Thursday, November 27, 2008

The big disconnect

The Sun's Shi Davidi writes today that the Jays may indeed be looking at the possibility of a payroll reduction. To quote:

The global financial crisis and the loonie's steep drop versus the American dollar appear to have drastically changed things for general manager J.P. Ricciardi and his staff, as hints of a possible slight increase in payroll back when the season ended have given way to a much less rosy outlook.

"The economy is definitely having an effect on us, so maybe our spending has slowed down a little bit," Ricciardi said.

"I think a lot of things are still being finalized, so I don't know if we're going to be able to be as active as maybe we once thought. But we're still trying to sort it all out."

Well, isn't that a fine kettle of fish? Or is it? How many times now, have we been told in all sincerity that things were one way and then they turned out to be something else entirely? Remember how JP "liked his team and was going to pretty much stand pat" last off-season? The speaker here, for all his good and bad qualities, is a well-documented fountain of bullshit. (Honestly, I wouldn't be surprised if the Jays courted Adam Dunn this winter - that's how much I believe what JP says publicly)

There's that, and then there's also this: Rogers (the company) made something like a billion dollars in the last year (per Stoeten last week at DJF). We are supposed to believe that a company overflowing with cash - not a little of it arising from sweetheart broadcasting deals with it's wholly-owned sports franchise - can't afford to even match last year's payroll? Again, that's bullshit by definition.

They may choose to take advantage of the financial crisis to pinch pennies - maybe - but don't be gullible enough to believe they can't afford it. The standard pessimism here is that they have to answer to stockholders who wouldn't like to see the Jays lose money. But the truth is that the Jays lose money, on paper, every year. the stockholders look at the big picture - the overall cooperation - and that makes a ton of money. Any person savvy enough to sweat the losses of a subsidiary unit is also savvy enough to understand the creative deals that benefit the broadcast units while maintaining the illusion that the baseball team loses money. And they are not the only ownership group that employs such creativity.

So before we speculate on what the ownership WILL decide to do, lets dispense with the fiction that they HAVE to cut payroll - they don't. As to whether or not they will, no one can know for sure. The Jays can be remarkably obtuse and are fairly prolific in the employment of the "say one thing and do the opposite" strategy. What we can say for sure is that the above quoted remarks mean next to nothing about what is actually going to happen.

My hunch is this: JP has two things going in his mind - first, listening to see if anyone offers to take a contract like Ryan's or Overbay's off his hands (for which the illusion of a limited payroll helps provide cover both with the fans and with the players) and second, hanging back until a lot of the big names settle and trying to address his needs on the cheap (for which the illusion of a limited payroll serves to dampen fan speculation about, for instance, chasing Manny).

An example: The Brewers would like to re-sign Sabathia and/or Sheets. If they did, pitching would not be a big issue with them. But if they lost out on both, then approaching them with an offer of young pitching for JJ Hardy becomes something they might be more inclined to listen to. That's a totally speculative scenario, mind you, but it conveys the idea.

From the GM's point of few, minimizing expectations under the cover of "bad economy - out of our hands" has to be much more helpful than being in on a lot of big names and coming away empty-handed. What's going to get JP more grief? Saying "We are players for Manny" and losing him, or saying "I don't think we can sign him" and then - SURPRISE! - he lands him?

All that said, there are basically three course which might be taken:

1. Kick up the payroll significantly and sign relatively major deals. You can speculate any number of variations here.

2. Stand pat - if the Jays did that their payroll would drop by some 15-20 million from last year.

3. Actively dump payroll - the Jays could deal Ryan and lose very little in the 'pen (assuming the health of the remaining pitchers); they could deal Overbay, move Lind to first, and sign a low-priced DH like Russel Branyan; I don't think they could - or should - move Rolen because the uncertainty surrounding his elbow would seriously limit the return you could get, plus whoever you acquired to play 3B is going to take up a considerable portion of the savings; they could ditch Frasor and Tallet via trade or non-tender. Theoretically you could drive the payroll down another $15 million or so with such moves. That would leave the Jays with a not-much-worse team for about $60-65 million. Of course, this assumes you find a taker for the whole amount on Ryan and Overbay.

I have said before, and maintain, that this team has decent potential for next year. We are, to be sure, somewhat at the mercy of what other teams do, much as the 2008 Twins came within a hair's breadth of making the playoffs only because the Indians and Twins unexpectedly failed to meet expectations. It would do the doom and gloom crowd well to remember that what happened to those two teams could easily happen to two AL East teams in 2009. To "write off" this season and ignore that potential is, in my opinion, sheer folly. I believe that Jays management is mindful of that reality and I seriously doubt that a big payroll cut is coming. Until and unless there is a formal announcement, I going to continue to assume the Jays have some money and some options. The disconnect between the corporate profits and the poor-mouthing is just too big for me to swallow.

~WillRain

4 comments:

halejon said...

But the side benefits to Rogers are already taken into account in the current budget. Just because the Jays "lose money" (I think Forbes said when all was said and done they broke even as an asset this year) doesn't mean the board is going to accept losing more of it. Again, the richness of Rogers the man or the company means nothing. It's a publicly traded company that has to maximize profit - or at least make an argument for it.

So the question isn't whether Rogers can "afford it", it's whether it can be sold to the board that spending more money (or replacing out of pocket what's been lost from GM/Shoppers bailing, less revenue expected, etc) on the Jays is a good investment right now. Not an easy sell in this division, financial climate, etc.

Pains me to say it, but from a financial and not a baseball view I would just run out another 87-win team for at least the next few years. The Yankees are about to go bonkers, and even going Bonkers on Burnett AND Manny doesn't make the Jays anything like favorites in the division. Unless there was some sign that the promotional value of the team was going to plummet if they didn't make the playoffs this decade, or this was a ripe time to make the playoffs and it would turn Toronto into a baseball town again and pay off huge...but that's not the case: attendance and ratings have been going up despite all the whining, and the AL East is at the worst it has been in years.

The savvy business move - and what J.P. seems to be trying to say without saying, is probably to tread water and hope the next wave of kids gives the team a shot in the arm in 2010.

You know, I've been trying to write this post for months.

The Southpaw said...

good thoughts. And yes, if the ONLY consideration is finances, then as long as the revenue stream is constant...

But the big dog said at the Beeston press conference that they were firmly committed to winning. Being firmly committed to winning is not always compilable with being firmly committed to a balanced budget.

Of course, he could have been bullshitting too.

~Will

halejon said...

So basically we need Beeston to convince the board that he and Cito have some of the old magic fairy dust that make the Jays one piece away, then hope the club finally overperforms its @#$@#$ pythagorean projection as hard as the Rays did last year, and...PLAYOFFS!

Anonymous said...

"You know, I've been trying to write this post for months."

me too....thanks for taking the ball. well done.