Report: Rays sign Evan Longoria to long term deal; after 20 at bats

[MessiahRp]

The only question mark to me is why they didn't at least wait until he had more ABs before going to this level. I have no problem buying out Arby years to offset costs later but he hasn't even logged 25 ABs in the bigs yet. Plus if a player tears it up you're still looking at year three before Arby numbers jump so why not wait a year or two before throwing that much money at them?

 

If Longoria were to come up this year and have a Ryan Braun-like year it would make great sense (just as it does for us) to lock him up long term for as cheap as possible. Without any serious time facing Major League pitching, to me, that's the risk. Again, I don't mind the whole buying out Arby years concept as a whole but usually you want at least one season to make a determination like this.

 

Otherwise you're going to have agents like Boras looking to exploit this for all of his top prospect clients to eliminate Arbitration years altogether.

 

Rp

[endaround]

Baseball salary inflation is different and separate from general price inflation. Salary inflation in baseball will only slow down when fans stop paying higher ticket prices, stop watching games on TV, stop buying merchandise etc.

 

I understand that, which is why I pointed out that team revenue gains are actually ahead of player salary gains over the last 5 years. Shouldn't we expect those revenues gains to level out at some point, however?

 

Tampa is taking a huge risk that probably isn't worth it, and other teams will pay for it. All it takes is one to set precedent.

 

If it actually isn't worth it, other teams won't follow suit. Teams spend more and more money on players because they know they ARE worth it, generally speaking. To call for owners to keep salaries artificially low (lower than market value) is to call for the return of collusion. The only reasons fans jump all over player salaries is because it's public knowledge. Owners are smart enough to keep their growing check books private.

You're assuming teams are pricing risk correctly. Given that they have problems pricing veteran talent, I have my doubts.

 

[Oldcity]

To call for owners to keep salaries artificially low (lower than market value) is to call for the return of collusion. The only reasons fans jump all over player salaries is because it's public knowledge. Owners are smart enough to keep their growing check books private.

Sure the salaries are artificially low for pre-arby players, but it's more than made up for from that point on.

Another aspect is that the Rays just put added pressure on a top prospect. Everywhere they go this year, the media is going to be talking about the "minor leaguer who got a 9 year deal." It doesn't make much sense.

 

[RyDogg66]

Baseball salary inflation is different and separate from general price inflation. Salary inflation in baseball will only slow down when fans stop paying higher ticket prices, stop watching games on TV, stop buying merchandise etc.

 

I understand that, which is why I pointed out that team revenue gains are actually ahead of player salary gains over the last 5 years. Shouldn't we expect those revenues gains to level out at some point, however?

 

Tampa is taking a huge risk that probably isn't worth it, and other teams will pay for it. All it takes is one to set precedent.

 

If it actually isn't worth it, other teams won't follow suit. Teams spend more and more money on players because they know they ARE worth it, generally speaking. To call for owners to keep salaries artificially low (lower than market value) is to call for the return of collusion. The only reasons fans jump all over player salaries is because it's public knowledge. Owners are smart enough to keep their growing check books private.

You're assuming teams are pricing risk correctly. Given that they have problems pricing veteran talent, I have my doubts.

 

From the article on ESPN..

 

 

Longoria gets $500,000 this year, $550,000 in 2009, $950,000 in 2010 and $2 million in 2011, a salary that would increase to $2.5 million if he is eligible for salary arbitration that year. He receives $4.5 million in 2012 and $6 million in 2013.

Tampa Bay has a $7.5 million option for 2014 with a $3 million buyout, with the buyout price increasing to $4 million if Longoria was eligible for arbitration in 2011.

By November 2014, must decide whether to exercise an option calling for salaries of $11 million in 2015 and $11.5 million in 2016. His 2016 salary can rise to $14 million, depending on his finish in MVP voting.

