Thursday, October 30, 2008

The Plan

With the GM's meetings around the corner, I thought it appropriate to share the general parameters of our "plan". The Padres launched this plan approximately 3 1/2 years ago, which was about a year before I was here, so I'll do my best in terms of accuracy.

Informally, the plan has four stages. At the beginning, each stage was sequential, which is to say that we couldn't implement Stage Three before successfully navigating Stages One and Two. However, once in place, all four stages continue indefinitely. We never officially "finish" any stage.

Stage One - Procure Players
Simple enough, right? However, looking back a few years, the Padres were in a tough spot organizationally. In 2004 Baseball America ranked the Padres' system 25th out of 30. In 2005 that dropped to 27th. In 2006 it bottomed out at 29th. In order to become competitive there had to be a laser-like focus on acquiring talent. Unlike the NFL or the NBA, however, the MLB draft takes time to produce Major League players, so this wasn't going to be a quick fix, especially considering we were picking somewhere in the 20's every year in the first round as opposed to the top five or ten.

In order to accomplish this goal we amassed a number of compensation picks in the draft, signed some top end draft-and-follow players, traded for a number of minor league prospects, and became very aggressive in Latin America (in part by constructing the state-of-the-art complex in the Dominican Republic). In fact, going back to 2004 and continuing through 2008, the Padres rank 6th in all of baseball in signing bonus dollars allocated to domestic and international amateurs, a ranking which belies our market size.

Spending the money, though, is only a piece of the equation. You also have to spend it wisely. Bill Gayton, our Scouting Director, and Randy Smith, our International Scouting Director, accomplished this balance, and the results began to show in 2008 as our system rocketed from 29th to 12th according to BA. These were drastic measures, and they were undertaken to expedite a normally lengthy process, which leads me to Stage Two...

Stage Two - Develop Players
Again, very simple in theory, but very difficult in practice. Once you sign all of these players, you have to move them through your system in a productive manner. Fortunately, our player development staff (field staff, strength coaches, trainers, etc) has done an unbelievable job of adopting and implementing Grady Fuson's systematic approach to development. We're not where we want to be yet, but we're well ahead of where we were. At the conclusion of this season we actually had six classification All-Stars as well as 11 players named to the Top 20 prospect list of their respective leagues. From an organizational perspective, we ranked in the top ten in OBP (1st), K/BB (1st), Runs Scored (2nd), BB/9 allowed (3rd), OPS (4th), Average (6th), K/9 (6th), and WHIP (8th).

Enough about prospects, though...

Stage Three - Produce Major League Players
A few years ago Chuck Lamar, the former GM of the Rays, infamously said, "The only thing that keeps this organization from being recognized as one of the finest in baseball is wins and losses at the Major League level." There's obviously a cheap laugh in there, but Chuck's point was that the foundation they had built in Tampa was strong, which was a necessary step, and that it was only a matter of time before that foundation led to Major League success. At the same time, Chuck acknowledged that the only thing that counts at the end of the day is winning Major League games. Everyone - front office execs, field staff, fans, you name it - likes to know that they have good young players in the system, but they really want pennants.

Unfortunately, the attrition rate is gruesome. Out of the entire pool of drafted and signed players, only about 18% of them ever get even one day in the big leagues, and only about 7% of them actually accumulate three years in the Major Leagues. It's even scarier if you examine the rounds - fewer than 50% of 1st round picks get three years in the big leagues, and from rounds two through five that number drops to about 15%. After that it plummets to the low single digits. In short, it's very difficult to scout, draft, sign, and develop Major Leaguers, so having a plan to do so isn't enough.

That's why the 2008 season, despite the trauma, was exciting for us at the end.

Chase Headley, Nick Hundley, Will Venable, Josh Geer, Wade LeBlanc, and Matt Antonelli, all players drafted in 2005 and 2006, became Major Leaguers. That is a rapid and successful ascent and a significant step in the organizational plan.

