Salisbury says Hamels is out of line
In the Inquirer, Jim Salisbury said Cole Hamels is out of line for calling the Phillies contract offer, at 500K I believe, a low blow. Salisbury further says that Hamels is spoiled for wanting a paycheck that extends beyond his service class (i.e. years in the league) Yesterday, the Brewers and their 1b, Prince Fielder had the same issue. I think its regrettable that the beat writers take the team's stance on this issue. Hamels and Fielder generate how many millions of dollars in additional income for their teams. Why shouldn't they see any of that? Now, I'm not for allowing players to become free agents immediately, but this idea that younger players, especially stars, should be paid a pittance is ridiculous. Hamels looks around and sees schmucks like Adam Eaton get paid $8mil a year with a fraction of the performance. Of course Hamels is not going to think that's fair. Furthermore, we say 'Oh, but Hamels will get his in a couple years'. What if Hamels blows out his arm? What if he loses his effectiveness? There's no guarantee that he will get his. I'm sure if Phillies management would have offered Hamels a couple million, like 2 or 3, he would have been appeased. Does this extra money really mean that much to the team that they won't spend it on one of their most deserving players. Not paying Hamels just encourages an adversarial atmosphere where players feel like management is against them. It creates bad blood, and for a team trying to keep a nucleus together, that's not a good thing.
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Re: Salisbury says Hamels is out of line
But at the same time, if an extra $100,000 would have kept the guy happier, that seems a worthwhile investment to me.
The big story here IMO is that the Phillies are clearly uncomfortable in the emerging world of big-time baseball economics. At some point, the owners will sell the team and the current tension will be resolved--either because some Mark Cuban type buys the club with the idea that he wants to win and is willing to pay, or a corporation takes over and imposes a more clearly defined budget structure.
What's happening right now reflects the divide between those two impulses, played out by people whose track record pretty conclusively denies them the benefit of the doubt.
by dajafi on Mar 3, 2008 2:44 PM EST reply actions 0 recs
Re: Salisbury says Hamels is out of line
I actually disagree with you on this point. The Phillies actually do have a pretty solid record of hanging onto home-grown stars. Rolen stands out as the obvious exception, but his situation is pretty complicated -- he didn't leave just because the Phillies didn't pay him enough. Burrell, Rollins, Utley and Myers have all signed long-term deals with the Phillies prior to free agency.
I actually wonder what sort of a message throwing extra money at Hamels would send to those other guys, who (presumably) were paid the minimum or close to it until they reached arb years and/or inked their current contracts.
by phatj on Mar 3, 2008 3:34 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
Still, the Rollins contract looks like an act of staggering genius now, and I don't have a huge problem with how they're handling the Howard situation.
by dajafi on Mar 3, 2008 3:45 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
and, IMO, the odds are very much in favor of this benefit not paying off. let's face it: in this era of baseball, the players who give their teams a hometown discount--especially when the definition of hometown requires a pretty big stretch (as it would for the S. California native Hamels)--are so rare as to be almost nonexistent.
what is the expected benefit for giving Hamels $600k instead of $500k? do we really think that he'd submit a considerably lower arbitration figure? that he'd sign a long term deal at like $8M AAV? I wouldn't really hold my breath.
(FWIW I made this same point on Beerleaguer earlier today.)
by perfectdepth on Mar 3, 2008 4:22 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
The only point I'd make beyond what I wrote earlier is that it also plays into a perception of the team around baseball. Do they treat their players right or do they jerk them around? Whether or not the perception is fair, it's real, and there's at least some chance it might matter in some way we can't grasp now, e.g. some friend of Hamels in the game has this in the back of his mind when the Phils come courting after the guy hits free agency.
by dajafi on Mar 3, 2008 7:48 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by perfectdepth on Mar 3, 2008 9:18 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
This is what Hamels agreed to when he signed with the Phillies in 2003 (or was it 2002?). The Phillies already have thrown him a bone, so to speak, by renewing him at $500K; he's not owed any more than the major league minimum ($390K).