If Longoria is simply as good as JJ Hardy, which shouldnt be too hard, paying him

500k

550k

950k

2.5 mil

4.5 mil

6 mil

7.5 mil (option first FA year)

11 mil (option)

11.5 mil (option)

14 mil (option)

 

...is a good deal. Considering Ryan Howard just got 10 million in his first year of arbitration and that Longoria is expected to hit like Ryan Braun, I'd say that the Rays have done well for themselves. I'd say the Rays have judged this talent pretty well.

[rluzinski]

You're assuming teams are pricing risk correctly. Given that they have problems pricing veteran talent, I have my doubts.

 

I was taking more exception to the idea that it only takes one team to ruin it for the others. A share your doubt about teams appreciating the risk involved, especially for pitchers.

 

Sure the salaries are artificially low for pre-arby players, but it's more than made up for from that point on.

 

If it "more than makes up for it", wouldn't owners not be spending less on players with repect to revenue? If I'm, looking at this wrong (I never got past Econ 101), someone let me know, plesae.

[Oldcity]

Never got into Econ either, so I'm not going to make any brilliant points in that regard. What I meant is, compared to the rest of the field, players in their first three years are severely underpaid. After that, if they are good enough to stick they'll generally make over a million bucks a year, and obviously depending on the player, a lot more. Star players often see about a 1,000% increase in a year. Also, without the system that keeps players on the cheap for their first few years, smaller-budget teams would have even less of a chance to compete.

 

My point is that players will start demanding long-term deals earlier and earlier. If the trend continues, it will eventually reach the draft. We already have players who fall because they refuse to take slot value.

 

I just don't see this as a good sign on the grand scheme.

[snyttri]

I'm also just at econ 101 level but I think rluzinski does a good job of explaining how higher salaries are affordable. The annual Forbes estimates mentioned, "The Business of Baseball", as well as the "the biz of baseball " seem to explain a lot. NBA ticket prices suggest the Brewers can charge considerably more for their best seats. Because the Brewers seemed sure of Braun's value and were optimistic about future revenues a preemptive contract strike long before he became ROY might have been a good gamble.

Forbes The Business of Baseball 2008

the biz of baseball

[Team Canada]

If he pans out, this is a great deal for them. Heck, we're paying Counsell $3M, so either way it's not horrible.

[TuesdaysWithRillo]

You think the Rays would rather pay him $500,000 per year for 3 years and then pay him 10 million a year or more in arbitration for the next 3 years after that? Smart move by the Rays.

[sheetswannabe]

Jeez, at this rate teams are going to start signing guys to longterm deals while they're still in the womb.

Haha found a new quote!!

[giffted1]

I really like this move for the Rays. If Longoria comes even close to fulfilling his potential this will be a steal. With all the talent that is on their team or close to being there they could realistically make some noise in the east in the near future. I wonder if they're working on a deal for David Price, who hasn't even pitched in the majors yet.

[snyttri]

The Rays are the fifth most profitable team in baseball according to Forbes, apparently thanks to revenue sharing. Better to keep their best finds than spend it on dicey free agents or just pocket it as the Pirates have done in the recent past despite the city buying a stadium for them.

 

Forbes operating income ranks 2008

[monty57]

rluz, I think you've hit everything pretty well on the head thus far. There has been a large increase in revenue, both in year-on-year comps and in new revenue streams such as the internet. From your findings, it appears that even with the increase in salaries, the owners are getting a larger share of the pot, so it's likely their gross margins and Return on Investment are higher. The question you posed seems to be the right question for the future. Salaries will continue to rise as long as revenues continue to rise, but how long can revenues continue to rise? Only so many seats and parking spots can be sold. Can prices for these seats and parking spots continue to rise? Is there high growth expectation in concessions and merchandise sales? I don't know, but I think the biggest increase in revenues for the next few years will be the internet. MLB gets 100% of revenue from the internet, and I believe it is shared equally among all of the teams. Since people such as Jobs and Gates have said that in the future all of your television viewing will stem from the internet, I could see a future where all of your baseball viewing will come from MLBtv.com, and it will stream from your computer to your TV. If this truly happens, revenues will greatly increase, and it will be spread evenly to all teams, eliminating much of the advantage big market teams now share.