This doesn't mean that all of the above are now locked in as Major Leaguers and are guaranteed to make it to the three year mark and beyond, but just getting here is a big step. The next stage, however, is the most important one...

Stage Four - Produce Championship Players
This is the most elusive stage of all. After all, just getting guys to the big leagues isn't enough - we need to win. Like all of the other stages, this takes time and plenty of patience. It is the rare player who rises to the big leagues and doesn't miss a beat. More often it literally takes years for a player to realize his potential at the highest level. There are constant adjustments and refinements to a player's game that unfortunately can't be accelerated.

Now that we've managed to reach the Stage Three/going on Stage Four area, however, we're incredibly excited about what that means going forward. Not only will these players be fighting to solidify their Stage Four status, but also right behind this first wave are additional waves of talent currently climbing through Stage Two. I guarantee that it won't be seamless, and not everyone is going to make it through, but the journey is going to be both entertaining and meaningful.

Summary
The aspect that has made this plan all the more difficult is that while building this pipeline we were absolutely committed to competing for a Championship at the Major League level. Rebuild and contend simultaneously - that was the goal.

This is akin to undergoing a major remodel at your house, but deciding to live there at the same time... and having a dinner party for all of your friends every week.

The Padres managed this balance for a number of years, effectively hiding the construction, especially in 2006 and 2007. In 2008, however, we failed on the Major League side. There is no other way to describe it. Trying to do everything at once spreads an organization pretty thin, and this season that was exposed. Fortunately, however, our system has caught up just in time with the realization of the beginning of Stage Three.

What does all of this mean for 2009 and beyond? You can expect us to remain committed to our plan.

For us to compete on a consistent basis, we need to: 1) produce our own players and 2) rely heavily, though not exclusively, on youth. Both our process and execution get better with each year, so we continue to strengthen the early stages of the plan even as we continue to push forward toward Stage Four. We believe in the players in our system and, most importantly, we have a chance in the near future to expand our foundation at the Major League level to include some of these players.

I don't know exactly which players going to make it to Stage Four (I wish I did), but I'm confident that enough of them will in varying degrees to put us back competing for a Championship year-in and year-out, which is exactly where we want to be.

24 comments:

Alex said...

Obviously this is a stripped down, basic example (I wouldn't expect you to divulge too much of the Padres plan) but this is probably the type of strategy I would imagine all teams would have, more or less. Obviously the execution of the plan is what separates the boys from the men.

Then again, maybe I'm giving other teams too much credit. I was pretty convinced that for most of this decade the San Francisco Giants plan went as follows:

Step One: Get on Barry Bonds back
Step Two: Ride him as long as we can
Step Three: Run away when he breaks down
Step Four: Pretend he never existed


We won't know exactly how well the Padres executed until they can complete step 4, but there are definitely signs that step 4 could be on the horizon.

the scratch said...

Thanks Paul, your breakdown of "The Plan" is a reassuring read. Now that the 2008 season is behind us all we can look forward to a more positive future.

If you had a few extra minutes I'd love some clarificiation on the level of excitement the front office experienced through the promotion of the 6 rookies you mentioned.

"That's why the 2008 season, despite the trauma, was exciting for us at the end.

Chase Headley, Nick Hundley, Will Venable, Josh Geer, Wade LeBlanc, and Matt Antonelli, all players drafted in 2005 and 2006, became Major Leaguers. That is a rapid and successful ascent and a significant step in the organizational plan."

While this is indeed a terrific accomplishment, my sense is that most Padres fans would correct your statement, "Despite the trauma..." with "Due to the trauma, these players were forced to become Major Leaguers.

Not to discount their acchievements but would they have made it to the show if we were chasing the penant all season?

How many other teams would have brought them up?

I don't want to come accross as a 'glass half empty' kind of fan but I definitely want some of whatever your sipping on out of your half full glass.

DANIEL said...

