One of the big questions that sports economists must be asking themselves is if the contracts we are seeing (and the ones we aren’t seeing for some big name players) are simply the product of market correction or is it a significant change in the sports model.  In baseball, the players, due to the strength of their union and the weakness of a handful of owners, have controlled the compensation level.  This year that is not the case.  While teams everywhere are laying off personnel, it is difficult for them to give outrageous contracts to baseball players.  And in the past few years, there have been some ridiculous contracts handed just to get players  to consider going to a non-contending team (think Gil Meche). But there has been none of that this off-season.  

Now its important to realize that everyone of those contracts that is given out affects future arbitration cases.  How much a young pitcher with better numbers than, say a Gil Meche, can use his dollar figures to help make his case.  Enough of those examples and the arbitration player gets more money. And then the free agent has to be paid more than the arbitration eligible player just because he brings more experience.    

One year of being careful with those contracts is a market correction.  If it continues next year, or even if we get to spring training and many aren’t signed, we may have to begin to look at how the business is changing.

Now its too early too to really figure out if this is good for the fans or not.  My best guess is that as those players seem fit less and less into that “spoiled millionaire” title, that we find them easier to cheer for.  I also am guessing that they begin to recognize that they have to reach out to the fans to create some value for themselves.. some job security, perhaps at the end of their career. And that’s great.

One of the things that brings this all to the forefront of my mind this morning is the re-signing of Jason Varitek yesterday. Bob Ryan writes a typically pandering column today about how ‘Tek and his agent Scott Boras got what they should have expected when they chose not to accept arbitration and instead test the free agent waters.  Lots of players are in the same boat.  Jon Garland turned down a $12 million arbitration offer, and now will be lucky if he makes $4 million.  But Ryan’s column fails to question the current economics question and puts all the blame on Varitek’s statistics.  Two years ago, his statistics and more importantly his reputation would have been worth significantly more than they are this off-season.  It isn’t ‘Tek’s numbers that have driven his price down, it is the entire baseball economy.  Varitek belongs in Boston at the $10 million price he could have gotten, the Sox have just gotten lucky that they didn’t really to give him that… but its foolish to think, as Ryan seems to imply, that the Sox really showed him!  Really, the whole baseball economy has been handing “uberagent” Scott Boras lessons all over the place.  The Sox, in truth, just got lucky that it happened and they could take advantage.  They also got lucky that they didn’t complete the proposed trade early in the off-season with the Rangers that would have sent Clay Buckholtz to the Rangers for one of their young catchers, and then found out they could have just brought back Varitek for $5 million dollars.  Now with the extra option year, they can’t be forced  to give up anyone for a young catcher and they have another year to decide who they really want.

Since Boras has been as surprised as anyone about how this off-season has gone, I am wondering what lessons he has learned.  Clearly, the Yankees still need to always be given a offer of last refusal, as it worked for Teixeira.  And Derek Lowe worked out well.  But with Manny and Varitek being front line clients who won’t get what Boras touted, will that cause him to play things a little closer to the vest?  Or will that give other agents the upper hand in luring players to them.  How has the game changed?