The Business Mess of the New York Mets

The Mets look to turn things around.The Mets run an awful business.  This year the team’s gate attendance is down 15% from last year, the single largest year-over-year drop for any team.  Mets ownership has to be disappointed with the team’s performance both on and off the field.  Some like to blame the team’s woes on the Madoff losses, others fault the team for not spending “enough money like the Yankees,” and some just like to blame luck.  Omar Minaya recently chose to blame certainty of revenues:

“I think when you win like [the Phillies] have, there’s a little bit more certainty of their revenues…and I think that helps you be more aggressive in procurement of higher-end players.”

Minaya’s statement clearly demonstrates how badly he as the Mets’ General Manager is missing the point.  The problem with the Mets has nothing to do with “certainty of revenues.”  Revenues were certainly there before the team’s on field play went sour.  More to the point, the problem is an inability to efficiently deploy the team’s capital.  As a team, the Mets have extracted incredibly little value in exchange for a few awful contracts, while simultaneously neglecting to spend on the draft and player development.

The Dead Weight Albatross

At $134+ million in payroll, the team boasts the fifth highest payroll in the league.  At 11 games out in the National League East and 8.5 games behind in the Wild Card, plenty of teams who spend less are outperforming the Mets by a good margin.  Let’s dig in a little deeper.

Player Salary
Johan Santana $20,144,707
Carlos Beltran $19,401,569
Francisco Rodriguez $12,166,666
Oliver Perez $12,000,000
David Wright $10,250,000
Jose Reyes $9,375,000
Jason Bay $8,625,000
Luis Castillo $6,250,000
Jeff Francoeur $5,000,000
Sum $103,212,942
Dead Weight $35,416,666
Handicap 26%

Clearly the Mets do spend money; however, 26% of their entire payroll ends up in what I call “dead weight.”  In amassing my index of the team’s “Dead Weight” I was both aggressive and modest.  My “Dead Weight” index includes Francisco Rodriguez, Oliver Perez, Luis Castillo and Jeff Francoeur.  Some would argue that Carlos Beltran fits this mold.  I would not.  Five years ago, the team signed Beltran, one of the premiere all-around center fielders in the league to what has withstood the test of time as a fair deal.  Sure, this year he was hurt, but if anything, the Mets deserve a significant share of the blame for Beltran missing a sizable chunk of time this season.  Last year, as the team was drifting off into the oblivion of irrelevance, Beltran continued to play with a bum knee, exacerbating his injury and necessitating offseason surgery, against the wishes of the team.

Where I got aggressive is in placing Francisco “K-Rod” Rodriguez on the list.  While he is not “dead weight” per se, no other team wanted to sign him to such a lucrative contract because while closers are very important, it is a position that a well-stocked and talented team could develop from within at a much cheaper rate than the prevailing wage.  Just look around the league and you will see several talented former Mets relievers at the helm of the bullpen on more successful Major League teams while getting paid a fraction of what K-Rod makes (cough cough Heath Bell for one).  This is but one reason why the Mets were praying that they could find a way to weasel out of K-rod’s contract following the TKO of K-Rod after the closer punched his father in-law at the team’s facilities.

The biggest culprit in the Dead Weight Index is none other than Luis Castillo.  Castillo has one more year left on a four year, $25 million deal signed following the completion of the 2007 season.  At no point in the contract has Castillo come close to providing production commensurate with his contract value.  To the contrary, Castillo has been more like a fat lip or canker-sore.  You know how when you bite your lip it gets a little swollen.  Once it’s swollen, you can’t help but bite that spot some more, thus further increasing the swelling?  Next think you know, what started as a little bump has morphed into a large, painful lump.  That is Luis Castillo.  This was a bad contract all along, but since dropping an easy pop fly for a sure Mets win over the arch nemesis Yankees, his presence has become an inescapable hell for the team’s fans.

Oliver Perez is not much different.  The team panicked after being unable to sign Derek Lowe, or any other front-end starter two off seasons ago.  The Scott Boras represented Perez was just coming off a mediocre year, filled with the player’s typical flashes of brilliance and total duds.  Many questioned Perez’ work ethic and focus, and sure enough, after being guaranteed more money  than most people make in a lifetime with a three year, $36 million contract, Perez fell off the face of the baseball earth.

