Friday, February 22, 2013

College Basketball a Season to Celebrate

The 2012-2013 college basketball season has been one of entertainment and joy for fans. Generally, I am largely resigned to catching a few games and waiting until, well, about now to start paying attention. This season has done a much better job of not only catching, but keeping my attention. Lo and behold March is right around  the corner for those who may have missed it, here are a few highlights to catch you up.

The Fall of Traditional Teams
Kentucky, North Carolina, and Duke are traditional powers and if the field of 68 was set today only one of them, Duke, would be in the NCAA tournament. Growing up a Utah Ute fan in the mid-90's it was gut-wrenching to see the Utes face Kentucky in the tournament. Three times they faced each other and three times Kentucky won. Most notably the 1998 National Championship game. Watching Kentucky fill up the loss column always bring me joy. This is allowing other teams a chance to shine, even if it is just for a year. Notably among these are Miami Hurricanes, Florida Gators and the reestablishment of Indiana Hoosiers as a top team. Temporary or a trend, I enjoy watching traditional powerhouses getting beat up and solid teams being showcased. 

Who is #1
A national champion is not crowned in November, or even in February, but the number one team in the country can be crowned each week. This season, that crown has been more of a curse than a blessing. Five different teams have held the (AP) ranking and in January the title changed hands each week. Indiana started the year ranked number one and is currently back on top. Seeing the top teams struggle and fall is fun from afar and clearly fans enjoy storming the court. Hopefully we will see the top team fall a few more times, if only to tune in later that week to watch them fall. 

College Athletes Succeeding
Stay with me on this one. Ever since the NBA put in place the 1-year rule the college game has focused heavily on the top freshmen in the game. That culminated last year with the all-freshmen starting five of Kentucky not only won the national title, but all five went pro and were drafted. This trend is not going away, but there is something refreshing about looking at the current top teams. Indiana is led by Cody Zeller (Sophomore), Miami is as high as it has ever been and are doing it under former George Mason coach Jim Larranaga, and Gonzaga Bulldogs being led by red-shirt junior Kelly Olynyk. Players on these teams have at least gone to a few college classes and learned to play a team game as none of them are 1-and-done schools. Olynyk has gone from being a fringe college player to a fringe lottery pick by sitting out a year and dedicated himself to the game Mark Few's system. No doubt teams are trying to identify players willing to red-shirt a season, really learn a system and maximize their college experience.

March is nearly upon us and all the joy to date could be squashed by traditional powerhouses. However, it is nice here in late February to sit back, enjoying what the season and has given us and dream a short dream that it will continue to inspire and surprise.

What has been your favorite moment of the college basketball season so far? Let me know in the comments.

Saturday, February 16, 2013

Coming to Terms with Draft Pick Compensation

With pitchers and catchers reporting this weekend, the rest of the league is not far behind. Groundhog predictions aside, Spring is right around the corner. Just as important the majority of free agents have been signed and fans are able to attach faces to their lofty hopes and dreams for the coming season. Kyle Lohse is a notable free agent still waiting for a contract and he may wait a bit longer as players and teams are still coming to terms with the new draft pick compensation system.

The biggest obstacle facing Lohse is that he is tied to draft pick compensation where if a team other than the St Louis Cardinals (his team last season) signs him they have to give up their top draft selection and the accompanying draft money. In a league that is putting an increased emphasis on youth and prospects that appears too steep of a price to pay for a 34 year old who just put up his career best season. Lohse was not the only player tied to compensation who struggled to find a contract this offseason. Michael Bourn finally signed with the Cleveland Indians earlier this week and Adam LaRoche bemoaned having compensation attached as he found it limited his opportunities before resigning with the Washington Nationals.

If LaRoche had his way the compensation issue would disappear altogether. That is not likely to happen. It is a tremendous upgrade over the previous A and B level compensation system it replaced and it severely limited the number of players affected. However, this leads to part of the problem. The old system worked, in part, because it was a little screwy. What was the difference between an A-level and B-level guy? Other than middle relievers seemed to get the B-level designation I could not tell you without looking it up. The new rule though is clear and unambiguous. Players get tied to draft pick compensation when they turn down their teams offer for the average salary of the top 125 players the previous season ($13.3 million). This number is the other big obstacle these players face and where I would like to focus.

