I was reading my favorite baseball blog, www.shysterball.blogspot.com, and Craig, the author/blogger, had a funny spoof about a baseball bailout, inspired by the recent government bailouts of the financial industry.
About 8 months ago, I had written an email to my friend Keith Rische about a Bad Contract Pool that major league baseball needed to create. Reading Craig's posting today brought me back to my previous idea.
Below is what I wrote in the comments section on Shysterball:
Bud and the owners found their perfect storm. Wall Street exploited housing, now lets get them to exploit bad baseball contracts. The owners can sell their crummy contracts (Zito, Andruw, Sarge Jr, Wells, Rios, etc) to the surviving Wall Street banks at par or even at a premium. Wall Street can take $1bb in contracts and turn it into $3bb in new SIV's, Derivatives, Credit Default Swaps, Options, ETF's, Contract Backed Securities, etc.
The GM's get to experience Brian Cashman's luxury of wasting money on over the hill players with no recourse. Ned Colleti and Brian Sabean don't look so stupid after all.
The owners already got the money for selling off the contract and don't have to pay Lloyd's for contract insurance.
Players and agents are thrilled with the unprecedented salary boom. "Miguel Cairo is a premium utility player and the market recognizes that," said Scott Boras at the press conference introducing Miguel Cairo as the highest paid utility player in history at $12,500,000/yr.
Bud has a great new revenue source and "new media" explosion on mlb.com. He can create a Fantasy Contract Derivative League where people can trade all these new fancy financial instruments of crummy players, just like a real Wall Street trader. MLBTV airs 2-3 hours of "Fast Contracts" and "Squawk Box Baseball," ala CNBC. Jim Kramer was rumored as a host, but loses out to Erin Andrews, which turns out to be a ratings bonanza.
This opens up an entirely new world of quantitative analysis for Sabermetricians as well. Rob Neyer never saw it coming. VORP and OPS are a thing of the past.
Bud Selig needs to pounce on this opportunity. Baseball needs it and Wall Street needs it. The infrastructure is already in place. If something goes wrong, march to Congress for taxpayer relief because these institutions are "too big to fail."
Back to Me: I really think there is merit in the idea except for one major sticking point. Investors have been fleeced so much lately that nobody in their right mind would buy this crap. There's no value in bad baseball contracts, unless just to trade in a Casino market by speculating, spreading false rumors, create panic, create mania - all in the effort to drive the shares in the direction of your bet.
The ridiculousness of my idea is parallel to the ridiculousness of the housing boom. Theories of a bigger fool pervaded and the realistic implications of risk were thrown out the window. Now we see why the global economy is in this mess.
By The Way: Craig just posted this on his blog. Thanks Craig.
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