The Jon Lester contract situation

[sk7326]

Lester isn't Ellsbury. If he was, his agent would be Boras. I would expect he will re-sign with the Red Sox for $16-18 million range. That's enough money for him to live his next 9 lives.

 

He enjoys his life in Boston. Enough to be compensated like AJ Burnett? No.

[rjortiz]

If Lester offered the Red Sox 5/80, they would have already signed him. Jon Lackey and AJ Burnett got bigger deals and they signed four years ago.

[Bellhorn04]

Doesn't it feel like the price of pitching is going up by the day?

[rjortiz]

Doesn't it feel like the price of pitching is going up by the day?

 

Especially for pitchers not affected by the QO. All proposals south of $100 million is wishful thinking. He's probably in the $120 to $140 million range. The Scherzer offer from the Tigers was $144 million. I'd guess Lester is aiming for that. Scherzer is better, but Lester's longer track record, durability, and postseason success could drive up his price.

 

I'm not excited about paying that much for the decline years of a pitcher that isn't really an ace. There doesn't seem to be a lot of surplus value, even with optimistic projections. Unless his hometown discount means giving up $40 to $60 million dollars, I would wait until the offseason to make a decision.

[SoxSport]

It's difficult to compare salaries from one team to another, since they are all working from a different revenue base. That's the mistake the media makes. They think just because the Dodgers or the Yankees pay a certain amount, so should the other teams. Some agents feel that way, too; others are more realistic.

 

Baseball is set up for the biggest markets to dominate. That they don't says something about the real value of free agents. They are overvalued. There are also other factors, such as revenue sharing and the draft which even the playing field.

 

It's unrealistic--to a point--to compare what one team is paying a guy relative to somebody else of comparable? abilities on another team. It is more a question of what a team's revenue base allows it to pay. If a player doesn't like that, he can go to free agency. If he likes where he's at, he works out the best deal he can with his current team.

[rjortiz]

It's difficult to compare salaries from one team to another, since they are all working from a different revenue base. That's the mistake the media makes. They think just because the Dodgers or the Yankees pay a certain amount, so should the other teams. Some agents feel that way, too; others are more realistic.

 

Baseball is set up for the biggest markets to dominate. That they don't says something about the real value of free agents. They are overvalued. There are also other factors, such as revenue sharing and the draft which even the playing field.

 

It's unrealistic--to a point--to compare what one team is paying a guy relative to somebody else of comparable? abilities on another team. It is more a question of what a team's revenue base allows it to pay. If a player doesn't like that, he can go to free agency. If he likes where he's at, he works out the best deal he can with his current team.

 

A couple things:

 

1) The third richest franchise crying poverty is laughable.

2) MLB salaries are undervalued. MLB labor market is an oligopsony, and institutes many ways to suppress wages.

3) The Dodgers and Yankees use this to their advantage. They don't need to overpay players, because they can stop bidding when everyone else drops out. Instead of one $50 million player (actual value), they can buy a $30 million player and a $20 million player.

4) It's actually more of a question of how skilled GM's are at getting players to sign for less than they are worth.

5) Baseball needs a salary cap and better revenue sharing if they are really serious about competitive balance.

Edited April 10, 2014 by rjortiz

[sk7326]

A couple things:

 

1) The third richest franchise crying poverty is laughable.

2) MLB salaries are undervalued. MLB labor market is an oligopsony, and institutes many ways to suppress wages.

3) The Dodgers and Yankees use this to their advantage. They don't need to overpay players, because they can stop bidding when everyone else drops out. Instead of one $50 million player (actual value), they can buy a $30 million player and a $20 million player.

4) It's actually more of a question of how skilled GM's are at getting players to sign for less than they are worth.

5) Baseball needs a salary cap and better revenue sharing if they are really serious about competitive balance.

 

5) Not precisely. The revenue sharing could be better, but the competitive balance is there now. There is enough sharing for every franchise to build a team that can make decisions to help itself. Indeed, the problem now is that the last CBA made things harder to ensure competitive balance. Tampa and Oakland cracked the puzzle - the teams that haven't are not prevented by money.

 

4) Well, with the rules for true free agency, there is a winner's curse for a big free agent i.e. you pay a premium price to win an auction and you are buying decline years often to do so. Now smart teams are proactive, like Tampa is - offering to buy the players arb years at a premium in exchange for a year or two of free agency. For the player there is value there. It is unrealistic to expect Pedroia deals or demand them from players.

