Wednesday, September 16, 2009

All Equal Contracts Are Not Always Equal

Yesterday, we discussed the reasons trading Carlos Zambrano made sense: The Cubs will be cash strapped in 2010 due to Jim Hendry’s insane contract structures and trading Z will alleviate the most salary and bring back the most in trade. What’s missed in the Cubs thinking about the cost here is this: Trading Zambrano will make the team worse and bad Cubs teams no longer generate the high level of fan interest as they used to.

A bad Cubs team means lower attendance and lower TV ratings. Even if tickets are sold at the beginning of the year, don’t think the Cubs really don’t care if you let the ticket rot in your desk. There’s a lot of profit in $7 beers. And TV viewers are also key. Advertisers expect decent ratings and part of the Cubs strategy is to launch their own TV network. That gets hard to do if the team stinks and no one is watching.

The Cubs risk that the cost savings of trading Zambrano could be partially offset by lower revenues. Trading Z could potentially cost the team more in cash flow than dumping Alfonso Soriano and eating half his salary.

What’s even more disturbing about thinking about trading Z is that Zambrano’s contract isn’t a killer contract. Even if Zambrano himself is overpaid, the fact that he’s a starting pitcher means that the cost measurement is not of the individual starters, but the rather that of the entire rotation. People think Z’s bad at $18 million per year, but that excess cost is covered by the $500,000 in salary paid to Randy Wells. Would Z make more sense if he was paid $9 million, but Wells also made $9 million? Having a high priced starting pitcher doesn’t prevent the team from getting more starting pitching. You don’t have to free up his specific roster spot to improve the rotation.

Compare this to the Cubs outfield. Soriano, Kosuke Fukudome and Milton Bradley are virtually untradeable given their contracts, abilities and/or histories. Further, no general manager is going to allow these guys to spend a whole season on the bench. In order to get better in the outfield, you have to get these guys off the roster. Zambrano doesn’t have to go to the bullpen for the Cubs to improve their rotation.

One dimensional position players with large contracts are a much bigger problem that starting pitchers with equally large contracts. For that reason alone, trading Zambrano doesn’t make a great deal of sense. When you add in that he’s actually good at what he does, it makes close to no sense whatsoever.

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