Funny, Alex, I still don't have the coaches straight myself. I still mix up Eiland, Thomson, and Long, but they won't require name-tags for long. Meachum I recognize.

Yeah, I figure Posada flew Joba down for the event. Guessing he chartered a plane, or borrowed Air A-Rod for the weekend.

The vets tend to take care of the kids. Didn't A-Rod buy suits for Melky and Cano last year? The third baseman will be picking up checks forever now.

Who's quicker to pick up a check: A-Rod or Jeter? Surprised we don't know by now. My guess is Alex is quicker to the draw -- but Giambi probably leads the team in tab-paying percentage. Damon's probably up there, too.

Any reputed tight-wads on the team?

On that very last paragraph:

Would it make sense for the Yankees to work now with Joba, Phil, maybe others, on long-term contracts? Here's what I'm thinking. You look, say, seven years down the road, and you estimate what a guy would get over that whole term if everyone played hardball (so to speak). So, obviously, it's practically nothing until they are arbitration-eligible, then it's $4M/yr or so, then a bunch more when they become free agents. Suppose you averaged it out and back-loaded it and offered them the contracts very early, like now or next year?

The advantage for the player is obvious: he gets insurance against a career-ending injury, and he gets his hands on money much earlier. For the club, well, if it's the Marlins there's probably no advantage. For the Yankees you absorb some risk (injury plus, of course, the risk that the player never realizes full potential), but you get to lock him up, so you'll never have to break the bank in the free agent market. And, you get happy players and happy fans.

The situation is probably more complicated.

1 That is funny. Long I can actually recognize because Torre was letting either him or Guidry do a lot of those stupid dugout interviews, but I would have a tough time with either Eiland or Thomson.

2 I think it is hard to say - we really don't know what some of these players are going to become still. Some of the guys taking heat for saying they should get paid, such as Prince Fielder and that db Paplebon, have had two solid seasons.
I am one of those people who wants the player to squeeze as much as they can out of the club; but I don't think the Yanks should make a decision like that so early in the game on Joba and Phil, to use your example. They haven't even had a full solid season yet - much less more than one season. They have both obviously shown flashes of greatness, but thre are too many examples of that not panning out.

On another note, in a follow-up to last week's discussion of the Yanks lineup vs the Tigers - here is a long article that breaks it down by position - with the nod to the Yanks.
http://tinyurl.com/26wbaq

2 Way too early to be paying those guys bigger bucks. Someone out there (Will Carroll?) has a concept for young pitchers called the Injury Nexus which is kind of an age/innings band that hurlers either get through or don't. The whole advantage of pre-arb and arb for the teams is they can sit back and see who gets through the gauntlet. Not to mention, the Yanks have the kind of cash that can buy out the last couple years of arbitration and first few of FA, a la Cano. I hate to be a downer, but as much as I like the young triplets and their brethren, you gotta figure at least one of the three gets derailed for one reason or another.

Re: Joba and Jorge. I read an article yesterday about how Joba flew a family of 5 from Nebraska down to Disney last week, just because. He grew up w/o ever taking a family vacation, and asked his old high school coach to ID a family like his own who could use the trip. Now, Joba's not poor by any stretch, but a kid his age and at his salary just dropping $10G on a nice gesture like that is class all around. He's the kind of guy who makes the rich veterans all the more happy to pick up a tab, buy him some suits, etc.

There are young guys who are angry all over the ML's this morning because they were renewed. If the Yankees are going to work out long terms with IPK, Franchise and Joba they'll also have to do the same with Wang. They'll have time to do it going forward. In fact I would think they might want to do something with Wang first then move on to the children next. If they're going to move Wang, signing him to a reasonable deal at this point might actually make him more marketable due to his service time. If they're going to hold on to him the signing may make sense as well. The problem is they may not know right now.

IMO they need to wait a bit to see what they have and see how what is coming from below develops before they lock into longer term deals. They have the ability to be somewhat flexible right now and to get good performance at a low cost. Also, one of the advantages of developing a top flight minor league system is that you don't have to sign everyone to long term high dollar deals. Any one of the kids is controllable for a number of years at a very low cost, that makes them extremely marketable now in a way that Wang may no longer be given his proximity to a bigger arbitration return and free agency.

I can see why they're waiting I think.

I don't really get the 'way too soon' argument.