I like this plan alot. I have followed each and everyone of your farm teams for the past 5 years. I have also printed and tracked your draft picks during that time span. I can see the incremental improvement in the players stats as well thru the years. It seems like there has been marked improvement starting with the 2005 draft. This past year's draft could go down as one of the best drafts in Padre history!! All that being said something must be done to reward fan patience at the Major League level during this rebuilding period. Get the fans involved with the progress of "The Kids." The plan laid out should be marketed and as such the ticket prices should be dropped not just frozen. I would rather you sink the $9mm you would give Giles, into signing more Latin players. Latin players are 16-17 yr olds and you currently can not draft kids stateside in that age range; therefore, loading up on younger latin players will only strengthen your farm system long term. The Padre farm system is going to bust out by 2011 with a steady 3+ major league ready prospects a year. Please Please do not trade Kyle Blanks [38th round], he may be the one decent guy[his stats are exactly what you guys say you are looking for in a hitter] that comes out of the Matt Bush draft year fiasco. Get him playing outfield this year. Bring him up mid-season if he proves he can handle AAA pitching and outfield play. Do not trade Peavy unless you get a boat load in return, and if you do trade him, wait like Cleveland did until the trade deadline. Tell Atlanta to take a hike if they do not want to play ball. They do not want to trade a top prospect? Who the H do they think they are trading for? Possibly the best pitcher in baseball! I would propose that you try to swing a 3 way deal that includes Tampa or Texas. Boston looks to have a few chips to trade as well. Stay away from the Yankee prospects, they are always overhyped and never really seem to produce. Tell Sandy I see the brillance in his plan, he just needs to market it better, throw the fans a bone by reducing ticket prices or taking your slowest day of the week and calling it dollar Wednesday or something [everything is a dollar] and keep emphasizing the kids!! Tell Sandy to have a State of the Padres address on Ch-4laying out where the organization is going. Put a radio link to each of your farm teams so that fans can listen to "the kids" on the radio. One last marketing move ------- Saturday night movies. Show a family movie on the Petco big screens in the park. Show a clip of "the kids" progress prior to the movie. If people do not want to attend the game, let them in free after the game, keep the concessions open. Wow am I long winded. Out!!

AztecAlum said...

Once again Paul, thank you for sharing this with us. While I like all Padres fan were very disappointed this year, we have all have to keep in mind that there are 29 other organization out there, all of which are pretty good at what they do, someone's gotta come in last (so to speak). We had a nice run the first 4 year at Petco, lets hope another run is just around the corner in '09.

dan said...

Paul, thanks for the post. The organization has made it known that there has been a substantial investment in stages 1 & 2 in the past few years. Will we get to a point where more of that investment will be shifted towards stages 3 & 4, and if so, what specific factors will need to happen?

Z.V. Sanders said...

Thanks for posting this Paul! I always enjoy reading on the procedures of organizations, and this is no exception.

Just wondering, about how many hours do you officially work each week? I assume you put in your time at the office, but still do some work on your own time like the rest of us?

What's He Thinking? said...

I guess the part I don't totally understand is that if you are "Now that we've managed to reach the Stage Three/going on Stage Four area," then why would you trade Peavy? Reaching stage three means you have major league players and you're looking to turn them into championship caliber players. You already have one in Peavy. And front line pitching is more valuable than any other commodity in baseball. If you can get 2-3 or even 4 championship caliber ballplayers for him, great for you, you just ripped off the other team. But what are the odds of that? If you think you're on the verge of step 4, I don't see why you let Peavy go anywhere. He's the guy you build around, he's the guy you market, he's the guy people pay money to see, he's the guy who starts three games of a 7 game playoff series. I guess I just don't get that part.

hector said...

Paul,

With Players Declaring for Free Agency, will you comment on some players of interest?

Also, I see Giles if retained will have 10/5 rights, so he will again be untradeable. If the team is not going to be a -serious- contender, why spend so much on him? I mean, it is a silly as paying 10 million to Maddux. I would rather continue to see the Padres invest in the draft and give some of the young talent a chance to play everyday.