 

As far as inflation, the sharpest increase I can remember for baseball salaries was in the 90's, during a period of near 2% CPI, when many economists were saying that we'd permanently cured high inflation. Also, recessions aren't necessarily deflationary (see the 1970's and out current economic situation). However, recessions can lower the salaries of players, as fans who lost their jobs probably won't fill the seats or buy jerseys, lowering team revenue and therefore player salaries. Therefore, I can't believe much of a correlation exists between salary and CPI, but rather (as you pointed out), the correlation is between player salaries and team (or more accurately MLB) revenues.

 

I think it's important to note that it seems to be the smaller-market teams that are doing this (Colorado and Tampa anyways, Arizona isn't really a low-payroll team but they're not New York, Boston, Chicago either). Really, it's a kind of insurance against "baseball inflation," which bigger market teams don't have to worry as much about. As far as "why do it now?" I think the answer is that the earlier you do it, the less the arby years cost. Teams and players are trading who has the dollars for who has the risk. It's sort of like buying life insurance when you're 20. The rate is unbelieveably low compared to buying it when you're 50.

 

Endaround's right, the contracts still need to be priced right, as the team is assuming a lot of risk. I'd guess that an average of less than $3MM/year for a top talent should be pretty risk free, as it will be insured if Longoria gets injured. The real risk is in his bombing as a player, and I'd guess that in 6-7 years even pre-arby players will be making over $1MM/year, so this contract doesn't appear to add much risk at all for the team. Longoria does guarantee that he'll make $17MM even if he gets permanently injured tomorrow, which is why he's willing to sign.

 

All the posters who have mentioned that you need to know what player you've got before signing a long-term contract like this are correct as well. I'd only take on this risk for a star player. I guess Tampa feels that they've seen enough to be willing to take the risk that Longoria is a star player.

 

If Braun would sign this same contract, I'd jump at it if I were the Brewers. Prince obviously wouldn't touch this contract, as he'll make at least half the contract's value next year.

[RyDogg66]

The Rays give up nothing in this deal. If he flames out and becomes Morgan Ensberg he could expect to make what he just signed for in arbitration. From what I have heard/read, the Union is none to happy about this deal. Rays were very smart to pull this one off.

[danzig6767]

The terms of that contract look pretty damn good to me from the Rays perspective

[Fatter than Joey]

The terms of that contract look pretty damn good to me from the Rays perspective

 

I agree -- I think it is a decent, albeit tangible risk.

[Oldcity]

After seeing the amount, it isn't too bad. The last few option years are pretty huge.

[RyDogg66]

The only risk I see here is if Longoria turns into Rocco Baldelli...like, tomorrow.

[jazzytrav]

This doesn't look bad at all. It's a bit of a risk, but not too much considering how low the initial contracts are. Longoria makes a little bit more his first few years, and the Rays might save some arby money. Plus if he makes it all the way through the contract, he'll be in a good position to sign one more big one.

 

I still worry that he'll start whining at some point if he's raking. I realize he can't holdout or anything, but it would probably be a distraction. Then again, I know nothing of Longoria's personality so I probably shouldn't make any assumptions. Maybe he just *gasp* doesn't care as much about the money.

[southpaw121505]

There is risk signing any player to a deal that long, let alone a player that unproven. That said, I like the deal for the Rays. Those numbers are going to be awesome for them is he produces anywhere near what people are expecting from him

[homer]

Eduardo Perez on ESPN said he called some of his former teammates and they are kind of PO'd at Longoria for signing this deal. They think it lowers the market by a ton if he ends up being as advertised.

[jazzytrav]

Eduardo Perez on ESPN said he called some of his former teammates and they are kind of PO'd at Longoria for signing this deal. They think it lowers the market by a ton if he ends up being as advertised.

Aww, that's too bad. I don't feel sorry for them.

[TooLiveBrew]

Collusion! Longoria is secretly the bastard love-child of George Steinbrenner and Farrah Fawcett!

[jazzytrav]

I don't think the offstring of a Steinbrenner would ever sign this deal. Sorry TLB http://forum.brewerfan.net/images/smilies/smile.gif