Sure, signing a guy early is a risk. But it's often very smart for a big, rich organization to take risks like that. If you do it regularly, some of the gambles turn sour and you're on the line for big bucks for a guy who isn't contributing much. But you also score big on some of your gambles, locking up a kid for many years at what turns out to be a bargain price. My point is that the Yankees seem like they're in a good position to absorb the risk. And it also looks to me like young pitchers might be well advised to sell off their risk to a team, as if they were buying slightly overpriced insurance.

2 I think it's way too early for that.

6 To amplify on that: yeah, it's a great way to get some certainty down the road. But you do that with players that have established themselves at least slightly. You also do it with players who are approaching arbitration, with the idea of locking them in through their first year or two of free agency. There's very little need to do it before arbitration.

If you do it now, what exactly are you gaining? Hughes has two more years until arbitration (presumably), Joba three; both have 6 years until free agency. Locking them up through the first year or so of arbitration doesn't help much...and do you reall want to sign unproven young pitchers - and yes, they're still unproven, in terms of health as well as performance - to 5- to 7- year contracts?

6 But they are also in a good position to absorb the cost of playing it safe. So, why risk wrapping up Hughes (for example) to a longterm deal and take a risk not only that he doesn't get injured, but also that he actually pans out as better than average player? Instead, it makes just as much (or more) sense to play it safe for a year or two, and when they are more convinced, sign him to the big chalupa. This is the way they played it with Cano, and that seemed to work out ok.

8 What are you gaining?
Money, I think. If Hughes is great for two more years, he will cost much more than he'd cost now.

Do I really want to sign unproven young pitchers to 5-7 year contracts? Yes, that's what I'm saying! What is the argument against this, besides the risk? Or is the only point that it's risky?

10 I think the financial risk of waiting is less than the risks of signing people so early on.

9 Why take the risk:
To save money, and for the usual benefits of locking up a player for a long contract.

You're right that they're also in a good position to absorb the cost of playing it safe, just because the Yankees are in a good position to absorb any costs, because they're rich. But in general, it's smart for the risk to absorb more risk. (That's why insurance companies are so profitable, and why big institutions buy much less insurance than little guys.)

Look, the Yankees and Red Sox pay big signing bonuses to risky draft picks. Other teams can't do that. The rich teams benefit by being able to absorb the risk. It's a good way to flex financial muscle without paying the luxury tax. Why doesn't it work the same way with locking up young players? That's all I'm saying.

11 Well, that obviously depends on the prices. I haven't crunched the numbers, but basic economics suggests that there should be a price at which transferring the risk from the poor player to the rich team can benefit both parties.

13 Yes, there's certainly a point where it shifts.
I don't actually totally disagree with you.
I just think in the end, from the team's perspective it is not worth it on the whole.

One thing though from 12 - to some degree teams pay the big signing bonuses to get a player they otherwise might not get - they don't have to do that with good young players. In other words, in some ways the players have the leverage when they are about to be drafted/drafted/signed - the teams have it in the period before the player becomes a free agent - and the arb period is sort of a grey area.

One thing to keep in mind with Joba when it comes to finances is I believe he signed for a $1.1mn bonus. If he can't afford to pay his way down to PR, then I think the Yankees need to get him a good money manager.

With all the recent complaints by young players about their contracts, I think you have to take into account their signing bonuses before determining the validity of the gripe. If the player excercised his leverage to extract a healthy bonus, then you can't blame the team for using the hammer.

I have a little bit of a different take on this:

Maybe it's not such a bad thing to hold back a little with the younger players on the roster - not because they don't deserve it but rather to keep from overwhelming their senses. It's enough of a culture shock to go from AA to the bigs in less than 3 or 4 months' time, but to suddenly have a bank account that's 20 times larger as well could be dangerous if you're dealing with someone who's head may not be in the right place.

Look at the NBA and the obscene amount of money that guys like Lebron and Shaq made in their first few years with the club - is that entirely healthy?

Oh, and Papelbon needs to realize he's still a n00b in the grand scheme of things. And only a few years removed from major surgery.

Jeter won a ROY award and two rings and before he even broke a million.

I don't think LeBron and Shaq are the best examples for the NBA- they are by most accounts good guys who are working/worked hard to build themselves into a brand.
That said, I don't think a bank account with 7 digits is any more likely than 6 to cause Phil and Joba to head over to Mons Venus and make it rain.

