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    Wednesday, June 4, 2014

    The Jonathan Singleton Deal, and the Rebuilding, Finances, and Future of the Houston Astros

    With Jon Singleton’s home run yesterday, it seems that a new era is officially under way for the Houston Astros. Although maybe it more accurately started two months ago with the call-up of George Springer. Or maybe a month ago, since that was when he took off (his first month was quite the opposite).

    Or maybe it was Monday, when the team inked Singleton to a new contract. And not just any contract, but the largest contract in history for someone without a game of Major League experience. On one hand, a guaranteed $10 million for five years (or, if the options are exercised, $35 million/eight years) seems like a steal for the Astros. One Win Above Replacement is going for about $6 million on the free agent market, meaning that Singleton could match that without even making it to 2 WAR. On the other hand, there was no way Singleton would have cost that much as a pre-arbitration, then arbitration-eligible player. On the other-other hand, that’s still not an unreasonable total, and if Singleton is good, he almost certainly would have been worth that and more. On the other hand, Singleton still hasn’t even played a game at the Major League level. On the other hand, he’s only giving up one year of free agency, worst-case scenario, so he’ll still be paid in good time if he is worth it. All I can figure out from all of that is that the deal sounds about right in balancing risk and reward for both parties (and also that I apparently have five hands).

    But this does bring up an interesting question: is this the new Astros, a small-market team? After all, they do have a rather meager $50 million payroll this season, with only two players making more than even $5 million this season (Dexter Fowler and Scott Feldman). This is a team that carried a $102 million payroll as recently as 2009; what’s going on here?

    Well, first, even at their peak, the team only once had a payroll over $100 million. Even then, a $90 million payroll shouldn’t be out of the question, right? Well, as has been written many times before, the Astros were in the midst of a full and total rebuild. I totally agree with that strategy, as it let them get players like Springer and Singleton, and top prospects like Carlos Correa and Mark Appel.

    And even more than that, what else was the team supposed to do? They traded away everything of value for prospects, so that means the only other option for immediate improvement was through free agency. Even budgeting $40 million more this season, what exactly could a team do with that much money?

    Well, the biggest single improvement would be signing Robinson Cano, the single best player on the market this past offseason. However, I think we can all agree that dumping $24 million a year into a second baseman until he’s 40 was not the way to go (plus, he’d be replacing Jose Altuve, one of the team’s brighter spots).

    The rotation would have been a likely spot to improve, probably by signing two of Scott Kazmir, Ubaldo Jimenez, Matt Garza, and Bartolo Colon, all of whom cost between $10 and $12.5 million per season, but only Kazmir hasn’t been a disappointment of those four. Worst case scenario, you just spent $23 million and didn’t really improve the rotation noticeably (and maybe more if going after them causes a bidding war).

    The remaining $20-odd million could have gone to players like Nelson Cruz or Jhonny Peralta, both of whom could have provided big improvements…except we’re talking with knowledge that we didn’t have at the time. It’s just as likely that you would have used that money on Kendrys Morales, or Stephen Drew, or Curtis Granderson, or Carlos Beltran, or any number of other players (including Shin-Soo Choo and Jacoby Ellsbury, if you’re willing to break the bank a little). No offense to those players, but that’s not a set of players that will push you over the edge. You would basically need to enter the offseason already knowing which players are going to become huge bargains the next season, a level of foresight the Astros clearly didn’t have, seeing as they just lost 100 games in three straight seasons.

    On top of that, signing those guys would mean sacrificing draft picks, which is definitely not the route that a team in the Astros’ position should be taking. If there were ever a team that should be sacrificing draft picks for short-term gain, it would be the Astros’ evil twin. Really, the only impact players they could have signed that wouldn’t have cost them key draft picks would have been international free agents, a market that they were actually active in.

    So okay, the Astros have good reason to not wade into the free agent market, really until they feel ready to compete. But that still doesn’t explain everything; aren’t the Astros a big market team? Houston is the fourth largest city in the United States, after all.

    Well, it’s not quite that straightforward. First, it’s important to realize that the teams aren’t just being sold to people in the city. Even using Metropolitan Statistical Areas (where Houston ranks fifth) isn’t quite accurate. The real thing we should probably be looking at is Metropolitan (or Statistical) Areas. Now, my knowledge on this is weak, so I’ve been supplementing it with Wikipedia, so forgive me if I mess up some of the finer details. However, the key difference seems to be that MSAs need to be based around a single city, with any other included cities being of “strong social and economic ties to the central counties as measured by commuting and employment”. What this means is that a metropolitan area can contain multiple MSAs.

    Why is this important? Well, it’s probably the best way of measuring baseball fandom, if we just want to go by population; it covers a wider area. Plus, it’s makes a degree of sense. For example, Boston’s Metropolitan Area extends all the way to Providence, RI, while their MSA doesn’t. While Providence is definitely a distinct city from Boston, it’s not like they’re likely to support someone other than the Red Sox, or too far to go to an occasional game.

    Either way, on this metric, Houston only ranks tenth (also note that the values for this ranking look like the inverse function, with huge drop-offs between the top cities before leveling off). Another relevant ranking is media markets, since TV contracts are the bread-and-butter of the game’s finances. Again, Houston only ranks tenth.

    And even tenth isn’t totally accurate; New York, Los Angeles, Chicago, and the Bay Area all of multiple teams that can draw on their support. Plus there are the more complicated cases of Toronto (which, while a smaller metropolitan area, also represents the only Canadian team, which is probably a slight boost) and Baltimore (Baltimore is sometimes lumped into the much larger D.C.-metro area, and undoubtedly still has support there from the pre-Nationals days). Meanwhile, the Astros still aren’t on a majority of TVs in their own city. No matter how you slice it, it looks like the Astros are actually drawing from a much more middle-of-the-road population base than everyone likes to assume.

    What does this all mean? Well, I think it can best be summarized like this: the Astros have had a low payroll because they are rebuilding. They probably won’t have $50 million payrolls forever. However, below-market deals like Singleton’s are a must for any team looking for a sustained run of success. And in reality, the Astros are probably much more in the range of cities like Seattle, Detroit, Miami, Atlanta, Dallas, and Phoenix than New York/Los Angeles/Chicago. Even when the team is back at full strength, I’m not certain that they’ll go past much past $100 million. Maybe the Rangers’ $115 million mark will be the gap. Either way, this isn’t some sleeping financial giant, which makes the savvy Singleton deal all the more of a godsend.

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