On the one hand the players are told they are worth a very acceptable one year offer. You do not need accountants, lawyers and a priest to figure out the value of these players. However, once players turn that money down they seem to treat it as a floor to their demands. For certain players that is just a pipe dream. Yet, the arbitrary bar appears to have set a starting point for players and teams to bargain over. Michael Bourn wanted $15 million a season over 5 years. He waited, and waited, and waited some more before finally accepting 4/$48. LaRoche signed for 2/$24, failing to get the third year he wanted. Lohse will likely also accept less than the qualifying number. The issue is not their skill, clearly their previous teams offered substantial commitments to keep them for another season, rather it is their use of a number based on others salaries rather than tied to their specific situation.

Players, agents, and teams are schooled in arbitration. Any player with between 2-6 years of major league experience has a right to go to arbitration and demand a salary increase. The player and team will submit figures in January and if they cannot come to agreement, both sides will present arguments to a three party panel on why their salary is most accurate. After hearing the arguments the panel will grant either the players number or the teams number, there is no middle ground when it gets to an arbitration panel. In the arbitration hearings "arbitration eligible players receive salaries based on the similarity between their past performance and the performances of other comparable players" -h/t Matt Swartz of MLBTR. Swartz has created a reliable formula for forecasting projections by finding slightly older players who compare with the current arbitration candidate at that point of their career. The new draft pick compensation only uses dollars to compare players, with no regard for position, age, performance, or anything else arbitration hearings consider. Without these factors the dollar amount is somewhat moot to teams. They do not care what a player turned down for one year with another team, they only worry about what they have to pay over several years. 

Players gamble on the opportunity to strike a lucrative long term deal, but they need to accept that $13.3 million is an arbitrary number and be willing to fluctuate as the off seasons progresses. November until just after the Winter Meetings, aim high, compromise nothing. But as the off season progresses fewer teams are interested and the asking price needs to go down, even below the number already rejected. Bourn and LaRoche both settled for an average annual value of $12 million. Rafael Soriano got $14 million per season.  When players fall under this number they likely feel they are getting pinched. Players should use the lessons of this off season and turn a few less annual dollars into another year, and a net win if achieved. They could also sign a one-year "pillow contract" with an understanding they will not be tied to compensation next year. Teams will continue to emphasize the loss of draft picks and money as an excuse not to sign these players, by not rigidly sticking to an arbitrary number the players can more freely control their destinies and their destinations.

I would appreciate keeping the conversation going in the comments below.

Saturday, February 9, 2013

Payroll Flexibility Is Just Fine

Earlier this week it was reported that the Houston Astros opening day payroll will be around $20 million. This is less than Barry Zito, Vernon Wells, and a dozen others will make this season. Predictably this has lead to a chorus of people demanding reform. This is not surprising, but it is 100% wrong. In an effort to combat ignorance I am here to explain why baseball is doing just fine the way it is and should avoid reacting to this.

The largest complaint, somewhat surprisingly, has been using the Astros payroll as proof that MLB needs a salary cap. If anything the low payroll should be a call for a salary floor, but even that is not needed. Baseball is unique in being a major sport that does not have a salary cap with both a floor and a ceiling. Baseball also has the longest run without major strife. These are not unrelated. Baseball's open payroll, albeit with a luxury tax at $189 million (or 9.5 Astros teams), allows teams to get creative with their payroll and operate within their means. The Royals and Rays do not operate in a similar market to New York, Philadelphia, or Los Angeles, demanding that they match payrolls would put a strain on the smaller markets while the larger markets make profits.

Another benefit comes in teams keeping players long term. Ray Lewis notably just capped a 17 year career with the Baltimore Ravens, but aside from quarterbacks star players generally get traded to free agency. An open market entices all players to get their perceived fair share, but the realities of a salary cap limit how often the drafting team can match what the market can bear. Some of you are probably considering the Royals and their long term perception as a feeder system for other teams. I am not trying to say that small market teams do not face their own challenges, just that when they want to get it done it is easier in MLB than other major sports. Joey Votto and Evan Longoria recently signed monster extensions for teams with limited funds. Fans appreciate knowing who will be playing year after year, it brings stability and reinforces the notion of "our team".

