Monday, March 30, 2020

The Economics of a Lost Season


Now, this is a story all about how
My life got flipped-turned upside down

As the opening line to the Fresh Prince of Bel-Air theme song would allude to, the entire sporting world has been rocked by the COVID-19 virus. MLB Commissioner Rob Manfred already had his hands full with the Astros trash banging scandal and is in line to be a bigger Enemy of The State than the current POTUS if the 2020 season is officially canceled. It`s optimistic to think a season could begin before Independence Day. In the event of a partial season, it surely would be unlike any other with impacts that go far beyond the sport of baseball in 2020. While it's tough to put the Focus on baseball in the midst of a global pandemic, these issues will impact the economic landscape for future years, such as the draft, free agency, roster sizes, minor league teams, and long term feasibility of the sport.
The first major announcement is that the draft has been shortened to 5 rounds. Jeff Passan and Kiley McDaniel have covered all of the implications of the deal agreed upon by the MLB and MLBPA. It seems to appease the owners, as it delays any large cash payments in the event of a cancelled season. It also leads to the inevitable shrinking of the minor leagues. The players were able to get their service time counted in a lost year, which was a main priority of the union. It`s highly unlikely there would be any short season baseball in the current environment, and I`m concerned that many minor league teams may not be able to survive without having Summertime baseball. One thing I haven't seen mentioned with playing in neutral venues or in front of empty stadiums is what would happen to the AAA schedule. In a compacted season MLB teams are going to need a shuttle of bullpen arms, spot starters, and a place for injured players to rehab, even with the expansion of the rosters to 29 or more. The potential for injuries could increase.
From a prospect standpoint, the shortening of the draft creates a unique opportunity to add talent to the organization from players typically drafted in the later rounds. Any undrafted players will be available to sign freely for $20K to any team. Some players may choose to wait until the 2021 draft, or follow the Carter Stewart path and explore the opportunity of playing professional baseball in Japan. I have combed through the past 10 years of the MLB Draft outlining some notable players that have been drafted in the 6th round and beyond. There will be legitimate undrafted talent this year. One caveat from this could lead to an increase in the quality of play in the NCAA ranks next year. Wouldn't be a bad idea to market the College World Series on the levels of March Madness and the NCAA Bowl games. Those are all highly lucrative events.

Pick

Team

Player

2010


6.202
BAL
Kevin Gausman
7.221
TB
Micheal Lorenzen
7.227
FLA
Mark Canha
8.251
TB
Merrill Kelly
8.260
COL
Corey Dickerson
8.264
LAA
Kole Calhoun
9.272
NYM
Jacob deGrom
11.352
LAD
Joc Pederson
16.486
TOR
Dalton Pompey
19.571
ARI
Adam Eaton
23.704
ATL
Evan Gattis
2011


6.199
TOR
Anthony deScalfani
6.201
CWS
Marcus Semien
6.204
TEX
Derek Fisher
7.226
OAK
Blake Treinen
7.241
PHI
Ken Giles
8.264
TEX
Kyle Hendricks
9.292
BOS
Travis Shaw
9.297
SF
Derek Law
10.317
DET
Curt CasAli
22.685
CIN
Amir Garrett
32.979
TOR
Kevin Pillar
34.1032
NYM
Seth Lugo
2012


6.189
HOU
Brett Phillips
6.213
ARI
Jake Lamb
8.272
TB
Luke Maile
11.340
MIN
Taylor Rogers
12.396
TEX
Keone Kela
13.424
DET
Devon Travis
15.475
TOR
Ryan Borucki
18.554
CHC
David Bote
18.568
SF
Matt Duffy
32.995
MIL
Nick Anderson
37.1126
PIT
Jacob Waguespack
2013


6.175
TOR
Matt Boyd
6.179
PIT
Adam Frazier
7.208
SD
Jake Bauers
7.225
CIN
Tyler Mahle
8.240
ARI
Brad Keller
8.249
BAL
Trey Mancini
9.260
MIN
Mitch Garver
9.261
CLE
Thomas Pannone
9.268
SD
Adam Cimber
10.297
SEA
Emilio Pagan
11.321
CLE
Adam Plutko
12.355
TOR
Tim Mayza
12.356
NYM
Jeff McNeil
14.434
NYY
Caleb  Smith
15.445
TOR
Jonathan Davis
16.475
TOR
Danny Jansen
22.665
STL
Luke Voit
26.773
BOS
Mauricio Dubon
30.895
TOR
Rowdy Tellez
33.977
HOU
Tyler White
2014


6.168
CHC
Dylan Cease
6.189
LAD
Brock Stewart
9.285
STL
Daniel Ponce de Leon
11.326
MIL
Brandon Woodruff
11.331
BAL
John Means
12.374
BOS
Jalen Beeks
16.466
HOU
Ramon Laureano
34.1006
HOU
Josh James
2015


6.195
LAA
David Fletcher
8.236
MIAMI
Chris Paddack
13.403
BAL
Cedric Mullens
15.437
COL
Sam Hilliard
2016


5.162
TOR
Cavan Biggio *
6.196
STL
Tommy Edman
9.281
LAD
Tony Gonsolin
12.362
CLE
Zach Plesac
13.390
TB
Nate Lowe
I omitteed players that were able to re-enter the draft after going to college, such as Alex Bregman, Aaron Nola, Kris Bryant, Jon Gray, Dansby Swanson, and Andrew Benintendi. With the changes coming in the 2020 draft, prospects coming out of high school may instead opt for the Pursuit of Happiness and a college degree over signing immediately to a major league club.

