Who Gets Jake Peavy’s Surplus?
It turns out that Jake Peavy thinks he does, and I think he’s right.
Last week, I discussed how the Padres’ ownership of Peavy’s contract rights for the next four seasons would allow the team to reap the benefits of the difference between his expected income generation and his salary. But, it turns out that Peavy and his agent Barry Axelrod plan to exercise some rights of their own to ensure that the Padres don’t capture the entire surplus.
“It’s not that far of a stretch to say this is a free-agent situation,” Axelrod said, “and if there is a guy like Sabathia out there, we would have to look at what any given team is going to pay Sabathia, because he and Jake won the Cy Young award in the same year, and we’re going to put Jake on the same plane as this guy.”
He added that “there might be some places where it is a more palatable deal to Jake than any other places.”
Axelrod already has said that whatever club would trade for Peavy, 27, likely would have to extend his full no-trade powers through contract’s end. …
“Making this about money is not my style, nor Jake’s style,” Axlerod said. “I think we proved that. But at the same time, I don’t think Jake should have to sacrifice anything.
“Jake signed an under-market deal with San Diego because he wanted to stay in San Diego. It was worth it for Jake to take less.”
Translation: if you don’t give us cut, we’ll exercise the no-trade clause. Peavy can use his veto power to make sure that he captures a good portion of the economic rents generated by his contract. And it sounds like he’s negotiating for more money, possibly through an extension or a salary supplement (I’m not sure if the latter is allowed under the current CBA). When it’s all said and done, the prospects the Padres can expect might be so bad and few—as his salary demands rise—that the Padres decide to keep him on the roster. And hey, if he likes playing in San Diego so much, maybe the Padres should reconsider their desire to trade him. Jake Peavy didn’t agree to a below-market contract so that the Padres could enrich themselves by trading him.
Thanks to MLBTradeRumors for the pointer.
J.C. Bradbury is an economist and associate professor at Kennesaw State University in metropolitan Atlanta. He is the author of The Baseball Economist and has operated Sabernomics.com since March 2004.
October 28th, 2008 at 3:59 pm
Is this the difference between trying to trade him in the off-season and Arroyoing him in late April?
Or should we just agree that Peavy’s contract is only considered “below-market” because the option value of the no-trade clause (which was required before he signed it) makes up the difference?
October 31st, 2008 at 11:25 am
There was some thought that Peavey really wanted to play for the Braves because he grew up in Alabama and was a fan. In that case, perhaps he would have agreed to give up some of the economic rents to play in Atlanta. But I always thought that anyone that can live comfortably in San and wants to leave has serious mental problems anyway. I’m glad to see that Peavey is not crazy.