Acuna Matata: Braves Give Ronald Acuna $100 Million

[Mike Sixel]

Sure, I don't blame him one bit for wanting this.......As Keith Law said this week, if he had a son negotiating in this situation, he'd advise him to understand all the options, but to plan on signing.....

[Mr. Brooks]

Correct, you can understand why a person in his shoes would take the money, while also believing that the Braves got a steal, relatively speaking. The two are not mutually exclusive.

 

When I was a young man, I had a classic muscle car. I bought it when I was sixteen, and put thousands of dollars into it over several years. Later, when I was an adult with a young family, we had to make a sudden, unexpected move for work. The only place we could find on short notice was an apartment, and the building had a one car per registered driver rule. I couldn't find affordable storage on short notice, and had literally a few days to sell it. I got taken advantage of big time, selling it for a fraction of it's worth (today, with the internet I could have probably found close to fair value).

It sucked, I'm occasionally still bitter about it now, 15 years later, and the guy who bought it got a steal. But, it was still the correct decision to take what I could get for it.

Not a very apt analogy, I realize as I type this, but it reminded me of that, so I went with it.

[biggentleben]

 

So injury "scares," and not actual injuries? I get thinking about just being "secure" but implying there's a level of concession he made because he's afraid of injuring himself I don't buy for a second.

 

He did miss playing time (and significant playing time for the wrist/thumb one) for both injuries, so they were actual.

[biggentleben]

 

Sure, I don't blame him one bit for wanting this.......As Keith Law said this week, if he had a son negotiating in this situation, he'd advise him to understand all the options, but to plan on signing.....

 

Yep, and when Acuna can now get his family out of Venezuela, that's a big deal. The Braves have been approached by three of their young core this offseason, and two were specifically to get family out of bad situations in their home country.

[Mike Sixel]

Yep, and when Acuna can now get his family out of Venezuela, that's a big deal. The Braves have been approached by three of their young core this offseason, and two were specifically to get family out of bad situations in their home country.

Meaning the team has all the leverage, and is taking advantage of it. Which is their right, but let's be honest with ourselves about where all the power is in this unequal relationship.

[Steve Lein]

 

He did miss playing time (and significant playing time for the wrist/thumb one) for both injuries, so they were actual.

 

Yes, but how you classify them as HUGE I do not get. It's all good.

[ashbury]

Meaning the team has all the leverage, and is taking advantage of it. Which is their right, but let's be honest with ourselves about where all the power is in this unequal relationship.

The union exists because of the unequal relationship, and now that this new phenomenon has arrived maybe they'll think up a way to tilt the playing field in the next CBA.

[Mike Sixel]

 

This really is an interesting case study in behavioral economics. Let's assume that option A is -  he could make 550K a year for the next two years, go through his arbitration years and then sign a $300 million 10 year contract, but it all goes away at any time in the next 6 years with a big injury or run of 2 bad years. Option B - he goes through 2 years at 550K a year, and then signs a free agent contract that buys out his arbitration years for a total of 150-200 mil for 10 years, all of which goes away if he has a major injury or bad year in the next 2-3 years. Option C - he signs a $100 mil contract now, get his money starting now but this is it - no big second contract because he'll be 33 (?) when this contract expires. In the event of a work stoppage he does NOT get paid under options A or B, but does under Option C. What do you do?

 

Behavioral economists and physiologists would tell you there is no right or wrong answer.  It all depends on your appetite for risk. That appetite comes from innate feelings and attitudes that you're born with and that you learn as your grow up and your brain develops, then influenced by your current situation and outside economic factors. Studies show that a majority of people are risk averse and would take the $100m now rather than lose that and gamble that things would go well enough to get the bigger reward. Would you take a $100m now (Option C) or risk that for the 50% possibility of $200m contract 3 years from now -Option B- or the 25% possibility of a $300m contract 7 years from now (Option A)? Add in the possible work stoppage where you get $0 under options A or B for a period of time, and the fact that things could change in the economy or the economy of baseball, and a risk averse person goes for Option C. I myself am the opposite and would go for Option A or maybe B depending on timing but that's the right answer for me, not necessarily for others.  What sucks for the players is that the owners get this and use it to their advantage since they have the leverage and the players do not.   

