All right, class, the subject for today is high finance. New trends in investment. Voodoo economics, Part II.
Now, let me pose a hypothetical question: If you had $290 million to invest, what would you choose:
1) A villa on the French Riviera?
2) A chalet in Aspen or Vail?
3) A yacht you’d keep moored off Cap-Ferrat?
4) Fifth Avenue?
5) Standard Oil?
6) The Empire State Building?
Well, let me guess what you wouldn’t buy with it:
1) An employee who was disgruntled or unproductive where he was now.
2) An inconsistent, unpredictable and maybe incompetent executive to fill a key role in your business.
3) A work force that might or might not be able to work together or might indeed prove disruptive to the management team you already had in place.
Let’s say your principal business--or even one of them--is baseball. Do you then:
1) Give a pitcher who was 8-18 last year and is 51-78 lifetime, a $6.35-million, three-year deal, which comes to more than $2 million a year?
2) Renegotiate the contract of a second baseman who hit .260 last year with four whole home runs so as to give him an additional $12.4 million to stay with your team four more years?
3) Sign a pitcher who started 27 games last year and finished only four of them and give him $13 million for four years?
4) Sign a pitcher who was 9-12 last year, who started 26 games and completed only two and had an ERA of 4.57 to a $6.4-million, three-year contract?
5) Re-sign a pitcher who was 15-9 with a World Series championship team and gave up 235 hits in 227 innings, 98 runs and 24 home runs, for $12.4 million for four years?
6) Give another pitcher who was 9-19 and had an ERA of 4.11 and gave up 105 runs in 208 innings $5.95 million for three years?
I can remember when rich guys would throw their money away on chorus girls and their families would go to court to get them declared incompetent. These new guys don’t even get kissed for their money.
Is everybody crazy? Is it a form of mass hysteria?
Maybe these players are drawing cards? They will get it back at the box office?
A 9-19 pitcher is a drawing card? A banjo-hitting second baseman fills seats? Gimme a break!
There’s no way baseball can recoup these massive expenditures at the box office. The L.A. Dodgers drew 3 million at the gate at home last year. The Atlanta Braves drew only 980,000. This didn’t stop them from giving a third baseman who hit .230 last year--you heard me, .230!--$10.2 million for four years. Of course, Terry Pendleton is a power threat. He hit two home runs last year.
The average salary in the major leagues is $597,000. The Oakland Athletics pay $804,000 a man. Bear in mind, you multiply this by 24.
To paraphrase Winston Churchill, never have so many owed so much to so little.
You used to have to invent the electric light, the internal combustion engine, discover gold, corner the grain market, run railroads to command this kind of money. Journeyman infielders today probably gross more than Commodore Vanderbilt did in his heyday.
Do you get the impression these guys are throwing money off the back of trains? You think the Rothschilds would invest their money in a sore-armed pitcher?
There are approximately 200 players in the major leagues today, nearly a third of the total, making a million dollars or more a year. A lot of them wouldn’t have even been in the big leagues 50 years ago. Granted, times were different when Babe Ruth was making the game’s top salary of $80,000. But not that different.
Buzzie Bavasi, when he was general manager of the Angels, said it best: “You don’t mind giving big money to big stars. It’s pouring out money for the spear-carriers. They’re giving million-dollar contracts to guys they would have been giving their releases to 30 years ago.”
A year ago, the Kansas City Royals won 92 games and finished second. They gave a free-agent relief pitcher, Mark Davis, a $13.4-contract, to get them over the hump. With him, they finished sixth with 75 victories. Davis responded with a 2-7 record and an ERA of 5.11. Relief pitchers live on saves? Mark Davis had six of them. To give you an idea, the league’s leader, Bobby Thigpen had 57.
K.C. also bought another Davis, Storm Davis, for $6 million. Storm wasn’t even a squall. He started 20 games, finished none, had a 7-10 record and a 4.74 ERA.
But that’s nothing. Atlanta once gave a relief pitcher, Bruce Sutter, $40 million. For that, they got 10 wins and 11 losses in three years, an ERA of 4.76 his last year and a total of 14 saves.
Dennis Martinez of Montreal wasn’t a free agent but was about to become one. So the Expos gave him a contract for $3,166,000 a year for three years. What had he done to inspire this runaway confidence? He was 10-11 last year. He’ll be 36 next May.
Kevin Gross will be only 30 next year. But he was 9-12 last year with a 4.57 ERA. Lifetime, he’s 80-90, no threat to Cy Young’s 511 victories, Walter Johnson’s 416 or even Grover Cleveland Alexander’s 373.
So the Dodgers gave him only $6.4 million for three years, practically an insult to a 9-12 pitcher. They figure him to replace Fernando Valenzuela who was 13-13 last year and who is 141-116 lifetime and is the same age as Gross. Figure that one out and bring the answer in for Monday.
Owners have to be good game players. They’re bellying up to the table and buying chips when they have agreed to pay the players’ association $280 million for colluding to save their money three years ago. This also puts 15 new players on the auction block for them to throw millions at.
I used to have great respect for rich guys. But I’ll tell you what: Why don’t we get a deck of cards or a rigged wheel and go find these guys? P.T. Barnum spent his whole life looking for guys like these. My gambling uncle had a word for them-- marks.