Dempster's deal shows economy may not affect free agents
Ryan Dempster signed the first big money contract of the offseason
The Chicago Cubs kept Dempster with a four-year $52 million deal
Despite the failing economy, contracts are expected to be as big as ever
It's hard to figure exactly whether Ryan Dempster's still-fresh $52 million contract -- the first big free-agent signing of the winter -- is a good move for the Cubs or a bad one. It's hard to say whether it's just baseball business as usual or the first step toward that long-rumored economic Armageddon in the game.
We've been hearing the same lame hysteria for years now, of course. All that whining about inflated salaries bringing the game down just seems so silly after a while. Last year, remember, Marlins president David Samson spat out this famous screed about Ichiro Suzuki's $90 million deal with the Mariners: "I would say it's the end of the world as we know it. It'll take the sport down, that contract."
That kind of reaction sounded stupid then, and not a whole lot smarter now. But now, when banks are dropping like Ichiro singles and Detroit automakers are threatening to go the way of the Montreal Expos, can we really rule out the possibility that baseball's economy might yet take a headfirst slide into Doomsville? Is Dempster's contract, in the midst of the worst economic turn since the Great Depression, proof that baseball is finally on its way to blowing itself up?
Well, about all we can say with certainty after Dempster signed his four-year deal on Tuesday is this: $52 million is a lot of money for a former closer who had exactly one good season as a starter -- eight years ago -- before his breakout 2008. A lot of money.
"I think," says J.C. Bradbury, an economist and university professor who runs the site Sabernomics: Economic Thinking about Baseball, "it's going to be another healthy offseason in which we're going to be dropping our jaws every time someone signs a contract."
The first big free-agent domino to fall every winter is always an interesting one. Many people point to Kyle Lohse's four-year deal with the Cardinals, at $41 million, as this year's fire-starter, though he had yet to hit the open market as a free agent when he signed. In fact, Dempster is the first important one to sign after the free-agent period began, and the interesting point about his contract is that he probably could have pulled in more than $52 million -- maybe a lot more -- had he been willing to shop around his services a little more. The Braves were after him, as were the Blue Jays and the Dodgers. Both the Yankees and Mets were at least interested. That, alone, could have driven up Dempster's price.
But Dempster, who lives in the Wrigleyville neighborhood of Chicago, wanted to stay with the Cubs, so he took the $52 million in a triumph of heart over wallet. Don't count on everyone else doing that. Don't be surprised if no one else does that.
As it is in the real world, the economy is a big topic around baseball these days. When the game's general managers get together in Las Vegas in a couple of weeks for the annual winter meetings, the economy probably will be the first topic on the agenda. Commissioner Bud Selig already has warned GMs to step carefully this winter.
I talked to a GM recently who believes -- and I'm sure he's right on this -- that the sinking global economy will touch every team in the game. No one will be immune. So the question isn't if teams will be affected as much as how much they'll be affected and what they'll do about it. And that's where the Yankees, say, and the Royals will take wildly different courses of action.
The Yankees -- yes, even the Yankees -- will feel the pinch. But because they have so much more revenue coming in than anyone else, they will continue to be the Yankees, even in these hard times. Even now, they're preparing huge offers for a number of free agents. Pitcher CC Sabathia already has a $140 million carrot in front of him to sign with the Yanks.
On the other side are teams like the Royals, who don't have thousands of businesses to choose from in their city if one of their corporate sponsors goes belly up. They're looking at possible lost revenue from ticket sales, too. They can't help but pull back in the way that they do business.
All that said, this is a sport that has grown immensely over the past few years, one that surpassed $6 billion in revenue in 2008. Over the past four years, according to Bradbury, baseball revenue has grown at a 9 percent clip per year.
"This is going to hit sports. Baseball, it does slow down with the economy," Bradbury says. "But it seems to handle it better."
The Dempster contract is the first example that baseball might get through this downturn just fine, and it helps as a base to set up free agent pitchers like Sabathia and A.J. Burnett for a huge payday . The deal is hardly textbook stuff, though. Dempster's particular circumstances are so different that it was difficult to pin down a comparable contract to work from. He was mostly a reliever from 2004-07, and a middling one at that. He had not been a full-time starter since 2002. But he worked his way back into the Cubs rotation in '08, then had his best season ever, going 17-6 with a stellar 2.96 ERA.
Does that mean Dempster, who will turn 32 next May, can continue to do that over the four years of his contract? Well, he had one other very good season as a starter, going 14-10 with the Marlins with a 3.66 ERA. That was in 2000.
A good year in 2000. Another one in 2008. "It's just screaming, 'Fluke!' at me," Bradbury says.
Dempster was dealing with the Cubs, too, a team that is operating in a different environment than, say, the Royals or Samson's Marlins. The Cubs, with Jim Hendry as GM, have been known to go on a signing tear or two in the past few offseasons, starting with the '06 winter that saw them nail down deals with pitchers Ted Lilly and Jason Marquis, infielder Mark DeRosa and outfielder Alfonso Soriano. Since the beginning of the 2006 season, the Cubs' Opening Day payroll has jumped from $94.4 million to $118.3 million, an increase of better than 25 percent. In comparison, the Yankees -- who had a $209 million payroll last season -- have seen only a 7 percent rise in that time.
Whether the game can continue to support that kind of payroll growth is as uncertain right now as the economy. One prevalent theory among baseball's executives is that the biggest names on the free-agent market -- Sabathia, Mark Teixeira, Manny Ramirez, Burnett -- will continue to get their money, but the lesser-known free agents will suffer. It's a good theory. And it may turn out to be true.
But Dempster, as good as his '08 season might have been, is hardly a top-of-the-line free agent. He was no better than the fourth best starter on the market, behind Sabathia, Burnett and Derek Lowe. And look what he got.
If that's suffering, we all should be so bad off.