July 25, 2014

Orlando Hudson and The New Business of Baseball

Orlando Hudson
Orlando Hudson, the former D-Backs second baseman who replaced the now retired Jeff Kent on the Dodgers roster this off-season, may very well be the face of things to come in the business of Major League Baseball.

Hudson, who had a wrist injury last season that likely limited his prospects during the off-season, was reported to have been offered $29 million over four years by the Diamondbacks to remain with the franchise. Many have suspected that Hudson turned down this offer partly because he was focused on securing a deal in either New York or Los Angeles before the free agent market disintegrated.

The Dodgers, meanwhile, have exerted extraordinary patience this off-season when chasing free agents. The Manny Ramirez negotiations in particular have shown how the Dodgers have been willing to wait out positions and players in order to stay true to their business philosophy. That philosophy, it would seem, is to focus on shorter-term deals that are tied to pay-for-performance models and incentives that reward players for delivering results while limiting team exposure to longer-term deals.

Such an approach would have been unthinkable a year ago, when teams were more than willing to shell out large, multi-year contracts with lots of up-front money in order to bring a contender to their team. Anyone remember our old friend Andruw Jones? Today, however, the business has changed. Free agents proliferate the market and those that have held out for 2008 money appear about as smart as homeowners who have refused to lower their home prices in response to a deteriorating market.

So the question remains – is Orlando Hudson the face of the “intelligent” player over the next few years? And are the Dodgers ahead of the game by exercising patience in their negotiations with players?

Let’s start with the question of Hudson. By all accounts, he is an intelligent, articulate man whose performance has been stellar. However, the three-time Gold Glove winner and former all-star earned $6.25 million last year with the D-Backs. In addition, Hudson hit a career high .305 last year with eight home runs and 41 RBIs. Why sign for $3.38 million plus another $4mil+ in incentives?
1. Geographic Sensitivity – Hudson was focused on NY and LA. Washington indicated interest, but wasn’t really a factor
2. The market changed, and Hudson knew it- the wrist was a warning sign for teams (go see how many times he had to work out for the teams courting him) and there were too many folks willing to play chicken and see what else they could land for a similar short-term deal. There weren’t many infielders of Hudson’s caliber available, but it was a buyers market.
3. Hudson’s view on money had changed- During the off-season, Hudson went to South Africa on his honeymoon and saw first-hand the impact that poverty was having on people with far less than he had.

In the end, Orlando Hudson got paid to play, and was incentivized to maximize the return to the team. In addition, he can be focused on courting potential suitors for when his contract expires and hope that the macroeconomic situation changes in the meantime. Seems like an intelligent choice when the alternative is waiting out Spring Training on a wing and a prayer.

So one to Question Two: Are the Dodgers ahead of the game in their patience and approach to player negotiations? I say yes. Consider this:
1. The Payroll is down $30mil (give or take) – the Dodgers can expect to expend $90 million or so right now for a team that is (pitching aside) eerily similar in talent to last year.
2. In most cases, the Dodgers have landed the key players they wanted to short-term deals that minimize risk and kept them from overpaying for talent and taking on risk over the long-term (a la Andruw Jones).
3. Will Ohman – The LHP turned down more money in a two-year deal earlier in the off-season from the Braves before signing with the Dodgers. Ohman told the L.A. Times “Initially, there was regret…for me to live at that address with that mind-set wouldn’t have done anything positive for me because there was nothing to foresee there would be a downturn of this magnitude.” Patience enabled the Dodgers to grab Ohman on a one-year minor league deal to see if he can play a role in the organization and was able to leverage his desire to be with a team prior to the start of the season to lock him down.

Now, Orlando Hudson (and arguably even Will Ohman) are not your typicall ballplayers who let their agents dictate their business affairs to a fault. Granted, both players overestimated the free agent market and paid for it, but both signed with a team that will be a contender in a weak NL West division and are not tied to low-paying multi-year contracts. The Dodgers get two solid players that are incentivized to perform this year both to maximize their current year earnings and the prospects for a fat, multi-year contract next offseason (should the macroeconomic environment improve).

To me, Orlando Hudson and the Dodgers represent the New Business of Baseball – a business I hope other players and teams embrace if they hope to survive and possibly even florish in today’s environment.

Comments

  1. I like the Dodgers methods this year. They used the market to their advantage, shed some dead weight and got some bargain players. Ned has done well this year. I think he has changed the way that he does things.

    I hear a lot of how the Dodgers should have signed another starting pitcher but Jason Schmidt is a good example of why not to do that just because. The rotation will not hinder the Dodgers that much provided they stay reasonably healthy.