I read that Milton Bradley got a type B rating from the Elias Sports Bureau, will the team consider giving him a multiyear deal that is backloaded?

S&J Stubblefield said...

Thanks Paul,

I'll have to apologize for my fellow fans who refuse to recognize that it takes time to build these teams through internal development. Obviously we want a contending team at the end of the year, but unlike some of my fellow fans, I would rather have a season or two (two high draft picks) where we dedicated the time to development of young capable players and allowed them to come into their own. It makes no sense to go out and sign aging or inconsistent veterans if we really are going to rely on the youth of the organization.

Let the kids play and find out if they are Major Leaguers or 4A players and move on. For too many years we've heard about prospects but due to the signings and trades of veterans, we have not been able to see them. Thank you for not allowing this to happen again this year.

This years World Series was a perfect example of clubs that took the time to develop their farm systems and committed to their investments. Both the Phillies and the Rays did just that. Yeah, the Rays lost but show me a Rays fan that isn't excited about next year.

With our Pads the last couple of years, we never know from one year to the next because we go out and get these guys for one and two year deals and turnover our lineup every year. Both the Phillies and Rays know who's coming back next year, they will make minor changes and at most have to see one or two core players go (Burrell, etc.)

I appreciate the time put into this communication and enjoy reading up on the intentions of the club.

I do have one question however.

With most of our prospects being outfielders, has there been consideration of moving Kouz this offseason allowing you to move Headley to his natural position to allow room for another outfielder, or Giles moving over to his previous position in left?

I know the team has talked about moving Greene this offseason or packaging him in a deal. What type of shortstop does the club want to target, a young prospect with pop and defense or speed and contact since the two rarely go hand in hand?

With the team unsure of Edgar Gonzalez at 2nd, has the team considered having Hairston spend time in the AFL or minors learning 2nd base?

Thank you for your time.

Jake

thrylos98 said...

First of all, I have to say that I am really thankful for your forward thinking and setting up this forum for communication of your thoughts with cyberspace fans. Second, I am not even a Padres fan. I am a Twins fan. As such, I have seen the plan you outlined succeed more times than one the last decade. One needs to look no further than the Rays' success this year to buy-in. Frankly (with the exception of the Marlins), no medium/small market team was able to succeed without building a strong internal pipeline of talent and developing that talent.

I think (and again I am a neutral eye) that it makes extreme sense to trade Peavy for 3-4 good building blocks. You have to sell high and buy low. Peavy in this market would be a desirable player for a lot of teams (whether he would want to break his no-trade clause to play for those teams is another story.) As a Twins' fan I totally supported the Santana trade and I think that it will work to the Twins favor in the medium/long run (actually even in the short run by freeing $20m a year, which would have gone to a player that plays only 34-35 games a year...)

One small criticism: In order for this plan to succeed you have to give chances to young talent. I think that you have done a great job with players such as Adrian Gonzales and Chase Headly at the major league level this year and have a great pipeline with players like Greg Burke, Mitch Canham, Michael DeMark, Jeremy Hefner, William Inman, Eric Sogard, Will Venable (to mention a few). I am sure that it would be supplemented by players received in a Peavy trade. My criticism is the following (an again this is a view of someone from afar who is not passionate about individual Pardes' players): You seem to have players past their prime in key starting positions (Giles and Hofmann) who are potentially blocking the infusion of young talent. I understand that there are a lot of local ties and passion for these players, but I would make sense (according to your plan) if they were willing to accept less playing time in order for the next generation of players to develop.

I know that trying to make a small/medium market team successful, while competing with the 1000 lb gorillas is a tough job. You are on your way there. Good luck and hope to see you play the Twins in the 2009 World Series.

hector said...

Junichi Tazawa.

There has been a gentleman's agreement not to sign the Japanese players from H.S./College. I guess the kid asked not to be drafted and they followed his instructions.
Technically he is a free agent right? or what is the procedure in play.