My main point remains though, why pay more for pre-arb years? If you don't buy out all of their arbitration years and the first couple of FA, you're not doing yourself any favors, and that is way too long to lock up a guy with all of half a season. Given the state of the business, they are commodities, which sometimes need to be moved. You think we could have traded Claussen for Boone if he had a 4 year major league contract attached to him?

Essentially, the MLB salary structure is designed around paying players for past performance instead of expected future performance. In the old days of one-year contracts, that system made sense, but with long-term deals, it is less ideal. The problem with trying to base a contract offer on future performance is complex projections are involved. For prospects, those projections are even more uncertain. I think the best approach is to allow prospects to build up sample size into arbitration and then look into a long-term deal. As others have noted, signing bonuses are already examples of teams taking financial risks on prospects, so it might not make sense to compound that risk with long-term contracts very early in their major league careers.

Think about it this way...if you don't sign a prospect to a long-term deal and he breaks out, your worst case scenario is you actually have to pay the player what he is worth. With the opposite approach, the worst case is you are paying a player who is ineffective (which is kind of like what we are seeing with Kei Igawa).

Yeah, I agree that it's hard to feel too sorry for the complaining rookies. (Papelbon isn't getting much fan sympathy in RSN.) The security these guys are looking for is, financial independence for the rest of their lives, not, being able to afford the condo fees.
Uh, co-op maintenance, to New Yorkers.

I bet Papelbon's agent is telling him to shut up. They'll get a whole lot more, in the long run, by playing the game like Jeter did than in selling their arbitration rights (in effect) for a few million up front.

18 Why pay more for the pre-arb years?
I already answered that. You save money in the long run, and you get the security of having locked up your player for his prime years.
They are commodities:
EXACTLY! I totally agree. And commodity futures are bought and sold all the time. Nobody asks, "Wait, why on earth am I paying for 2009 pork bellies now, when they might turn out to be much cheaper next year?" We know why. You assume risk when you buy futures, but if you do it right it's very good financially in the long run.

19
"Think about it this way...if you don't sign a prospect to a long-term deal and he breaks out, your worst case scenario is you actually have to pay the player what he is worth. With the opposite approach, the worst case is you are paying a player who is ineffective (which is kind of like what we are seeing with Kei Igawa). "

Right. I don't think I'm getting your point, though. You seem to be saying that there's a risk involved in paying for a long term contract. I agree. My point is that somebody is going to assume that risk, either player or team. The team is in a better position to assume it (being so rich). So it makes more economic sense for the team to do it. So there ought to be a 'fair price' at which both parties benefit.

18 Yeah I probably should have picked guys who were on the next tier, but you get my point.

21 I don't think anyone argues with the idea of signing kids to long-term deals before they hit arbitration. But jeez, let the kids pitch a little in the majors first. You're talking about kids with all of a month or two pitching big-league ball. You don't sign them to 7-year contracts now.

20 The rub here is that pork futures are somewhat more projectable than an individual pitcher. I can produce forecasts determining roughly what I think demand for bacon will be like in a few years, based on recent consumption, expected population growth, etc. You need to see some kind of track record. Signing a bunch of youg pitchers to long term contracts is more like venture capital. Yeah, you can spread the risk out and assume that the guys who break out and succeed will carry the costs of the duds, but you gotta be damn sure you can beat the market over time. In this regard, I'm content to taking market returns versus wild swings.

I'm working on a quick Excel model and will post it when I can...

24 Okay. (I'm not sure about the facts -- I think you can get futures options that are very risky indeed -- but it's just an analogy.) So it's like venture capital. High risk, high reward.

I know a guy who used to do this for a living. He did the math, actually, other people spent the money. He was always looking for risk, he said. If he could find a pocket of a market with huge risks, he was sure it would be very profitable for his employers, who had tons of money. Because the rest of us are so risk-averse, we'll pay to get rid of risk. So I'm suggesting the Yankees are in a good position to benefit from buying risk, just as my friend did in Chicago. (Commodities market, not Cubs.)

21 I guess there always has to be a fair price at which both parties benefit. I don't necessarily agree that all of the risk in on the player, however, as a team has to weigh more than one negotiation. If you guess wrong on too many, it could negatively impact both performance on the field and the bottom line. Also, keep in mind, that from a business standpoint, profit margin is what the team risks. Even though they are "rich", most team owners not only seek to make a profit on the franchise, but also strive to attain certain margins. Too many bad contracts can make an owner wish he was building hotels or breeding race horses instead.

