Normal Keeps Getting Bigger

I often shake my head when Jon Heyman analyzes baseball moves. The man is well-connected and probably can get scoops with one eye open, but his opinions are often...fascinating. Anyway, this is all a precursor to say that I promise I am not about to poke fun at Heyman in this post. A tweet of his caught my eye the other night:

in last 2 days, guy w/ .298 on base percentage and guy w/ .211 batting average got big deals.
— Jon Heyman (@JonHeymanCBS) November 30, 2012

Heyman is referring to B.J. Upton (5 years, $75 million) and Russell Martin (2 years, $17 million), respectively. He rightfully points out flaws in both of these players' talents, and infers that both are getting more money than they should.

What if these aren't big deals though?

Don't get me wrong, neither $17 million nor $75 million are amounts to sneeze at. Both Upton and Martin should be able to sleep well for the foreseeable future. These totals feel big, and are mammoth when compared to the salaries of most baseball fans.

However, teams are the ones that pay these players, and the landscape of team finances is in the middle of a revolution. We are on the leading edge of television taking over the national pastime. MLB's national TV deals will double, which lines every MLB team's pockets with $20 million more to spend.*

*National media revenue is split evenly among all teams. You can do the math and double check for yourself if you wish.

However, the regional TV packages are where the shocking growth is at. The Angels, almost exactly a year ago, signed a regional deal with Fox Sports worth $3 billion for the next 20 years. Right now, the Dodgers are negotiating a regional TV package with Fox Sports for $6-7 billion over the next 25 years.  Yes, it is fair to say that the Dodgers are a more storied franchise, and the Angels technically play in Anaheim, but these are similarly successful teams in similar media footprints. I doubt the Dodgers brand name is worth $3-4 billion extra. Regional television contracts are in the midst of exploding.

B.J. Upton was signed by the Braves, and Martin by the Pirates, so at first blush the Angels and Dodgers have nothing to do with their contracts. However, they are both shoppers on the free agent market, and they bring their extra spoils to the table with them. Every new media contract adds money that can be spent in free agency, while the pool of available players remains largely static (the names change every year, but the number of them remains pretty much the same). It's pretty simple math - lots more money without any new free agents means each free agent gets more money.

Ken Griffey Jr. was arguably the most popular player in the 1990s. His biggest salary in the '90s came in 1999, and it was $8.76 million. Russell Martin's deal with the Pirates is 2 years and $17 million, an average of $8.5 million annually.

The price tags on free agents have been going up ever since free agency came to Major League Baseball. The difference now is that the rate is likely to increase at a dizzying pace. Russell Martin's deal is the biggest the Pirates have ever handed out in free agency. David Wright just signed a long-term deal with the Mets that is now the biggest ever in their history. Record contracts might turn out to be a norm in this year's market, but there are several local TV contracts up for negotiation in the next few years. This might turn out to be a buyer's market, even with record prices.