|A return to normal in 2006? 11-11-05 Part 1|
Contributed by: Staff
Kevin McClatchy recently promised Pirate fans that his team would loosen its always tight purse strings during the coming months, that his Pirates would budget more money for its 2006 players’ payroll than it had in the recent past, money it would spend so that it might field a significantly better or even a winning team next year. McClatchy might even follow through on his promises.
Let’s assume that the Pirates will spend more money putting together next year’s team. (It goes without saying that Pirate fans have good reason to question promises made by the McClatchy partnership.) What, then, should we expect from this pricier team? A winner? A championship contender?
A .pdf version of this article.
I believe the ‘typical Pirates fan’ is someone who neither carefully follows the team nor is wholly aware of the problems which currently afflict Major League Baseball in general and the Pirates especially. The typical Pirates fan is neither a cipher nor greatly informed about the sport. He or she is a fan, but not need not see a psychiatrist about their
fanaticism. Would such a person expect the 2006 Pirates to be a much better team than the 2005 squad? I ask this because Pirate fans now must consider a difficult issue: The McClatchy partnership has recently shown a new commitment to spend more money for its players payroll. It is reasonable to assume the partnership would do so in order to enable the team to win more games than it won in the recent past. Naturally, we might wonder if there is any sense in this splurging on payroll? Should a typical fan place his or her trust in the purchasing power of money? Will the fact that the McClatchy partnership intends to spend more on the team make the 2006 Pirates a better team than its predecessors?
I do believe there is a bit of sense in the effort to win more games in 2006 by spending more on team payroll. But, my belief is a qualified one.
After all, the economically ‘prudent’ 2005 Pirates won a mere 67 games. The very thrifty 2004 team won 72 games. The 2005 team finished in last place in the National League Central Division, 33 games behind the division winning Cardinals. They tied the Colorado Rockies and the Tampa Bay Devil Rays for the second worst record in the Majors. To sink back to this level of ineptitude, the McClatchy partnership spent only $38 M on its player’s payroll in 2005, the third lowest amount among the 30 Major League teams. Having witnessed the McClatchy partnership’s meanness and the unfortunate play of the team caused by their frugality, the Pirates and the team’s fans cannot help but to look upwards and beyond the gutter the organization has called home since 1993, for the team’s fortunes couldn’t fall much father than they did last season, a season much like every other since Barry Bonds left Pittsburgh for San Francisco.
More McClatchy partnership money for players.... A better on-field product.... Who among the team’s fans could quibble with that direction for their team? Who wouldn’t expect a spending increase to help some? If it happens that the McClatchy partnership were to spend more on the Pirates in 2006, as McClatchy promised, if, that is, his partnership reveals a preference for winning more games during the 2006 season while profiting less in the short-term than it would have if the partnership had stood pat on its low-payroll strategy, would the expectations of the ‘typical Pirates fan’ be spot on about the 2006 season? Will he or she see David Littlefield unleashed this winter? Might the team notably improve because the McClatchy partnership chose to spend more money on the team? We might wonder about the kind of improvement we would see next year because, for the Pirates to notably improve their play in 2006, Littlefield would need to acquire impact players. The team has many holes to fill, according to Littlefield: Rightfield, thirdbase and firstbase.
Would the partnership approve a budget that included the money needed to bring Brian Giles back to Pittsburgh? Can we expect Littlefield to sign Bill Mueller or Nomar Garciaparra to play thirdbase, thus solving the gaping hole created by his gifting Aramis Ramirez to the Cubs? Will he sign Billy Wagner to close out the team’s wins? Will he trade for Lyle Overbay, Chad Tracy or Casey Kotchman (my favored acquisition)? That is, would Littlefield sign one or more of the big names who will enter the market this winter while also making a daring trade or two for the kind of young talent the team needs? But, even if he were to manage this feat, a ‘rational Pirate’ fan may yet wonder about the kind of improvement he should expect from these acquisitions? With these new players on their team, might the Pirates finally soar above the .500 plateau under McClatchy’s leadership, which we fans might want to call the McClatchy Line in honor of the man who turned being perfectly average into a Holy Grail for most Pirate fans? Could it contend with the kind of money Littlefield would have at his disposal this winter? Or, would Pirates fans face a disappointing year like they confronted in 2001 and 2003?
I would suggest that Pirates fans — we long-suffering Pirates fans — ought to remain prudent — if not extremely cautious — with the expectations they invest in their team. Opting for a prudent attitude does not imply making a commitment to be negative or cynical with respect to the organization, as partnership apologists are wont to argue. A prudent attitude avoids negativism and cynicism because someone could only be prudent by setting his or her sights on what might feasibly happen and not on what we as team fan(atic)s want to have happen. While devotion to a team might be blind, reason should always remain steadfast in its commitment to comprehend the real as such. Being prudent would thus make one a realist with respect to the Pirates. As a realist, as an individual committed to discovering what will probably happen, what will likely happen given what we know about the Pirates and about Major League Baseball in general, we would begin to answer the questions I posed above with a definite maybe! A realistic approach suggests that a better-funded 2006 Pirates team could win more than last season’s squad. It would be surprising if it failed to win more if Littlefield acquires a few impact players. But, a realistic approach also suggests that the 2006 team might not win enough to hold the interest of the team’s fans beyond the All Star break or even the first extended losing streak of the season. Briefly put, a typical Pirates fan and certainly a reasonable Pirates fan might wonder to what degree will the team improve next year? Would the improvement be a significant one? Would it be worth the money spent on the kind of players the Pirates can acquire to make it happen? These are difficult questions to answer. Their difficulty derives from the fact that the 2006 team could win 13 additional games over what the 2005 team won but that an increase of this magnitude would still fail to put the team over the .500 mark. The Pirates have a long climb to make. The length and difficultly of the climb means that the team’s immediate and long-term futures are not at all obvious and certain.
