I’m not referring to the portion of Pat Burrell‘s new two-year $16-million contract that will be going to the Rays Baseball Foundation. When I first read the headlines, I inadvertently believed the deal was worth $16 million per season, which is close to what I anticipated he would get. For two years, I have him valued at approximately $30 million. This contract is also considerably less than the $31.5 million that Burrell’s former Phillies will pay Raul Ibanez over the next three seasons.
I can only guess what motivated Burrell to sign this contract. Here are a few potential explanations.
- The down economy has reduced revenue expectations, decreasing teams’ willingness to pay for free agents.
- There is a glut of free-agent outfielders on the market, forcing competition between players, and thus depressing salaries.
- Burrell wanted to take less to play in a comfortable environment that the Rays provide.
I don’t think the economy explains much of the discount. The inferior-but-similar Ibanez received a far superior contract in the same market conditions. Ryan Dempster and A.J. Burnett both received big contracts that I believe exceed their expected values. Furthermore, I believe the potential damage to MLB from the recession has been exaggerated by management, who want to convince players to sign for less. Though baseball will suffer, I think the damage will not be that large and short-lived. I’ve been following the economic impact stories closely, and baseball—like other major sports—seems to be somewhat resistant to recessions. Fans love their sports teams, and following sports is a relatively cheap form of entertainment. In any event, the economic downturn cannot explain the magnitude of Burrell’s discount—a short-term deal for nearly half of his potential revenue generation.
The second potential explanation is an argument that I see frequently in discussions of the free-agent market. However, the common intuition regarding the number of free agents on the market affecting the competitiveness of the market is wrong. The relative scarcity of talent doesn’t change when a player signs with a team or when there are many players on the market. For every free agent signing, there is one less buyer on the market, and for every free-agent player there is an additional open roster spot. Braves fans are well aware the available slots for outfielders.
This leaves me with the final explanation: Burrell was willing to accept less to play in Tampa. If Burrell was a financial mercenary, I think that he would’ve waited longer to sign a deal like this. Burrell went to college in Florida, so maybe he likes it there. Playing in front of fans who boo you for your big salary even when you are a productive player has to be frustrating. In Tampa, if the team stinks the fans just don’t go to the game. He’s earned a total of $54 million over the course of his playing career, so he’s probably willing to sacrifice some additional wealth for comfort.
We’ll soon see how the rest of the market shakes it. If other deals are vastly below expectations, then I think it’s a sign that the economy is having a dramatic effect on the players market.