Giants won’t make qualifying offers to their free agents, including Angel Pagan

8 Comments

Angel Pagan was a key contributor for the World Series champion Giants this season, batting .288/.338/.440 with eight home runs, 56 RBI, 29 stolen bases and a .778 OPS while playing solid defense in center field. However, the Giants are prepared to let him walk for nothing if he signs elsewhere as a free agent.

That’s life with the new collective bargaining agreement, as Andrew Baggarly of CSNBayArea.com reports that the Giants will not make qualifying offers to any of their free agents. This list includes Pagan, Melky Cabrera and Jeremy Affeldt. Marco Scutaro is also a free agent, but the Giants can’t make him a qualifying offer since he was acquired from the Rockies during the season.

As Craig explained in detail earlier this week, teams must make a one-year qualifying offer to impending free agents in order to secure draft pick compensation. The dollar amount is determined by the average of the top 125 salaries in the game, so this year it checks in at $13.3 million. That would obviously be a pretty hefty chunk of change if Pagan was to accept, but he’ll likely be looking for a multi-year deal coming off such a strong season. Still, the Giants weren’t willing to take the chance.

Of course, just because the Giants aren’t making any qualifying offers doesn’t mean they aren’t interested in bringing any of their free agents back if the price is right. Giants general manager Brian Sabean has expressed interest in re-signing Pagan, but Baggarly hears team officials are less confident about doing so. That he won’t cost a draft pick will certainly make him more attractive to interested teams.

There is little correlation between player salaries and ticket prices

Ralph Freso/Getty Images
11 Comments

With the recent spate of contract extensions and big name free agent signings, more than a handful of fans have expressed concern that deals signed by the likes of Mike Trout, Bryce Harper, and Manny Machado will drive up ticket prices. Research on the subject is scarce, but both pieces of research I found — by Jon Morgan at The Baltimore Sun in 1998 and Nate Silver at Baseball Prospectus in 2003 — found very little correlation between the two variables.

In Morgan’s article, he cited Allen Sanderson, an economist from the University of Chicago who said, “They are either independent of each other or the causality is reversed.” Causality, in layman’s terms, is one variable explaining the other. If the data showed a high degree of correlation, we could determine that, for example, an increase in player salaries does also result in an increase in ticket prices. But that wasn’t found.

Silver compared year-to-year changes in average ticket price and total player payroll from 2002 to ’03 and found essentially no correlation as well. The reason for this is manyfold, starting with the basic observation that the equation for an owner to set team prices is dependent many more factors than just his player payroll. Things like the team’s current competitiveness and general popularity, the presence of impactful marketable players, the area in which the team resides, and the general place on the expendable income ladder most of the city’s residents stand can all impact the price, arguably much more than player salaries.

As Rob Arthur noted in his column for Baseball Prospectus today, it is also important to consider that Major League Baseball’s business model has changed substantially. Teams used to be much more reliant on fans going through the turnstiles, which results in concession and merchandise sales, as well as other ticket sales. However, with revenue sharing and the league’s lucrative broadcasting deals with the likes of ESPN, Fox and Turner Sports, a team needn’t sell out most of its home games to turn a profit. MLB’s spin-off of MLB Advanced Media, BAMTech, has also proved bountiful. Nearly three years ago, The Walt Disney Company acquired a one-third stake in BAMTech at the cost of $1 billion. Disney then bought a majority stake at another $1.58 billion in 2017. A large portion of that $2.58 billion was distributed among the league’s 30 owners, a windfall that could easily put an otherwise struggling team into the green. (The players, by the way, don’t get a cut of this directly.)

Some teams are raking in money outside of baseball. As Craig noted last month, Liberty Media — which owns the Braves — is aiming to make money through real estate, specifically office buildings surrounding SunTrust Park. The Braves saw a 14.5 percent increase in revenue from 2017 to ’18, yet player payroll has actually gone down slightly. The Braves opened last season with a $118 million payroll. According to Cot’s Contracts, the 25-man roster is currently at $114 million coming off of a 90-win, first-place campaign in 2018. The only notable free agent signing the Braves made was third baseman Josh Donaldson on a one-year, $23 million deal.

The Braves could have increased fan interest significantly by signing Bryce Harper or Manny Machado. The club could still sign flame-throwing closer Craig Kimbrel, a former Brave, or Dallas Keuchel, the 2015 AL Cy Young Award winner. Both are as yet unsigned free agents and the club chooses every day not to pursue them. The Braves have built a competitive roster, but acutely on the (relative) cheap. They don’t need to motivate fans to come out to the ballpark with so much money coming in from so many other places.

Harper, Machado, and Trout won’t be driving up the cost for fans to see them play. If their teams have success, more fans will come to the ballpark in which case simple supply and demand will dictate ownership to increase prices. If one takes issue with that, one’s problem lies with ownership or the general phenomenon of talented, popular players making their teams better and more interesting. The issue isn’t with the handful of $300-400 million contracts having been signed recently.