Archive for Business

Cubs Jump into Top Five in MLB Attendance

The early part of the Major League Baseball season presents an interesting paradox when it comes to interest and attendance. Fans have waited all winter for real live baseball, and Opening Day comes with big crowds and pageantry. After Opening Day, crowds tend to thin out a bit as people come to terms with the long season, and in many places, weather that is still less than hospitable to baseball. Comparing attendance this season to attendance at this time last season shows a still-healthy game with a few teams having made major jumps after successful seasons a year ago.

When looking at per-game attendance so far this season, it should come as no surprise that the usual names remain atop the board, per Baseball Reference.

MLB TEAM ATTENDANCE PER GAME THROUGH MAY 16 2016

The Los Angeles Dodgers, St. Louis Cardinals, San Francisco Giants, and New York Yankees were the top four in attendance last season — in that order — and those same four teams continue their grip on the attendance lead this year. The Chicago Cubs have swapped spots with the Los Angeles Angels while the Toronto Blue Jays have taken an edge over the Boston Red Sox. The bottom five teams are the same as the end-of-the-season numbers last year, although in a different order, as Tampa Bay Rays finished the end of the season last while Oakland A’s were ahead of the Chicago White Sox and the Miami Marlins.

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The Lawsuit That Won’t Go Away: The Nats, O’s, and MASN

One can be excused for having lost track of the many twists and turns in the long-running broadcast-rights-fee dispute between the Baltimore Orioles and Washington Nationals. Over the past four years, the two teams have waged an extensive legal battle over how much the Mid-Atlantic Sports Network (MASN) ought to be paying the Nationals for the team’s local television rights, with both sides capable of pointing to various victories and defeats along the way.

For those interested in a longer recap of the many ins and outs of the dispute, we have previously covered all of the gory details here on a number of occasions over the last several years. In short, though, under the terms of the 2005 agreement in which Baltimore allowed the Nationals to move to Washington, D.C., the teams agreed that they would renegotiate the television rights fees that MASN — the vast majority of which is owned by the Orioles — would have to pay the Nationals every five years.

Unable to reach an accord on the Nationals’ rights fees for the 2012-2016 time period, the teams eventually took the dispute to an arbitration heard by Major League Baseball’s Revenue Sharing Definitions Committee (RSDC), which ultimately awarded the Nationals $60 million per year in broadcast rights fees from MASN. Dissatisfied with this outcome, MASN and Baltimore then took the matter to court, successfully persuading a New York state judge (Judge Lawrence Marks) to overturn the RSDC’s arbitration decision late last year. In particular, Judge Marks ruled that because the Nationals’ legal counsel in the dispute — the Proskauer Rose law firm — had previously represented several of the RSDC members’ teams, the firm’s participation in the arbitration created the appearance of potential bias by the RSDC in favor of Washington.

As I noted this past December, both sides then appealed Judge Marks’ ruling to the court of appeals. The Nationals argued that the trial court had erred by throwing out the arbitration award; MASN and the Orioles, conversely, have asserted that Judge Marks should have permanently disqualified the RSDC from rehearing the dispute. That appeal remains ongoing.

Washington, however, believing that MASN has been underpaying it for years, is not content to sit back and wait for the appellate process to run its course. Instead, the team is now asking Judge Marks to order the Orioles to re-arbitrate the matter before the RSDC, even while the appeal continues. MASN and the Orioles, meanwhile, have unsurprisingly opposed this request, countering last week by asking the trial court to postpone any future arbitration in the dispute pending the outcome of the appeal.

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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.

AVERAGE STARTER SALARY BY POSITION

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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.

DEAD MONEY ON MLB PAYROLLS

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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.

COMPARING MLB SALARY AND SERVICE TIME

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