My dad — a real estate lawyer — likes to dispense advice about home ownership that I only sort of pay attention to because millennial writers can’t buy homes in New York, silly. But the general gist is that a second home is not a great investment. (I know. A second home? In this economy? But go with it.) At least in a strictly financial sense. It’s illiquid and unpredictable and generally a stressful way to try to move money around in the hopes of ending up with more of it.
The caveat to this advice, the overwhelming exception that keeps the real estate market afloat in certain areas, is if you actually want to be able to go on vacation there. You’re paying then not for some future return of bigger money, but for the enjoyable experience made possible by owning the home. Don’t think of it as a stock or a bond (are they different?); think of it as a thing you’re buying. You know, how spending money often works.
In this way, owning a vacation home is — or should be — like owning a baseball team, or the exclusive right to employ Mookie Betts: needlessly painful if your primary objective is maximizing return on investment, but a hell of a lot of fun if you’re in it for the dynamic on-field product, soaring vistas, and escapism.
Paying Betts $27 million in 2020 — a bargain for a player as talented, decorated, and popular — then, is a bad investment if John Henry and the Fenway Sports Group are primarily concerned with having the maximum amount of available money in 2021. It is a good investment, however, if what he wants is for fans to be able to watch Betts play baseball in a Boston uniform.
It really is that simple. If the Red Sox were primarily concerned with fielding a talented team at Fenway Park, they would still have Mookie Betts today. Instead, they’ve shipped him and David Price to the Los Angeles Dodgers as part of a three-team trade that ultimately netted Boston many years of cheap team control over outfielder Alex Verdugo and pitcher Brusdar Graterol.
And the extenuating details, which purport to offer an explanation, do little to provide an exoneration. The Red Sox did not want to pay the Competitive Balance Tax levied against teams who spend over the sport’s soft payroll limit ($208 million for 2020), and did not want to pay the extra tax for exceeding it in successive years. But their penalty — projected at about $12.4 million — is prohibitive to an ownership group valued at $6.6 billion only insofar as it wanted it to be.
Major League Baseball’s owners bargained for this luxury tax precisely so it could serve as a soft cap and a public-facing abdication of agency over ambitious spending. Without a salary floor applying upward pressure, it’s farcical to claim that the suppression of big-market payrolls is a competitive balance issue, anyway. Owners built this system not to level the playing field but to give themselves an excuse to trade the Mookie Bettses of the world before they’re allowed to make market value.
So now let’s talk about that.
If Boston had paid Betts the $27 million he is owed this season, he would still require either an extension or re-signing as a free agent to return in 2021. The Red Sox, like many or most teams, would have fans believe that this — a player’s hard-won and often post-prime opportunity to earn, barring collusion or an analytical groupthink that approximates it, his true market value — is in fact a handicap on them when it comes to top-tier talent. Players should be both cheap and long-term controlled, and if they can’t be one they should be the other.
An All-Star player approaching free agency is a ticking time bomb in terms of value. Better flip him now lest he be rendered an All-Star player with an ability to command an All-Star salary.
We should be uncomfortable with the way this treats adult professionals like indentured servants (at best) who lose all value when they obtain agency. But also: Betts’ value to the Red Sox shouldn’t be how much they can essentially sell him for, it should be how well he performs for them while they’re paying him.
This is a common framing device for teams whose premier players are in a walk year. But the Red Sox wouldn’t get “nothing” even if Betts refused to re-sign with Boston — they would get literally the ultimate possible payoff for any sort of smart roster construction: a season’s worth of the second-best player in all of baseball, on their team. They would get his highly productive services during the time that they pay him. Not some prospect potential equivalent of one risk-assessed season of Mookie Betts but literal Mookie Betts! Would you say the Astros got “nothing” from having Gerrit Cole on the team in 2019?
It is difficult to overstate this but also impossible to understate it. The point of building a baseball team is for it to be good at winning baseball games. Betts makes Boston better in that respect. There isn’t some higher plane of “winning” that only billionaire businessmen can understand. Next season’s wins are not more valuable than this season’s, and you can’t reliably parlay one win this year for two wins next year no matter how many proprietary algorithms you run.
And what’s really rich: The Red Sox have already proven that spending money on this specific team works — they had a historically dominant season that ended in a championship in 2018. They can keep that very successful team relatively intact — the only catch is they have to pay them like winners. John Henry, estimated net worth $2.7 billion, can afford to do so. If he’s not interested in building and enjoying the best team his money can buy, why bother owning a baseball franchise at all?
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