If the kid is for real, I hope the Padres get him. I am glad you guys dodged the fukudome bullet.
Can you imagine trying to trim payroll with that contract on the books?

H said...

Thanks Paul, this is great insight. As a Phillies fan, it is amazing to look back upon the moves that were and were not made that got them to this year's championship. In Stages 1 through 3, they procured and developed a great core of home-grown MLB players like Hamels, Howard, Utley, Rollins, Burrell and Madson. Ed Wade and the scouting department deserve a lot of credit in Stages 1 through 3 for procuring, developing and not trading away these players. However, I believe Stage 4 is where Ed Wade's firing and Pat Gillick's hiring was the difference between the Phillies just missing the playoffs and being champions. Gillick is uncanny in his ability to procure championship players without giving up too much or in some cases, much at all. He knew that he did not have to give up too much from the farm to get CC when he could get Joe Blanton, expecting that Blanton would be a huge upgrade over Adam Eaton. He got JC Romero last year and Scott Eyre and Matt Stairs this year for next to nothing and they all were huge for the Phillies down the stretch and in the postseason.

obsessivegiantscompulsive said...

Thank you for sharing, very interesting to get any inside look at things, I thank you for baseball fans everywhere (not that I represent them, but I think that they should).

Alex, FYI, the Giants did not run away from Bonds when he broke down. First, he did not break down, he hit .276/.480/.565/1.045 when he was 42, if that is breaking down then I wish every Giants player would break down like that, we'd kick butt every year.

And the Giants didn't pretend he never existed, they had a celebration of past Giants players this year, and had events focused on positions spread through the year. When it was time for the outfielders, Bonds was invited and he showed up. In addition, when the Giants opened up a SF Wall of Fame, Barry was invited and came to that event as well.

And while the Giants were riding on Barry's back, Sabean drafted Noah Lowry, Matt Cain, Fred Lewis, Brian Wilson, Jonathan Sanchez, Tim Lincecum, Madison Bumgarner, Tim Alderson, Nick Noonan, as well as signing Pablo Sandoval, Angel Villalona, Rafael Rodriguez. Plus all the other young players who played in 2007/2008 and contributed good performances, like Kevin Frandsen, Emmanuel Burriss, Eugenio Velez, Alex Hinshaw, Sergio Romo, Travis Ishikawa, and Nate Schierholtz. We are ready to be competitive in 2009 (played .500 playing mostly the young guys in August/September) and if Posey is as good as advertised (despite the sad odds that was noted above) and can start for us in 2010, then we'll be ready to be contenders.

matt3bj said...

Although this is a little off topic, i can't understand why the team would possibly pick up Brian Giles when Garret Anderson will be out there. We would save some money and in the meanwhile rid ourselves of a decent player, but a player that absolutely has not lived up to what the Padres were hoping for when we first traded for him. Garret Anderson would be better than Giles in most categories. Please don't pick up Giles option, I rather see the kids play. If you want a veteran, Anderson is the guy!

David Harris said...

Paul,
Thanks for the insight. This is a very well organized plan and makes a lot of sense.

That said, I don't understand how the organization's push to trade Peavy fits into this plan? You say the Padres are on the verge of Stage 4. Peavy would seem to be the prime example of a Stage 4 player. So, why trade the leading edge player for this plan to take a step back to Stage 1/2/3 with 3-5 players?

It seems to me the organization would want to feed off of Peavy to demonstrate to the Stage 3 players what is possible. Instead, Peavy appears to be being used as an example of "if you get too good/too expensive, you're going to be shipped elsewhere."

It seems to easy to get stuck in a loop between Stages 1 through 3, instead of ever realizing Stage 4. How do you prevent that from happening?

Eitan said...

"Garret Anderson would be better than Giles in most categories."

Please list a category in which Garret Anderson would beat Giles (besides creating outs), I dare you. And remember Garret will now be in Petco!!

Cpt Top Off said...