Before proceeding, it’s worth considering the following: Have I equivocated here, which would surely be a bad thing if I had. My ‘definite maybe’ might be too ambiguous to pass muster as a general answer. A ‘definite maybe’ — this indeed appears to be as equivocal a response to a question as one might expect to find!
In order to determine whether or not I have equivocated, I would need to show that my answer was not just a pile of mush, intrinsically shifty and thus dishonest. If my answer had any of these qualities, one would expect it to obscure essential things and factual truths about the circumstances I want to address. It would perform this obscuring operation by surrounding these circumstances with a façade composed of vague meanings and doubtful references. Does it? I wouldn’t think so. I believe my ‘definite maybe,’ a term which evokes the subjunctive mood, renders my answer an abstractly put but defensible — and thus reasonable — response to the questions I asked. Yet, this claim, if true, does not solve my problem. It fails because I must also admit that using the term makes my reply appear as though I meant it to protect me in some way. The equivocal use would have protected me by providing a weasel worded answer to my questions. Things could turn out one way, but maybe not.... ‘Maybe’.... It certainly can be used as a weasel word! A ‘definite maybe’.... This is just a more complex instance of that faulty type of reasoning. Yet, in this instance, as in many others, my use of the term allows me to accurately represent the situation the Pirates will confront in the coming months. For instance, consider what, exactly, are the team’s short- and long-term plans? Does it even have a plan? Or, is it merely practicing crisis management while taking the profits which accrue to those who own a franchise of a monopoly cartel? These are reasonable questions given the team’s recent history. My ‘define maybe’ would accurately reflect the Pirate’s current situation because using the term refers to the somewhat risky path the team now walks and, to be sure, the problems we fans have when attempting to identify what the team is up to and what it might do in the future. A fan might wonder about the team’s direction because the financial risks the organization now confronts would only be intensified by any attempt the McClatchy partnership would make to build a championship contender in Pittsburgh. These risks are the typical ones specific to any investment. Will the McClatchy partnership lose money in the short-term? Will it wholly lose its capital and end up filing for Chapter 11 relief, as McClatchy suggested it might? These risks appear as such as soon as we ask whether Dave Littlefield might acquire the kind of players the Pirates need in order to contend for a championship. As perverse as it may be, for Major League team owners like the McClatchy partnership, there is money to be made even when they choose to make little or no effort to win. Indeed, thanks to the revenue sharing and luxury tax provisions of the last CBA (.pdf), teams like the Pirates can make more money playing the fool for much of the League than they can trying to win. The ambiguity of my ‘maybe’ thus originates from the rather unique circumstances of the team and the League I wish to address and not from any sloppiness or bad faith on my part.
I believe it’s safe to assume that the McClatchy partnership, like most organizations and individuals, wants to avoid taking great risks when pursing its goals. I also believe it, like most organizations and individuals, wants to overcome whatever doubts it might have about itself, its actions and its environment. It seeks certainty. And it’s certainly the case that the McClatchy partnership has not motivated anyone to label it a ‘danger junkie’ with respect to the strategies it implements and the goals it pursues. Indeed, risk avoidance has been one of its more notable traits. As such and as an organization now facing a difficult future, it’s scarcely obvious to outside observers what the McClatchy partnership could do to cash in on the promises it made to the team’s fans when they, along with the citizens of the region and state, built PNC Park for the team. My use of a probabilistic word like ‘maybe’ thus avoids being mere spin, which is what the use of weasel words mostly becomes in practice. Rather, my ‘definite maybe’ reflects the open-ended but not shapeless future of the team, it reflects a future that need not repeat the past.
Given my argument as I have developed it so far, we should note that it shows the McClatchy partnership facing a dilemma: On the one hand, the partnership could seek to win a championship by building a team with that goal in mind while also working hard to turn a profit? Or, on the other hand, the partnership could seek to maximize its profits by keeping its sights low and thereby avoiding the kind of dangers and uncertainties building for a championship run entails for a low-revenue team like the Pirates?
Which horn will the McClatchy partnership choose? Contention or dumpster diving? Given what we know about the partnership and its past practices, I’d expect that it has already chosen or will chose the safer and more profitable course, a path that must ends with the organization selling a mediocre product to an increasingly credulous public. My position might be a common one but it’s not the only one. John Perrotto believes otherwise. The passage of time and events will soon settle the matter.
My larger argument
To be sure, I need to flesh out my argument.
To begin, the recent (post-2003) practices of the McClatchy partnership have been rather curious, to say the least. They have been so odd that General Manager Littlefield’s peers have sometimes laughed at his efforts while the team’s fans pine for a new owner. They have been such that, as time passed and significant events transpired, it became clear to many Pirates’ fans that the organization had not and would not strive to win a championship of any sort. The reason for making this judgment: The McClatchy Pirates failed to make the moves necessary if the team were to become a robust and effective competitor. An organization commitment to winning has not been a noticeable feature of the McClatchy Pirates. In fact, we might note its existence within the organization by the fact that it refers to no quality whatsoever that we may reasonably attribute to the McClatchy partnership and the organization as a whole. We glean its presence by its absence.
This lack is a considerable one given the weight rooting for a winning and contending team would have for the team’s fans. Cheering for a contender, participating in a championship run, watching one’s hopes as they are fulfilled — these should provide a qualitatively different experience for every fan of the contending team save for the experiences of the fair weather travelers and intrinsically pessimistic of the lot. The hope most fans have for witnessing a championship run or two makes tolerable rooting for the team during thin times. Given the significance of a hope for a fan, we ought to ask: What must the Pirates do to contend in their division and beyond given the nature of the organization and its market?
