Contract Negotiation MLB Players MLB Teams

The Struggling Economy and its Effect on Free-Agent Signings

Buster Olney of ESPN reported that,

“There is a growing feeling within the industry that the nation’s economic struggles are going to have a major impact on the decisions of some teams. Some executives and agents believe a lot of teams might shy away from long-term obligations knowing that the disposable income of many of their fans might disappear —— and disposable income is what the baseball industry relies upon. More clubs may be apt to cut payroll or hold their budgets in place, rather than spend, because of the fiscal uncertainty. Some executives and agents talk about the upcoming off-season and increasingly sound as if they are coastal residents preparing to batten down for an economic hurricane.”

When all is said and done, the current economic climate and its effect on professional sports might be the biggest sports story of the year. While the current recession has not affected the New York Yankees who spent considerable money on free agents C.C. Sabathia, A.J. Burnett, and Mark Teixeira, it clearly has influenced the decision of other organizations to sign big name free agents. Take for example Bobby Abreu. Abreu was looking for a contract somewhere in the ballpark of three years at $15 to $16 million per year. Yet Abreu remains unsigned and it appears that he is looking at offers in the range of one to two years at $8 to $10 million per year. Several other big names such as Adam Dunn, Ben Sheets, Orlando Cabrera, Pedro Martinez, Manny Ramirez and Jim Edmonds remain unsigned. Teams are hesitant in the current economic climate to spend millions of dollars on players who are past their prime or injury prone. Even players like Andy Pettitte and Jason Varitek, who initially turned down offers from the Yankees and Red Sox to look for more money appear to have no other options out there. They will be forced to return to their former teams for a lower salary or to retire (Pettitte has already signed).

It will be interesting to see how this story plays out in 2009. A number of free agents may have to take significant pay cuts or sit out the upcoming season. It will also be interesting to see how the economic climate affects attendance figures. While the big market teams such as the Yankees, Red Sox and Dodgers should have no problem selling tickets, will fans in Pittsburgh or Kansas City want to spend their hard earned money to watch mediocre teams?