by phatj on Mar 3, 2008 2:50 PM EST reply actions 0 recs
Re: Salisbury says Hamels is out of line
The players cannot expect to have no restrictions on salary otherwise payroll would be completely out of control. The 6 years before free agency rule is the only thing that keeps teams other than Yankees/Red Sox/Mets/etc. competitive and even then the teams have a hard time maintaining any consistency even when run by a good front office. (i.e. Oakland/Minnesota). The Players Union decided that they preferred this structure, so if Hamels wants to complain about a "low blow" then he should direct those complaints to Donald Fehr. By no means am I without sympathy for Hamels in situation, as pointed out Eaton stands to make 16 times as much. It really sucks for him right now, but assuming he stays healthy, he will probably be reaping the benefits of the current system in about 4 years. Still, he should be pissed at the Union and Fehr, not the Phillies for taking one of the few advantages afforded to them in the current CBA. Owners lose on the draft (Boras trying to turn it into an auction) and free agency (It just takes one bad contract like Zito's to inflate the market value of everyone else), so they need to make up ground on the 6 years in between.
by zdavis2512 on Mar 3, 2008 4:14 PM EST reply actions 0 recs
Re: Salisbury says Hamels is out of line
I don't see why having a happy Hamels is such a great thing anyway. As far as we know, a pissed-off Hamels will perform even better than a contented Hamels.
If I thought Hamels might give the team a break on his salary down the road out of gratitude for its generosity today, then maybe there would be a point to overpaying him. But I don't think he would.
by taco pal on Mar 3, 2008 6:15 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by JasonB on Mar 3, 2008 8:36 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by Neduol Caz on Mar 3, 2008 10:14 PM EST reply actions 0 recs
Re: Salisbury says Hamels is out of line
But, in reference to the fact that 500K was fair because that was what was collectively bargained for by the PA, let's remember, Hamels is a 23 or 24 year old kid. He had no say in the last collective bargaining agreement. Just because the CBA strives for fairness for players in the aggregate does not mean each and every player is handled fairly. Hamels, in this case, unfortunately is getting at least 20x less than he would make in the market. Now, I'm not saying that players should hit free agency like 2 years after they enter the league. But, it would be more fair to take a player's past performance into consideration when creating the salary scale for younger players. Say a player like Hamels, because he was so successful for the team and so instrumental to its success, rather than the standard bump, how bout a double-bump? Yes, I know that's not in the CBA, and I know the retort to this response will be 'that's the CBA for you'. But, just because it's in the CBA does not make it fair. For a kid to look around the inflated salary numbers and say 'why not me', I don't think there's anything wrong with that.
And, in the future, I really hope the Phils do not expect a 'hometown discount' or any other loyalty discount for Hamels. And for those of you that posted that the Phils were right to only offer 500K, I hope you don't say he should take a hometown discount when that time rolls around. In fact, I hope you say he should go to the highest bidder, because, by the CBA rules, Hamels can choose any team he wants.
by dp8039 on Mar 3, 2008 10:52 PM EST reply actions 0 recs
Re: Salisbury says Hamels is out of line
by perfectdepth on Mar 4, 2008 8:24 AM EST up reply actions 0 recs
Agreed...
by JasonB on Mar 5, 2008 12:37 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by Neduol Caz on Mar 4, 2008 8:52 AM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
The only point I have to add is that the idea that the collective bargaining process has been unfair to Hamels should be rejected completely. The whole point of collective bargaining is that decisions are made by majority rule and uniform rules are put in place that make the labor force better off as a whole. If Hamels' views are in the minority, then that's tough. The same CBA would have been negotiated whether Hamels had been in the players' union at the time or not. Majority rules, and that's entirely appropriate because without collective bargaining all the players would be made worse off.
The union doesn't sign these CBAs to give charity to the owners, you know. They sign them because they're in their own interests. The CBA makes the players better off because (1) it prohibits collusion, which would be perfectly legal and acceptable in a non-CBA universe (see, for instance, the way MLS assigns players to different teams), and (2) it limits the number of free agents out there in any given year so that every free agent can get a better deal. I know you're not supposed to cite Wikipedia but this accords with what I've read elsewhere:
As an economist, Miller understood that too many free agents could actually drive down player salaries. Miller agreed to limit free agency to players with more than six years of service, knowing that restricting the supply of labor would drive up salaries as owners bid for an annual, finite pool of free agents.
The union intentionally limits the number of free agents on the market in any given year. They realize that if they take turns on the open market, they'll each be better able to drive up their prices when it's their turn.
