Reds - General

The Votto and Phillips Extensions: Impulse or Vision?

Reds' CEO Bob Castellini / Credit: Cincinnati Enquirer

Not that long ago, John Fay asked Reds GM Walt Jocketty what he surely thought was an entirely hypothetical question: If the Reds were a $100 million payroll team, would the contract issues with Joey Votto and Brandon Phillips still loom?

“They’d be done. No question,” replied Jocketty, known to be very judicious with his words. “But we’re in a position where we have to be more careful with our long-term deals.”

Twenty days and $285.5 million later, Votto and Phillips’ extensions are, in fact, done. Blockbuster deals are common in other places, for other teams, but not in the home town of the slow-but-steady Cincinnati Reds. These agreements seemed impossible two weeks ago, not only to Reds fans but also to the team’s General Manager.

What happened, and what does it mean about the Reds?

One theory: The spending binge is simply the product of owner impulse. In the time it takes Drew Stubbs to get from first to third, Reds’ CEO Bob Castellini chucked the standard, reasonable business plan that links gradual growth in team payroll to a club’s revenue. Castellini read the paper, saw Jocketty’s hedging, conservative words and decided he wasn’t going to sit by as the Cardinals or Phillies spent more and won the National League pennant again. He was going for it (h/t: Mike Maffie).

The Votto and Phillips extensions reveal nothing more than a wealthy owner, driven by a fierce desire to win and intense loyalty to the players around him, who opened his ample wallet to solve a problem.

Impulse. That’s one theory.

On the other hand, the huge extensions may be visionary — the aggressive, calculated actions of forward-looking strategists, racing to get ahead of the rapidly changing financial currents that will soon engulf and dramatically change their sport.

One positive trend, a tidal wave of national and local media revenues will almost certainly lift the bottom lines for all MLB franchises, from the Yankees to the Pirates. That revenue, along with a performance-based uptick in attendance at GABP could well provide enough money for the Reds to afford its marquee players and a bit more.

On the negative side, growing disparities in local broadcast revenues will dramatically widen the gap between the big market teams and the rest. The Reds will invariably lose the escalating off-season battles for meaningful free agents.

Given that context, it makes perfect business and competitive sense for organizations like the Reds to lock down their own players now, before the massive tide of TV money from both coasts washes up in Pittsburgh, Kansas City and Cincinnati and carries away their rising superstars.

The crest of that wave became visible this off-season and originated, for a change, in places other than New York, Philadelphia and Boston. Enormous free agent contracts were handed out by the Miami Marlins (Jose Reyes, Heath Bell, Mark Buehrle), Detroit Tigers (Prince Fielder), Texas Rangers (Yu Darvish) and the Los Angeles Angels (Albert Pujols and C.J. Wilson). Sadly for teams like the Reds, the new world of baseball revenue is about to become even more skewed against them.

The truly noteworthy aspect of the Votto extension, that it was reached two seasons before the first baseman becomes a free agent, is the tell that the Reds recognized the need to act pre-emptively.

Back to Jocketty’s reply on March 24. Was the Reds’ GM just low-balling expectations, secretly knowing that Fay’s question wasn’t so hypothetical, but being unwilling to admit it?

I don’t think so. More likely, it was a seismic change in baseball fortunes that intervened. On March 27, a group led by Magic Johnson bought the Los Angeles Dodgers for a staggering $2+ billion. Overnight, the value of the other twenty nine baseball franchises massively increased, collectively by billions and billions of dollars.

That West Coast earthquake and the free-agent-spending tsunami it will cause, decisively precipitated the Reds’ new payroll strategy and jumped the Votto and Phillips negotiations abruptly into hyperdrive.

Timing? The Dodger mega-sale was announced three days after Jocketty’s sober assessment, seven days before news of Joey Votto’s agreement leaked into the twitterverse.

The Votto and Phillips extensions may partly be explained by the owner’s passion, but they also make rational — even far-sighted — sense in the quickly changing financial landscape of professional baseball.

5 thoughts on “The Votto and Phillips Extensions: Impulse or Vision?

  1. Man great article Steve. I believe it’s more likely impulsive than a vision, but there definitely was a vision that led him to be impulsive. The vision of BOTH Votto and Phillips in Dodger blue, as well as vision of more money coming in…but both of them begot the impulsive framework for the deal. And there’s no way they’re done.

    I doubt you’ll see the Reds give up very many free agents. They’ll sign their players long term, they’ll develop their own talent, regardless of who is in place at the major league level, and they’ll make trades. The vision is being realized right now. This offseason is going to be typical, in a sense as the Reds will make signings when they fall into their laps(Madson) and then they’ll take initiative and go get the pieces they feel they need by any means necessary(Latos, Marshall).

    On that note, I wonder how people are feeling about the Sean Marshall trade now? I’d say we won that one.

  2. Great article. This was purely visionary in my eyes. The Dodgers sale is a more momentous event than the causal fan realizes. But, we can see the changing game in the Angels TV contract and subsequent spending spree, the Rangers and so on. Baseball is about to enter a new economic reality and small market teams need to get ahead of the curve. I believe that there will be a number of extensions of younger players signed that are backloaded in anticipation of increasing revenues.

    Greater increasing revenues for large market teams are a serious concern for parity. If the luxury tax threshold increases as revenue increase, this has the potential to make Major League Baseball look more like a professional European soccer league where there is a true division between the haves and have nots based purely on money. I, for one, do not want to see this in baseball so I hope that in the near future the league and the Union have a serious discussion about the luxury tax/salary cap if we want to maintain a truly competitve league for 30 teams (okay 29, the Astros don’t count).

  3. Great article. I think the most important part of all this is that RN now has a Magic Johnson tag.😀

  4. Solid read, and I tend to agree that Castellini said, well I might lose some money short term, but when I sell, I’m going to make a huge profit on this team. That will more than make up for any short term loss.

    Great article. I think the most important part of all this is that RN now has a Magic Johnson tag.

  5. Pingback: Series Preview: Minnesota T(wins) coming soon | Redleg Nation

Comments are closed.