2021 MLB Non-Phillies News/Notes

andyb 2021-02-22 23:46:36 UTC #101

The sum of venture capital projects needs to be profitable though, not each individual project. And that applies here. Their projected profit margin I imagine is substantial. Maybe not 50%, but I bet it is over 25%. That is essentially money out of the pocket on net from poor players. Yes, some need cash. But that really should be on MLB to pay them better.

When loans are made to future doctors with payback plans based upon income, the profit margin is likely much, much smaller than the margin on these loans.

German41 2021-02-23 10:44:05 UTC #102

But the investor is certainly taking a big risk and the reward needs to be commensurate with that risk. There is nothing nefarious with what they are doing and no one is forced to participate on the player side.

andyb 2021-02-23 14:17:49 UTC #103

But they are not really taking a risk. There is data on the success rate and future major league salary of every prospect. They are not offering $500K advances to 17-year-olds in the DSL who signed for $10,000 also. There is risk for any individual loan failing but not the collective.

Like any bank publishes their financial details about loans, I want to see this from these guys. If they are netting 50% of their venture capital on this they are predatory. At 5%-10% I'd concede they serve a purpose. I just doubt it is anywhere close to that. Baseball players are among the most studied people on the planet. Financial analysts can calculate like future WAR and derive salary from that. At least the ones who work for teams other than the Phillies.

German41 2021-02-23 15:18:30 UTC #104

No one forces a player into one of these deals. The player is trading future upside for upfront payment. They value $ upfront because they know that there's no guarantee of future success. Arms-length deal. not sure why you feel a need to paint the investor as a vulture.

julio 2021-02-23 15:28:01 UTC #105

Another point to be made: If the return to investors is anything like what andyb estimates, one would expect to see additional such enterprises springing up. There do not appear to be any significant barriers to entry; if something on the order of a 25% return is available, I would expect to see competitors jumping in, left and right, until the rate of return falls to a point commensurate with alternative investment opportunities.

andyb 2021-02-23 15:57:09 UTC #106

People are not forced into payday loans either. They are forced to do that by their circumstances (i.e. bills to pay). The solution for payday loans is to regulate them (cap the interest rates) so they are not predatory and do things on the other side like raising the minimum wage and providing health care so people do not need the cash to survive.

There are solutions here. The current situation is predatory though if the profit margin is too high.

andyb 2021-02-23 16:11:23 UTC #107

See this Twitter thread for some idea of what the return might be:
https://twitter.com/JoePompliano/status/1362941671386869761

By 2016 they invested $26 million in 77 players. Average deal was $350K cash for 8% of earnings. Remember these 77 players skew towards being better prospects. I imagine they also skew towards Latin American prospects who are likely poorer.

There are competitors in the market. The post notes one on the NFL side. I am sure there will be more if this remains unregulated. MLB should be paying prospects more and certainly should be providing the personal trainers, consultants and dieticians needed for them to get to the majors.

I imagine the profit share from their initial rollout of advances will be well over 25%. Maybe over 100%. They break even with Tatis alone. Are there side deals with agents with don't know about? With family members or buscones? There are LOTS of unanswered questions here before we should go pronouncing this as a good thing. It sure looks lie they are making lots of money and that money is coming from the players as a group.

julio 2021-02-23 17:16:00 UTC #108

I totally agree with this... but MLB isn't doing that, and isn't going to do that.

I'm not sure that Schwimer's business is a good thing. But I'm also not sure that it's a terrible thing. At bottom, I guess I'm rather cynical about it - it is a very capitalistic enterprise, in a very capitalistic industry in a very capitalistic society. Capitalism tends to be predatory. This enterprise, though, has a potential negative impact on the finances of only individuals who are earning at least $570,500 per year, and who almost certainly have professional agents/attorneys on retainer.

At the same time, it presumably has a positive financial impact on some players who don't actually make the majors - so there's actually a bit of redistribution of wealth here (albeit with a healthy capitalist profit for those who underwrite the enterprise).

But BLA doesn't bleed the poor to fatten the wealthy; it may tax those who were once poor, but only after they have hit the jackpot. For those who may be poor, and who never hit that jackpot, it's a windfall. BLA is capitalistic, and as such it aims to obtain a significant profit - but it beats the heck out of capitalist enterprises that bleed those who actually are poor, and that do nothing for anybody except wealthy investors.

