Tuesday, December 23, 2008

Money Talks. Some Money Talks Louder.

So did I ever tell you guys that I used to sell cars?

Oh sure, it was high-end upscale cars that cost more than most of us make in a year... but the car business is the car business, whether you're pushing Jags for Foreign Motors West or Scions for Ernie Boch Jr. No matter what you're selling, the person on the other side of the table thinks you're lying to them, that you're out to cheat them, and that no matter what price you quote them, they can get a better deal out of you, or someone else if you're not going to play ball.

Also, they have the money. They may want your car, but you REALLY want their money, and as much of it as you can take.

So when your weekly paycheck completely depends on separating as much of that money from said person as quickly and efficiently as possible, you learn a couple of things about negotiation strategies.

And so we come to the New York Yankees, who today reportedly swooped in and signed Mark Teixeira for $22.5M per year for 8 years, give or take.

Just like I expected.

Of course everyone thought I was cuckoo for thinking this -- how could the Yankees afford another $180M after laying out so much cash for C.C. Sabathia ($161M) and A.J. Burnett ($82.5M)? (Plus, Teixeira doesn't have initials for his first name! Clearly not a fit!) I believe the phrase "batshit insane" was bandied about as well. (Although it was bandied with love and affection, and therefore I don't take it personal or nothin'.)

The answer is simple: Functionally, the Yankees do not have any spending limits. Practically, the Yankees aren't even up to last year's payroll -- and they're moving into a new stadium with lots of new revenue opportunities this year. Using conservative estimates, the Yankees will probably make two to three times as much from ticket revenue as the Red Sox next year. They'll probably make 5-10 times as much as the Red Sox from their media outlets (TV, radio, etc.) Oh, by the way -- here's a dirty little secret that MLB has gone to great lengths to not mention at all: there's an offset to the revenue sharing calculation (a pot to which $100M or so of Yankee income typically goes) based on costs relating to new stadium construction. This was designed to help small-market teams finance the cost of building new stadia, by essentially upping their revenue sharing such that big-market teams bore a part of the costs of the construction. (The technical method is that a team is allowed to deduct certain stadium-related expenses from their gross local revenue for revenue sharing purposes; that gross revenue determines whether the team pays or receives revenue sharing payments.) Well guess what? The Yankees just paid an assload of money to build Yankee Stadium 2.0. Much of which will be deductible from their income in 2009 for revenue sharing. Which means that not only won't the Yankees be sharing much of that copious new revenue they're generating, there's a theoretical chance they may actually wind up receiving revenue sharing payments!!!! (It's a slim chance, true -- it's expected that the new revenue will more than offset the "credit" from the stadium expenses. But there's still a chance... and did you ever think back in 2003 that the Yankees would be paid to take A-Rod?)

But they still have to negotiate deals with these people. And that's where strategy comes in. And that's why I completely expected the Yankees to become involved in the Teixeira negotiations, and likely win them, even when Bonnie Prince Hal was denying everything.

(So did I ever tell you guys that I went to college with Hal Steinbrenner? Nice kid. Quiet. Better looking than his dad.)

"But Pimp", you say, "the Yankees went after Sabathia immediately and actively. Isn't that their negotiating strategy? Why didn't they go after Teixeira like that? They didn't even talk to him until today, apparently!"

If you want to win a negotiation, you need to know some things. Presumably, you already know your side of things -- what your parameters are, what you hope to achieve, and what you want to get from the negotiation. You also need to know who's sitting on the other side of the table -- what they're hoping to achieve from the negotiation, what motivates them, what you have that they want. Finally, you need to know who else is in the game, and what they're bringing to the table. If you have all of that information, and it is accurate, then you will "win" the negotiation. Either you will get what you want, or you will know that the circumstances are such that you were not going to get what you wanted within your acceptible parameters.

Although it's difficult, I know, pretend that you're in charge of the Yankees. You know what you have that others want -- money, and lots of it. You also have some intangibles going for you -- you're always competitive, you play in a marquee city, your captain truly Knows What It Is To Be A Yankee (/heavenly trumpets), etc. But mainly you have money, and lots of it.

First, you have in front of you Carsten Charles Sabathia. CeeCee is a sensitive sort of guy -- as Peter Gammons would put it, "a great player and an even better human being." He wants to play near his home. He wants to make his family happy. He still wants to win, of course, and he still wants to get paid... but you can't be sure that money is such a big driver for him. So how do you play this negotiation? Well, in this case, your strategic advantage -- money, and lots of it -- may not be the motivating factor. You just don't know. So you need to take the initiative. YOU make the first offer, and make it good. Use your financial advantage to your advantage. Put the dollar figure at or near what everyone reasonably expects to be the top offer anyone would rationally make to him. Hint that the offer might not be around forever, but don't pin him to the wall with a "take it or leave it within a week" ultimatum.

