Hanley Ramirez signing – Change in strategy?

Please click on spreadsheet to enlarge or print.

At first glance, the signing of Hanley Ramirez appeared to signal a shift in philosophy for the Florida Marlins management. If there was going to be a shift, this would have been the logical first step.

But as the numbers in my spreadsheet above indicate, this signing by itself does not represent any commitment of the $105 million in Revenue Sharing [RS] monies the Marlins will probably receive over the next three years prior to the planned new ballpark opening. The RS estimates are based on the statements by Pittsburgh Pirates President, Frank Coonlley, who disclosed that the Pirates would be receiving $35 million in RS monies in 2008. That level of RS monies are consistent with the Forbes estimates regarding Florida Marlins revenues from 2002 through 2007 – see the Marlins Profit and Loss statement I have compiled [link to updated version]. By any criteria of how RS monies are allocated – Marlins have less Local Revenue and lower Payroll – the Marlins should receive a greater share of RS monies than the Pirates.

Put another way, in 2006 & 2007 the Marlins pocketed 100% of the Revenue Sharing monies received [about $72 million]. In the case of the 2007 season, they did so with a major league salaries level of $30 million. They then reduced their major league salaries by $9 million for the 2008 season. So even after the new Ramirez deal kicks in for the 2009 season [$5.5 million], they would still be under their 2007 salary levels – levels at which they were able to pocket all RS monies. Think about it, even after the Ramirez deal, the Marlins are currently on track to be under their 2007 major league salaries level of $30 million for the three years [2008 thru 2010] prior to their stadium opening.

Why is that important? Because part of the company line the Marlins will put out as valid reasons for not spending money on other players is that due to their low revenues and the Ramirez deal, they can not afford to do much else. The Ramirez deal, as of today, does not even bring them back up to their 2007 level of salaries, let alone dip into using their Revenue Sharing monies for the first time since 2005.

A recent article by Juan C. Rodriguez from the Sun-Sentinel [link expired] points out that Ramirez was worried about making a mistake by not holding out for an additional $30 million dollars. An ESPN article addresses how Ramirez would have benefited from the Ryan Howard arbitration awarded salary of $10 million for 2008. My spreadsheet provides a reasonable scenario under which Ramirez could have made an additional $30 million by going the arbitration then free agency route. But that route entailed a risk of injury and or sub-par performance. This is a good example of how to quantify the cost of avoiding risk when it comes to professional athletes salaries.

The joy in South Florida over the Ramirez signing is probably the latest example of the Societal Stockholm Syndrome, the scenario whereby victims begin to feel sympathy for their captors.

About Jorge Costales

- Cuban Exile [veni] - Raised in Miami [vidi] - American Citizen [vici]
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1 Response to Hanley Ramirez signing – Change in strategy?

  1. Like I said, only Bud Selig knows but there has to be a reason that it’s happening and there has to be a reason the other clubs aren’t up in arms. For one thing they are getting beaten by the poor boys of the league. Complaining that the Marlins aren’t spending enough while the fish are in first place sounds like a hollow argument. Nobody forces clubs like the Yankees to spend what they do. The can complain about revenue sharing but they could make a lot more if they shaved some off their bloated payroll.As for the Marlins, I think Bud’s priority is to get the stadium built to assure that baseball will be in SoFla for the next 30 years. I think that includes creative financing on the club’s part.As I’ve said before, there is NO MARKET bigger than Miami-Ft. Lauderdale that doesn’t already have baseball.

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