 

Then you have the Brian Dozier example. He signs a multi-year team friendly contract that guarantees him decent money to age 31. At the time, it makes sense because guys in their 30s are getting big dollar multi-year deals and he figures "I get security now and a good 3-5 year 15 mil a year deal later". The world changes when steroids go out (not suggesting Dozier used steroids) and teams see things like the Albert Pujols deal, so teams are leery of signing guys over 30 to long term deals unless their huge stars. He then has an injury and a bad year at the wrong time. Goodbye 4 year $60m deal, hello year to year existence. He's getting $9m this year but if has another year like last year he'll be lucky to get a major league deal next year. On the other hand, he did make a lot of money without risk - $30m plus from 2012 to 2109.  Good deal or bad deal? I say bad deal, but its all in your perspective and we have the value of 20/20 hindsight. If he'd had a career ending injury or hadn't developed 35+ HR power out of nowhere, it would have been a good deal.

 

All of this is to say that I think a lot of what's happening now is that players see the system changing and labor storm clouds on the horizon and we're seeing a flight to security. It's like when people buy T-bills instead of stocks when the economy looks shaky.  While I agree with the posters who say that the team owners (capital) are taking a disproportionate share of the economic pie compared  to the players (labor), I see why players want to lock something in now rather than taking the risk of injury, skill decline or yet another sea change in the system.      

 

great post! Agree with all of it, but even if I didn't, it would still be a great, thoughtful, post.

[Mike Sixel]

 

The union exists because of the unequal relationship, and now that this new phenomenon has arrived maybe they'll think up a way to tilt the playing field in the next CBA.

 

Hopefully for the players' sake, yes. But, unions are pretty much failing at their jobs right now, if they even still exist, most places. 

[Mr. Brooks]

There is really only so much the union can do, unless the current players are willing to become sacrificial lambs for future generations.

 

This isn't the primary source of income for owners. It is for the players.

Not saying the owners would welcome a strike/lockout, I'm sure they'd rather keep the peace, if possible.

But, they can afford to miss a season or two of revenue much more than the players can.

Ownership skills don't dissolve with age, they can make the money back later. Giving up a year or two in your prime is money the players can never get back.

[jkcarew]

 

Meaning the team has all the leverage, and is taking advantage of it. Which is their right, but let's be honest with ourselves about where all the power is in this unequal relationship.

But did the team take advantage of the unequal relationship in the cases of Harper, Machado...or Trout?

 

To me, it's just negotiation. Acuna is in his own unique situation...as were Harper, Machado, etc. I concede that the teams are able to exercise leverage in more scenarios than they were 2+ years ago...but think that that pendulum was bound to swing back at some point.

[Mike Sixel]

 

But did the team take advantage of the unequal relationship in the cases of Harper, Machado...or Trout?

 

To me, it's just negotiation. Acuna is in his own unique situation...as were Harper, Machado, etc. I concede that the teams are able to exercise leverage in more scenarios than they were 2+ years ago...but think that that pendulum was bound to swing back at some point.

 

back from what? Players have always been underpaid compared to revenue growth.......

 

And yes, Trout saw what happened to two of the best players ever, and how few teams were in on the bidding for some reason....he admitted as much.

[jkcarew]

 

The union exists because of the unequal relationship, and now that this new phenomenon has arrived maybe they'll think up a way to tilt the playing field in the next CBA.

To the extent that a 'new phenomenon' has arrived, I'd say it arrived because the players have less real leverage. And that would make problematic that any material tilting on the player's behalf would be accomplished in the next CBA...perhaps, even with the threat of a work stoppage.

[jkcarew]

 

back from what? Players have always been underpaid compared to revenue growth.......

 

And yes, Trout saw what happened to two of the best players ever, and how few teams were in on the bidding for some reason....he admitted as much.

Attendance has always grown as well. But not anymore. Many owners will see (do see) attendance as a leading indicator of revenue. The union was arguably the most powerful in the nation when the game's growth was strong. Whether the status quo was 'fair' to begin with...the players were bound to have a struggle as growth slowed.