 

3) The rich teams (including us) have the advantages you mention. ALSO, the qualifying offer structure helps us too. After all, the draft pick cost goes DOWN the more qualified FAs you sign. If the Yankees blow their first round pick for McCann, a 2nd round pick for Ellsbury is a steal.

 

The salary cap is just a transfer of wealth. I think the luxury tax-revenue sharing combo has worked for baseball and provided competitive balance in a way that other sports have not really achieved. The NFL feels wide open, but that is more a result of a 16 game season than anything else. There is still little turnover at the top.

 

If you want competitive balance, you'd get rid of the salary caps on rookie bonuses (it is the one place where the Tampas and Pittsburghs were getting a ton of bang) and draft pick compensation for free agents and just allow the trading of draft picks.

[sk7326]

Doesn't it feel like the price of pitching is going up by the day?

 

The price of innings is very highly regarded by the industry. If you can churn out 200 IP at a #3 starter or better level, that's really really hard to find. I am always hesitant to pay for decline as rjortiz notes - but if you need to accept a couple of years of #4 starter level production, I'd rather do it with a guy without an injury history, a guy with sound mechanics and a guy I trust to be able to crank out 30 starts a year. Lester does hit all of those. Also, if you lock him in at a rate now, with the inflation of salaries in general and the high value of durable pitching - even the decline years aren't really that overvalued. It's something a team like the Red Sox can do though, and I don't see a huge reason to play hardball.

[Spudboy]

The price of innings is very highly regarded by the industry. If you can churn out 200 IP at a #3 starter or better level, that's really really hard to find. I am always hesitant to pay for decline as rjortiz notes - but if you need to accept a couple of years of #4 starter level production, I'd rather do it with a guy without an injury history, a guy with sound mechanics and a guy I trust to be able to crank out 30 starts a year. Lester does hit all of those. Also, if you lock him in at a rate now, with the inflation of salaries in general and the high value of durable pitching - even the decline years aren't really that overvalued. It's something a team like the Red Sox can do though, and I don't see a huge reason to play hardball.

 

This all makes very good sense unless the employer feels that they have another employee ready to replace the guy.

 

What if the Sox are confident that one of the young players in MiLB will be ready next year? Not necessarily as a number one but someone ready to step up and start in the rotation.

[rjortiz]

5) Not precisely. The revenue sharing could be better, but the competitive balance is there now. There is enough sharing for every franchise to build a team that can make decisions to help itself. Indeed, the problem now is that the last CBA made things harder to ensure competitive balance. Tampa and Oakland cracked the puzzle - the teams that haven't are not prevented by money.

 

I would argue that the disparity in payroll is keeping Oakland and Tampa from solidifying their status as contenders. The Red Sox can go add Peavy despite his $16 (?) million salary. They can kick the tires on Cliff Lee. The Rays have to take risks on injured relievers, and use internal options. It really emphasizes how astonishingly well run their organizations are. It looks like Pittsburgh is going to join them.

 

4) Well, with the rules for true free agency, there is a winner's curse for a big free agent i.e. you pay a premium price to win an auction and you are buying decline years often to do so. Now smart teams are proactive, like Tampa is - offering to buy the players arb years at a premium in exchange for a year or two of free agency. For the player there is value there. It is unrealistic to expect Pedroia deals or demand them from players.

 

I was talking about the team valuation of players being more than what they are paid. Cano probably won't be very useful at age 40, but he's going to help sell tickets, jerseys, concessions, advertising, and help ratings for ROOT (where they own a majority stake). That all adds to the value he provides on the field. They might even sneak into the playoffs this year. If they pull that off, I don't think paying him $24 million in 2022 will bother them that much. They might not even own the team at that point.

 

3) The rich teams (including us) have the advantages you mention. ALSO, the qualifying offer structure helps us too. After all, the draft pick cost goes DOWN the more qualified FAs you sign. If the Yankees blow their first round pick for McCann, a 2nd round pick for Ellsbury is a steal.