In addition, you also have to consider that there is risk on both sides of the equation: both making a long-term deal and not making one. In a sense, the team takes on more risk when it makes a deal, while the player takes on more risk when he does not. For that reason, I'd expect players to be more receptive to a deal early on in their careers, with teams becoming more interested as the arbitration years dwindle (which, admittedly, is far from a profound statement).

24 The comp to the commodity markets doesn't really work because a trader can have a whole portfolio of losing bets redeemed by one breakout play. In baseball, the Yankees could strike gold with Hughes, but if the rest of the team stinks, well, it wont help the bottom line (going on the assumption that revenue declines when losses mount).

Also, commodities do not have much variability, whereas MLB pitchers certainly do. That also plays into your point about the relative predictability of the two.

Finally, most commodities contracts are negotiated in an open market. When a team signs a young player to a long-term deal, no other bidders are involved.

25 That logic was partly behind the big bets major banks made in the sub-prime market. Look how that turned out :).

25 RI, I'm going to take what pistolpete said in 16 a bit further.

This isn't necessarily true of everyone, and I don't think its true of Phil/Joba/Ian, but, locking up a young player very early on in their careers may destroy their own motivation to succeed, work hard, etc. Giving them something to help stay motivated - even if it costs the team more down the road - is quite valuable.

Exhibit A of "fat paycheck = no performance": Carl Pavano.

Also, think about the precedent the Yanks would set by handing out long term deals to guys with less than 3 months of major league experience. Every young stud the Yanks have will expect the same as soon as they make it up. Enough of those guys get hurt/don't make it, and the Yanks end up losing money, not saving it.

BTW - Bagel Boy, if you're reading this, check out my response to your last post in the "Perfec" thread.

I understand the point.
Here's my entirely, ridiculously amateur scenario. (see attached link).
http://tinyurl.com/2rr7db

Say we sign the Three to 7 year deals, which would buy out their first year of FA. I am assuming they all become arb-eligible after the '09 season, and FA eligible after 2013. Joba and Phil get 7/$17.5M and IPK 7/$14M. BP projects VORP 7 years out, and incidentally likes Joba much more than the other two.
For this scenario, cumulative over 7 years, you're paying about $92K per unit of VORP.

Scenario 2 imagines they all achieve the same VORP but the Yanks pay them only what they have to right up until FA. Cumulatively, you end up paying them $137K per VORP point, but much of that comes in their first year of FA. Through the end of their arb years, you're looking at $55K/VORP.

The third/fourth scenarios projects two of them to achieve their forecast VORP, and Phil to get hurt during 2009 and be largely ineffective afterwards. This is probably the most likely to happen, total production-wise, whether it's 2 guys performing and one getting injured, all three underperforming, etc. The difference between the LT deals and paying as you go here are marginal, especially when looking at your costs through the arbitration years. And all this does is push FA one year into the future, so the eigth year and beyond become expensive anyway. I thinks it's way better to let them play out until a team has some idea of who's going to produce long term and who isn't.

27 I don't see the disanalogy.
Sure, a trader can have a lot of bad bets redeemed by one great one. So can a team, though.
Commodities don't vary as much as pitching prospects: fine, I thought I agreed to that. But futures options have huge variability, and in any case just pick an economic bet that does have large risk.
Open market vs. monopoly: maybe. Not clear to me how this affects the point. It means the team has an advantage in the negotiations, but as far as I can see it can use its advantage equally by negotiating a long term contract, or not negotiating the contract. In either case the player is stuck with whatever the team is willing to offer.

29 Perverse incentives, aka moral hazard (in insurance). That's a good point, I agree. On the other side, though, the team has a perverse incentive when it isn't committed to the player long term. (Why not use the pitcher for a lot more than 180 innings, since we don't have to pay the cost of his burning out if we don't want to?) A long term commitment can correct that incentive, so it should yield a kind of windfall that the player and team can share, a win-win situation. It's a difficult question whether your incentive problem or mine is a bigger deal.

There is also a very human reason for the Yankees to avoid signing pre-arb players to long term contracts. A team takes that risk so that they can pay players less than the "going rate" during the latter years of their contract. One can imagine that this could potentially create grousing and hard feelings if someone feels underpaid. The Yankees have no need to save a couple of bucks at the risk of upsetting anyone. They have enough money to pay everyone a fair amount when their time arises.

