from Amazon
Tuesday, July 13, 2010
Would you rather own Joe Mauer Properties or Domonic Brown Properties?
Dave reasons Brown. The way to look at the list is: in a one-for-one deal, with contracts and service time considered, you’d rather own the #46 than the #47 properties, or the #50 than the unlisted property. It’s hard to wrap one’s head around a property like Joe Mauer, and his 160MM$ obligation, with a minor leaguer like Domonic Brown, and no financial obligations.
In our reality, this would be like Oprah Winfrey owning her estate worth 120-200MM$ with a 160MM$ mortgage. And me owning a 0-40MM$ mansion, with no mortgage to speak of. According to the process laid out by Dave, Oprah should trade her mansion (and mortgage) to me for my mansion.
Does this make sense? Well, yes. Oprah could in fact just walk away from her mansion, and she would be no better or worse off. She can just buy another property, somewhere else. Or if the Twins were to trade Joe Mauer after signing him (presuming he was signed at market prices), they would get back nothing for him.
In what way does it NOT make sense? Think of Fantasy baseball. What’s the worst thing that could happen to you when you are bidding? That by the end of the auction, you have all your players, and you still have 20$ in unused play-money. That represents an opportunity lost, that you could have gotten better talent, but you chose to buy the more underpriced talent.
If the Twins were to not spend the money that their fans already gave them, that extra 20MM$ in their bank account is just sitting there… doing nothing to help them this year. Unlike the Fantasy example, that money does rollover (it’s in their bank account). But, does it simply go as dividends to their investors, and so, is money lost from the Twins-fans perspective? Or, does it go back into R&D (future players)?
So, that’s how Dave’s process wouldn’t make sense: that you believe that any savings on the team part simply does not get rolled over to the team’s benefit.