As capitalist businesses go, I can't see BLA anywhere near the top of the list on grounds of "predatory practices."

allentown 2021-02-23 17:17:58 UTC #109

If it were that easy, the Phillies would have a lot better farm than they do.

andyb 2021-02-23 17:38:55 UTC #110

I don't disagree with most of what you say. What you don't say is what you think of my response which is to regulate it. Cap the payout amounts. Have full disclosure on what the profit share (and projected profit share) from the players is. I note projected because this thing started 5 years ago and we will not know the true profit share for 15 years.

You take the position that MLB is capitalist so there is nothing wrong with this capitalist add-on as long as it does not take money from players on the front end. If players knew the true profit margin they might have a different response.

At no point did I say this should be disallowed. All I said is it should be regulated. And then the part about MLB better providing for these players through higher salaries, better support, etc. - which we agree on. Unregulated capitalism is not always a good thing. Texas is finding that out now.

julio 2021-02-23 18:30:42 UTC #111

You'll get no argument from me on this. I would argue that unregulated capitalism is pretty much always a bad thing - or perhaps better to say, pretty much always leads to bad things.

My point wasn't that there's nothing wrong with BLA's capitalist behavior - but that it's a small-time enterprise in an economic system that's full of big-time enterprises that are far more predatory. I mean, MLB itself preys on young men, exploits their dreams of stardom rather mercilessly, then just discards most of them. Schwimer found a way to skim a few $ million from a multi-billion industry that is inherently exploitative? I won't argue that BLA is moral, or "right," but I might argue that it's entirely consistent with the rest of the industry.

zambonir 2021-02-23 19:18:38 UTC #112

While I agree with andy for the most part, part of me thinks this is also none of MLB's business. While it's true player agents have to be certified and follow a lot of rules, the league can't tell its players what to do with their money (and neither can the union since most of these guys aren't even in the union when they make their deal). Nor can they just unilaterally decide to regulate this, at best it would have to go in the CBA - because really they can only regulate the players, not the third party.

Agents do have to get approval to give their clients loans, or report third-party loans they helped arrange, so you'd think this might fall under that. Ultimately MLB is probably perfectly happy this exists, because they aren't interested in making things better for their minor leagues (regardless of all the noise this year), and neither is the major league union.

BostonRoss 2021-02-24 04:58:44 UTC #113

I can't get worked up when money is being redistributed from the very wealthy to others. Essentially, money is going from guys like Tatis to guys like the 2020 equivalent of Michael Taylor. And some to Schwimer and his partners, but even they are probably not as wealthy as Tatis.

andyb 2021-02-25 18:04:01 UTC #114

In a blast from the past the Giants signed Scott Kazmir to a minor league deal. He has not pitched in the majors since 2016. Took a couple of years off and then had a handful of innings in Indy ball. Sitting 91-92 these days with a good slider. I would not put it past him to make it back to the majors since he is still shockingly only 37 years old.

flyers19rw 2021-03-03 23:12:16 UTC #115

Lester is out for the Nats. Surgery to have his thyroid removed.

andyb 2021-03-03 23:32:10 UTC #116

Only out for a week though so he should not miss any time.

flyers19rw 2021-03-03 23:50:58 UTC #117

There can be side effects to this which can be problematic. I’m sure that he’ll have the best medical attention but this isn’t like having your appendix taken out. Tremors and other muscular issues are common.

zambonir 2021-03-04 01:06:45 UTC #118

At this point that would be like us losing Matt Moore or Velasquez though, they need him, but he's a bottom-rotation guy.

zambonir 2021-03-04 02:51:06 UTC #119

The terribleness of Mickey Callaway has also turned into another chapter of the Nick and Terry Francona story (which you'll recall involved Kapler too)

This isn’t easy, but it needs to be said. Here is my statement: https://t.co/g90fYnptH6 pic.twitter.com/hAR8tc02Zz
— Nick Francona ( @NickFrancona ) March 2, 2021

andyb 2021-03-04 16:02:37 UTC #120

JBJ to the Brewers. 2/24. Happy the Phillies did not pay that.

Also, DH and expanded playoffs appear off for 2021, though note it was a last minute agreement last season to implement them. It is probably only fair to go ahead with the current system as roster construction decisions have already been made. Assume both of these will be in the next CBA for 2022.