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View Full Version : Does the market ever correct itself?


cburns
11-24-2007, 12:19 AM
After reading the many posts this offseason, and all of the reading from the past few offseasons, there has always been talk about "the market correcting itself". Has this ever actually happened? It seems like every year, mediocre players get paid more than what their statistics dictate. Maybe the only way the market could correct itself is owners colluding with one another, but won't happen. I'm not sure how one would determine if a market has been corrected or was corrected, maybe one of my fellow WSI'ers would be able to shed some light on the topic.

Foultips
11-24-2007, 12:21 AM
After reading the many posts this offseason, and all of the reading from the past few offseasons, there has always been talk about "the market correcting itself". Has this ever actually happened? It seems like every year, mediocre players get paid more than what their statistics dictate. Maybe the only way the market could correct itself is owners colluding with one another, but won't happen. I'm not sure how one would determine if a market has been corrected or was corrected, maybe one of my fellow WSI'ers would be able to shed some light on the topic.

There was a book written in the 90's titled "Lords of the Realm"

Then as now as long as you have one owner who overpays the market will stay insane.

cburns
11-24-2007, 12:27 AM
Well yeah, what was the saying Reinsdorf said, "we are at the mercy of our dumbest competitor?". There will always be one team who according to the other teams overpays. I guess when I hear the of "the market correcting itself" I think of salaries going down. I'm sure it all depends on what position in free agency is the most abundant. For instance, would Tori Hunter have been offered the same contact last offseason? Conversely, Would Gary Matthews Jr. have been offered the same contract this offseason?

The Immigrant
11-24-2007, 09:57 AM
Annual revenues for MLB were around $1.2 billion in the early 90's. They were more than $6 billion last year and continue to grow. Teams are flush with cash and it is finding its way to the players, as it should. Even the Royals can afford to take gambles by giving multi-year deals to the likes of Gil Meche. There will not be a "market correction" anytime soon in the absence of collusion, but the owners lack the incentive to violate labor laws when their teams are swimming in cash. This is the new reality.

Paulwny
11-24-2007, 10:58 AM
Once players file for FA the GM's and owners start salivating and go into a feeding frenzy over marginal players. It'll never end, the owners are and have always been their own worst enemy.
The price of poker will go up every year even though KW and JR don't want to admit this.

Lip Man 1
11-24-2007, 01:32 PM
The market has corrected itself in the past, though that was primarily because of collusion in the mid 80's, which the courts ruled baseball had to pay for.

When Bud Selig himself talks about MLB now being a six Billion dollar business you are not going to see any corrections of the type Kenny Williams has publicly talked about, for a few years or until the next labor crisis. In that case the financial 'crisis' could be an owner's invention from a posturing standpoint.

This was discussed a little on Chicago Tribune Live! Friday and the consensus appeared to be that with the "new" baseball financial order, a 100 million dollar team payroll is going to be the 'norm' for clubs... basically not even worth noting anymore.

Lip

pmck003
11-24-2007, 01:47 PM
The market will correct itself once people can't/stop paying for tickets and merchandise.

Jurr
11-24-2007, 04:28 PM
The market will correct itself once people can't/stop paying for tickets and merchandise.
Very true, but the radio/tv packages will keep things up.
I found it very interesting when I read in depth about the collective bargaining agreement. The funniest part dealt with the D-Rays and their collective receipts from other teams in '04. Just from other teams, the Rays received 34 million dollars. Their payroll was 26 million. Makes you scratch your head, doesn't it?

PalehosePlanet
11-25-2007, 11:27 AM
I don't think the market will correct itself per se, but I do think that salaries will stall somewhat in the next couple of years.

The good news is --- from our perspective --- is that Kenny seems to finally realize there will be no correction. Evidence of this is the Linebrink signing and offering Hunter 5/75; who BTW would have been batting 6th, or 7th in our lineup. Just seeing kenny offering up 15 million per for a hitter that's not even good enough to bat in the middle of our order tells you that he is not expecting a correction any time soon.

Grzegorz
11-25-2007, 11:41 AM
The market has corrected itsaelf in the past, though that was primarily because of collusion in the mid 80's, which the courts ruled baseball had to pay for.
Lip

I respectfully disagree; this is not an example of the market correcting itself.

Lip Man 1
11-25-2007, 01:32 PM
The question was asked 'has the market ever corrected itself?' Yes it did... through collusion.

It was illegal, the courts forced MLB to make good on it but none the less it was still a 'correction.'

If you are saying the market has never corrected itself without artificial means then I'd probably agree with you, but as asked, the original question made no such distinction.

Lip

slavko
11-26-2007, 12:24 PM
Every other commodity market experiences ups and downs. That's a fact of ecenomics. That this one has not doesn't mean that it won't happen, but to have it happen would require a cataclysmic ecenomic event, IMO. Forever is a long time.

downstairs
11-26-2007, 12:35 PM
Every other commodity market experiences ups and downs. That's a fact of ecenomics. That this one has not doesn't mean that it won't happen, but to have it happen would require a cataclysmic ecenomic event, IMO. Forever is a long time.

Sort of. The reason you see those ups and downs is because they're traded on a daily basis. You can see the prices change second-by-second.

Salaries are basically a once per year thing.

When you look at most every "other commodity market", it goes up almost every year.

Also, compared with every other major sports league (heck, most every other *business*), MLB players are underpaid in terms of percentage of revenue.

D. TODD
11-26-2007, 01:41 PM
Annual revenues for MLB were around $1.2 billion in the early 90's. They were more than $6 billion last year and continue to grow. Teams are flush with cash and it is finding its way to the players, as it should. Even the Royals can afford to take gambles by giving multi-year deals to the likes of Gil Meche. There will not be a "market correction" anytime soon in the absence of collusion, but the owners lack the incentive to violate labor laws when their teams are swimming in cash. This is the new reality. Exactly, MLB is bringing in money hand over fist, these players are getting paid fair market value for the times we are in, if anything they are probably not getting enough..

Oblong
11-26-2007, 01:44 PM
The question was asked 'has the market ever corrected itself?' Yes it did... through collusion.

It was illegal, the courts forced MLB to make good on it but none the less it was still a 'correction.'

If you are saying the market has never corrected itself without artificial means then I'd probably agree with you, but as asked, the original question made no such distinction.

Lip

Since when does holding down prices through illegal practices mean that it's been "corrected"? The market wasn't correct because the prices were artificially low. That may be desirable to fans who think ball players make too much money but it's not really correct. I'm not even sure what correct is supposed to mean in this context. Salaries will always go up as the revenue goes up and as someoen's willing to pay for the services.

History has shown that the first FA period following a CBA renewal has shown wacky contracts. That was last off season. By the following season things return to relative normal. We'll see how this off season pans out.

The market is whatever the users of that market have traditionally determined it to be. Mediocre free agents have been getting big contracts for years now. The players are worth whatever someone's willing to pay them.

Save McCuddy's
11-26-2007, 01:54 PM
Actually, Player salaries are not climbing commensurately with rising team revenues. At the time of the 1994 strike, the owners offered the players a revenue sharing deal that would guarantee that the players took between 48% to 52% of the overall revenue annually. Donald Fehr in his infinite wisdom turned that down in favor of the free market / free agent system. Now, with overall revenue's hitting $6 Billion and the Yankees franchise value being estimated at $1 Billion (Forbes) the players are taking an estimated 42% annually of the overall revenues. Looks like they should have taken the deal.

Oblong
11-26-2007, 02:08 PM
Yes, I agree. I didn't mean to imply that it's proportional. Just that if the revenues keep going up, as they have, then the salaries will continue to go up as they have more money to spend.