First, it’s clear the Pirates need more highly talented players. They have a few; they need more. Littlefield admitted as much in 2003 while he was in the midst of jettisoning most of the talented players the team had. One way the team might have addressed this problem would have taken the form of trading veteran talent for prospects. The Pirates could and probably should have traded most of their veterans for as many high-ceiling prospects and good young major leaguers or near-to-the-majors prospects as it could manager. These were the kind of trades the team should have made it dumped salary a few years back. The Giles to San Diego trade provides the obvious example of this kind of trade. Yet, the Giles trade provides one of the few nuggets in a bucket of slag the team acquired since 2003. The Suppan-Sauerbeck for Sanchez ‘trade’ provides the other.
Second, its true that valuable players like Brian Giles are in scarce supply. That’s one reason why they are valuable. Giles was a superstar, one of the game’s best hitters. Consequently, he could bring Jason Bay, Oliver Perez and Cory Stewart to the Pirates because of his talents and comparatively certain production. Unlike Giles, one thing or another tainted Ramirez, Benson and Kendall. All were tainted in some degree by the injuries they had recently suffered and the compromised production these injuries caused. With their injuries and the risks they posed, the return they would fetch could not have been as great as Giles, the superstar, unless, of course, the team acquiring any of the three were to make a mistake. Still, Giles alone brought a budding star outfielder (Bay) and pitcher (Perez) along with a C level prospect (Stewart) to the Pirates. It takes its place along side of the original Giles trade as one of the greatest trades in the team’s long history. So, while a sane person would not use the San Diego trade as a guide to the kind of talent the Pirates would get when the team traded its other veteran players, it would not have been too much to expect more from the trades the team made which included Ramirez, Benson and Kendall. Littlefield failed to maximize the talent he got for these players. In order to maximize the talent each player brought in return, Consider Littlefield’s three major 2003-2005 trades:
Littlefield would have needed to trade his veterans for high-ceiling prospects that were playing in the lower minor leagues at the time of the trade, as Wilbur Miller has pointed out many times. He would have needed to be creative. He wasn’t. Rather, Littlefield seemingly wanted one or two ready-to-play-in-the-majors players in return for each of the three. He was more interested in plugging holes on the major league team than he was in building a contender. Simply put, these trades were salary dumps. Unfortunately, Littlefield got what he wanted. He successfully reduced the team’s payroll. But, he failed to acquire the talent the Pirates needed if the team were to excel on the field. He got low-ceiling players and prospects for his veterans. The Ramirez, Kendall and Benson trades thus provide obvious examples of the kind of trades Littlefield should have avoided: Each failed to bring the Pirates the impact player the team needed.
As the above tables show, Littlefield’s trading track record has been an exceptionally poor one. Most of the players he has acquired in his key trades are now out of the organization altogether (e.g. Armando Rios, Matt Herges, Randall Simon and Benito Santiago) or nearly so (e.g. Ryan Vogelsong, Bobby Hill, Brandon Lyons and Ty Wigginton). Given his record, it follows that, if the Pirates were to mount a pennant run at any time over the next five years, the team’s success would not only be surprising, to put it mildly, it could only be judged a product of good luck or of a sea change in the team’s strategy.
I believe the Ramirez giveaway provides the lens needed to see clearly the Pirates’ strategy at work.
1. Cutting bait: The 2003 Ramirez debacle and beyond The path the Pirates traveled while preparing for the opening of PNC park had the team paying quite well for some of its veterans — for players such as Giles, Jason Kendall, Kevin Young and, notoriously, Derek Bell. Cam Bonifay, then the Pirates’ General Manager, also brought along and bound to the organization the team’s younger players and prospects — players such as Aramis Ramirez, Kris Benson and Jack Wilson. Ramirez and Jack Wilson would eventually become All Stars. In anticipation of the great day to come, the team’s payroll steadily rose from the nadir it had touched in 1997 (see the table below). The Pirates appeared to be on the right path, a path that would produce a championship.
Considered retrospectively and given the terrible record the team compiled during the final years of the Bonifay regime, it might seem surprising to read today a claim that the Pirates did not lack for talent as the organization approached the arrival of the new park. The team certainly had a few players. Still, it also had gaps in the squads it sent onto the field. These holes were not accidents of execution. Rather, they were accidents of design since they were born of the systemic failures that characterized the organization’s draft and development departments. Simply put, during the McClatchy partnership’s tenure, the Pirates failed to sign and develop the impact players they would need to make a championship run. These organizational failures were intensified — but not caused — by the poor luck the team endured at that time. Among these unlucky events we would include the injuries suffered by Benson, Jason Schmidt and Pat Meares. Jason Kendall also suffered another debilitating injury in the first weeks of the 2001 season, an injury that permanently undermined his power but not his determination and ability to remain in the everyday lineup. Bad luck does not exhaust the story, though. The front office made poor decision after poor decision. These also took their toll, and financial worries were often the root cause of the troubled decision. Among these decisions we would want to include trading a talented player like Jose Guillen for a backup catcher; dumping Tony Womack’s salary; failing to identify and use Bronson Arroyo’s talent; mishandling Chad Hermansen and Aramis Ramirez; trading away Chris Young for a player to be released soon thereafter; trading prospects for Randall Simon, a player his team (the hapless Detroit Tigers) planned to non-tender soon after the trade was made; the organization’s ongoing fascination with veterans on the downward slope of their career paths, players like Derek Bell, Pat Meares, Chris Stynes and Raul Mondesi; and the organization’s propensity to focus on what a prospect can’t do instead of what he can. This witches’ brew turned the 2000-2003 seasons into something of a nightmare for the organization. With the talent they put onto the field, the Pirates could neither win enough games nor holler uncle and seek to regroup, for admitting defeat at that specific time would have amounted to designating the city’s wonderful new park a conspicuous insult to the taxpayers of the region and state. During a time when the organization and region expressed their hopes for the future, the Pirates were actually suffering through a dangerous crisis.
