Padres opt to show Towers the door

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Kevin Towers, the longest tenured GM in baseball, will be let go after 14 years running the show in San Diego, Padres CEO Jeff Moorad confimed Friday night.
The long rumored move will come following a second straight losing season. The Padres have improved from 63-99 in 2008 to 74-85 so far this year, but the second-half surge did Towers no good. The writing had been on the wall since the moment Moorad took control of the team earlier this season.
Despite typically modest payrolls, the Padres won four division titles during Towers’ stay. However, they also finished in fourth or fifth place nine times and lost 95 games on three occasions.
Towers should still be remembered rather fondly in San Diego for the Adrian Gonzalez/Chris Young fleecing of the Rangers. His trades for Phil Nevin, Ryan Klesko and Woody Williams were also big successes, though those teams at the beginning of the decade were failures anyway. His ability to put together quality bullpens, that were always very cheap outside of Trevor Hoffman, had to be one factor that gave Moores pause before he decided to let him go.
But, in the end, player development problems doomed Towers. In my Restoring the Rosters series in August, I ranked the Padres 28th in talent signed. Of the 28 first- and supplemental first-round picks to come on board during Towers’ tenure, only one, Khalil Greene, has turned into a quality major leaguer. Now, it’s still too early to judge those last 10, all of whom have been drafted since 2007, and Tim Stauffer is recently showing signs of life, but that’s an abysmal track record.
The Padres need some new blood, so they’ll look outside of the organization for a successor. Jerry DiPoto and Peter Woodfork, both of whom worked with Moorad in Arizona, seem like logical choices. DiPoto has been a hot name the last couple of years anyway, and he should be considered the favorite for the job,

New tax law could affect MLB trades

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Jim Tankersley of the New York Times notes that a tax law passed by Republicans could affect trades in Major League Baseball. The law added the word “real” to a certain line of tax code that now only allows real estate trades to qualify for tax immunity. Previously, certain assets like trucks and machinery could have been traded tax-free.

A perhaps unintended consequence of that change could mean baseball teams could have to pay capital gains taxes when they trade away and acquire players. MLB’s chief legal officer Dan Halem said, “There is no fair market value of a baseball player. There isn’t. I don’t really know what our clubs are going to do to address the issue. We haven’t fully figured it out yet. This is a change we hope was inadvertent, and we’re going to lobby hard to get it corrected.”

Tankersley wonders how players would be valued for the purposes of this tax law:

Mr. Verlander, for example, was clearly a more immediately valuable asset to the Astros than the three prospects they traded to get him. He gave up only four runs in his five regular-season starts for the team, then won four straight starts to begin the playoffs. In very simple terms, he brought value to the Astros in a trade, and had the new law been in place last year, the team would have owed taxes on that added value.

But what, exactly, was that value? Was it the size of his contract? Mr. Verlander earned $28 million last year, while the players traded for him drew minor-league salaries. Was it the additional wins he brought to the team? Statisticians estimate Mr. Verlander gave the Astros nearly two more wins last season, a value that, depending on the statistician, could reach $20 million. Or was it some calculation of the total future value Mr. Verlander will bring to the team, minus the total future value it gave up in the prospects it traded away — and possibly adjusted for the amount the team will have to pay Mr. Verlander?

Complicating matters further is that teams value players differently, and one player might help a certain team far more than another team. A struggling club with a surplus of starting pitchers might trade one to a playoff contender in desperate need of one, in exchange for position players who could improve a struggling lineup. In that case, both teams could, reasonably, be considered to have gained value in the trade, and thus would owe taxes on it.

Republicans said they weren’t trying to hamstring sports teams, but that’s exactly what they might have done here. It seems likely that the law will eventually be amended to exempt sports teams, given that leagues like the MLB and NBA are enormous and worth so much money. Whether that will be done in a reasonable amount of time is another question entirely.