Is the market going to play into the Blue Jays hands?

Like most industries, baseball has seen significant economic fallout from the coronavirus pandemic in 2020 that hit just as the season was taking off. From having no choice but to shorten the season, to losing all in-stadium attendance and revenues and extending to lower TV ratings, pretty much all aspects of the business were adversely affected.

While there is now light on the horizon, at the very least there’s a lot of uncertainty about the 2021 season. When the season begins, how long a season gets played, and what amount of in-person attendance is permitted is largely up in the air. Plausible scenarios really include everything from a repeat of little in-stadium revenue to recovering most if not all of it.

But despite all these unknowns and uncertainties, the offseason marches on and front offices must make longer term strategic and shorter term tactical decisions. Predictably, MLB has engaged in its favourite past-time, that is, crying poor and invoking financial ruins of operating losses that strain credulity and mountains of debt. Were those claims of overwhelming financial claims true, there certainly would be a huge correction in the market and deflation in the prevailing price of a win.

Undoubtedly, there has been a hit, but rather than a widespread cataclysm the more likely impact this winter stems from the uneven ripples that flow outward. Teams that were already stretching and overextended may be forced to painfully retrench, thereby creating opportunity from the crisis. Baseball is ultimately a zero-sum game: for every winner there is a loser; there are finite playoff spots and only one team wins the World Series.

The Blue Jays are, or at least should be, in better shape than most to weather the financial impact. In the early phase of a building cycle, they had modest long term financial commitments, with just under $120-million in guaranteed salaries coming into the offseason, and $60-million for 2021. That’s not only well below average, but well short of the payroll numbers they ran even in the trough of a rebuilding cycle. And little of it is dead money.

Moreover, they have the benefit of very financially stable ownership. That isn’t to say that they can run losses covered by cell phone and cable profits, that’s simply not the way it works. But being owned by a massive publicly traded corporation means no issues with access to capital markets, or piles of debt held at the team level. That’s a real issue for teams who changed hands recently, whose new owners paid huge values paid for with a lot of debt stacked on the business.

So if this winter’s market ends up heavily tilted towards buyers, with few of them and compounded by motivated sellers, there’s every reason to think the Jays actually would be among the major beneficiaries as a team strategically positioned to add and win immediately and over a longer term. In fact, one could argue that the tougher the outlook, the better they are relatively. They might have less money available in absolute terms if the outlook were abysmal, but it would further in a world of deflated salaries.

But are things really shaping up this way?

The earliest tangible glimmer of a brutal impending market was Brad Hand going unclaimed on waivers with one year left at his contract at a heretofore reasonable salary of $10-million. Granted, he’ll be 31 with his velocity down a tick, but even if he backs up to a 3.50 ERA next year (higher than any of the last five), he’d be still be a solid anchor in the bullpens of a lot of contenders (especially if expanded playoffs with more short series continues).

The other expected sign of fiscal tightness was expected to a tsunami of non-tenders, especially among the more experienced and expensive players with limited control. That deadline came and went last week, and while there was a record number of non-tenders, it wasn’t an utter bloodbath. There were a few mild surprises, but nothing shocking or that would indicate significant deflation in what teams are willing to pay for wins.

Moreover, while the free agent market has been super-frozen even by the standards of the past few years, the early indications there struck me as surprisingly robust as well. Robbie Ray ($8-million) and Drew Smyly ($11-million) are both useful pitchers, but are the exact type of mid-market veteran with question marks I’d expect would be the first to get squeezed in a really tough market. Adam Eaton and Yuli Gurriel each got $7-million guarantees coming off terrible years. Again, if the market was collapsing, it seems teams would be much more loath to gamble on them bouncing back at that price.

Granted, that doesn’t necessarily say much about what’s going to happen at the premium end of the market, and maybe the uncertainty causes more disruption, and thus opportunity, when it comes to mega commitments. That would run counter to recent MLB trends whereby teams put more emphasis and payroll on acquiring impact talent at the expense of complementary veterans who are more fungibly replaced by cheap young players. But if the 2021 and 2022 seasons (potential labour strife) are both at risk, one could be see teams hesitant to be stuck with the backend of big contracts without the front-end benefit.

There’s also the question of exactly what resources are available:

In normal circumstances, there’s be a pretty firm budget for the next year at this point, if not at the outset of the offseason. But that appears not quite to be the case, which is understandable given the circumstances. At the very least, it seems very likely there won’t be a full season of attendance, with the potential for very little in-stadium revenue both in absolute terms and relative to other teams. Rogers is ultimately publicly traded and investors hate earnings surprises, so a more conservative posture now with upward flexibility later would be logical.

Ultimately, only time will tell of course, and the Blue Jays do seem to be engaged on many of the more significant available players. Perhaps it was too much to hope that everything would fall neatly into place to land some impact players on the cheap to add to their emerging core and put in place the foundations of a serious contender over the foreseeable future.