I have no doubt whatsoever that things weren’t meant to turn out this way. Who in their right mind would choose failures as annoying as these would prove to be? Who would insult the team’s fans in this way? Who, that is, would build a Taj Mahal instead of a winning team?
In fact, the construction and debut of PNC Park was intended to generate a renaissance for the struggling organization and, to a far lesser degree, for the city and state that would pay most of the bill for the costly stadium ($262 M). PNC was supposed to contribute into the revitalization of Pittsburgh’s North Shore while thereby generating a stronger tax base for the city, county and state. It would showcase a city that has yet to recover from the absolute decline of the regional manufacturing economy. Apart from these general economic benefits, the stadium was also pitched to the locals as a resource that would provide the McClatchy partnership with the financial wherewithal to field competitive teams (see, for instance, this, this, this). For Pirate fans, then, PNC would amount to more than a pleasant place to watch a game. It was meant to redress past grievances and to heal the wounds which accumulated after 1992. It would accomplish this by given the region what the teams of the early 90s couldn’t — a championship. The failures of the Leyland’s best teams remain a sore point for many Pirates fans. Yet, their failures took on a greater significance with the teams that followed. Although Pittsburghers seemingly hated Barry Bonds with an unholy and irrational passion; the failure to keep a player of Bonds’ stature and abilities, while also losing players like Bobby Bonilla, Doug Drabek and John Smiley, signaled the onset of the team’s most recent Dark Age. But righting any or all past wrongs did not happen after PNC opened. Rather, and more importantly, new injuries were inflicted on the team’s fans. The Pirates sent losing team after losing team onto the field. Eventually, the McClatchy partnership would claim the Pirates lost $30 M from the time PNC opened to the 2003 season. Even if we assume McClatchy was telling the truth about the team’s losses (he defends himself here and here), it remains the case that the Pirates floundered in their costly new stadium. Moreover, the North Shore development projects fared about as well as the Pirates had. These failures created an aura for PNC. Soon, the stadium itself became something of an elegant but expensive embarrassment for the city and its citizens, for how happy could any ‘yinzer’ be when he or she could not avoid paying for the best park in the major leagues while watching his or her money go to waste on an organization as inept as the McClatchy Pirates?
The McClatchy partnership decisively addressed these organizational failures during the 2003 season. It was then, when the team floundered during a season in which McClatchy had silently hoped the team would finally contend for a division title, that the partnership chose to liquidate some of its costly assets. This liquidation sale took the form of player trades. Littlefield jettisoned players like Brian Giles, Jason Kendall, Aramis Ramirez and Kris Benson. As I stated above, I believe the 2003 Cubs trade provides a lens through which to view the organization strategy then coming into view. Aramis Ramirez was a very young and talented hitter who suffered through the growing pains that young players often experience. Yet, by 2003, Ramirez was no longer a risky proposition as a major leaguer. He had already had his breakout season in 2001, when he was 23 years old. He compiled an OPS+ of 125 and an EQA of .291 during the season. Moreover, he played thirdbase, a position for which the Pirates utterly lacked a prospective replacement. They still lack such a player. Ramirez, for his part, looked poised to be a star. He easily was the best hitter the Pirates minor league system had produced since Barry Bonds came to the majors in 1986. Ramirez was as near to being irreplaceable as a player could be. Yet, he was not that irreplaceable that Littlefield wouldn’t trade him for virtually nothing. I say he traded Ramirez for nothing because Littlefield not only traded Ramirez to the Cubs, he also traded Kenny Lofton and cash for a cache that included Jose Hernandez, Bobby Hill and Matt Bruback. Lofton alone might have commanded that return, since the Cubs desperately needed a centerfielder, although the Cubs may have wanted the Pirates to take Hernandez as a throw-in because the Cubs who no longer needed him on the field and could have use the money they had budgeted for Hernandez’s salary to pay Ramirez. The gist of the problem revealed by the Cubs’ trade of 2003 is this: Littlefield gave the Cubs Ramirez and cash for the right to not pay Ramirez what remained of his 2003 salary and the whole of his 2004 salary! In return, the Pirates got three players the team had no use for. Ramirez became an All Star, as expected, and Kenny Lofton nearly helped the Cubs win the 2003 NL pennant. Much of baseball laughed at the Pirates and their fans while most Pirates fans wanted blood while McClatchy claimed the team had been losing money.
The specific reasons that prompted the McClatchy partnership to trade away the team’s veteran talent remain obscure to this day, although we have no reason at all to doubt McClatchy when he asserted that he would not ’continue to blindly write checks for unproductive players’. One reason they remain obscure is that it’s just so hard to believe a Major League Baseball owner when he claims he’s losing money! Why, for instance, do franchise values and revenues climb while teams still claim they lost money? Why do teams lose money when revenues markedly increase? What is not difficult to identify is the strategy the McClatchy partnership implemented to get its finances in order. The team would spend just enough money on its players to remain a credible major league franchise while simultaneously taking as profit the money due to it from Major League Baseball and according to the 2002 Collective Bargaining Agreement. We know the McClatchy partnership took money as profit because McClatchy has confirmed for us that the team now operates in the black. Once the organization committed itself to fielding only inexpensive teams, teams that would produce in a degree and manner equal to the money the organization spent for its players, and once it chose to build teams which addressed its present needs instead of building for a championship run in the future, it was at that moment that the McClatchy partnership established with great certainty that it strongly preferred to profit in the short-term by selling a mediocre product to the team’s fans and by taking handouts from Major League Baseball instead of staking itself to winning or losing over the longer-term and to profiting (or losing) in a grand way at some point during that indefinite future. As the table below shows, the post-2003 Pirates committed far fewer dollars to the construction of their teams than they had spent in the previous years. Yet, the rest of the league saw the average team payroll increase. So, we must ask what did the McClatchy partnership do with the money is saved? It put its money where it thought best: In the pockets of the partners.