Paul,

On a different topic, can you shed any light on the search for a new broadcaster? It's really a shame - outside of Vin Scully, I thought Vasgersian was probably the most enjoyable broadcaster to listen to.

Any chance for Dave Campbell, who once did radio play-by-play for the Pads? How about Dick Enberg, who makes his home in La Jolla and once mentioned his interest in one day doing Pads' games? Just pleeease, no Steve Quis.

Alex said...

obsessive,

I was clearly making a joke with that statement, but I think you're definitely being a bit over defensive of the Sabean regime. Certainly in recent years the Giants have made a more concerted effort in building up the farm system, but had that same effort been shown a few years earlier, the Giants might have a chance of contending quickly as opposed to the reality of mediocrity.

Citing Velez (who is a Blue Jays product by the way) as a "contributor" is a stretch considering his .299 OBP coupled with god awful defense. Not too mention the guy's track record isn't that special, especially considering he has always been too old for his minor league levels. Ishikawa? Some promise perhaps, but the likelihood is that he will be a guy that falls into the category of players who never acrew more than 3 years of big league experience.

Burris? Great speed and hands, sure, but he'll have to hit over .300 consistently to have a chance of being a league average offensive shortstop. It's hard to think too highly of any player who will struggle to slug over .350 in his career.

The Giants do have intriguing talent on the lower levels, I can't deny that, but that is due to recent efforts whereas their system and "plan" has been deficient for most of the past 10 years. The only reason the Giants were able to have any success at all this decade is because Barry Bonds went from a Hall of Fame player into one of the single greatest offensive forces of all time.

His success was their success, and yes, the Giants did turn their back on him. He did break down, as any 42 year old would, but as you pointed out he was still an excellent hitter, and yet the Giants decided to let him go and eliminate all of his decorations from around the stadium. And the ceremony he participated in where joked with Joe Torre? It was in honor of all Giants players and what you omitted was that the Giants had taken a lot of flack in the media and from fans about their treatment of Bonds, which was probably a big reason why they wanted him to attend that ceremony so badly.

Bottom line: Bonds was the reason for the Giants having the success they did the last decade and he still needed a job while being a productive player. The Giants would not give him a job, even when they clearly could use his production. How is that not turning their back on him? Aaron Rowand was the viable piece of the future they needed to clear space for? They got their home run record and sold their tickets and shirts and moved on.

David said...

On an entertainment business standpoint, as well as a baseball standpoint, I disagree with Hector and think that signing Greg Maddux was very positive in '06 and '07 even though it didn't translate to a championship either time. Another '06 future Hall of Famer - Mike Piazza - was a better deal, but also a much bigger surprise.

With that in mind, what are the chances of the Padres signing Ivan Rodriguez as the 60% catcher and have him tutor Hundley. Would he be interested in the two year 8 million dollar contract offer the Padres could probably afford?

hector said...

neither Giles or Anderson. It is obvious this is a rebuilding year. Thanks for the good and competitive years, now lets see what the new kids can do. I support the rebuilding 100%

Lets see how many of these kids reached state 4.

Congrats, I was reading that the Padres were #6 in spending in amateur talent. I wonder why the UT does not report this when they call the padres penny pinchers.

hector said...

Paul,

I was looking at the box score on Carrillo's start and saw that he struck out 6 batters in 2 innings. Seems awesome, but sometimes the stats don't tell the whole picture.

How is he looking? what are your expectations for Cesar in 2009?

Hector

hector said...

just an example on how I think statistics are not enough. I was reading the following in the Union Tribune
"... Pujols would have won if the plus-minus system outlined in “The Fielding Bible” – a defensive statistics guide. Pujols compiled an NL-best score of plus-20; Gonzalez ranked 25th in the majors with a minus-6.

Gonzalez as a lefty is able to make and has made plays that as a righty Pujols cannot attempt. Scouting + Stats is a great approach, but I feel the team is too statistically driven that it fails to analyze and use the knowledge of baseball people.

zino said...