[Mr. Brooks]

Attendance has always grown as well. But not anymore. Many owners will see (do see) attendance as a leading indicator of revenue. The union was arguably the most powerful in the nation when the game's growth was strong. Whether the status quo was 'fair' to begin with...the players were bound to have a struggle as growth slowed.

Growth hasn't slowed, it has accelerated rapidly.

Revenue has grown 325% over the last 25 years, and the league has set record revenues 15 consecutive years.

[jkcarew]

 

Growth hasn't slowed, it has accelerated rapidly.
Revenue has grown 325% over the last 25 years, and the league has set record revenues 15 consecutive years.

Everyone wants to talk about revenue. But revenue will eventually track attendance. With attendance stagnant/declining, it raises the question of when, not if, teams will no longer be able to squeeze money out of media streams (or at the very least...how they would at the past growth rates.) If you measure the current health of baseball strictly on the basis of revenue growth up to this point, you are ignoring some major, and obvious, question marks.

 

Mind you, I'm not taking the 'side' of the owners. But, the players (and when we think players, we should think agents) have lost some of their leverage. I'm acknowledging that there are reasons for that (I'm sure some not related to the economics of the game) beyond the possibility that all the owners suddenly discovered the concept of collusion.

[biggentleben]

 

Growth hasn't slowed, it has accelerated rapidly.
Revenue has grown 325% over the last 25 years, and the league has set record revenues 15 consecutive years.

 

Yes, much of this through their leadership in digital sports broadcasting and local team contracts. Many in baseball feel there's a significant financial bubble underlying the game. Players feel it as well. Attendance and TV ratings are stagnant to declining, merchandise sales at the major league level are stagnant or down domestically, and social media has put the game in an increasingly bad light about minor league baseball the way that the NFL was with concussions before one person filed the first lawsuit. Multiple former players have taken their lives when they could not support their family and had no usable skills when they could not make it to the major leagues after giving a decade of their life to the game. That was the big flag that began lawsuits against the NFL. There are some big things that could be belly-up right now.

 

For anyone who is an investor, a friend of mine working in NYC that used to trade on Wall Street said that he would move "stocks" in baseball the way that he was moving real estate companies in 2006-2008, which is why he's sitting in a big chair at 42 instead of attempting to reclaim money lost to clients and his company at that time. He said there is simply too much propping up going on around the game to make things look good to advertisers, but then they try to release books that show flat books or even losses. His review of a couple teams with owners who are required to open their books showed him that the game is really unhealthy financially and is likely to have a blow up soon when TV companies back out and offer significantly less money and advertisers begin walking away due to the lack of audience.

[biggentleben]

 

Yes, but how you classify them as HUGE I do not get. It's all good.

 

In talks with his dad, he's told me how impactful they were to Ronald's psyche. An injury doesn't have to keep a player out for years to be something that makes an impact on that person.

 

All too often we forget that players are people as well.

[biggentleben]

 

This really is an interesting case study in behavioral economics. Let's assume that option A is -  he could make 550K a year for the next two years, go through his arbitration years and then sign a $300 million 10 year contract, but it all goes away at any time in the next 6 years with a big injury or run of 2 bad years. Option B - he goes through 2 years at 550K a year, and then signs a free agent contract that buys out his arbitration years for a total of 150-200 mil for 10 years, all of which goes away if he has a major injury or bad year in the next 2-3 years. Option C - he signs a $100 mil contract now, get his money starting now but this is it - no big second contract because he'll be 33 (?) when this contract expires. In the event of a work stoppage he does NOT get paid under options A or B, but does under Option C. What do you do?

 

Behavioral economists and physiologists would tell you there is no right or wrong answer.  It all depends on your appetite for risk. That appetite comes from innate feelings and attitudes that you're born with and that you learn as your grow up and your brain develops, then influenced by your current situation and outside economic factors. Studies show that a majority of people are risk averse and would take the $100m now rather than lose that and gamble that things would go well enough to get the bigger reward. Would you take a $100m now (Option C) or risk that for the 50% possibility of $200m contract 3 years from now -Option B- or the 25% possibility of a $300m contract 7 years from now (Option A)? Add in the possible work stoppage where you get $0 under options A or B for a period of time, and the fact that things could change in the economy or the economy of baseball, and a risk averse person goes for Option C. I myself am the opposite and would go for Option A or maybe B depending on timing but that's the right answer for me, not necessarily for others.  What sucks for the players is that the owners get this and use it to their advantage since they have the leverage and the players do not.   

