(The following is being syndicated from The Captain’s Blog).
During the winter of 1996, the Florida Marlins shocked the baseball world and altered its financial landscape by spending almost $90 million on new players, including $18 million per season for Moises Alou, Bobby Bonilla, and Alex Fernandez. Fifteen years later, the now Miami Marlins are at it again.
Days after celebrating the Marlins’ World Series championship in 1997, owner Wayne Huizenga began dismantling the team.
Two days after signing Heath Bell to a three-year, $27 million contract, the Marlins also reeled in Jose Reyes, who was inked to a six-year, $106 million deal. The combined amount owed to both men in 2012 is almost 30% more than the team paid its entire roster just four seasons ago. And, if rumors are correct, the team isn’t done spending yet, with several impact names like C.J. Wilson, Mark Buehrle and even Albert Pujols reportedly still in play.
Wayne Huizenga’s lavish Hot Stove spending resulted in a World Series title in 1997, but the championship was largely overshadowed by the fire sale that followed shortly thereafter. Almost immediately after Edgar Renteria’s game winning base hit in game seven bounced past the outstretched glove of Tony Fernandez, the Marlins began slashing payroll. Huizenga cited mounting financial losses for his decision to dismantle a championship team, but subsequent analyses suggested the 1997 Marlins were profitable and the fire sale was nothing more than part of a plan to sell the team. It’s impossible to say how much Huizenga’s decision stunted the growth of baseball in South Florida, but the team’s attendance has never come close to the 2.3 million fans who watched the team in 1997.
As in 1996, there are some underlying financial motives to new owner Jeffrey Loria’s open-wallet policy. In 2012, the rebranded Miami Marlins will open up a new publicly-financed ballpark (which is currently be investigated by the SEC), and the goal is to field a competitive team during the inaugural season. Loria seems to be banking on the combination of a new ballpark and a winning team rejuvenating fan interest in the region, but what if he is wrong? The Marlins’ new stadium in Miami has been considered by some to be a big gamble for both the team and the municipality, and now, with an inflated payroll, Loria seems to be doubling down.
Marlins Historical Payroll
Note: 2012 figure is a projection.
Source: Baseball-reference.com
If the Marlins increase payroll to $100 million, but revenues do not increase as expected, could baseball be in store for another fire sale? Considering the long-term commitment to South Florida indicated by the new stadium, that doesn’t seem as likely, but it’s worth noting the team has so far refused to include no-trade clauses in their contract offers, as reported by the MLB Network’s Peter Gammons. The economics of baseball in Miami are impossible to forecast, but if the Marlins continue to add top-level talent, and can keep existing young superstars like Mike Stanton, Josh Johnson, and Hanley Ramirez, it wouldn’t take a crystal ball to predict long-term success on the field. Unfortunately, it’s also not hard to envision another fire sale.
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5 Responses to Is Marlins’ Hot Stove Spending a Prelude to Another Fire Sale?
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TIQ IQ
I’ve been wondering exactly how the Marlins can be forecasting future revenues on their new stadium in Years 2-6 of the Reyes deal (or Years 2-8 of any potential Pujols deal).
The Mets — in a much larger city and with their own team-controlled television network — witnessed dramatic attendance losses over the past two seasons after opening their new ballpark in 2009. Granted, the Mets share the market with a more successful team and have put out a fairly bad product on the field and those factors might account for some of the lost attendance.
But wouldn’t the Marlins be subject to the same risk? I don’t understand how a team with a smaller media market that doesn’t control its media rights in the same way the Mets do could be so willing to expand payroll right now. We’ve always known that the Marlins could sustain a payroll higher than the one they’d been putting out for the last half-decade; Bud Selig even said so and shamed them into spending on their own players. But with the lowest revenues in baseball the past several years, I just don’t see how they can be ramping up in this way without the inevitable selloff in a few years’ time.
The Marlins are absolutely subject to the very same risks, which is why things could get messy if the projections fall short. However, it’s worth noting that the Marlins have been very profitable, likely have a lot of cash, and benefited greatly from public financing. The Mets, however, have a big debt burden from CitiField compounded by the Madoff litigation. If not for the latter, the team would probably be on solid financial footing.
Loria has been running a low-budget operation and pocketing money for years so between the savings and the revenue sharing, yes, I agree that there are vast cash reserves which can be tapped.
But, at a certain point, higher expenses reduce profit margins, especially when the novelty of the new (and in my opinion, based on the renderings I’ve seen, hideous) stadium wears off, I can’t see Loria willing to continue funding a team in a market that has been historically cynical and tepid with its support.
It’ll all eventually crumble for the Marlins. For that reason, I find this offseason spending spree to be pretty asinine.
Wow, four-years $58 million is a real overpay for Buehrle in my opinion when Wilson is available. When you consider that Mark will be 36 in the final year of this deal, a similar age to Wilson when he finishes his next deal, I don’t see how he’s the better option. You could sign Wilson to a 6 year 87 million dollar deal and have him at the same annual average salary through his year 36 season. You can argue that Buehrle is more steady, but Wilson is clearly the better pitcher.
Well it looks like the Angels have trumped everything the Marlins tried to do at the Winter Meetings in one day. They just became a scary team by signing Pujols AND Wilson.
Weaver
Haren
Wilson
Santana
What a 1-4!