 

And look who is receiving the compensatory picks for those players. Atlanta and Boston. The big markets are also able to extend QO's to players that small markets could not. The Red Sox can sweep $14 million under the rug. The Yankees offered $14 million to a setup reliever. The Rays aren't going to gamble 1/5th of their payroll on a possible acceptance. Definitely needs to be scraped during the next CBA.

Edited April 10, 2014 by rjortiz

[rjortiz]

This all makes very good sense unless the employer feels that they have another employee ready to replace the guy.

 

What if the Sox are confident that one of the young players in MiLB will be ready next year? Not necessarily as a number one but someone ready to step up and start in the rotation.

 

I agree with this 100%. If Henry Owens is blowing away MLB batters in September, I'd be more inclined to let Lester walk. I also want to see what happens with Peavy's option for 2015.

[sk7326]

This all makes very good sense unless the employer feels that they have another employee ready to replace the guy.

 

What if the Sox are confident that one of the young players in MiLB will be ready next year? Not necessarily as a number one but someone ready to step up and start in the rotation.

 

I think you have to consider it, but given the risk for pitching across the board, being able to have sure things in slots is extremely valuable. I think if Owens were ready - you MIGHT let Lester go, but the team would still want some veteran filler because it is hard to get through the marathon without some real horses. For an Owens sort (these days) we know the kid would be on some sort of limit, like 150-175 innings.

 

I think the existence of those young starters is what has made guys like Lester premium assets. When you are watching the workloads of your kids, it is hard to contend while taxing your bullpen - and giving too many innings to your soft 5th-6th inning underbellies of your pitching staff - without having guys who do not have to be babysat.

[redsoxrules]

Lester is also a beast in the playoffs. It would be nice to keep him for that purpose as well.

[sk7326]

I would argue that the disparity in payroll is keeping Oakland and Tampa from solidifying their status as contenders. The Red Sox can go add Peavy despite his $16 (?) million salary. They can kick the tires on Cliff Lee. The Rays have to take risks on injured relievers, and use internal options. It really emphasizes how astonishingly well run their organizations are. It looks like Pittsburgh is going to join them.

 

It seems that way, but Tampa has had a solid 6 year run - which is about as good as any team can hope for in the free agency era. The Rays and A's cannot make some of the decisions the Red Sox can, or they have to think harder. At the same time, the luxury tax and revenue sharing system gave them the tools to manage their franchise. The teams have identified market inefficiencies - they were on the forefront of advanced defensive evaluation. They have to take chances on injured relievers, but they also figured out that all relievers are chances - so in a way who cares. The Red Sox have figured this out. You treat relievers like NFL running backs, or disposable diapers - just the best way to handle them.

 

I've noted, removing the compensation structure for free agency helps everybody - and if you just let teams trade draft picks, the compensation would take care of itself.

[SoxSport]

The Yankees have been in a class by themselves for a long time spending-wise. Their revenue pool has been the biggest due to their cable Yes network. How many people know the Yes network is stuck in cable packages all over the country? So aren't the Texas Longhorns and NCAAF networks. If you have these channels stuck in your cable package, you are paying the Yankees, UTexas and the NCAA money out of your cable bill. And you have no control over that, unless you want to lose some channels you watch. The cable system sucks, but that's the way it is, and that's why athletes in the TV cable sports make millions in salaries. Especially MLB, which has no salary cap--no way to control salaries. Salaries are lowest in the NFL, with a hard cap, but they still make millions from lucrative TV contracts. TV pretty much runs the show these days. They even set up the schedules in these sports--including college football.

 

In MLB, the new Kahuna on the block is Fox Sports West, and the huge cable contracts given to the LA teams--Dodgers and Angels. The Dodgers have spent out of sight because of this contract, and have surpassed the Yankees. The Red Sox actually are behind the Phillies in spending--I think they are 4th--about $50 million below the Yankees and $65 million or so below the Dodgers. The latter two teams are over $200 million. The Phillies have a bigger ballpark and generate more revenue from it than Fenway with 3 million or so yearly attendance.

 

The Red Sox aren't really "rich" compared to LA and NY. They do have a sports network NESN, but it's a regional network--you don't see it nationally like the Yes network. The killer for them is their small ballpark--they have to charge the highest per capita ticket prices in baseball to max out their revenues. Mostly because they are in a division where their rivals are the Yankees. If they were in a different division, I suspect their payroll would be much lower--and they are going in that direction anyways. Relying more on their farm system and shorter FA contracts.