What does this accomplish for you? Well, first, it drives away a lot of the competition. Teams that know they can't compete with you financially, and which don't have any sort of non-financial competitive advantage, e.g. shitloads of fuckable blondes (see, e.g.. Los Angeles, Derek Lowe), are quickly out of the running, and often don't even bother to make offers. Maybe CC truly wanted to play in Oakland. We'll never know. Second, and more importantly, it tells you whether you'll get your guy. If you recall, the Yankees made their offer, and CC promptly sat on it. Didn't say yes; didn't say no. You'd think that this meant that Sabathia wasn't completely driven by money; that he was looking for an excuse to go to the team that he really wanted to play for (arguably the Angels or Dodgers). And you'd be correct. But notice what he didn't do -- he didn't reject the offer. So while you, as the Yankees, knew that money wasn't going to be the deciding factor, you now have a clue that money would be a deciding factor. So you're still in the game, because your competitive advantage is still working for you. In the end, the Yankees just upped the deal enough so that CC's interest in money overrode his interest in playing in LA -- something that the Dodgers and Angels were unable to do, since the Yankees could always add another million a year at will. And the Yankees won. Mission accomplished.

Now, you have Mark Teixeira. Teixeira, for all his expressed desire to play near his Baltimore home, still has Scott Boras as an agent. If you have Boras as your agent, money is your main concern. Period. That is why you bring in Scott Boras -- because he is adept at getting top dollar for his clients. So right away, you, as the Yankees, know that you have the upper hand in these negotiations, because you have the pot of gold, and everyone else doesn't. This time, though, you're up against the Red Sox, who also have a ton of money. Not as much as you, but enough to compete with you, and they also have many of the same intangibles that you have. They are clearly your toughest negotiating opponent.

If you are the Yankees, and you are battling the Red Sox for a money-oriented player, there is one, and only one, way to play the negotation: you MUST be the last voice that is heard at the table. You don't even need to speak before that. No matter what happens, you WILL win if you want to win. Because no matter what the Red Sox offer, you can always offer $1M/year, or $2M/year, or $5M a year more. Always. Therefore, here is what you do: you shut the fuck up. Let Buster Olney and Peter Gammons speculate about whether the Nationals will build around Teixeira on the verdant banks of the Anacostia. Let John Henry get politely pissy about Boras' hard-core negotiation strategies. Let the numbers fly around -- $160M. $170M. $178M/9 years. Let the Sox make their best offer and come thisclose to hammering out a deal.

Then wait.

The phone will ring. It will be Scott Boras. He will tell you what the Red Sox offered, and what he thinks he could reasonably extract out of them.

Then you decide whether you want Mark Teixeira on your team or not. Because it's just a matter of picking a number at that point.

Now having said that... what does this substantively do for the Yankees? Well, the Yankees are improved over the team that would have taken the field at House That Ruth 2.0 Built in April had the Yanks made no moves, that's for sure. But the team that would have taken the field then would have struggled to beat out the Orioles for last place in the AL East. Yankee fans may be gloating over this deal, but it doesn't hide the fact that the Yankees are -- gasp -- rebuilding. And this deal is, notwithstanding what Tony Maz may think, more important for the Yankees than it is for the Red Sox. If they do nothing other than sign a catcher in the rest of the offseason, the Sox will still be competitive in the AL East next year, if not favored. (Let's wait for the Rays to prove they can perform consistently before we completely hand them next year's title, okay?) If the Yankees had done nothing, they would have had Wang and a gang of unproven AAA arms in their rotation, with a rapidly aging and injury prone offense having to score 10 runs a game at least to compensate. Hardly a recipe for success.

Now, the Yankees are back in the game. Teixeira shores up what has been a black hole in the Yankee lineup the past couple of years. (Doug Mientkiewicz? Really???) Sabathia and Burnett are much, much better than any of the pre-existing options availabe to the Yankees. This is now a team built to compete. But is it a team built to win?

Probably not. The Yankees still have a lot of questions around them. Xavier Nady is the only "sure thing" in the outfield right now. Johnny Damon (remember him?) is a walking hamstring pull these days, and he's getting to the age where bat speed starts to degrade. (Just ask Jason Varitek.) Nobody seems to be sure whether Melky Cabrera can be an everyday centerfielder in the AL. In fact, it seems as if the Yankees believe he CAN'T; otherwise, there's absolutely no explanation for their interest in the withering corpse of Mike Cameron. Robinson Cano at this point is basically Julio Lugo with better press and more upside. Oh, and your shortstop has less fielding range than my Roomba. (But those unnecessary jump-throws sure look good on SportsCenter, don't they?) Finally, there's that enigma at third base. Who knows what to expect from him anymore?

IF -- and these are big ifs -- Youkilis' 2008 season was indicative of what is to come from him, and IF Mike Lowell returns to health, then the Red Sox are still a better team than the Yankees on paper. But the gap is a lot narrower now than it was a month ago. That's cause for concern on the part of Sox fans... but it's not cause for panic.

Just remember -- it's pronounced "salt-uh-la-MOCK-ee-uh"....


Hazel Maes Landing Strip said...

LARS ANDERSON. Write that name down, you will be hearing it alot over the next 12 months.

Boatdrinks said...

I fucking heard trumpets when I read that line. Of course, I have Christmas music playing, but still. Spooooooky.