Monday, March 9, 2009

The upside to a min payroll

MLB Trade Rumors has the link to Buster Olney's report on the scout's glowing reports about SS.

They add the somewhat snarky comment that "There's no way the Nationals can pass on a talent like this."

Really. Was that necessary?

I notice the previous posting concerns a 17-20% drop in attendance forecasted for MLB this summer.

So really, who in baseball will be in a position to offer $10m in cash to an amateur pitcher?  Maybe the NY pair, Boston, the Dodgers maybe but that's it, that's the list.

The rest of these teams will be scrambling to make payroll if they end up on the real bad end of a cratering attendance number. How about $400m in lost revenue with this drop. 

Even if a team has a deep pockets owner, think their other investments/businesses aren't hurting?  Milwaukee has an $80m payroll this season.  What if projected revenue drop by 25%?  Detroit is north of $100m?  What's the attendance drop likely in Detroit this summer 30%? 50%? 75%? 

Where are teams going to cut?  I doubt they can squeeze much out of the 40%-45% non-payroll expenses they have.  It will come out of payroll unless the owner decides to eat the loss (Or MLB arranges financing ala the NBA's loan) They won't be looking to add a pricy new risk while they are desperate to dump salary anyway.

And will these teams even have $10m in cash on hand by July? 

Washington, OTOH, has a paltry $50-$55m payroll.  A 25% attendance drop will cut into profit not expenses.  And let's not forget, in this new age of supersized government, the DC area is actually GROWING.  It's likely the attendance drop in DC (Even with a bad team) will be less than other markets. (to put it another way, all you saps in flyover country will be subsidizing our Nationals indirectly . . . thanks and you're welcome)

So really, the Nationals have the financial wherewithall to make the big bonus payment and they have the need for a symbolic signing.  Boras might posture and bully for a while, but he knows that the Nats are where he'll be able to squeeze the most. 

I discount to about 10-15% probablility that the Lerner's would just not pay the huge bonus on principle.  Maybe that's low but since they've owned the team, they have been genrous with draft bonuses.  (And don't give me the Crow crap, in three months, he'll know just how sorry he should be for turning down that $3.5m)  Over slot for 2,3,4,5 & 15 last year.  Way over slot for McGeary the year before.

The upside to the min payroll?  When you're the only one with money when everyone is trying to sell . . .

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