Marlins Add Payroll

Last week, the Marlins reached an agreement to increase payroll, largely thanks to a provision in the Collective Bargaining Agreement that I previously thought was unenforceable.

A principal objective of the Revenue Sharing Plan is to promote the growth of the Game and the industry on an individual Club and on an aggregate basis. Accordingly, each Club shall use its revenue sharing receipts (from the Base Plan, the Central Fund Component and the Commissioner’s Discretionary Fund) in an effort to improve its performance on the field. Each Payee Club, no later than April 1, shall report on the performance-related uses to which it put its revenue sharing receipts in the preceding Revenue Sharing Year. Consistent with his authority under the Major League Constitution, the Commissioner may impose penalties on any Club that violates this obligation (p. 112).

The team quickly responded by signing Josh Johnson to a four-year, $39 million deal. Just yesterdayDan Uggla and the Marlins avoided arbitration with a one-year $7.8 million contract.

I estimate Uggla to be worth $10 million next year. If Johnson was as healthy and good as he was in 2009, I estimate him to be worth $55 million over the next four years. Both these players appear to be worth more than what they will receive; however, I think the push of the settlement nudged these deals upwards.

I don’t think Uggla would have gotten that much in arbitration, and it probably would have been worth the gamble of going to arbitration and losing. The difference between the salary he got and what they might have lost is too small to worry about for most teams. But, I think the Marlins hoped to guarantee Uggla’s trade value. As it stands, he’s worth about $2 million in prospects to the Marlins ($10 million value — $7.8 million salary). Trading him with his arbitration obligation undetermined may induce uncertainty that lowers the value of potential prospects they want to receive. After all, the Marlins appear to be very good at identifying good young talent in other organizations.

Johnson, on the other hand, really got a good deal. 2009 was really his first full year of durable and excellent performance. If he repeats that and ages normally, his contract is about dead-on, given his service time. I think performance uncertainty would prevent the Marlins from signing this deal under normal circumstances.

Despite the cries about the Marlins low payroll, they haven’t just sat back and collected revenue sharing money while fielding an awful team. The Marlins are competitive almost every year. Even with all the buzz surrounding the Braves late-season run, the Marlins actually finished ahead of the Braves in the standings. The Marlins may not spend a lot on payroll, but what they do spend, they spend it wisely. They appear to have an excellent scouting department that is capable of spotting good talent. Even after developing players on the farm, they are able to trade them away as high-dollar players for more good prospects. That’s why I think it’s funny that the Marlins are the ones getting busted by the CBA provision. The goal was to preserve competitive balance, and the Marlins have pulled their weight. But, that doesn’t mean I don’t support the CBA provision. To the contrary, if revenue sharing is to exist it has to be enforced. It’s enforcement may be imperfect, but it provides an incentive to be more than a welfare recipient.

One Response “Marlins Add Payroll”

  1. Millsy says:

    Interesting about upping the payroll. But do you think that perhaps they took that from investment into their minor leagues (where they have been successful, giving the picture of fantastic rate of return on MLB payroll). If they’re taking money out of minor league investment, they might not only make their team worse in the long run, but also risk more on concentrated gauranteed contracts in MLB, rather than spreading it across development.

    Given the Marlins succes, I think this sets an interesting precedent for teams like the Pirates, who have to compete with the Steelers in a football town, where winning more baseball games through direct payroll spending may not be all that close of a substitute for football fans.