So when you say that Hamels would do better on an open market, that isn't necessarily true. Hamels would certainly do better if he were to enter the open market while all of his peers still have to follow the rules of the CBA. In a pure free market, with every player available to every team simultaneously year after year, Hamels might very well do worse over the course of his entire career.
by taco pal on Mar 4, 2008 11:17 AM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
It was like more likely considered beneficial for two reasons...
- Owners would be less likely to collude and keep salaries down if there were three or four teams bidding on three or four players at a position, instead of thirty teams bidding on thirty players. Owners colluding was a big concern at the time, I'm sure.
- The system was set up by the players' union to represent the current players. Setting up six years service time as a threshold benefited pre-existing players at the expense of not yet drafted players. It's the same reason we don't vote more based on environmental issues and other things that affect future generations more, and instead focus on remedies to the housing crisis which our great-grandchildren probably won't be affected by.
by Matt Swartz on Mar 4, 2008 7:25 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by taco pal on Mar 5, 2008 2:47 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by Matt Swartz on Mar 6, 2008 12:00 AM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
Another way to put this is, when there are fewer gradations in price and talent, there are more inefficiencies in the market because there are more people whose optimal decisions are "stuck in between" the two closest options offered by the market. It's human nature for people who find themselves in that situation to err on the side of overbidding rather than underbidding. This is sort of analogous to what used to happen in the U.S. stock market before it switched its pricing system from sixteenths to decimals. After the switch was made, investors saved money - the impacts of the switch on investors and dealers didn't just cancel each other out.
by taco pal on Mar 6, 2008 11:59 AM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
Why does labor earn approximately 50% of baseball revenues and approximately 67% of most other labor revenues? Is baseball a particularly capital intensive game? I'm guessing it's probably not. My best guess is that its the oligopsony of major league baseball franchises holding wages down by not paying 0-6 service time players their market values.
by Matt Swartz on Mar 8, 2008 12:48 AM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by taco pal on Mar 10, 2008 11:58 AM EDT up reply actions 0 recs
Okay, now I can actually reply to this, even though it's kind of old.
The 50% figure is player payrolls, but that is a very large share of total expenditure. How much do you think the Phillies really pay to other employees? Maybe enough to drive it up to 51 or 52%, but not significantly different.
The 67% figure is a ballpark for the US Economy as a whole, and many other industrialized economies right now. It is sometimes called the "labor share of income" and is derived from the production function Y=(K^a)*(L^(1-a)) where Y is output, K is capital, and L is labor. Under a few assumptions, including perfectly competitive labor markets, it can be shown that total wages spent on employees should equal something close to (1-a)*Y, making the labor share of income equal to 1-a. This is somewhat of a simplification, but it's done in typical intermediate macroeconomics undergraduate courses. The US Economy has historically shown 1-a to fall between 0.6 and 0.7 or so. An imperfectly competitive labor market where the firms had more bargaining power would lead the labor share of income to be smaller, which is why I believe this to be true for baseball. It could be that baseball is more capital intensive than the average US industry, but I have a hard time believing that.
by Matt Swartz on Mar 29, 2008 6:01 PM EDT up reply actions 0 recs
Yes, I recall that function from college now that you mention it. Or at least, I recall the two exponents. I thought it had to do with inputs for national GDP growth, not income distribution, but my memory is hazy. In other words, I don't remember the derivation you mention, but I don't doubt you on that. There's a lot I don't remember from college.
I'm obviously not going to be able to figure this out by googling, so now I'm honestly just scratching my head. The thing is, every firm- or industry-specific site I'm finding seems to indicate that labor/revenue is well below 2/3. For instance: airlines (about 45%), restaurant (about 25%), some sort of oil drilling company (about 20%), hotels (35%), hotels again (about 45%), UPS (a little over 50%), health care industry (about 50%). I don't doubt that I might just be missing something here, but I promise I'm not cherry picking any of these figures. That's everything I can find.
by taco pal on Apr 2, 2008 1:34 AM EDT up reply actions 0 recs
Yeah, it does have to do with national GDP but that's just national income. If markets are competitive then wage is the marginal productivity of labor, and the resulting derivation will yield that.