The following charts illustrate well the distance between the Pirates and the rest of the league.
Why would a Pirates’ fan be interested in the maximum payroll during a given season? Why should he or she care about what the Yankee’s (most of the time) pay for their players? How much does the maximum payroll affect a team like the Pirates?
Any significant allocation of money to the players by one of the Pirates’ competitors affects the Pirates by definition. It increases, decreases or maintains a specific salary rate for a specific level of production. So, players of Alex Rodriguez’s strip earn about $25 M per year, which effectively them out of the Pirates’ market segment.
2. The perennial ‘Drive for 75’
Not long after the 2003 season concluded, I dubbed the Pirates post-2003 strategy the ‘Drive for 75.’ I discussed some of its features here, here and here while Russ Steele independently affirmed and amplified a few of my main points here. Wilbur Miller’s take on the Pirates to also strongly influenced my analysis of the McClatchy Pirates.
The ‘Drive for 75’ strategy refers to the McClatchy partnership’s attempt to reduce its players payroll expenditures while also providing a product (a Major League Baseball team) that would play well enough to maintain fan interest in the team (as measured by team attendance). What is the purpose of the ‘Drive for 75’ strategy? Simply put, the ‘Drive for 75’ strategy seeks to generate something like a ‘steady state’ condition for the organization. Reaching something like 75 wins would help to realize that steady state. It would make probable the kind of attendance (about 1.5 million fans per season) the team would need to turn a profit, assuming, of course, the team receives money transfers from the league as it has for over a decade. Given a stable revenue stream, cost certainty and the monopoly it has as a provider of Major League Baseball to Western Pennsylvania, the partnership’s inputs (investment capital) and outputs (profits taken at a given rate of return) could and probably would remain constant or nearly so as time passed. In fact, the Pirates averaged 1.68 M fans per year since the 2003 watershed season. It averaged 1.72 M fans per season since 1996, the partnership’s first year at the helm, and 1.64 M per season when the outlier year of 2001 is removed from the tally. To put the matter into different terms, stability this system generates would only reflect the decisions made by the partnership, unless, of course, an external shock (a strike or lockout, a new CBA, an upsurge of local consumer dissatisfaction, a national recession, etc.) undermined the strategy. Given this stability, the ‘Drive for 75’ strategy should be nearly riskless and profitable for the partnership over the short-term. It should also be nearly riskless and profitable over a longer-term given the absence of any significant change in the team’s economic environment.
Dave Littlefield signaled the implementation of the ‘Drive for 75’ strategy in 2003 by nearly giving away most of the team’s costly players. The fallout from the dumping spree was immediate and raw. The backlash should have surprised no one. In this the Pirates merely transferred that money that had been budgeted for the players (payroll) into the deep pockets of the team’s owners, McClatchy’s protests to the contrary notwithstanding. Hence, the importance I attribute to the 2003 Cubs’ trade, as discussed above. Aramis Ramirez was not so expensive or such an obvious failure when on the field that the partnership could not and should not have kept him a Pirate. Yet, the partnership paid the Cubs to take Ramirez off their hands! He was traded because the partnership preferred the cash they saved to holding the contract of a quality Major League thirdbaseman. The fans reacted much as one might expect.
At the time, the Littlefield sold the team’s salary dumps to the fans as a way station along the path to leading to ‘financial flexibility.’ He was not shy when he made this point: “We need more players,” General Manager Dave Littlefield said. “We need more financial flexibility. We need to allocate our dollars to players who are performing.”
What, then, could ‘financial flexibility’ mean when Littlefield applied the term the to the Pirates? It was clear then just as it’s clear now that the team needs more (impact) players. Yet, what role would the partnerships financial flexibility play when Littlefield went to acquire more players? To answer that question, we should begin by noting that the McClatchy partnership failed to reinvest the monies it saved on payroll in the team or in the minor leagues, although McClatchy had gone on the record to claim that the team did put a part of the money into player development. here and here. Rather, having confronted a steady stream of criticism, McClatchy eventually admitted that the partnership paid down the team’s debt. This use of the savings only revealed the ‘time preference’ of the partnership for the profits it would take from the team. The McClatchy partnership merely postponed the moment when it would pocket the profits it realized when it reduced the team’s payroll, presumably to that time when it sold the team.
Is it not the case that any team’s fans or Pirates’ fans care more about their team when it makes a championship run than they would when it makes incremental improvements while remaining near or on the bottom of the pile? Andrew Zimbalist suggests (Zimbalist 2003, 38) that the fans do care about championship runs. If so, does this not suggest that the fans make a distinction between contenders and non-contenders, a judgment that is reflected in the attendance figures of the given teams?
Why, then, would the McClatchy partnership implement a strategy meant to win a mere 75 games or thereabouts? Why cause diehard Pirates fans to enrich the makers of Prozac, Jim Beam and Iron City? Why would he break with his public and the trust placed in him by choosing mediocrity?
Well, first of all, the Pirates have seldom exceeded 75 wins in a season during McClatchy’s tenure. In fact, it has met or topped the 75 win mark only three times since 1996, the McClatchy partnership’s first season at the helm (taken from the Pirates’ page at Baseball-Reference.com), as the following table shows:
A sorry record indeed. The Pirates have had only two top half of the division seasons during McClatchy’s tenure. The team has never made the playoffs. It has only threatened to make the playoffs once since 1996. And McClatchy was once thought to be the savior of the franchise by so many Pirate fans! Struggling for mediocrity — that is, for an 81-81 record — surely does provide a difficult to achieve goal for the hapless — and the Pirates are hapless if they are anything.
