The Long Awaited First Baseball Post on The Pickle

But it’s not what you think.

Yesterday, the Milwaukee Brewers signed second-year outfielder Ryan Braun to an 8 year, $45 million contract. In mid-April, the Tampa Bay Devil Rays locked up rookie third baseman Evan Longoria (non-baseball fans who haven’t heard this name before, enjoy), after only a handful of games in the bigs, with a 9-year, $47 million deal. There are two things you have to know to understand why these contracts are so remarkable.

First, here are the basics of baseball’s collective bargaining agreement. For the first three years of a player’s service in the major leagues, teams can pay him an escalating league minimum, which is a little less than half a million per year – nothing to sneeze at, but well below open market value for the services of a good player. For the second three years, players are arbitration-eligible, which means that they and the team can take salary figures to arbitration, which is supposed to result in a deal that is close to market value. In practice, salaries in arbitration years tend to be a bit below market value, and they are usually only one-year contracts, so the team bears no risk, and the player bears all the risk. So all told, MLB and the players union have agreed to restrictions on the market for players that protect the investment that teams have made in developing young talent – for six years.

The second thing you have to understand – and I suspect that most of Pickle Nation has read Moneyball, so this is not going to be new – is that baseball teams in small markets compete with less money to pay players than do their big market competitors. Revenue-sharing has helped to moderate the disparity a little, but it’s still true that the Red Sox, Yankees, Dodgers, Tigers, Mets, and Angels can field payrolls north of $150 million per year, whereas the Devil Rays, Brewers, Marlins, and Pirates have to keep it around $50 million.

Which brings us back to Longoria and Braun. These guys may well develop into superstar, face-of-the-franchise type talents, but Longoria has done literally nothing on the major league stage, and Braun only has a year under his belt, so it’s an incredible risk that their teams are taking – with a thin payroll, they are agreeing to pay more now to avoid paying a lot more during the arbitration years, and ultimately likely losing the best player on the team to free-agency just as he is in his prime. If they do turn out to be great players, it’s a strategy that gives the Rays and the Brewers the financial flexibility they need to add more pieces to a solid core, and to compete for a championship. That’s a recipe that could work – a core of young stars making good money, but less than they could make on the open market, a couple of fresh additions coming up through the minor leagues, and a few higher priced free agents that the team can now afford. That’s a recipe for a championship.

Of course, the other side of the coin is that Braun and Longoria might not contribute, or worse, they might get hurt. The Sox and Yankees don’t have to take that kind of risk. In the past, no teams would – contracts of this length are very rare, and unheard-of for players so far from free-agency. But if you don’t have the money to sign proven producers, and if you aren’t willing to take a risk, you’re going to tend to suffer the same fate that the league’s small market teams have suffered: on occasion, you see a young team getting hot in the fall and riding momentum to the World Series, but for the most part, rich teams make the playoffs, and rich teams win in the playoffs. The Braun and Longoria deals seem to signal a new, riskier strategy that small market teams hope will yield a higher return.