A New Financial Landscape for Rangers

by Dan M | Posted on Friday, December 30th, 2011

by DIC HUMPHREY

It seems like an eternity, but it was really less than 18 months ago that the Rangers’ financial situation had deteriorated from the Hicks’ ownership attempting to sell a minority interest to raise capital, to a full sale of the team and on to a bankruptcy proceeding as the team was leveraged above the price the franchise was able to command on the open market.  The team was a ward of the baseball state, with MLB funding operations to keep the team solvent until the ownership situation could be resolved.

How quickly things can change!  Since emerging from bankruptcy with new ownership, the team’s financial fortunes have changed as dramatically as the team’s fortunes on the field.  Two World Series appearances, season ticket sales that more than doubled, and a new television contract have boosted the team’s finances into a new stratosphere.  Gone are the days when the team had to overpay in prospects to make a trade for immediate help on the field because they didn’t have the financial wherewithal to add additional salary.  Now they have the financial footing to gamble more than $100 million to secure the services of hopefully one of the top pitchers in baseball.  Make no mistake about it, adding Yu Darvish if he signs is a huge gamble, but it has the potential for a huge reward.  It’s the type of move a team operating on a shoe string can’t make.

The financial landscape may have changed, but this is still a critical time for the Rangers’ finances as they try to position the team for the future.  Texas will contend in 2012 and probably for a couple of years thereafter no matter what moves are made this winter.  The core of the team is very good and very young.  In subsequent years though, the team could recede into mediocrity if the right decisions aren’t made now.  The White Sox and Cubs are examples of teams that aren’t competitive because they are stuck with high dollar contracts for unproductive players, and it’s a place the Rangers don’t want to go.

First, Texas is looking to identify and keep its core together.  Indications are that the team is interested in working out long term extensions with Ian Kinsler, Derek Holland, Mike Napoli and perhaps Josh Hamilton.  All have expressed a desire to stay, which is a credit to the atmosphere developed by GM Jon Daniels and his legions.

The most problematic of those extensions is Hamilton.  He is signed through this year and will turn 31 a few weeks after the 2012 season opens.  That’s older than most players hitting free agency for the first time in their career.  There is no secret that his life style early in his professional baseball career included years of alcohol and drug abuse, which delayed the start of his big league career.   How much toll have those years of substance abuse taken?  How long can he continue to play at an elite level?  He missed 41 games last season, 29 in 2010, and played just 89 games in 2009.  How long are the Rangers willing to financially commit to a player with his health issues?

Hamilton says he wants just a “fair” deal.  He leaves the impression that he’s not asking for the moon.  The answers though are often a matter of perspective.  There could be gulfs between the Rangers’ and Hamilton’s perceptions of a “fair” deal.

Kinsler has proven to be an exceptional fielding second baseman with tremendous range and a superior throwing arm.  Offensively, his combination of power and speed (30 home runs coupled with 30 stolen bases twice in the past two seasons) make him a force at the top of the batting order.  He’s still in his 20’s, so it makes sense to secure this talent for a number of years.

Napoli set career highs in batting average (.320), home runs (30), and RBIs (75) last season.  He also proved to be a much better receiver than the Rangers imagined, particularly earning high marks for his pitch calling and handling of pitchers.  It is generally thought that he’ll command around $9.0 million in arbitration this year, so a long term contract will entail an eight digit annual salary.

Holland proved to be the Rangers’ best pitcher over the last three months of 2011.  He doesn’t have enough service time to qualify for arbitration, so he will be less costly to sign.  He seems amenable to the idea of securing a contract of five years or more rather than playing arbitration roulette every year, so this deal could happen.

No one really knows how flush with cash the Rangers are, but even after the $100 million plus commitment to Darvish, rumors continue to link Texas to free agent first baseman Prince Fielder.  He is supposedly seeking a deal of at least 10 years with an average annual value of at least $20 million per year; a contract comparable to the one Albert Pujols signed.  Fielder at 28 is certainly younger than Pujols, but he’s not Albert Pujols.  His agent Scott Boras has in the past pulled rabbits out of hats for clients that looked to be overpriced, but Fielder could be a tough sell.  First of all, the two biggest bidders for free agents are sitting out this rodeo, as the Yankees (Mark Teixeira) and Red Sox (Adrian Gonzalez) are set at first base.  Fielder’s old team, the Brewers, has already moved on to plan B, such that the offers they are no longer candidates to bring back the hefty first baseman.

The Rangers continue to come up in rumors as one of the teams that are “in” on Fielder.  It seems doubtful that Texas would be willing to sign him for 10 years.  With Fielder’s weight and physique, it is entirely possible, if not probable that his physical decline will come sooner rather than later in his career.  He would be an offensive upgrade at first base in 2012, but could be a very average, very expensive designated hitter option over the final years of a 10 year contract.

The television contract with FSN is rumored to range from $1.6 billion to $3.0 billion or even more, as well as rumored to have a substantial up front signing bonus.  Obviously, with such a range, the reliability of the rumors is questionable, though even at the low end of the range, the new contract is substantial.  With this contract, the team is no longer in the financial straits of 2010.  With all this strength, the Rangers have different financial considerations, but the import of those decisions is perhaps even more critical to the team’s future than money considerations were just two seasons ago.

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