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Loosening the Purse Strings

November 27, 2012

Today a report surfaced from Peter Gammons that the Tigers owner Mike Ilitch spoke with super(!) agent Scott Boras about free agent closer Rafael Soriano. Suddenly the chatter took flight. The conversation on Twitter went back and forth between the value of closers in general and the value of Soriano in particular.  One other theme came to the surface. People were concerned that Ilitch was speaking to Boras and would somehow get duped into overpaying for Soriano.

There are two variations on this concern. One, that Ilitch is simply under the charm of Mr. Boras and will do his bidding. Two, Ilitch is going to overpay for free agents in general.  The first concern is unfounded. The Tigers organization has very shrewd people at the top and Mr. Ilitch hasn’t made a fortune by making a habit of mismanaging money. The second concern goes hand in hand with signing top notch free agents. Perhaps you heard last year that the Angels overpaid for Albert Pujols and C.J. Wilson, the Tigers overpaid for Fielder, and the Rangers overpaid for Yu Darvish.  Sure, the numbers on these contracts seem outrageous, but guess what? The teams need to pay that to obtain the services of the free agent.

Now, you can make the argument that signing free agents is not an efficient way of adding top talent and you would be right. But I have news for you. The Tigers have become a team that is less concerned with efficiency and is going with unadulterated brute force.

Now tell me this, why would you be against signing Soriano? Any answer that you might give would not come down to the value of Soriano himself, who is a very good pitcher.  Your answer would compare his pay to that of others who we might be able to sign.  We are talking about the opportunity cost of signing Soriano.

I get this argument up to a certain point. To illustrate, the Tigers last off season could have chosen to non-tender Delmon Young saving 6.75 million and could have used that money to sign Josh Willingham at 7 million. Wow, that would have been a hell of a deal! Smart.

Unfortunately not all trade-offs are shaped in this way. If the Tigers had not signed Prince Fielder last year would there have been a way to move his supposed “freed up” salary to sign other guys to earn more wins than he did? Maybe, but it is more difficult to see, before the fact, exactly where.

Also, what is the upper limit to the payroll? We don’t know. Maybe there isn’t one. The whole concept of opportunity cost hinges on there being mutual exclusivity.  Ok, we aren’t Dodgers with a new fat TV contract, but Mr. I does have some money and is eager to see the team win.  What if an extra 20, 30, dare I say 50 million per year wasn’t much of a problem?

Tigers watchers are concerned that adding free agents now will hamper our ability to sign Verlander and Cabrera in the future.  Do you not think this is something that Dave and Mr. I have thought about already?!  In the stock market information that might affect a company’s stock price, if available to the public, is said to be “baked into the cake”.  That is to say, people have already adjusted to the existence of this knowledge. I wonder if JV’s and Miggy’s possible extensions are “baked into the cake” already. Dave and Mr. I know that day is coming when they are going to have to pay those guys more and are preparing for it.

All over major league baseball payrolls are expanding and the Tigers will be no different. For the 2013 payroll Tigerbot1 over at blessyouboys.com put together this projection.  Before signing Torii Hunter we’re looking at 127.8 million and with Hunter on board we are at 140.8 in 2013. Let’s play pretend and give JV and Miggy each 10 million dollar raises next winter to extend them. We are looking at a 2015 payroll of 160 million, maybe 170 million depending on who else we keep.  Is this doable? My hunch is by 2015 this might not even put the Tigers in the top 5.

What about Sanchez?

What about about him? Sign him too! Why not?!

But, but Mr. PCB! What if our payroll goes to 200 million!?! Then what?

Sweet! I’m all for it.

You see, what you are really afraid of is not the fact that we are spending so much money on free agents, you are worried that our spending on free agents will stop. Sure, this is a legitimate concern that hinges on the fate of Mr. I. But right now there seems to be no stop. People were concerned that signing Martinez would hamper getting future free agents and then we signed Fielder. People were concerned that signing Fielder would leave us without options and we signed Hunter. Perhaps signing Hunter will keep us from signing another strong free agent next year or extending JV and Miggy, but I strongly doubt it. Regular season attendance is strong, the playoffs add another source of revenue, and all the people coming downtown fuels income for Mr. I’s other ventures  as well. The economy is recovering, the value of the franchise is growing, MLB is developing new and exciting ancillary ventures, and the Tigers’ existing TV contract expires after the 2017 season.

What are you afraid of? Are you afraid of becoming the Yankees of the Midwest  When it comes to payroll I wouldn’t mind. You may have heard they’ve won several championships. (I’ll leave the arrogance though, thank you)

Sure, this may all be a bit short sighted, but who can see into the future? Mr. I’s gaze is certainly limited.  Should we sign free agent x? Why not? Maybe we should all live like we are on borrowed time.

Plus, there’s no Red Wings hockey, the guy’s probably as bored as we are. #YOLO!

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