Jeff Francoeur was a risk/reward attempt by the team to extract upside out of a once promising prospect.  You cannot fault them all that much for this attempt, despite the fact that Francoeuer is now riding the pine.  Plus, in baseball terms, his $5 million is not a massive sum of money, nor is it crippling.  However, in conjunction with the slew of other decisions made by the team, it further handicaps the team’s ability to sign new players.

I kept Jason Bay out of the Dead Weight Index for now although he has contributed virtually nothing in productivity.  According to Fangraphs, Jason Bay has provided barely more productivity than a replacement player this year.  This comes in year one of a five year deal, at the tail end of which many expect Bay’s production to slip while his back-end pay rises substantially.  Certainly this does not bode well for the future finances and performance of the team.

The Draft and Player Development

This is probably the single largest factor as to why the Mets continue to slip both on and off the field.  In 2009, the Mets were dead last in the entire league in money spent in the amateur draft.  The team spent less than 1/5th the amount of the top two draft day spenders, and 33% less than the next lowest spender.  This year was no different.  Keith Law, a draft expert at ESPN, offered the following analysis on the team’s 2010 draft:

The Mets were close to another draft disaster until they signed first-rounder Matt Harvey; after him, they didn’t’ give any player over $400,000, and stuck largely to safe, easier-sign college players. Two exceptions are 7th-rounder Greg Peavey, who showed four pitches and threw strikes in a successful stint on the Cape this summer, signed for $200,000; and 24th-rounder Erik Goeddel, a draft-eligible sophomore from UCLA who was 94-97 in relief at the end of the spring and chose pro ball over a chance to be the Sunday starter for the Bruins in 2011. They signed only one high school player, Akeel Morris of the U.S. Virgin Islands. It’s really time for Mets ownership to recognize the competitive disadvantage they’ve created with such skimpy draft budgets.

No risk, no reward.  Omar Minaya had been touted as an outstanding talent scout.  Figures that his claim to fame was “discovering Sammy Sosa.”  We all know there was not all that much there until Sosa went on a steroid-induced home run binge.  In looking at this year’s teams on top of the standings, once clear trend stands out: ALL of them spend handsomely on the draft, and all of them take some risks.

What puzzles me most is the fact that the Mets are not shy to spend money and they are not necessarily risk averse.  However, when it comes to the single place where a baseball team can extract the most value over the long run, the Mets barely qualify as bit players.  The amount they have spent on the draft is absolutely pathetic and is manifested on the team’s roster in two ways.  First, the Mets have very little young talent with high upside to call up in order to round out the team’s pitching staff, bullpen and bench.  Instead we end up with a cast of Coras, Easleys and Valentins.  Only this year has the team been able to call up some young players with upside (see: Davis, Ike).

Second, and perhaps most importantly, the Mets lack the tools necessary to make trades that will improve the Major League roster.  The team had the chips to make a deal for Cliff Lee; however, the lack of depth made such a trade nearly impossible.  Were the Mets to trade for Lee there simply would be nothing left for a rental.  Meanwhile, the Yankees took a legitimate stab, and the Texas Rangers won out, because both teams possess a stash of young, nearly Major League ready prospects.

What to do?

This is the third year in a row that at some point my fantasy baseball team sported some derivative name of “Fire Omar” (at one point it was “Fiya Minaya”).  At this point there is only one way for the team to move forward.  It is essential that they restructure and rebuild their front office to accommodate for the new realities of building a baseball team.  All successful teams now build from the ground up, while complementing their roster with the necessary players to have the most competitive team possible.   In the year of Oliver Perez’ contract signing, the Mets could have accrued the most impressive array of draft talent.  Instead for the entire draft they chose to spend a mere 10% of the cost of one year of Oliver Perez and are left with little to show for it.

The Mets have an amazing core of home  grown talent in David Wright, Jose Reyes and hopefully Ike Davis to build around on offense, and Johan Santana on the mound.  The problem is that they lack an in-house future.  It’s time for the team to stop spending on headline free agents like K-Rod and Jason Bay, who are closer to their end of days than beginning, and to start spending on a young, bright future.