I'm guessing that looking over your industries, they do seem to be a bit capital intensive, but I think the discrepency is really that the labor costs mentioned are only direct. For the restaurant one that I looked over, the materials used seem to be treated separately from labor. Obviously a fraction of the material costs when to labor to produce those materials. So the labor should really include that. Each firm's value added might have 2/3 labor costs, but not it's total revenue.
If you wanted to do the same analysis for a baseball team, the costs of the hot dog producers would get thrown into the labor costs, not just the hot dog venders. Naturally, I'm guessing the vast majority of a baseball team's revenue does not come from them, and I'm guessing the 50% revenues would be accurate. I would guess the Phillies make about $200MM and spend about $100MM on player payroll. if you wanted the number to correspond to the national number, you would have to figure that labor costs of the entire hot dog production and other small laborers included something like 250K per game to add up. I'm guessing it's significantly less than that which is one of my reasons for suspecting that baseball players make less than their competitive wages.
by Matt Swartz on Apr 4, 2008 4:02 PM EDT up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by WholeCamels on Mar 4, 2008 9:42 AM EST reply actions 0 recs
Ultimate confirmation that the Phillies were right
by taco pal on Mar 4, 2008 11:59 AM EST reply actions 0 recs
Re: Salisbury says Hamels is out of line
I was following the Twins negotiating with Santana. They offered the hometown discount and when he didn't take it, the Pohlad (sp?) ownership really did release a statement saying they thought Santana not taking the discount shows lack of loyalty.
Not saying Hamels is Santana, but the loyalty discount thing happens.
'when Hamels is an FA, he'll be playing for the highest bidder regardless of whether the Phillies paid him $500,000 or $600,000 or $700,000 in 2008. expecting anything else is naive.'
Maybe. But, is there anything inherently wrong with trying to keep your best players happy?
Plus, who knows how healthy he'll be in 2012. Again, if his arm blows out or he suffers from some other career threatening injuries, like Mark Prior did, he won't get that FA money at all. I wonder if that entered Hamels' mind
Even if, from a business standpoint, there's only like a 1% chance that he will take a discount later on, showing graciousness here at least won't create the disagreement that we're seeing.
And again, we can rationalize it however we want. Getting to the basics of it. If we knew that a worker A in industry X got paid substantially less than worker B, despite the fact that worker A vastly outperforms worker B, that's unfair, regardless of tenure. This is alleviated somewhat by arbitration in the latter years of the rookie scale. But I know if I was in Hamels shoes, I would not like the rule as it plays out. From Hamels' point of view, he is getting the shaft.
by dp8039 on Mar 4, 2008 1:30 PM EST reply actions 0 recs
Re: Salisbury says Hamels is out of line
that's just not true at all. in fact, the exact kind of situation you describe is extremely common in unionized environments.
by perfectdepth on Mar 4, 2008 1:57 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
If Hamels thinks he's getting the shaft, he needs to take it up with his union rep. Of course, his union rep will probably tell him to pound sand, but that's neither here nor there.
by phatj on Mar 4, 2008 2:16 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by perfectdepth on Mar 4, 2008 3:37 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
The system as is really doesn't help young superstars. It helps a lot of other players, including older stars and young mediocrities, but young superstars are the ones screwed over. And Hamels is feeling that for the first time.
On an open market, he'd be the hottest commodity out there. But, he doesn't work in that environment and it's to his detriment . . . now. Until he hits free agency, he's one career-ending injury away from living the rest of his life working in a field he's never prepared for as opposed to never having to work again. Of course, compared to the rest of us schlubs, we'd take that risk. But, in his position, he sees the possibility and understands what's happening and has every right to be upset about it.
by David S. Cohen on Mar 4, 2008 5:31 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by Homer on Mar 4, 2008 8:11 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by David S. Cohen on Mar 4, 2008 9:15 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by phatj on Mar 4, 2008 10:58 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by taco pal on Mar 4, 2008 2:14 PM EST up reply actions 0 recs
Re: Salisbury says Hamels is out of line
by Neduol Caz on Mar 4, 2008 2:40 PM EST up reply actions 0 recs
I understand both views
I can understand Hamels dissatisfication for the amount of money he was rewarded after such a good year, but at the same time, they cannot just go around giving huge money to such a young player. That is far too revolutionary for the front office to do.
Read blogs. They're good. http://wuhangotyouall.com
by wuhangotyouall on Mar 27, 2008 2:33 AM EDT reply actions 0 recs

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