 

Then you have the Brian Dozier example. He signs a multi-year team friendly contract that guarantees him decent money to age 31. At the time, it makes sense because guys in their 30s are getting big dollar multi-year deals and he figures "I get security now and a good 3-5 year 15 mil a year deal later". The world changes when steroids go out (not suggesting Dozier used steroids) and teams see things like the Albert Pujols deal, so teams are leery of signing guys over 30 to long term deals unless their huge stars. He then has an injury and a bad year at the wrong time. Goodbye 4 year $60m deal, hello year to year existence. He's getting $9m this year but if has another year like last year he'll be lucky to get a major league deal next year. On the other hand, he did make a lot of money without risk - $30m plus from 2012 to 2109.  Good deal or bad deal? I say bad deal, but its all in your perspective and we have the value of 20/20 hindsight. If he'd had a career ending injury or hadn't developed 35+ HR power out of nowhere, it would have been a good deal.

 

All of this is to say that I think a lot of what's happening now is that players see the system changing and labor storm clouds on the horizon and we're seeing a flight to security. It's like when people buy T-bills instead of stocks when the economy looks shaky.  While I agree with the posters who say that the team owners (capital) are taking a disproportionate share of the economic pie compared  to the players (labor), I see why players want to lock something in now rather than taking the risk of injury, skill decline or yet another sea change in the system.      

 

Excellent post. One thing to point out is that Acuna is going to be 29 when the 8-year deal is done, 31 if both options are picked up. Looking at the free agency class for 2019/2020, he'd be one of the youngest in the class, even after the options.

[Mike Sixel]

 

Yes, much of this through their leadership in digital sports broadcasting and local team contracts. Many in baseball feel there's a significant financial bubble underlying the game. Players feel it as well. Attendance and TV ratings are stagnant to declining, merchandise sales at the major league level are stagnant or down domestically, and social media has put the game in an increasingly bad light about minor league baseball the way that the NFL was with concussions before one person filed the first lawsuit. Multiple former players have taken their lives when they could not support their family and had no usable skills when they could not make it to the major leagues after giving a decade of their life to the game. That was the big flag that began lawsuits against the NFL. There are some big things that could be belly-up right now.

 

For anyone who is an investor, a friend of mine working in NYC that used to trade on Wall Street said that he would move "stocks" in baseball the way that he was moving real estate companies in 2006-2008, which is why he's sitting in a big chair at 42 instead of attempting to reclaim money lost to clients and his company at that time. He said there is simply too much propping up going on around the game to make things look good to advertisers, but then they try to release books that show flat books or even losses. His review of a couple teams with owners who are required to open their books showed him that the game is really unhealthy financially and is likely to have a blow up soon when TV companies back out and offer significantly less money and advertisers begin walking away due to the lack of audience.

 

I'm not buying what your selling. Portland investors are considering spending a billion buying a team. And other investors are looking to buy a team or an expansion team.......

 

But, I'm sure the owners will keep saying they can't afford these rich contracts, which are growing at a slower rate than revenues, year after year.....

[biggentleben]

 

I'm not buying what your selling. Portland investors are considering spending a billion buying a team. And other investors are looking to buy a team or an expansion team.......

 

But, I'm sure the owners will keep saying they can't afford these rich contracts, which are growing at a slower rate than revenues, year after year.....

 

The AAF signed advertising deals the week before they folded. Just because people want in doesn't mean it's a healthy product.

[Mike Sixel]

 

The AAF signed advertising deals the week before they folded. Just because people want in doesn't mean it's a healthy product.

 

We're going to compare the AAF to a business that has never lost money, has record revenues year over year, and has suitors willing to pay up to a billion just to get in?