Second, the team faces a daunting cost of winning vs. profits tradeoff. Baseball is a child’s game. It is meant to be played for fun and fitness. Yet, Major League Baseball is a rich man’s game. Most (all?) who play it do so for pay or profit. Those who play for profit have little choice but to take out more than they put in. Major League Baseball teams are, without exception, costly investments. If anyone doubts this point, if it might seem to them that this or that owner is a sportsman and gentleman, they can adjust their perception of the game and the world at large by considering one simple fact, namely, that Major League Baseball as a whole is now valued at an astonishing $9.96 B while the value of individual franchises average $332 M [according to the business of baseball page at Forbes.com]. It thus takes an enormous amount of money to make millionaires out of young men with a talent to play a simple game. Given this immense sum and given the fact that Major League Baseball and its teams will confront some of their employees while their people are free agents seeking work in relatively free markets, it follows that there will always be a subtle or not so subtle push towards higher payrolls. Under these conditions and with a tendency towards wage inflation, it is not at all surprising that winning rates are strongly and positively correlated with team payroll expenditures. So, the more a team spends on its players, the more likely it is to win a greater number of games [on this point, see this article for an argument with evidence demonstrating this fact]. A team that wants to win with consistency and without also risking failure must pay to have that capacity. Major League Baseball is a rich man’s game because it costs a lot of money to buy into the game and a lot of money to play the game well. This belief — ‘that higher quality costs more than lower quality’ — is a strong one, and is ‘held by sports fans, owners, and economists’ [see Glasnapp, 2004, p. 25]. If team payroll and winning percentage are related in such a way that any team that plans to win consistently and at a high rate will need to pay dearly for the capacity to achieve that goal, this fact does not imply that there is a 1:1 correspondence between the money a team spends on its payroll and the wins it gets for the money it spends. For instance, let’s say that a baseball team spends $10 and wins 10 games. Given the money spent-wins gained correspondence, does it follow that a team which spends $20 will win 20 games? No. It doesn’t. Nor does it mean that a team which spends $5 will win a mere five games. So, even though a team’s winning percentage depends on the money it spends on its payroll, the relationship between the two variables is far messier than that suggested by a 1:1 ratio. In fact, in professional sports in general and in Major League Baseball in particular, the payroll-winning percentage relationship is subject to the law of diminishing returns.
What this means for a professional baseball team is this: While having better and costlier players increases a team’s chances of winning (the team probably will generate a higher winning percentage), the fact that these better players tend to be rare in number and thus costly in price generates a mechanism that will cost a team more at the margin to acquire the players needed to win another game than it would cost that team to win another game before it reaches the margin. Under the normal conditions specific to a competitive market and to team sports, the relationship between payroll and winning percentage produces wage inflation throughout the league, as noted above. This inflation is very noticeable among the rarely skilled players, who are nearly unique, irreplaceable and always more expensive than their alternatives. This wage inflation also imposes a set of difficulties on the lower-revenue teams. They will find it difficult if not quite imprudent to vie with their higher-revenue for these rarely skilled players. A contract that for them might be a great financial burden could be little more than a trivial matter for another team. Hence, the massive payrolls of deep pocketed and competitive teams like the Yankees, Red Sox, Mets, Dodgers, Cubs, etc. They willingly pay dearly for those last few wins they might need to secure a championship.
In general, then, teams which spend more for their players tend to win more; teams which spend less tend to win less. The word ‘tend’ is yet another weasel word. What it means in this instance is: Those Major League Baseball teams which choose to spend more on player payroll than their competitors will probably win more games than their thrifty competitors. They will also be better placed to master the crises (injuries, player turmoil, underperformance) produced by their team. They might be so well off that they might even contend for a championship. The Yankees and Red Sox provide notorious and contemporary examples of teams that succeed at spending a lot to win a lot. They are not the only or most obvious examples. Wayne Huizenga’s 1997 Florida Marlins and Jerry Colangelo’s 2001 Arizona Diamondbacks won championships largely on the basis of fat wallet method of team construction. They certainly spent a lot and won it all as a consequence. Two conclusions can be drawn from these considerations: First, ‘The relative playing strength of a team depends on the financial strength of the team and the owner’ [see Scully, 1995, p. 25]. Second, financially weak owners rarely contend for championships.
Is there a causal relationship between baseball payroll expenditure and team winning percentage? Would the Pirates win more if Mark Cuban bought the team? Maybe, for, in principle, we cannot rationally make that claim since, as we know, correlation does not prove a causal relationship exists, as any basic statistics text makes a point to tell us. Even finding that two variables are strongly correlated does not thereby indicate the existence of a causal relationship between the two variables. Thus, if a team chooses to spend more money on its player’s payroll than it had in the past and than its competitors will spend, that is, if a team opts to win and backs up its choice with its wallet, that decision alone need not result in a team that wins more than its past incarnations had or more than its competitors will. And, it certainly does not mean that this willful team could even win a championship of any sort. The extra money this team spends could just go to waste so far as improving the on-field product is concerned. If, therefore, spending more does not cause a team to win more games when compared to its past and its competitors, the explanation for this disconnection between a team’s spending and winning rates will be found in the other factors at work in Major League Baseball.
3. Some evidence
Do I have evidence to support my argument? Yes. Some ad hoc evidence:
For instance, the Mets and Dodgers — especially the Mets — spend generous amounts of money on their player’s payroll. Both teams are high-revenue organizations located in exceptionally large markets, New York and Los Angeles. If they can win, they are assured of large attendance figures and have healthy television contracts. Yet, these days, they rarely compete for Division championships, let alone a World Series title. Only the Mets made it to the World Series (2000). They lost to the Yankees, another high-revenue, large market team. It’s also noteworthy that both franchises have had chaotic and even bitter ownership and managerial squabbles that have led to changes in personnel. The following table shows the high cost some teams will pay to win.
