Archive for Economics

On Thursday, the University of Alabama abruptly fired head baseball coach Brad Bohannon for his involvement in a pair of suspicious bets involving the Crimson Tide’s game against LSU last Friday. That night, a bettor at the sportsbook at Great American Ball Park — home of the Reds — placed two suspiciously large bets on LSU to win, large enough to draw the attention of U.S. Integrity, the company retained by the Ohio Casino Control Commission and the Southeastern Conference to monitor sports wagering in the state’s casinos.

On Monday, the OCCC instructed Ohio bookmakers to take Crimson Tide games off the board. Regulators in other states followed suit, as have several major online sportsbooks. And in the wake of Bohannon’s firing three days later, ESPN reporter David Purdum revealed that surveillance cameras within the sportsbook had recorded the suspicious bettor communicating with Bohannon at the time he was placing the bets in question. Read the rest of this entry »

On Wednesday, the Oakland Athletics revealed that they’ve taken a concrete step toward building a ballpark in Las Vegas. Well, not “concrete” in the literal sense, but the A’s have “signed a binding agreement to purchase” a place to put concrete, a 49-acre plot near Allegiant Stadium (home of the NFL’s Raiders) and the Las Vegas Strip. Pending approval of a “public-private partnership,” A’s president Dave Kaval told the San Francisco Chronicle, a stadium could be completed in time for Opening Day 2027.

There are still plenty of components to be juggled, but this is the biggest indication yet that the years-long effort to find a new home for the A’s in California is doomed to fail. Should the A’s relocate, they’ll become the first team to do so since the Montreal Expos moved to Washington in 2005, and the first team in the AL-NL era to move three times. Read the rest of this entry »

Just 14 hours before the start of the MLB regular season, the league and the MLBPA reached a tentative agreement on the first collective bargaining agreement for minor league baseball players. They could have picked a day when the baseball headlines weren’t as crowded, but when it comes to making labor history, there’s no time like the present.

The headline figures include massive increases in the minimum salary across all levels and reforms in most of the areas that have made minor league baseball’s working conditions a target for criticism. All that just seven months after minor league ballplayers announced their intent to unionize. Read the rest of this entry »

Last week, I wrote about what I consider to be a key driver in the recent uptick in long-dated contracts: rising interest rates. It was a math-y and abstract article, and I wouldn’t blame you for getting a few paragraphs in, noting the sheer volume of numbers and calculations, and moving on with your life. But if you didn’t do that, hold onto your butts, because it’s time to take the financial angle up a notch.

The main takeaway of that previous article was that when interest rates are high, money in the future is worth less in present value, so teams that look at their books in terms of net present value will perceive long-term contracts as a smaller liability. The easy way of thinking about this is by imagining a team funding a contract upfront by buying bonds and holding them to pay out each future year of a player’s contract. You have to spend much less money today to fund future obligations than you would’ve had to spend if interest rates were much lower, as they were for the entire previous decade.

That’s not realistic, though, because teams don’t pre-fund contracts with treasury bonds. They have better stuff to do with any money sitting around, like buying real estate developments or lobbying senators. Most teams have debt outstanding, too; if they had a huge chunk of change sitting around, they’d look for new investments first, then think about retiring debt, then think about buying out minority owners, and probably prioritize buying treasury bonds only slightly higher than lighting the money on fire. Read the rest of this entry »

I’m going to start today by telling you something very obvious: the new hot trend in contracts this offseason is extremely long deals. You know it. I know it. Ken Rosenthal says it, so it must be true. Living legend Jayson Stark laid it out as only he can: we’ve seen three free-agent deals of 11 or more years in the last two weeks, as compared to one in the entire previous history of baseball.

What factors are behind this hot new contract structure? Did a financial consultant walk through the Winter Meetings whispering “long contracts are in, pass it on” to team employees? I truly wish that were the case. It could be my big break in starting up Ben Clemens Investigates, and I’ve always wanted to wear a Sherlock Holmes hat. Bad news, though: to the best of my knowledge, that didn’t happen. It didn’t have to happen. The incentives to offer long-term deals are mathematically based, and I’m frankly pretty annoyed that I didn’t see this coming in predicting contracts this offseason. Read the rest of this entry »

With the first 12-team postseason in MLB history right around the corner, we’re hearing a little bit of griping. The playoffs, like your dad’s hand-me-down sport coat, are too big. Look at the race for the last Wild Card spot in the NL, in which the Phillies and Brewers have spent the past two weeks bumbling around like a pair of somnambulant dachsunds investigating a cricket. Eventually one sneezes and forgets what he was doing in the first place, and the other gets tired and plops over for a nap. The cricket escapes unharmed. Surely these are not playoff-quality teams. Surely they’re nothing but an inconvenience to a champion-elect like the Dodgers. But they’ll get a full three-game audition nonetheless. What a waste of time.

And by and large, I agree. While the current playoff structure seems to incentivize regular-season competition and could lead to some exciting October action, all things being equal I’d rather go back to an eight-team playoff bracket. Maybe because that’s the way things were when I was a kid, which is the overriding logic behind about 95% of people’s opinions about baseball, art, or society at large, but that’s how I feel.

But go back and consider, for a moment, that hand-me-down sport coat from your dad. You’re a teenager, fresh off a growth spurt, all tendons and hormones. The jacket, made for a man, looks weird on the frame of what is essentially a very tall child. But the problem is not that the jacket is too big; it’s that you are too small. On a bigger person, with a more fully developed frame, it would look just fine.

So while a 12-team playoff is probably too big for a 30-team baseball league, a 30-team baseball league is preposterously small for the size of the audience it serves. America, like Leon from Airplane, is getting larger. MLB should do the same. Read the rest of this entry »

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 »

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 »

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 »

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 »