Possibly because I'm old and poor, but I think people are very jaded when it comes to player salaries.

In the mid 60's, the best player in the game made $100,000/yr... and Mickey was literally embarassed to make that much. And for a game he LOVED to play. So what's 40 years of inflation on $100,000?

I don't know, but the 'best' players in the game now make $20m/yr... or 200 times as much.

So, yeah the owners are rich, but I can't feel sorry for a 22 year old that make $390,000.

And I know they're special, and unique, and rare, and Stallone makes $20m/movie (maybe for 1 or 2), but I think the players are VERY handsomely paid.

Since baseball is a monopoly and has a special exception, I don't know why with millionaire players and billionaire owners, the cost of a game to a fan, who finances this whole show, is so high. There is government regulation in a lot of businesses. It's a shame to see that attending a game in person will soon be only for the elite.

Going to a game used to be the domain of the working class.

31 There's yet another scenario: wait a year, or two, which provides you roughly the same opportunity with much less risk. Yeah, the contract might cost you a few million dollars more. but I'll bet that would be more than offset by the lower salaries up till then and by the greatly decreased risk.

Again, the idea of locking up young talent before arbitration is a sound one. But what's the rush? I really can't see how waiting a year or two would cost them enough to make it worthwhile.

BTW, only Hughes will be arbitration-eligible after 2009. Even that's assuming that he qualifies as a "Super 2," but I think that's a safe assumption.

Knuckles 31 , I probably don't understand the model. But insofar as I do, it seems to prove my point. If Phil succeeds, then with the long-term contract the team pays $91K per point of VORP, whereas with arbitration it pays $137k. The long contract is better. If Phil fails (the third and fourth scenarios), the team pays $110k per VORP point with the long contract, and $121k if they stick with arbitration.

Doesn't this mean the long term contract is better from the Yankees' point of view, in either case, and therefore just a good move??

35 Maybe. But if that really does present much less risk for the team, then it must present much more risk for the player. That means the player ought to be willing to accept a substantially lower pay-out to avoid it (by getting the long-term contract early).

37 I don't find that anywhere near a convincing case. Let the kids pitch a little. Revisit this a year from now. The savings just wouldn't be enough to offset the risk.

Hughes and Chamberlain have a combined total of under 100 ML innings. Let them show they can pitch.

38 What's wrong with my argument, though?

Do you agree that if the risk for the team (of going to arbitration) is much lower, then the risk for the player must be much higher?

You say the savings wouldn't be enough to offset the risk, but somebody has to bear the risk. The player should be willing to give up money in order to pass the risk to the team. Right?

My point is that the major savings come from buying out the first year of FA, which is an awful long ways off. Going year to year is more cost efficient in the aggregate pretty much right up until FA. Would you rather give 3 guys 7yr/$15M contracts that eats one year of FA, or wait a few years, and watch one and a half of them pan out, buy out the star's first two or three years of FA and maybe the first year of FA for the second innings-muncher type guy...

You also need to factor in the present value of the up front payments versus the discounted value of the future payments. Also, salary cap implications would have to be considered.

I agree with 38 in that it makes more sense to pay more for less risk. That seems to be a nice compromise between speculating early and risk no return and being forced to pay market rates later. By waiting until the early arbitration years, you get more certainty on performance and still can negotiate a discount to the market.

34 I don't begrudge the players a dime. Just because they were so unfairly treated post depression doesn't mean we should pine for those unfair days.

I also disagree that the working class is being priced out. Even a team like the Yankees still has regular tickets under $20, not to mention several $5 days. If one is willing to make an extra effort, a day at the ballpark is still affordable.

39 Give me some numbers. How much would you expect to pay right now; what do you expect the pitchers to do this year; and if they do that, what would you expect to pay a year from now?

42 I agree with you on both points. Baseball has been selling more tickets and making more money than ever before, so the salaries and prices apparently aren't too onerous.

Besides, ticket and concession prices aren't a function of the salaries. If the Yankees can get 4 million people to pay X amount, that's what they'll charge regardless of the payroll.

I don't park at the Stadium, and I bring food and drink in with me. I forego the beer, so basically I pay for the ticket and nothing else.