The Mets’ payroll increased 399.6% during since 1996. The Dodgers’ payroll increased a mere 214.9%. Both paid out slightly more than $.75 B to their players since then. Yet, each team only went to the playoffs twice during the relevant period. On the other hand, they have even had teams that collapsed on the field while management was paying large salaries to unproductive players. Clearly, the Dodgers and Mets provide noteworthy examples of a team that mostly unsuccessfully spent a lot to win a lot.
There are, then, other factors at work. Some teams are efficient; others are not. For instance, if we want to identify an efficient team, consider the Pirates! The Pirates tend to generate more wins per dollar spent (as per Doug Pappas’ marginal dollars/marginal wins) than most teams do.
Presumably, ‘efficient teams’ like the Pirates spend their money wisely, or at least they use it ‘wisely’ relative to the winning rate they seek to achieve.
Similarly, some teams are unlucky; others are not. The lucky ones avoid injuries; the unlucky ones do not. For instance, the Dodgers were poised to compete for the NL Western title this past season. But, a rash of injuries scuttled their season. Eventually, the team forced its rather successful manager, Jim Tracy, to leave the organization. His boss, Paul DePodesta, soon followed.
Some teams, like the Pirates, are incompetent; others are not. Incompetent teams chose faulty strategies or they poorly implement their plans even when those plans would have proven viable had the team been competent. Thus, Pirates fans saw the team’s ‘Drive for 75’ strategy fail in 2005.
Some teams, the Pirates once again, just don’t try to win, as Andrew Zimbalist suggests here. That’s one conclusion that can be drawn from the McClatchy partnership’s ‘Drive for 75’ strategy. The partnership prefers to maximize the profits it takes from the franchise instead of maximizing the winning percentage generated by the team it puts on the field. It would rather win about 75 games every year, maintain attendance at an acceptable rate and take money transfers from Major League Baseball than it would stake a claim to a championship by spending more money for its players, increase revenue by building the team and developing the markets in which it sells its goods. The ‘Drive for 75’ strategy wishes to minimize the risks involved in player acquisition by keeping team payroll costs low while simultaneously winning just enough games to ensure the revenues taken from the partnership’s investment are sufficient to turn a profit. The McClatchy Pirates has often proven to be an efficient winner (losers) while simultaneously being incompetent slackers as well! They prefer profiting in this way because, as we have seen, spending a lot of money, comparatively speaking, on player’s payroll is an insufficient condition for fielding a winning team.
Some teams spend but don’t win. Some teams win without spending much. That is the risk involved in fielding a Major League Baseball team. The risk is especially acute for the low-revenue, small-market teams. They can’t afford to fail greatly too often. Yet, teams also get what they pay for because team winning percentage correlates with payroll expenditure. They can increase the probability that they will field a winning team by spending more on their players’ payroll. We may reconcile these two claims by noting that there is enough slippage in the relationship between money spent and winning achieved that some stingy teams do win and some spendthrift teams manage to lose (or lose more than one would reasonably expect given the amount of money they put into their payroll). It thus follows that spending a lot of money doesn’t even amount to a necessary condition for fielding a winning Major League Baseball team. Organizations like the A’s, the post-Huizenga Marlins and the Twins demonstrate this point quite well. They spend far less than others yet continue to win at a comparatively high rate. They contend for and win championships. The Marlins even won the World Series in 2003.
If spending a lot of money on players’ payroll is neither a necessary nor sufficient condition for fielding a winning team, it does not follow that players’ payroll is irrelevant. Having the money to spend when it is wise to do so is a crucial resource a team must have if it is to remain a competitive Major League franchise. Apart from a copious supply of cash, a baseball team also needs something we might call ‘baseball savvy’ if it is to consistently field a winning team — contenders. Billy Beane’s Athletics’ and John Schuerholtz’s Braves now stand as the two best organizations in baseball. They consistently win but they rarely spend an extravagant amount of money to do so. Consider their records since Beane became Oakland’s General Manager.
Yet, the A’s win despite their low payroll while the Braves have created a dynasty while maintaining a stable payroll.
The A’s and Braves’ thrive largely because they have ‘baseball savvy.’ What is baseball savvy? We may define it as the skilled individuals and competence one can find in some organizations. Savvy teams evaluate talent better than most of their competitors. They act decisively and will take risks in order to win. They certainly do not win because of their fat wallets. They win because they make far more successful than unsuccessful decisions. Given their success, these savvy teams provide the models which most of their competitors strive to emulate. Indeed, most teams must copy savvy organizations like the Braves and A’s because they can’t afford to copy the high-revenue, large-market, big-spending teams. Only the Red Sox, Mets, Cubs and Dodgers can reasonably hope to emulate the Yankees. Only the Red Sox have won a World Championship in the recent past.
If money alone cannot effectively buy baseball happiness — which is to say, if it can’t just command a championship winning team into being because it is money and such a team is for sale — it remains the case that a team’s fans can still hope that the free agent market would affirm their demands for a pennant winner by supplying numerous high-quality players from which their GM could build their team anew. As the hot stove league unfolds, might we Pirate fans expect our team to sign the kind of free agents the team needs to excel during the 2006 season? As a matter of fact, the prognosis is not good. First, this is not a strong free agent class, as might conclude after checking a list of this year’s free agents. Nor will Littlefield have the kind of money it takes to top feed from the talent pool. His nut tops out at about $49 M. Third, it’s uncertain whether talented veterans would choose to play for a rebuilding team like the Pirates if they had other and better options available to them. Why would they play for a team that never wins or, for that matter, a rebuilding team? Given these impediments to success, Littlefield should find it tough going in the free agent market this year, just as he has found it to be for the past few seasons. So, for the fans who want to root for a championship contender, its not at all certain whether Dave Littlefield even believes he will find the kind of players his team needs during the 2005-6 free agent signing period, the kind of players he needs to build a winner in Pittsburgh for the 2006 season and beyond. We may doubt that he has this belief given the rather instructive exchange he recently had with Ed Eagle: MLB.com: You have quite a busy off-season ahead of you, Dave. How do you rank your priorities for the coming months?
