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May 21, 2012
That's the question surrounding one of baseball's crown jewels as the sport enriches its young stars with an unprecedented urgency, changing the economics of the game
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May 21, 2012

When Will Eric Hosmer Get His?

That's the question surrounding one of baseball's crown jewels as the sport enriches its young stars with an unprecedented urgency, changing the economics of the game

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Speaking last month, Boras toned down his rhetoric, saying of Hosmer, "Evaluating and understanding the value of that kind of player and talent, that's a process that's going to take years." On the industrywide trend of long-term contracts, the notoriously uncompromising negotiator was more strident: "Whether it's in the case of a Madison Bumgarner or a Matt Moore or any of those other deals, I find those contracts to be unconscionable."

A few days earlier Bumgarner, the Giants' 22-year-old lefthander with 20 career wins coming into this year, had signed a five-year, $35 million extension with the Giants—a deal that surpassed the five-year, $14 million contract that Moore, a 22-year-old lefty with one major league start under his belt at the time, signed in December as the largest ever for a pitcher with less than two years of service time. "My job is to teach our players to [maximize their value]," Boras says, "and I can't fathom how [any agent] would give direction to players [to sign] contracts of this nature at that young of an age."

The long-term contract is a big gamble for the player who might cost himself tens of millions of dollars by signing away his arbitration and free agent years and for the team betting on unproven talent. Hosmer himself has thrown that risk into sharp relief. After tearing through the league last year, he has struggled in 2012: Though he was second on the team with five home runs, he was batting only .180 average and had a .586 OPS in his first 33 games.

Still, long-term deals have become all the rage, with teams trying to retain as much of their talent as possible at current market prices. Many executives believe that the trend has already led to a shrinking free-agent pool. As a result they expect the cost of free agents to skyrocket even more in the coming years—making it imperative for small- and mid-market teams who can't compete in bidding wars to stockpile assets at today's prices. The Rays, despite a minuscule payroll, are built to win for years to come in the high-rent AL East because they had the foresight to lock up many of their core players (Moore, ace James Shields, third baseman Evan Longoria and outfielder Ben Zobrist, among them) to team-friendly long-term deals. "There's an urgency to go this route," says an executive with a small-market AL team. "[Long-term deals] are a risk for us—but we can afford to make a $10 million mistake. We can't afford to make any mistakes with a free agent."

The Royals have adopted the lock-them-up blueprint: Since January 2011 they have handed out extensions to 26-year-old designated hitter Billy Butler (four years, $30 million), 25-year-old shortstop Alcides Escobar (four years, $10.5 million), 28-year-old outfielder Alex Gordon (four years, $37.5 million) and 22-year-old catcher Salvador Perez (five years, $7 million). "There are a lot of factors, a lot of risks with these contracts," says general manager Dayton Moore. "You have to expect the player to perform for the lifetime of the contract. You have to expect that the contract isn't going to sap the incentive from the player. You have to expect the player will stay healthy." (In fact, one of Moore's long-term assets has already gone down with an injury. Less than a month after he signed, Perez, one of Hosmer's closest friends on the team, had surgery to repair a torn meniscus in his left knee. He will be out until at least mid-June.)

Two big pieces of the Royals' rebuilding plan are still unsigned: Hosmer and 23-year-old Mike Moustakas, who is regarded as one of the best young third basemen in the game. Both are Boras clients. Is now the ideal time for the team to make an aggressive push for long-term deals for both? "I don't know," Moore says. "I know who we are as a market. We know full well we're not going to keep them all—the economics of the game simply won't allow it."

Moore knows, too, that the economics of the game are changing dramatically, that the gap between the haves and have-nots is widening. That's mostly because of a new game-changer: lucrative local television deals that are enriching teams at both spectrums, from the Dodgers—whose recent sale for a record $2.15 billion was possible in large part because their broadcast rights could fetch at least $3 billion—to the small-market Reds, who could sign first baseman Joey Votto to a staggering $225 million extension in April because of the windfall they could soon see from their own TV deal.

"The escalation of revenues coming from local sources is pushing other teams to join the Yankees and Red Sox at the top of the mountain, and it's allowing teams without a mega TV deal to get left behind," says economist Vince Gennaro, author of Diamond Dollars. "It was fairly easy to determine who the haves and have-nots were seven, eight years ago. Today I'm not so sure. Maybe the teams that are locked into long-term TV deals from five years ago will become the have-nots."

The Royals have a contract with Fox Sports Midwest for the next eight years reportedly worth about $20 million per—a deal that might look small when the Reds renegotiate their own contract with Fox Sports Ohio, which they're likely to do before it expires in 2016. The Royals' TV contract would seem to doom their chances to lock up a premium star like Hosmer, though owner David Glass—the former Walmart CEO who has long been under fire in Kansas City for his stinginess—could decide to open up his wallet to lock up his franchise player. Or, as Gennaro says, "The Royals have so much talent that maybe they can be competitive in the next two or three years, and maybe that enables them to go back to their network and redo their deal—maybe extend it with more up-front dollars, and before Hosmer gets to that free-agent window, they're able to do something."

But by then it may be too late to sign Hosmer for anything less than Joey Votto money. The clock is ticking in Kansas City. Someday soon the Royals will approach Hosmer, and he will sit down with Boras and his family and talk about his future. They'll talk about the security of a long-term deal that's likely to reach nine figures. They'll talk about the possibility of becoming Mr. Royal for life. But they'll also look at 2017 and wonder why Hosmer can't be the superstar who signs the game's next landmark megadeal. In a world where Votto gets $225 million from a small-market Midwest team, why can't Hosmer, if he becomes the player everyone expects, get $300 million? Or more?

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