Paul,

great post and good plan... However, the organization still has to prove, that it can draft and develop championship caliber players. Right now, I would say based on what I have seen, the jury is still out for position players. I anticipate that we will know in a couple(?) of years whether the team that Sandy Alderson assembled can actualy draft and develop championship players.

best,
zino
http://zinostop10.blogspot.com/

Dan said...

Paul,

Thank you for this bit of information, this may be the most insight into a baseball operations plan that I have ever read. I'm actually kind of shocked that there are only 23 comments.

My comment is going to bring us to current issues in collective bargaining. With the San Diego Padres operating income reaching $167 million at the conclusion to the 2007 season (Forbes), it puts the Padres 18th overall in total team revenue, 16 million below the league average (c. 183M). I have seen signs of concern for mid-market teams in the form that you point out in this discussion. The Padres have enough resources to field competitive teams and also develop top prospects; however it requires specific micro-management of talent, not to mention some surprises in player development. The team endured a tough 2008 season at the major league level because these efforts were spread too thin.

I worry that the 2001 and 2006 Basic Agreement's have changed the economic landscape of the game so drastically for large market and small market teams and their business plans so that medium market teams may be the most negatively affected by the new spending trends. For those who do not know, the 2001 agreement created meaningful luxury taxation on payroll dollars spent above a particular tax threshold of 49% on each additional dollar spent on player contracts. It also increased revenue sharing from a previous 20% to 34%, which meant that 34% of all local revenues from each team were put into a fund with the Office of the Commissioner and re-distributed back to teams evenly. This effectively gave a significant amount of money back to the small market teams to be able to compete in the increasingly polarized baseball economic climate, but had little effect on mid-market franchises. The small market teams of Tampa Bay, Milwaukee and Florida most notably have used these funds to re-invest into their minor league systems and have seen the fourth stage of this plan realized in the production of championship caliber players. Large market teams have also begun to adapt to the economic system distributing their wealth to major league talent and also developing minor league assets.

A significant problem that happened with the 2006 Basic Agreement is that the tax threshold will be increased significantly throughout the term of the agreement (through 2011) from around 135 million to over 170 million by 2011. Also, the percentage of revenue shared was dropped from 34% to 31%. This means that large market teams have the ability to spend greater amounts of money before being hit with a luxury tax and also the amount of money distributed to each team decreased by 3%. In 2007, this 3% drop in revenue sharing meant nearly $500,000 was lost for the Padres under the 31%. Sure, in a game that is about to see at least two players sign contracts in excess to $20 million per season, $500K isn’t much. However, it can go a long way to develop talent if you take a look at the facilities that teams have built in Latin America and the Caribbean Islands.

The problem that I forecast for mid-market teams is that their revenue sharing dollars really do not change that much and they are forced to effectively spread themselves thin in order to succeed. Small market and large market teams have been able to use their resources and develop successful business models through player development exclusively at the small market level or spending money and some player development at the large market level. The Padres and other mid-market teams will have the luxury to sign a few big contracts or retain a championship caliber player or two, but they also have to focus heavily on developing minor league talent with a large portion of their budget in order to be successful. Is this some of the sentiment that the Padres feel while being spread too thin?

While an unpopular statement, when word was spread that the Padres were considering a payroll of $40 million in 2009, it makes so much business sense. With a team comprised of level three developing talent, the Padres will enjoy significantly higher amounts of money to re-invest in their organization for future seasons to the tune of somewhere in the 30 million dollar amount. I believe that the Padres have done this before after Tony Gwynn retired they let the payroll decrease for 2002 and 2003, and then in 2004, they had the money and prospects to pay David Wells and also trade for Brian Giles. This business strategy resulted in two NL West Championships and one season that required 163 games to be played before a winner was determined from the NL West. I do fear however, that success for mid-market teams is going to follow in this load and re-load pattern now until new economic policy is developed in Major League Baseball.

Anyone’s thoughts?

Regards,

Dan Fisher
http://baseballecon.blogspot.com/