[sk7326]

The Yankees have been in a class by themselves for a long time spending-wise. Their revenue pool has been the biggest due to their cable Yes network. How many people know the Yes network is stuck in cable packages all over the country? So aren't the Texas Longhorns and NCAAF networks. If you have these channels stuck in your cable package, you are paying the Yankees, UTexas and the NCAA money out of your cable bill. And you have no control over that, unless you want to lose some channels you watch. The cable system sucks, but that's the way it is, and that's why athletes in the TV cable sports make millions in salaries. Especially MLB, which has no salary cap--no way to control salaries. Salaries are lowest in the NFL, with a hard cap, but they still make millions from lucrative TV contracts. TV pretty much runs the show these days. They even set up the schedules in these sports--including college football.

 

In MLB, the new Kahuna on the block is Fox Sports West, and the huge cable contracts given to the LA teams--Dodgers and Angels. The Dodgers have spent out of sight because of this contract, and have surpassed the Yankees. The Red Sox actually are behind the Phillies in spending--I think they are 4th--about $50 million below the Yankees and $65 million or so below the Dodgers. The latter two teams are over $200 million. The Phillies have a bigger ballpark and generate more revenue from it than Fenway with 3 million or so yearly attendance.

 

The Red Sox aren't really "rich" compared to LA and NY. They do have a sports network NESN, but it's a regional network--you don't see it nationally like the Yes network. The killer for them is their small ballpark--they have to charge the highest per capita ticket prices in baseball to max out their revenues. Mostly because they are in a division where their rivals are the Yankees. If they were in a different division, I suspect their payroll would be much lower--and they are going in that direction anyways. Relying more on their farm system and shorter FA contracts.

 

NESN is on FIOS here in DC. It's not as lucrative I suspect - but nobody's starving. The Red Sox have a small ballpark, but a market with a near unlimited itch to pay - it's still quite the mint. If the Red Sox were in a different division they would still spend a lot. And well they should - given how they gouge the Nation the fans have every right to expect that. If JH is robbing the Sawx to pay Liverpool, yeah that is a problem. But yes the arms race with NY does hold them extra accountable. The trend of relying on their farm system is only because they have a potential MVP candidate there - there is less youth on the roster than you think. Really the trend with this team is more or less unchanged from the Theo days (pre-2011 if you want to be picky maybe), it just looks better with a World Title.

[jacksonianmarch]

It's irrelevant whether the Yankees or the sox have more money. They both have the money to field $200+million teams. It's more about the value with them, and I doubt signing a 30+ yr old starter with a lot of miles to a big money, long term extension is something they want to do. I can nearly guarantee that Lester hits the market

[rjortiz]

The Yankees have been in a class by themselves for a long time spending-wise. Their revenue pool has been the biggest due to their cable Yes network. How many people know the Yes network is stuck in cable packages all over the country? So aren't the Texas Longhorns and NCAAF networks. If you have these channels stuck in your cable package, you are paying the Yankees, UTexas and the NCAA money out of your cable bill. And you have no control over that, unless you want to lose some channels you watch. The cable system sucks, but that's the way it is, and that's why athletes in the TV cable sports make millions in salaries. Especially MLB, which has no salary cap--no way to control salaries. Salaries are lowest in the NFL, with a hard cap, but they still make millions from lucrative TV contracts. TV pretty much runs the show these days. They even set up the schedules in these sports--including college football.

 

In MLB, the new Kahuna on the block is Fox Sports West, and the huge cable contracts given to the LA teams--Dodgers and Angels. The Dodgers have spent out of sight because of this contract, and have surpassed the Yankees. The Red Sox actually are behind the Phillies in spending--I think they are 4th--about $50 million below the Yankees and $65 million or so below the Dodgers. The latter two teams are over $200 million. The Phillies have a bigger ballpark and generate more revenue from it than Fenway with 3 million or so yearly attendance.

 

The Red Sox aren't really "rich" compared to LA and NY. They do have a sports network NESN, but it's a regional network--you don't see it nationally like the Yes network. The killer for them is their small ballpark--they have to charge the highest per capita ticket prices in baseball to max out their revenues. Mostly because they are in a division where their rivals are the Yankees. If they were in a different division, I suspect their payroll would be much lower--and they are going in that direction anyways. Relying more on their farm system and shorter FA contracts.

