Baseball Money: The Ultimate Risk

I will be the first to admit that baseball is not my favorite sport, and coverage of it is not my specialty. However, every once in awhile there is a story that comes along that demands a certain amount of attention. The contract the Padres recently signed Tatis to is one of those stories. Tatis just signed a 14-year, $340M extension with the San Diego Padres last week. Old news I know, but the point I am going to make is not. This was originally going to be a piece about the risks involved in Tatis's deal, but upon further research I realized that this is a much broader risk taken by the league as a whole.

Baseball is unique from the other major sports leagues. They have no salary cap, nor a salary floor. Teams can spend as much on their roster as they desire (luxury tax pending), or as little as they want. This is evident in the payroll numbers from teams like the Dodgers ($230,000,000) all the way down to the Pirates ($34,000,000). There are many arguments to be made for/against instituting some form of salary demands. I have made the argument that a salary cap is needed to even the playing field and end this arms race that smaller market teams simply can't compete in. Others have argued that a salary floor would be more beneficial to weed out the cheap owners and force smaller teams to invest more capital into their teams. I'm not going to say one answer is better than the other, but I do feel something should be done. Yes the Rays ($45,500,000) made the World Series last year, but they ultimately lost to the top spending team in the league. 3 of the final 4 teams were in the top 5 in payroll last season. It's clear that if you're not spending, then you likely won't be competing for the World Series. To gain an edge these higher budget teams have entered a new arms race. Paying top dollar on extremely risky contracts to keep the best players around.

This Tatis contract is insane. The Padres will be paying him $36M when he is 35 years of age. We have seen similar deals to this one, but not at this high of a risk. To put it in perspective Tatis only has 558 career at-bats. Mike Trout had 4,340 when he signed his extension in 2019. Bryce Harper had 3,306 when the Phillies signed him. Only Trout and Mookie Bett's deals are bigger than Tatis's. Those are two proven studs and even their contracts are a bit head scratching in terms of longevity. The Angels will be paying Trout till he's 38, the Dodgers Betts till he's 39. Paying a 35+ year old baseball player $30M+ a year is not sound team building strategy, it's desperation now to stay relevant.

Trevor Bauer got a 3yr $102M deal from the Dodgers. He's making more this year than the whole Pirates payroll. At least his deal is only 3 years at most if he doesn't opt out sooner. The risk here isn't as much the money as it is the time. With no cap the teams can keep raising the price with no consequences other than that done to the owners pockets, the increased years are what kills you. Tatis or Trout tear their ACL next year, never return to form, and you're stuck with them for 12+ years with no way out. Small market teams can't compete with these contracts both financially and in terms of the years required. Even if they could compete with the money, 12-14 years is too long for them to commit to. These teams like the Pirates and Rays operate on a year-to-year basis. Unless they nail every draft pick, have every prospect reach their full potential, and moneyball some veteran players, they can never compete with the likes of the Yankees or Dodgers. Small market fan bases are stuck living off the scraps with the slightest glimmer of hope that they'll one day win a championship. What's even the point? Yeah small market teams will maybe win a playoff series here or there, but then they'll just get decimated like the Royals did after they won the World Series. They couldn't afford to keep anyone around and went right back down to the basement of the league. Maybe I'm looking at this all wrong, but it's just my 2 cents as someone who just casually watches the baseball world evolve.