The Blue Jays have the 5th overall pick in the 2020 draft, which is a huge asset and their highest pick since taking Vernon Wells 5th overall in 1997. As of now Spencer Torkelson seems like the consensus number 1 overall pick, and it doesn`t appear like there will be much time for any others to overtake him. Austin Martin is another top college bat out of Vanderbilt and many mock drafts have Nick Gonzales from New Mexico State slotted in at 5th. Emerson Hancock and Asa Lacy are the two top ranked college pitchers and could be available to add to a stable of Bright starting pitching prospects.

As far as service time goes, the Blue Jays trio of youngsters would accumulate the same service time in the case of a cancelled 2020 season as they had in 2019. Vlad, Biggio, and Bo would enter 2021 with 1.157, 1.129, and 1.063, respectively. Fernando Tatis and Chris Paddack would both enter with 2 full years of service time after notably both making the majors on Opening Day last season. National League ROY Pete Alonso would also have the 2 full years while American League ROY Yordan Alvarez would enter with 1.054. The Dodgers Will Smith is over the 172 day mark by 8 days, which could be manipulated with a week in the minors at some point. Gavin Lux falls short of a year at 0.056.  Calculating how a shortened season affects the Super-2 status and arbitration awards is enough to give any front office executive a Concussion.

In these quick talks of an agreement for 2020, players prioritized service time while the owners were concerned about the large influx of cash they'd pay in a lost season. Hopefully these concessions are the start of a healthy negotiating process and the 2022 CBA talks can go off without a Hitch. A work stoppage almost destroyed the game in 1994 and it took the Bad Boys of the steroid era to bash home runs to regain popularity. The players union will likely continue to protect the active players and we might see an international draft process as early as 2022.

Below I have listed all of the deferred, retained, and buried money for the 2020 season. My loose understanding of contract law would interpret this with the deferred money being paid, as it payment from previous seasons yet the retained money would not be paid, saving teams like the Red Sox, Mariners, D-Backs and Dodgers over $10 million. I still haven't seen a concrete resolution on what happens to released players who have had their contract purchased or terminated, but guys like Ellsbury, Tulo and David Wright could still get paid the full amount of their salary while active big leaguers receive $150K per player. The Red Sox seem to benefit in a cancelled 2020 despite a controversial off-season. They have $35M in dead money on their salary payroll, with $21M retained in trades and $14 to Rusney Castillo in the minor leagues. Though their efforts to reset the luxury tax penalty could be rendered moot as it is likely MLB will reset or pro-rate the luxury tax levels.

Team
Player
Deferred
Retained
Other
Arizona
Greinke

$10.3M


Tomas


$17M Buried
Atlanta




Baltimore
Trumbo, Cashner, O`Day
$1.5M, $1M, $1M


Boston
Price, Sandoval, Castillo

$16M, $5M
$14M Buried
Chi White Sox
Alonso

$1M

Chi Cubs
Brach

$500K

Cincinnati
Griffey Jr, Arroyo
$3.5M, $1.363M


Cleveland
Kluber

$500K

Colorado
Mike Dunn

$1M

Detroit
Fielder

$6M

Houston
Singleton

$250K

Kansas City
Peralta

$1M

LA Angels




LA Dodgers
Bailey, Olivera, Maeda

$5M, $4.6M, $2.463M


Kazmir
$8M


Miami
Wei-Yen Chen
$15M
$10M

Milwaukee




Minnesota




NY Yankees
Alex Rodriguez
$5M



Ellsbury


$26.142M  (Jacoby released)
NY Mets
Bonilla, Vargas
$1.2M (Bonilla)
$2M (Vargas)


David Wright


$12M (Released)
Oakland




Philadelphia
Odubel Herrera


$7M (Released)
Pittsburgh
Marte
 $1.5M

San Diego
Olivera, Kinsler
 $8.5M
$4.25M (Released)
San Francisco
Cozart


$12.6M (Released)
Seattle
Bruce, Leake, Santana, Cano
 $12.25M, $8M, $4M, $3.75M

St Louis
Leake
 $4M

Tampa Bay
Longoria

 $2M

Texas
Fielder


$9M (Retired? Released?)
Toronto
Tulowitzki


$14M (Released)
Washington
Strickland
 $387K


Strasburg, Soriano
 $10M, $2M


2021 Blue Jay Free Agents
The biggest Blue Jay slated to become a free agent after 2020 is Ken Giles. Newly acquired Travis Shaw, Joe Panik and Chase Anderson may become free agents before they even play a (regular season) game for the Jays. Matt Shoemaker is also slated to hit the open market. Given the uncertainty in the marketplace right now, it does not seem like the best time for players entering free agency. Perhaps Trevor Bauer was ahead of his time in stating that he wanted to accept one-year deals when he hit free agency. 

Player
IP
ERA
xFIP
K/9
WAR
SV
AGE
A
65.1
2.76
2.73
13.22
1.2
34
30
B
53
1.87
2.73
14.09
1.8
23
29

From the chart above, Player B is Ken Giles, who is currently set to hit free agency after the 2020 season regardless how many games are played. Player A is, yeah, you probably guessed it… Will Smith. He just signed an open-market deal with the Atlanta Braves for 3 years and $40 million, with a QO attached and a comp pick surrendered. He seems like an excellent comp for Giles and Atkins should absolutely be comfortable offering him a contract around the same ballpark figures to shore up the back end of the bullpen.

We will be experiencing an incredibly unique time and the fallout will impact much of the world in 2020 and beyond. I'd imagine the luxury tax gets reset for every team as a concession to the players entering the market in the hopes of attracting more buyers. If you haven't noticed, there are references to over 10 Will Smith movies, songs or movies throughout the post and I didn't even get to mention the future i, Robot umps who threaten to replace the Men In Black in calling balls and strikes. Here's a throwback BANGER to help us continue to self-isolate this Monday.