This is why the slotting system is stupid

Leave a comment

lincecum_090913.jpgPaul Hoynes of the Plain-Dealer has a story I’ve never heard before: the Indians drafted Tim Lincecum in the 42nd round of the 2005 draft.  Ok, I knew that part. He demanded $1 million to sign, which is really high.  The Indians offered $700,000, he said no, and went back to college and the rest is history.  I knew that part too. The part I didn’t know:  Major League Baseball got all kinds of mad at the Indians for even offering the $700,000 because that was above the slot recommendation for the 42nd round.

Lincecum was a well thought-of prospect, but he was coming off a bad sophomore year. The Indians, and a lot of other teams, realized that he’d be pretty good, but were trying to make a value play: get the guy when he’s at his lowest, maybe even when he’s worrying if he had the stuff to make it.  Maybe he jumps at the $700K!  It’s definitely worth a shot, and if it had worked, baseball as a whole would have saved a over a million bucks on what they ended up paying Lincecum when he eventually did sign ($2.025 million with the Giants a year later). Heck, even if they had met Lincecum’s demand they would have saved over a million.

But rather than applaud the effort to buy low, baseball got all pissy at Cleveland in an effort to maintain their misguided and counterproductive slotting system.  Just foolish.

Cubs owner Tom Ricketts continues to cry poor

Tom Ricketts
Nuccio DiNuzzo/Chicago Tribune/Tribune News Service via Getty Images
10 Comments

MLB owners and the MLB Players Association continue to hash out details, some in public, about a 2020 baseball season. The owners have been suggesting a shorter season, claiming that they lose money on every game played without fans in attendance. The union wants a longer season, since players are — as per the March agreement — being paid a prorated salary. Players thus make more money over the 114 games the MLBPA suggested than the 50 or so the owners want.

Cubs chairman Tom Ricketts has been among the more vocal owners in recent weeks, claiming that the coronavirus pandemic and the ensuing shutdown of MLB has greatly hurt MLB owners’ business. Speaking to ESPN’s Jesse Rogers, Ricketts claimed, “The scale of losses across the league is biblical.”

Ricketts said, “Here’s something I hope baseball fans understand. Most baseball owners don’t take money out of their team. They raise all the revenue they can from tickets and media rights, and they take out their expenses, and they give all the money left to their GM to spend.” Ricketts continued, “The league itself does not make a lot of cash. I think there is a perception that we hoard cash and we take money out and it’s all sitting in a pile we’ve collected over the years. Well, it isn’t. Because no one anticipated a pandemic. No one expects to have to draw down on the reserves from the past. Every team has to figure out a way to plug the hole.”

Pertaining to Ricketts’ claim that “the league itself does not make a lot of cash,” Forbes reported in December that, for the 17th consecutive season, MLB set a new revenue record, this time at $10.7 billion. In accounting, revenues are calculated before factoring in expenses, but unless the league has $10 billion in expenses, I cannot think of a way in which Ricketts’ statement can be true.

MLB owners notably don’t open their accounting books to the public. Because the owners were crying poor during negotiations, the MLBPA asked them to provide proof of financial distress. The owners haven’t provided those documents. Thus, unless Ricketts opens his books, his claim can be proven neither true nor false, and should be taken with the largest of salt grains. If owners really are hurting as badly as they say they are, they should be more than willing to prove it. That they don’t readily provide that proof suggests they are being misleading.

It’s worth noting that the Ricketts family has a history of not being forthcoming about their money. Cubs co-owner Todd Ricketts got into hot water last year after it was found he had used inaccurate information when paying property taxes. In 2007, he bought two properties and demolished both, building a new, state-of-the-art house. For years, Ricketts used information pertaining to the older, demolished property rather than the current property, which drastically lowered his property taxes. Based on the adjustment, Ricketts’ property taxes increased from $828,000 to $1.96 million for 2019, according to The Chicago Tribune. Ricketts also had to pay back taxes for the previous three years.

At any rate, the owners want to pass off the financial risk of doing business onto their labor force. As we have noted here countless times, there is inherent risk in doing business. Owning a Major League Baseball team has, for decades, been nearly risk-free, which has benefited both the owners and, to a lesser extent, its workforce. The pandemic has thrown a wrench into everybody’s plans, but the financial losses these last three months are part of the risk. Furthermore, when teams have done much better business than expected, the owners haven’t benevolently spread that wealth out to their players, so why should the players forfeit even more of their pay than they already are when times are tough?