NEWSLETTER
In normal times, I would’ve had two reactions to the Los Angeles Dodgers extending Mookie Betts on a deal that ultimately amounted to 12 years and $365 million, kicking in after this season. My reactions would’ve been: (1) wow, Mookie was definitely right not to extend with the Red Sox for $250+ million, and (2) dang it, Mookie isn’t reaching free agency. That’s no fun.
These are not normal times.
You cannot think about Betts getting that monster deal right now without viewing it through the lens of the pandemic and its “biblical” impact on the league. Which means my reactions to the deal were completely different than they would have been four months ago. This deal back then wouldn’t have surprised me. This deal right now absolutely shocked me.
Let’s talk about some other reactions.
Reaction #1: The very top of the market is still exploding.
Even during the relative free agent freeze out of the last few years, the guys at the top of the market – the stars – were not only still get theirs, they were pushing the top of the market forward. Pretty normal stuff for an industry whose revenues were growing annually.
At the same time, the “middle class” of free agency was getting more and more squeezed as teams, en masse, increasingly decided that there wasn’t enough value in the difference between 31-year-old Decent Free Agent X and 23-year-old Decent Prospect Y to justify paying what we’d come to expect as normal free agent rates.
Betts, who’ll play next year at age 28 and is a dang superstar, definitely falls into the group of guys “at the top of the market.” In that respect, his deal – which approaches Mike Trout’s extension and far exceeds recent deals for other young stars like Bryce Harper and Manny Machado – is further evidence that the top of the market continues its ascent, despite the pandemic. But because that was already happening before the pandemic, how much can we really say this means for anyone other than the elite guys? I kinda think it doesn’t mean anything for them. Or at least it doesn’t prove anything for them.
That is to say, I’m not sure this deal tells us much of anything about the broader free agent market, because guys like Betts (and Gerrit Cole or Stephen Strasburg or Anthony Rendon) were already showing us that the price tags for players were becoming super stratified. The market increasingly says Betts isn’t worth double a player half his talent – he’s worth, like, quintuple that amount.
So if the pandemic were to have an immediate impact on free agency and arbitration – and I still very, very much think it will – you can bet it will be felt most acutely by players who are not truly elite. Certainly, they would’ve been even more freaked out if Betts had signed for $100 million, though, so at least there’s that.
Reaction #2: The Dodgers clearly feel good about the financial future.
Yeah, maybe the Dodgers were down the road a bit on this deal and felt pretty committed to getting something done with Betts. But if the pandemic truly and fundamentally changed their outlook on the next decade of professional baseball, they would’ve pulled the plug before putting pen to paper. You cannot plausibly take anything away from this deal as far as the Dodgers go beyond saying, yeah, clearly they feel like the revenues are going to come right back. (And, let’s keep in mind that MLB just secured a new long-term TV rights deal with Turner for a huge increase in fees last month, so the Dodgers aren’t alone in betting that things, eventually, will be fine.)
Are there probably still concerns about next year? Yeah. But, again, clearly the Dodgers do not believe next year’s disruption will fundamentally change the financial course of the sport.
For his part, Dodgers President Andrew Friedman flat-out said that this kind of long-term thinking was part of the deal (OC Register): “I think from ownership on down, this just speaks to the faith we have in things getting back to normal. Obviously this is over a much longer period of time which helps in that confidence. And it’s really high once we kind of get through this. And fortunately when you go 12 years you have nothing but time.”
The Dodgers might be in a truly unique situation relative to most of the league, but at least they feel good about the long-term health of the sport. That’s not nothing, and for that part, the extension made me happy.
Reaction #3: So, extensions and big money deals are still possible … right?
Well, Betts signing on for 13 years with the Dodgers doesn’t exactly mean the same thing as a team extending some other good-ish arbitration-level player – no team has yet been willing to take that risk in this environment – but it does mean that extensions can get done. Does it have to be an elite guy with a deep-pocketed team to get done, though?
Depends who you ask. And who they ask.