 

The Red Sox are worth $1.5 billion. Stop crying about being poor.

[Bellhorn04]

You can make all the perfectly logical rebuttals to SoxSport you want. He won't respond and he'll just say the same damn thing the next time. It's almost amusing.

[Bellhorn04]

I don't think letting Lester walk is something the Sox want to do at all. It all depends how high his demands are. I'll be surprised if they can't come to an agreement but we won't know till we know.

[jacksonianmarch]

I don't think letting Lester walk is something the Sox want to do at all. It all depends how high his demands are. I'll be surprised if they can't come to an agreement but we won't know till we know.

 

Like I've said before, guys take discounts to gain security. My guess is the sox want both a lower AAV and less years. Ain't gonna happen. If Lester hits the open market, he'll start at Tanaka money

[Bellhorn04]

Like I've said before, guys take discounts to gain security. My guess is the sox want both a lower AAV and less years. Ain't gonna happen. If Lester hits the open market, he'll start at Tanaka money

 

This is going to be a tough one for the Sox FO. Letting him walk might be the smart thing, but there'll be hell to pay PR wise if he signs with the NYY or other top contender. Fans hated it when Pedro left too but he was clearly nearing the end. Lester could be a solid #2 and sometime #1 for 5 more years at least. He's proven to be a very durable guy and seems to have his stuff back. This has a way to go to play out.

[jacksonianmarch]

He isn't Pedro. Pedro was a tiny man who threw ungodly hard. Lester is a big man who is a f***ing horse. He's a guy you pay up for. That being said, if the sox want to avoid costly payments to older arms, then you let him go. The sox built up a lot of cred this past yr with the title, so they can try to run the kids out there. But they also need to be careful. One or two bridge yrs and the fanbase will be pissed, especially if you let Lester walk and Owens or Ranaudo aren't what theyre being billed as

[SoxSport]

NESN is on FIOS here in DC. It's not as lucrative I suspect - but nobody's starving. The Red Sox have a small ballpark, but a market with a near unlimited itch to pay - it's still quite the mint. If the Red Sox were in a different division they would still spend a lot. And well they should - given how they gouge the Nation the fans have every right to expect that. If JH is robbing the Sawx to pay Liverpool, yeah that is a problem. But yes the arms race with NY does hold them extra accountable. The trend of relying on their farm system is only because they have a potential MVP candidate there - there is less youth on the roster than you think. Really the trend with this team is more or less unchanged from the Theo days (pre-2011 if you want to be picky maybe), it just looks better with a World Title.

 

NESN is not in the NJ-PA area on FIOS.

[SoxSport]

The Red Sox are worth $1.5 billion. Stop crying about being poor.

 

Who's crying? And who's poor? LOL.

[SoxSport]

The Red Sox are worth $1.5 billion.

 

The Yankee Yes network is worth $3 billion.

[rjortiz]

The Yankee Yes network is worth $3 billion.

 

OK. The Red Sox are still the 3rd richest franchise in MLB.

[SoxSport]

OK. The Red Sox are still the 3rd richest franchise in MLB.

 

you should check the numbers. The LA teams and Philly are richer, and Texas is very close--maybe ahead now.

Houston is also very rich, but they don't spend it. Sox in top 5, no doubt, but way behind NY and LA.

The Yankees have put an incredible amount into the luxury tax over the years. Their media resources are boundless.

[Station 13]

The Red Sox charges the most for an average ticket price. They make loads of money. They have no problem upping payroll to the Yankee level of $200M.

 

But let's stop talking about that and more on Lester. Lester look at this as a free agent contract and what his peers are getting. His peers are getting handed hundreds million dollars deals. He has taken a discount already, why would he go through it again?

 

Expect the contract talks to begin at 5 year at an AAV of 20M.

Edited April 11, 2014 by Station 13

[rjortiz]

you should check the numbers. The LA teams and Philly are richer, and Texas is very close--maybe ahead now.

Houston is also very rich, but they don't spend it. Sox in top 5, no doubt, but way behind NY and LA.

The Yankees have put an incredible amount into the luxury tax over the years. Their media resources are boundless.

 

http://www.forbes.com/pictures/mlm45fdgdd/3-boston-red-sox-5/