[biggentleben]

 

Very interesting and enlightening. You explain something that I've wondered about - how is baseball doing so well when enthusiasm about the sport is less than I can remember, particularly in the "coveted" 18-34 and 34-55 age groups. Sadly, I'm no longer coveted myself and I live in LA where attendance never flags for baseball even though the Dodgers local TV contract is limited to one cable provider who can't get any of the others to buy because it costs too much. Yet the generations below me are not huge baseball fans, not in the way they follow the NFL and the NBA. I've heard that TV ratings are waaaay down. I'm a huge sports fan and even I can't handle baseball on TV unless it's the Twins or a few innings of the Dodgers or Angels. Too long, too many commercials. When I do watch, I'm always doing something else like reading, laundry, making dinner, eating, something like that. There just isn't enough action to keep one's full attention when you add in so many commercials at the same time. 

 

It will be interesting to see what happens when the national TV contracts come up again.  There may be an economic reckoning at that point. 

 

The LA market is a great example of this. The original TV deal was considered to be a "next step" in local TV deals that would set the standard for future deals in other big markets. Instead, in order to make back the money that is being paid to the team, it's too expensive for cable providers to even purchase.

[biggentleben]

 

We're going to compare the AAF to a business that has never lost money, has record revenues year over year, and has suitors willing to pay up to a billion just to get in?

 

The point is that it is sports. Most places in this country would lose their mind to bring in a pro sports team. You couldn't get anyone in this town to pass a 0.5% city-wide sales tax to support education, but if a minor league team tomorrow showed interest in moving, money would flow into the local baseball stadium to fix it up, recruit restaurants, and construct new hotels.

[Mr. Brooks]

Declining ratings doesn't necessarily mean declining revenue is ahead.

As media consumption becomes more diversified, the cost per share goes up.

You can't make assumptions based on trends from when each household chose from 3 channels. Or even based on 5 years ago before streaming took off.

The actual ratings numbers may be down, but they are still strong compared to most other individual shows.

[biggentleben]

 

Declining ratings doesn't necessarily mean declining revenue is ahead.
As media consumption becomes more diversified, the cost per share goes up.
You can't make assumptions based on trends from when each household chose from 3 channels. Or even based on 5 years ago before streaming took off.
The actual ratings numbers may be down, but they are still strong compared to most other individual shows.

 

I don't have his numbers, so I won't pretend to argue with the details, but the point he was making is that the viewership will hit a point of no return, akin to what is being seen in Los Angeles, where it's too expensive for local cable companies to pay for the channel that hosts the local MLB team due to the amount of money that channel has to recoup from what it paid to the team. I don't have his numbers, but there's about a half-dozen markets in the next 2-3 years going to face what LA is now and most of them by 2025, in his estimations.

[Mr. Brooks]

I don't have his numbers, so I won't pretend to argue with the details, but the point he was making is that the viewership will hit a point of no return, akin to what is being seen in Los Angeles, where it's too expensive for local cable companies to pay for the channel that hosts the local MLB team due to the amount of money that channel has to recoup from what it paid to the team. I don't have his numbers, but there's about a half-dozen markets in the next 2-3 years going to face what LA is now and most of them by 2025, in his estimations.

Ok, LA might have out kicked their coverage, but on the other side of that are markets, like the Twins, that are still stuck in under valued media deals.

[biggentleben]

 

Ok, LA might have out kicked their coverage, but on the other side of that are markets, like the Twins, that are still stuck in under valued media deals.

 

Yet the Twins saw this same thing with Victory Sports within the last 20 years. There's only so much the market will bear.

[Mr. Brooks]

Yet the Twins saw this same thing with Victory Sports within the last 20 years. There's only so much the market will bear.

Of course there is only so much the market will bear.

But, nobody has shown me any evidence that we are headed towards that point. Only theories and guesses and hypotheses, no evidence.

Anyone who reads all of my posts will see that I'm not on the players or owners side. I'm only on the side of facts. I've simultaneously argued against pro labor and pro ownership whenever I think an argument goes against the facts.

[Vanimal46]

For 8/100 the Braves lock in the 3rd player in MLB history to hit 40 HRs in a season before turning 22 years old.

 

40/30 with the potential to be 40/40.

 

Highway robbery for the Braves...