Archive for Economics

So, You Want to Seize the Means of Production

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Unionizing a workplace isn’t as simple as buying a bullhorn and stamping out some buttons, though both are obviously essential steps in the process. It requires huge amounts of organizing effort, cajoling, and, unfortunately, paperwork.

Last week, the MLBPA announced that it had sent out authorization cards to thousands of minor league players; if a majority of players give the union consent to negotiate on their behalf, federal labor law will require MLB to negotiate collectively with those players over pay and working conditions. Tuesday, the MLBPA announced that a majority of minor league players had signed and returned those cards, and sent a letter to the league asking for recognition.

The hardest thing to do in sports is hit a baseball, but following the internecine contours of collective bargaining procedure has to be up there on the list. So let’s trace out the next few steps in a process that will likely take months, if not years, to complete. And since minor league ballplayers are merely one of many groups undertaking high-profile unionization efforts these days, knowing how this works might help you impress people the next time, say, the Starbucks union comes up at a party. (I need to start going to cooler parties.) Read the rest of this entry »


The Jarred Kelenic Service Time Question Illustrates a Broken System

Jarred Kelenic is right, or at the very least, he’s not wrong. There’s no reason not to take the recent claims of the Mariners outfielder and his representative, Brody Scoffield, at face value. Their story — that Kelenic was offered a pre-debut extension and that when he declined to sign it, the club refused to call him up in 2020 for service time reasons — is totally believable, and is backed up by Kevin Mather’s now infamous remarks over Zoom to the Bellevue Breakfast Rotary Club; Mather, the club’s President and CEO at the time of his remarks, resigned last week. The proposed extension, which Mather described as a “long-term deal, six-year deal for substantial money with options to go farther,” speaks both to Kelenic’s immense talent as well as the Mariners’ desire to lock him up on team-friendly terms.

Jerry Dipoto, who addressed the situation last Tuesday, is right, or at the very least, he might not be wrong. Dipoto said what one normally would about a highly-ranked prospect who is generating hype but isn’t on the roster yet. (Here it worth remembering that GMs operate within the budget strictures ownership set for them. That’s not to say Dipoto has no agency, and owners look for GMs who are willing to let this type of fiscal responsibility take precedence over winning baseball games. But in reality, ownership should be on the hook to a far greater degree than the front office in the eyes of fans.) Kelenic has only played 21 games above A-ball. He hit a very solid .253/.315/.542 in those 21 games, as a teenager mind you, and was actually remarkably unlucky, as evidenced by his exceptionally light .246 BABIP. Still, a little more seasoning in Triple-A, as Dipoto suggests, might be beneficial. Kelenic’s approach could use some tightening and his strength gains have come with some of his twitch going backwards, which is starting to hinder him defensively.

But those are nitpicks, not deficiencies that should have kept him out of Seattle. Evan White proves the case. White isn’t nearly as talented as Kelenic, but he signed a pre-debut deal and was instantly the Opening Day first baseman in 2020. His bat wasn’t ready, as evidenced by a miserable 66 wRC+ to go with an ugly 41.6% strikeout rate, yet he was there. Was White the Mariners’ best option? Maybe. But did the fact that he signed the sort of big league deal that Kelenic turned down drive the decision to have him with the major league team while Kelenic futzed around at the team’s alternate site in Tacoma? No question. Read the rest of this entry »


The Surprisingly Complex World of Minor League Contracts

I obviously don’t have access to MLB Trade Rumors’ site traffic data, so it’s an educated guess that “[Team] Signs [Player] To a Minor League Contract” pieces are among their least trafficked pages. I get it. Big trades and big free agent acquisitions are exciting. Some vet trying to hang on and being given another chance? Not so much. That said, the world of minor league contracts for veterans is one that I was very close to during my time in baseball. The first time I was given the assignment of negotiating these deals, I thought they would be simple. I quickly learned they were anything but. Unless something dramatic and unexpected happens in terms of the labor negotiations between the league and the players, spring training is close. With an unprecedented number of free agents still out there, plenty of these types of deals are being negotiated as we speak, so it’s a good time to get into what it takes to get a deal over the line.

Opportunity

The crux of any minor league contract negotiation is opportunity. Players don’t want to be in the minor leagues. The focus is on playing in the majors, and which potential employer gives them the best chance to spend significant time in the big leagues. The reasons are obvious. They get paid like big leaguers, they accrue service time, and the perks (better per diems, charter flights, opulent hotels, palatial clubhouses) are phenomenal.

Agents don’t talk about money or contract clauses first, they talk about the possibility of their player being with the big league club. I would imagine that every Quad-A shortstop right now has his agent in touch with the Reds, while avoiding clubs like the Mets, Padres and others where the position is filled by a star-level talent who tends to stay on the field. Agents for these players become depth chart aficionados, studying every team’s situation across various position families to see where their player might slide in.

Personally, I always tried to be honest with agents and players with regards to said opportunity. Sometimes a team is offering the player a real chance to break camp with the big club; sometimes they are clearly a depth piece meant to bide their time at Triple-A until someone gets hurt or drastically underperforms. And yes, sometimes you do find yourself in direct contact with players. I always appreciated the conversations, and thought it spoke well of the player on a makeup level, as the individual was personally invested in the process.

Beyond the chances to play in the big leagues, clubs need to sell potential roster pieces on the additional benefits of joining the team. For the Astros, the player development system and the club’s ability to communicate data-based improvements was a big part of the pitch. Often players wanted to speak to someone more important than the negotiator, like the GM or field manager, just to hear assurances from the source themselves. Read the rest of this entry »


So You Wanna Buy a Baseball Team

In a postseason full of headline-grabbing stories (the ball is de-juiced! Gerrit Cole is a cyborg! The Nationals win in the playoffs now!), a quiet bulletin came out on Wednesday. Bloomberg’s Scott Soshnick reported that Major League Baseball will now allow investment funds to take minority stakes in teams.

The news cycle moved on. The Yankees-Astros game was postponed! What will A.J. Hinch and Aaron Boone do with their rotation flexibility? Did you know Juan Soto isn’t yet 21? There are big baseball things happening right now! Investment mumbo-jumbo has a way of fading to the background.

I’m here to tell you that it matters. Not in an urgent, baseball-ends-today way, but in a way that could change the nature of the sport long-term. This story might not be on everyone’s radar right now, but it’s important to consider the ramifications and conflicts of interest that can arise from a small change.

To understand what this decision means, we’ll need a little background. First, let’s talk about what an investment fund is. It’s a broad term by design, one that encompasses many different ways of pooling together money. Without further comment from MLB, we can’t know the exact specifications of what they’ll allow, but we can make some educated guessed. A college endowment? Definitely. A special purpose fund raising money from 100 rich people to invest in teams? Certainly — one has already been started, and it plans to raise $500 million to purchase minority stakes.

What about a pension fund? Pension funds’ preferred tax status mirrors that of college endowments, and the two invest in very similar ways. A hedge fund? Baseball will have to spell out the rules, but that doesn’t seem so different from letting endowments or pensions own minority shares, and it’s certainly not much different than a special purpose vehicle. Heck, hedge funds are largely specialized investment pools already, and endowments and pensions make up a sizable portion of hedge fund assets under management. Read the rest of this entry »