who play fundamentally sound baseball. That is the key to building a successful organization, not the ability to spend a fortune on 16 year old kid's potential.
Kasper is one of those expanded stats guys. He likes to talk about the sabermetrics of a player or a situation, especially on lazy Sunday afternoon broadcasts. He believes that Epstein-Hoyer front office is using the principles of sabermetrics and Moneyball philosophy of Billy Beane, Oakland's successful GM, to build a winning organization. Beane found a way to analyze player performance by new metrics such as OPS, OBP and situational performance measures. Beane realized that you do not need a line up of HR, RBI and high BA players in order to produce runs. (Which had historic precedent before with the Go-Go- White Sox in the 1950s).
Kasper writes that "But, for the millionth time, "Moneyball" was not about on-base percentage. Or computers taking over for scouts. It was about exploiting market inefficiencies. Again, repeat after me: It was about EXPLOITING … MARKET … INEFFICIENCIES."
What Oakland did and continues to do is to find players that fit into their run production system. Players that have consistent performance traits who when put in the right situation have an opportunity to perform well. A player who can coax a walk and steal a base is just as valuable as a .300 hitter making contact for a double. That is not a market "inefficiency" but scouting players to fit specific roles on the ball club.
This was the first year that teams could "trade" international salary pool money. Kasper believes the Cubs strategy of trading for more bonus money was a genius move. He believes the Cubs were the first team to target pool money in trades to give them an edge on other teams in signing young, raw players from other countries. Except, that observation misses the point.
In prior years, teams could spend an unlimited amount of money to sign international free agents. The Cubs overspent tens of millions of dollars on international players, including Jorge Soler and the bust, Geraldo Concepcion. However, other teams such as the White Sox, spent little on foreign players by comparison. But an objective view of current rosters shows the White Sox have more impact foreign players on their roster (especially in pitching) than the Cubs.
Further, the Cubs are not "exploiting" the situation when the rules clearly state clubs can trade bonus money. What the Cubs are actually doing is overspending for foreign players which in the long run inflates the cost for talent for every club. The Cubs may have to scramble to find more IFA bonus money to sign the number one prospect for $2.8 million (to avoid a penalty tax and future signing restrictions). The Cubs did not corner the market in talent, but may have cornered themselves in a budget and future signing sinkhole by overspending this year.
And the Cubs also overspent on the amateur draft. The team has overspent on lower round draft choices which now has impacted on whether the team can sign No. 1 pick Kris Bryant. Currently, the Cubs do not have enough bonus pool space to sign Bryant at even the recommended slot price. Bryant's agent wants more than the slot value. If the Cubs sign Bryant, the team will incur a financial penalty. If the Cubs don't sign Bryant, the team will incur more substantial penalties including potential loss of future first round pick. Again, this compulsive overspending on prospects is not gaming the system but creating one's own budget inefficiencies.
And Kasper buys into the myth that spending big money on a player means that player will be great in the future. "Because it accelerates the essential process of adding a large quantity of young players to a system that badly needs it, which in turn should push championship-caliber talent to the big leagues on a yearly basis," Kasper states. Except, that is not true.
Less than two percent of the international players signed this year will have any impact on a major league roster. High school players drafted by teams have less than a one percent chance to have an impact on a major league roster.
Spending bonus money does not equate at all to actually finding and developing baseball players. Old time scouts would tell you that there are things that they could observe that do not show up on a stat sheet. Things like whether the prospect positions himself correctly in the field; whether he understands the game situation; whether he is anticipating the play on the next pitch; whether he makes the correct baseball IQ play in the field (hitting the cut off man, taking an extra base, etc.) Also, whether a prospect has the demeanor to play at more competitive levels. The raw stats like height, weight, 40 yard dash, mph on fastball are only starting points. Like at the pro football combine, people get caught up with number of bench reps or vertical leaps. But the wise general managers come back to a simple question after seeing all that data: "can the kid play football?"
Oakland has developed a long line of baseball players who play fundamentally sound baseball. That is the key to building a successful organization, not the ability to spend a fortune on 16 year old kid's potential.
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