The last benefit I will mention is the creative ways teams operate within their means. The Rays are perennial contenders with a shoestring budget. The Royals GM has been telling the fan base for years that they were building through the draft for a competitive window somewhere beginning in 2013-2014, that talent is now at the major league level. The Athletics are determined not to spend heavily until they get a new stadium, that did not stop them from winning the AL West last season. In fact it was only last season when teams on the bottom half of opening day payroll accounted for half (5 of 10) of the playoff teams. Parity is alive and well in baseball. The NBA and NHL's recent strikes were centered on the issue of teams tied to unsustainable markets and the teams were losing money hand over fist. While the Rays are threatening to move due to lack of attendance, no other team is complaining about losing money.

The Astros have a new owner who promised to gut his team, slash payroll, and build in the Rays mold. Let us see what develops. It was not too long ago when the Astros, with the killer B's 2.0, were making deep postseason runs and spending their share. They may not reach the Guggenheim (German for fist-fulls of dollars) heights of LA, but it is more about strategy than the almighty dollar. Strategy has been at the core of what makes baseball fun, there is no reason to change for the sake of conformity.

Friday, February 1, 2013

Extending Youth

Welcome to the extension portion of the Hot Stove season. The majority of top tier stars have signed their new contracts, big name trades have been completed and teams are looking to fill a hole or two with a diamond in the rough minor league invite. It is also time when general managers sit down and try to hammer out an extension or two to lock up their top young talent. In recent years the emphasis on prospects and signing youth to team friendly deals has lead to many signings. Odds are you are hoping your team locks up your budding superstar. Careful what you ask for, you just might get it.

The problem with the modern trend of signing young players to long contracts is that you deal with more uncertainties in the makeup of the player, how they handle the increase in wealth and fame, their ability to become leaders and most importantly their ability to maximize their potential. Yet when it hits and the player and the team click the contract more than pays for itself. Albert Pujols signed a massive 7 year contract for $100 million back in 2004 when he was 24. That deal was a major steal for the Cardinals as they got arguably the best offensive player of the decade for a fraction of what he would have earned on the open market. Since that time the number of big value contracts buying out arbitration years, pre-arbitration years, and a few free agent years has steadily increased. Players trade future raises for cost certainty and teams gamble that the player will continue to produce. While a contract extension sounds good today, be careful what tomorrow might bring.

Tomorrow has come for the Arizona Diamondbacks and Justin Upton. Though just 25 and with 3/$38.5 million remaining on his contact, Arizona GM Kevin Towers decided to ship him to Atlanta as the cornerstone of a 7 player swap. We may never find out exactly what led to the souring of their relationship, but Upton's extension was accomplished by Josh Byrnes, not Towers. If memory serves me correctly, Upton was made a trade candidate as a condition to Towers taking the job.

Labeled a 5-tool talent, the former first overall pick (2007) has already been an all-star and finished 4th in MVP voting in 2011. However, he has been inconsistent from season to season and affordable or not, Arizona was ready to move on. Upton dealt with constant trade rumors, coaching changes, slumps and injuries and still put up numbers 29 other GMs would be happy to have in their lineup, especially when the producer was still short of his prime. Unfortunately, it appears that struggles and inconsistency are more the norm than the 7 spectacular years that Pujols provided the Cardinals.

Buster Posey, Mike Trout, Clayton Kershaw, Bryce Harper, Jordan Zimmermann, and Chase Headley are just a handful of players many consider long term extension candidates. They represent a spectacular list of underpaid rising stars and I would not be against seeing any sign lucrative deals. However, such a signing does not guarantee future success. Posey and Zimmermann have already missed significant time due to injury. Trout and Harper, both 2012 Rookies of the Year, are young and extremely talented. That said there is minimal cost risk to waiting another season or two to see if they are as good as advertised or if they are going to come crashing (relatively) back to Earth. Headley was a pleasant surprise for San Diego last season, but can he reproduce it, or something close to it? Kershaw has been dominant for several years, but it is not a stretch to imagine the Dodgers looking at their rivals in the Bay and what happened to Tim Lincecum last season as giving them a reason to hesitate.

The unifying and unpredictable factor here is youth. The better extensions buy up a free agent year or three. This usually allows a player to get another big contract or a team to better absorb the cost. Who will be worthy of such a contract and who will become next Dontrelle Willis are questions every team must determine. While another season may cost your team a few million more, but, as the Upton trade shows, today's rising GOAT for a team might only end up a goat after all.

As always any thoughts, questions, or opinions are welcome