Finance MLB Uncategorized

Eating cash

Major League teams are electing to eat huge dollars rather than playing sub-par players.

Eating cash is the new eating crow.  I am not sure when the tide turned and teams decided it was better to eat cash and release or trade a player rather than running him out day after day (or start after start) to suffer the indignity of a deal gone bad.  But it sure seems as if teams are no longer afraid of those choppy waters.  This phenomenon reared its head a few times in the past few weeks.  To wit:

After an on-radio tirade by the team’s general partner, Padres’s GM A.J. Preller thought it best to rid himself of James Shields.  The problem, Shields is still owed about $58M (from the 4/$75M deal he signed last season).  The White Sox, exerting great leverage, required the Padres to eat $31M to take Shields off their hands.  The ChiSox got an innings eater at $7M/year for the next three years.  (Don’t judge the bargain too soon: Shields gave up 7ER and 3 HRs in 2 innings in his South Side debut.)

Last week the Dodgers did a two-fer: First they released Alex Guerrero.  The Dodgers finally resigned themselves to the idea that this was just a bad deal for a bad player; and there is plenty of blame to go around.  Even while playing shortstop in Cuba, the scouts felt that he didn’t have the skills to play that position in the big leagues.  The Dodgers gave him some work at second base, but never enough reps to become proficient (that is partly due to emergence of Dee Gordon in 2014); and then they moved him around the diamond (3B, 2B, LF, RF) like it was musical positions.  Unfortunately for both the player and the team, the music has stopped.  Back in 2013 the front office thought it made sense to take a 4/$28M risk on a mid-level hitter with no real Major League-caliber defensive position.  Now the Dodgers are forced to pay about $7M to make this mistake go away.

But Guerrero is a rounding error compared to the debacle that is and was Carl Crawford.  With the hand-writing on the wall for seasons, the Dodgers finally bit the bullet and ate the remaining $35M on this deal.  Red Sox fans rejoiced when the Dodgers took over this $142M albatross in 2012, and now the Dodgers are left holding the bag.  Time will tell if Crawford can ever again be serviceable Major League player, but he will still be paid like one through the end of next season.

These Padres and Dodgers are also linked in ways other than the 5 Freeway and the NL West.  When the Dodgers dumped Matt Kemp on the Pads before last season, they agreed to pay $3.5M of the $21.5M Kemp is entitled each year through the 2019 season.  However, when (if?) the Padres dump Kemp on some other unsuspecting team prior to the August 1st trade deadline, it seems pretty clear that they will have to eat some money.  Thus, there is a great chance that, come August, Matt Kemp will be wearing yet another uniform and getting paychecks from three different clubs.

One team unwilling (yet) to eat cash, and choosing instead to eat crow every other day or so, is the Philadelphia Phillies.  They still owe Ryan Howard about $16M for this season, and then $10M to buy out his option for 2017.  Rather than release a fan favorite (?) and someone who has meant a lot to the team and the community, they give Howard spot starts and pinch-hitting opportunities.  This is how has that worked out: 9 HRs, 9 singles, .150 BA, .559 OPS, and strike outs in 1/3 of all plate appearances.  There is no sign that Matt Klentak or the owners are willing to embarrass Howard by releasing him; they would rather embarrass him by allowing him to hit.

Of course, as I have written previously, the grand-daddy of all “eating cash” deals is Josh Hamilton and the Angels.  The moment the Angels shipped Hamilton to the Rangers, they agreed to pay $73.5M of the $79.5M Hamilton was due through 2017.  It was announced today that Hamilton had surgery to totally reconstruct his ACL; he may never play again.  Which, insofar as he was traded in-division, may be the best news the Angels could have received.

As television deals get richer, and as revenues continue to grow, and as GMs still cannot help themselves from making long-term, dumb (?) deals (see Greinke, Zack; Pujols, Albert; Cabrera, Miguel; Sabathia, CC; Sandoval, Pablo; Ramirez, Hanley; Ellsbury, Jacoby; etc., etc.), in the years to come you may see more and more teams electing to eat cash rather than eat crow.

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