Littlefield: We know, in general, that we need to strengthen the offense — specifically looking at right field, first base and third base as the areas to strengthen. We’ll consider trades and free agent signings and obviously take into account what we have internally, both in the Major Leagues and the Minor League sides.
We also feel like we need to strengthen the right-handed side of the bullpen. We’ve got Salomon Torres coming back, along with some others, but we think that we really want to try to strengthen that area, also.
So far, so good. And yet, Littlefield goes on to state:
MLB.com: The free agent market is considered by many to be relatively thin this winter. How much of a concern is that to you, knowing the needs [for a stronger offense and for a first baseman, third baseman and right fielder] that you have just mentioned?
Littlefield: I think every year when you evaluate the free agent market and people evaluate it as strong, weak or somewhere in between, if you look at the previous year you will find that there were some good players who came out of that crop that weren’t necessarily the highest-rated from the masses. There are a lot of examples over the years of guys that performed very well. We’re not only looking for the big names who have maybe produced recently, but maybe some guys that will be bouncing back.
So, Littlefield will look for a bargain free agent or two (e.g. a Reggie Sanders, Matt Stairs or Salomon Torres) in the coming months! I wonder if he believes his will be a unique strategy? I ask this rather scornful question because which team, apart from the Yankees, consistently finds itself so well-healed financially that it may concern itself mostly with the quality of its players but not much with the price it will pay for the team it fields? Even the Yankees face budget constraints (as we saw with Carlos Beltran), and will bargain shop (e.g. Tony Womack) from time to time. The Yankees, like everyone else, lack an infinite amount of money to spend. The Pirates — or Littlefield — face severe budget constraints. Given the presence and intractability of these constraints, Littlefield can only bargain shop (bottom feed) when he searches for free agent help. Indeed, the Pirates are so cash strapped that it even needs revenue transfers from teams like the Yankees in order to field a viable major league team while also turning a profit. Naturally, it is due to these constraints that the Pirates are not stocked with obvious Hall of Famers (e.g. Alex Rodriguez, Derek Jeter and Randy Johnson). Rather, the Pirates mostly field replacement level, rookie, prearbitration and inexpensive veteran players. For the Pirates, these players aren’t bargains per se. They are necessities. If Littlefield intends to build a championship contender, he likely will do so through the first year player draft and through clever trades.
Yet, it is quite natural that teams and their fans are drawn to the well-known players in the market — to the ‘big names.’ The Pirates and their fans are no exception to this rule of thumb. When fans speculate about player acquisitions, they tend to focus on these well-known players. Even Pirate fans fall prey to this kind of wishful thinking, although years of rosters born of poverty should have cured them of this habit. These players are well-known mostly because they performed well in the past. They are or were stars or long-time starters in the league. Their history, along with the fact that their past performance is a known entity of a sort, also tends to (but does not necessarily) make them a safer bet for the team signing them to a contract. By ‘safer’ I mean that they are more likely to produce at an adequate and predictable rate than a less heralded player who might lack an extensive track record or whose track record is a poor one. The former are ‘proven’ veterans, as the common term would have it. A team can count on them. They will produce much as they have in the recent past.
Now, I believe it’s uncontroversial to claim that sensible ‘risk management’ provides a meaningful goal for any baseball team which lacks an infinite supply of money. (By the way, they all do.) By risk management I am referring to an organizational capacity and thus a strategy meant to reduce the amount of uncertainty and possible harm the will team face during the course of a season and beyond. By ‘sensible risk management’ I am referring to a ‘feasible’ (or realistic) strategy meant to reduce the uncertainty a team faces. That said, we should remember that risk can never be wholly avoided. It can only be managed. We may thus define a ‘feasible’ strategy as one that will probably enable the organization to achieve its chosen goals.
Given these definitions along with the general argument developed above, what bearing would risk management have on the moves a baseball team would make? How should we assess a team given the risks it faces? First of all, we can say that, when shopping for free agents, a team will tend to get what it pays for so long as it avoids taking obvious risks. Given these considerations, I believe it is clear that, if some free agents were to present themselves as bargains for a team like the Pirates, which is supposedly too cash-strapped to bid for the better, safer and thus better known players, it follows that these players will probably also carry with them a great deal of risk too. The risk, of course, would be that these putative bargains would collapse at some point during the life of their contract, that they would fail to produce, that they would drag down the team and embarrass the fans. Chris Stynes, Randall Simon and Raul Mondesi provide the most compelling examples of this strategy failing to produce acceptable results for the Pirates. Benito Santiago also stands out in this regard. Their failures were rather predictable. In fact some fans, a part of the ‘mass’ Littlefield speaks of in his answer to Eagle’s question, had no trouble at all identifying Stynes, Simon, Mondesi and Santiago as probable failures. If some fans could know that the Pirates were making a mistake signing these players, why not the General Manager and his scouting department? In any case, we should conclude that these players were not bargains at all — and that they should have been identified as such by the baseball professionals running the Pirates. We should also conclude that the ‘big names’ Littlefield alludes to above mostly function as red herrings for the fans of the team. They are good and nearly risk-free. They are red herrings because the Pirates won’t sign any of them. The team just can’t afford the ‘big names’ when these players can still play worth a damn. If the Pirates fail to spend the money on these ‘big name’ free agents, if the team refuses to do anything but to look for bargains in the free agent market, then we fans should expect the team to fail to acquire the kind of players it needs this winter. Instead of signing the players it needs, the team will merely sign the kind of players it can afford. It appears Littlefield knows this already.