The offseason is ending as it began — with massive investments in star talent.
Albert Pujols and Prince Fielder received their $200 million contracts during the winter. Many in the industry expected that would happen. They were free agents. Open markets often make owners lose track of their decimal points.
More surprising was what happened Monday: The employers of Matt Cain and Joey Votto weren’t obligated to lavish long-term contracts on them, but they did it anyway.
Cain, the ace right-hander, agreed to a six-year, $127.5 million contract with the San Francisco Giants. It’s the largest contract in history for a right-handed pitcher.
Votto, meanwhile, is close to signing an extension with the Cincinnati Reds worth $225 million over 10 years, according to FOXSports.com senior baseball writer Ken Rosenthal. He’s primed to become the fourth member of the $200 million club, joining Alex Rodriguez (twice), Albert Pujols and Prince Fielder.
Cain was scheduled to become a free agent after this season, Votto after 2013.
From this, we can draw a few conclusions.
1. In a sport with $7 billion in annual revenues, and a $2.15 billion franchise (the just-sold Dodgers), perhaps we shouldn’t be surprised by $200 million player contracts.
2. Although general managers speak of “taking advantage of market inefficiencies” and “seeking reasonable acquisition cost” — buzzwords of the bean-counters — owners frequently disregard The Plan when it comes to franchise players.
3. The Yankees and Red Sox aren’t the only teams that can afford the most expensive players in the game.
We can’t put these investments in the same category as Pujols (Angels) and Yu Darvish (Rangers), who became affordable in part because of new television rights deals with FOX.
The Reds, for example, are in the midst of an agreement with FOX Sports Ohio that generates around $30 million per year. It runs until the end of the decade, so it’s not as if the Reds are about to get an unexpected infusion of cash by renegotiating a television-rights contract. In that respect, the Reds and Votto are similar to the Tigers and Fielder and Marlins and Jose Reyes; each contract was signed in the middle of a long-term television-rights deal.
Also, Cincinnati is the smallest television market in the United States with a Major League Baseball franchise, according to Nielsen. It becomes larger if Columbus and Dayton are included, but that isn’t likely to change much during Votto’s contract.
In essence, owner Bob Castellini and general manager Walt Jocketty made a difficult choice. The Reds can’t afford extensions for Votto and second baseman Brandon Phillips without dramatically increasing their payroll, which is now around $85 million. Apparently, they chose Votto. There’s now a good chance Phillips will sign elsewhere after this year.
Votto was the safer investment anyway. He’s a 28-year-old first baseman. Phillips is a 30-year-old second baseman. All things being equal, the respective rigors of the positions are such that middle infielders tend to wear down at a younger age than first basemen.
Besides, the Reds are seizing a competitive advantage within the National League Central. The Cardinals and Brewers just lost their franchise first basemen through free agency. The Reds have signed theirs to what is effectively a lifetime contract.
The rationale for the Giants and Cain is slightly different. Even as the team held a happy news conference with Cain, the question of what they will do with Tim Lincecum hovered in the not-too-distant future.
Lincecum already surpassed $20 million in average annual contract value, which is almost unheard of for pitchers in their pre-free-agent years. His current deal is up after the 2013 season. His eagerness to sign a long-term deal has been tepid, so the Giants had little choice but to sign Cain as insurance against Lincecum’s potential departure.
San Francisco GM Brian Sabean has built his team on pitching excellence, and the Giants don’t have an abundance of starting depth in the upper minors. They couldn’t risk losing Cain to free agency. He’s been too reliable, posting a 3.39 ERA and average of 212 innings over the past six seasons. Besides, this is a nice "thank you" from the Giants for saddling him with crummy run support and 69-73 record.
The Giants’ television revenues didn’t have a huge impact on the Cain negotiations. The team is at the start of a long-term rights agreement with Comcast SportsNet Bay Area. (The Giants actually own one-third of CSN Bay Area, with CSN owning the rest.)
Clearly, the Giants and Reds subscribe to the notion that star players are essential in (a) winning championships and (b) marketing an entertainment product. The players are homegrown in each case, adding to the teams’ comfort level in investing so much in one player.
Monday offered further evidence of the financial canyon between the millionaires on the field and just about everyone in the stands. But we’re well past the point of being shocked. These are the numbers of baseball, just like ERA and OPS. Two more teams saw fit to meet the price.