Jeff Passan argues this deal is Betts telling other stars approaching free agency that they can still get big money, so don’t settle for a pandemic-crushed extension right now. Similarly, Scott Boras contends that Betts’ deal is proof that teams will still pay big money for known quantities.
In contrast, Ken Rosenthal seems to believe this was a uniquely singular deal for a uniquely singular player by a uniquely singular team. Only the Dodgers and only for Mookie. That kind of thing.
The real truth, as cliche as it sounds, is probably somewhere in the middle. This thread, from a baseball fan who happens to be an economics reporter, might actually offer up the best take on the state of big-money extensions and/or free agent signings. He intros by saying that “Money is the new Moneyball”:
What I mean by that is, COVID-19 has upended the trends of the last couple decades in baseball, where teams rigorously quantified player value and sought to pay for bargains — the more bargains, the farther you could go on your budget. 3/
— Jim Tankersley (@jimtankersley) July 22, 2020
If you're a big-market club with a strong financial position, you have the ability to ride out these revenue uncertainties in a way other teams do not. You can keep spending big to get top talent, because, well, you're the Yankees. Or the Dodgers. The $$ will be there again. 5/
— Jim Tankersley (@jimtankersley) July 22, 2020
It's a double win for those teams: They can keep spending big, and they have far less competition. I'd be stunned if the Stras or Rendon free agencies played out the same way if they'd been this coming offseason.
If you're one of those rare clubs, you can't miss that chance. 8/
— Jim Tankersley (@jimtankersley) July 22, 2020
Which brings us to a fear I have about this recovery in the broad economy – something that small business owners mention a lot when I talk to them. Some big companies are really well positioned to just buy up market share right now, while small companies drown in uncertainty. 10/
— Jim Tankersley (@jimtankersley) July 22, 2020
I want the Dodgers to win the World Series, but I don't want all of the great free agents in the next few years to land in NY or LA.
I like buying lumber at Home Depot, but I don't want my neighborhood hardware store to fail.
These are the pressures of this crisis.
/fin
— Jim Tankersley (@jimtankersley) July 22, 2020
This, too, would support the idea that the very, very elite players are still going to be paid in a huge way. But the lesser guys? Maybe even only slightly lesser? They’re going to have to scramble. Though that could wind up presenting opportunities to mid-market teams to do even better in free agency than they ever have before (in terms of talent acquisition).
The new CBA could throw a wrench into all of this, though, depending on how it sorts out things like a salary cap or luxury tax or revenue-sharing. Money as the new Moneyball might last only a very short time, actually, so maybe that’s another reason the Dodgers were quick to jump on locking down a guy like Betts.
Reaction #4: Does all this mean the Cubs now can confidently try to extend Kris Bryant and Javy Báez and Anthony Rizzo and on and on?
Each team’s situation is a little unique, and the Cubs timing with Marquee is probably all kinds of unfortunate. We know that they were anticipating this year to be a little softer financially as they launched, and then things would get really gravy next year. But with massive overall losses this year, not only to attendance but to carriage for the last four+ months? With questions about attendance lingering into next year?
It’s just bad, bad timing folks – because all those questions chronologically overlap with the final offseason before guys like Bryant, Báez, and Rizzo are due to become free agents. That suuuuuucks. I don’t think you can have confidence that the money will be there for big extension(s) right now, and I don’t think Betts’ deal really changes the calculus from the Cubs’ perspective. If anything, it could make the players all the more confident that the money will be there for them next year, so why sign a pandemic-depressed extension now?
I hope the sides engage this offseason. I really do. I hope the Cubs have the confidence that their revenues will return (also: get the Comcast-Marquee deal done right freaking now, because that’ll help). But Dodgers and Yankees live in a financial tier that other teams, including the Cubs, simply don’t. Bryant ain’t Betts? Agreed. But also the Cubs ain’t the Dodgers.
In the end, my reactions to the Betts deal in this environment are really mixed. I like that it shows some financial confidence for the sport, but his situation is also sufficiently unique that I’m not sure how much it actually tells us. It was really, really surprising. Maybe I’m still just kinda awe-struck.
