Josh Johnson – The $8 Million Man

johnson_joshJosh Johnson, through his career, has displayed near-limitless potential. In 2009 and 2010, he put up a remarkable 2.80 ERA in 392.2 innings, striking out 377 and being named an all star twice. Armed with a fastball that averaged near 95 miles an hour and a near-unhittable slider, he made opposing hitters look foolish on a consistent basis. The problem is, since then, he hasn’t been healthy enough to show off that potential. In 2011, he pitched only into May before right shoulder inflammation ended his season. In 2012, he remained relatively healthy, but only put up a 3.91 ERA in 31 starts, well below the 2.98 ERA he had averaged from 2005 to 2011. And in 2013, a contract year and his first with the Blue Jays, he bottomed out. Johnson fought elbow and tricep pain all year; his fastball sat 2 miles slower than in his prime. Johnson struggled like he never had in his major league career. He posted an astronomical 6.20 ERA in 16 starts, shuttling back and forth between the disabled list and the Rogers Centre until pain in his forearm (later revealed to be bone spurs in his elbow, which were then surgically removed) shut him down for the season. Johnson, while a good bounce back candidate for a team to take a flyer on, was not by any definition a player you could count on to produce.

And yet, he received an $8 million contract from the San Diego Padres.

Let me preface this discussion by saying that I am a fan of this deal for the Padres. Johnson is the classic low-risk, low-reward pitcher, and for a rebuilding Padres team in desperate need of pitching, they couldn’t afford not to take a chance and hope they strike gold.

Nor do I think the Padres got fleeced — they paid Johnson what was, give or take maybe a million, essentially market price. And that’s what astonishes me. The market is shifting rapidly. Baseball is flush, more flush than it has ever been, thanks to television (and to think that, when TV was invented, baseball owners feared it would ruin business.) Baseball’s new national TV deal pays out $51.67 million to every team, more than double the revenue from previous deal. And individual teams’ payouts from contracts with regional sports networks has grown exponentially in just the last 10 years. In 2007, the Braves signed a TV rights deal with Liberty Media that pays $14 million a year. But this year, the Dodgers negotiated a 20-year deal with Time Warner Cable that will pay $6 billion over the life of the contract, an average of $300 million a year. In just a 6 year span, the value of a baseball team’s TV rights has increased by 2100%.

This is why we see players like Robinson Cano feel comfortable asking for $300 million. But as we’ve seen, the influx of cash doesn’t just affect the star players. Dime-a-dozen utility players like Skip Schumaker and Nick Punto are no longer a dime a dozen; Schumaker got $5 million over two years, while Punto got $2.75 million over one. Carlos Ruiz gets $26 million over 3 years, and Marlon Byrd, who just a year ago was nearly out of baseball, gets $16 million over two.

Why is this phenomenon occurring? Like so many rapid shifts in our culture today, it’s all because of the internet. Cable companies realize that the internet, where people can stream their favorite shows on demand in high definition, puts their business model in mortal danger. But the only product they have where people need to watch live, on their TVs? Live sports. Thus, cable networks are willing to pay a premium for access to the only content out there that has the ability to keep people from cutting the cord altogether. And the MLB is more than happy to take the money desperately being thrown at them.

Of course, the money might dry up, if cable companies either cease to exist or can no longer afford to pay the obscene amount for live sports that they currently pay. But until then, enjoy this brave new world of $300 million contracts, $5 million utility players, and $8 million Josh Johnsons. In 5 years, these contracts will look ludicrous, either because the bubble has burst or because it has expanded to ungodly size. For as much as we think of it as immune to the winds of the world, in baseball, just as in life, the only constant is change.

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