Financial Uproar

For anyone who follows my Twitter, it won’t come to a surprise that my favorite baseball team is the Toronto Blue Jays. Hey, I’m Canadian, I gotta cheer for the home-country team, right? Even though the Blue Jays are in the midst of another mediocre season, not all is bleak in Toronto.

In October 2009, Toronto finally fired longtime General Manager J.P Ricciardi, mostly because he had a gigantic nose. No, wait, that’s not right. Ricciardi was hired in 2001, and was given 8 years to turn the team into a contender. Ricciardi came highly recommended as a member of Billy Beane’s “Moneyball” Oakland A’s management team of the late 1990s. Even though the corporate owner (Roger’s Communications) opened up their wallets for both prominent free agents and to keep homegrown talent around, the Jays never even got close to making the playoffs during Ricciardi’s tenure.

Enter Ricciardi’s longtime assistant, Alex Anthopoulos. He was promoted to the head job when Ricciardi was fired. In just 2 short years, AA (like I’m typing out that tough Greek name more than once. Ricciardi was bad enough.) has made a series of shrewd moves that have quickly cemented his reputation as one of the better GMs in the league.

And the good news, at least for the guy who writes this blog, is that AA’s good moves can be applied to your personal finances. Here’s how.

Make The Most Of Limited Resources

Even though the Jays are owned by mega rich Roger’s Communications, their corporate owners aren’t just going to let the General Manager spend as much money as he wants. The Red Sox and Yankees have the resources to spend their way out of their problems. The other 28 teams do not.

One of the best moves made by Anthopoulos was to trade starting center fielder Vernon Wells to the Anaheim Angels. The Blue Jays received 2 players in return, but they’re not important. The significance of the trade was that Angels assumed all of the over 80 million dollars still owed over the last 4 years of Wells’ contract. The savings gave the Blue Jays the resources to sign Jose Bautista, who helpfully decided to become the best hitter in the league after the team acquired him for next to nothing.

Just like your finances, teams only have a certain amount of money they can spend. Well, except for the two teams mentioned. Since a full 90% of the team’s expenses are player salaries, trading high priced players can free up money to be spent later, like locking up a promising young player to a long term deal. Which brings us to point 2.

Controlling Costs

Baseball has a somewhat unique system for determining how much young players get paid. For the first 3 years of pro ball, players get a base salary, which is followed up by a form of salary arbitration over the next 3 years. What it means is that, for the first 6 years in the major leagues, a player plays at a discounted salary compared to a veteran who is free to explore free agency. Naturally, a really good young player is highly regarded. Not only does that player have potential, but they’re paid less than a player who was a free agent.

In July 2010, the Blue Jays sent shortstop Alex Gonzalez and 2 minor leaguers to the Atlanta Braves for shortstop Yunel Escobar and pitcher Jo-Jo Reyes. When the Jays’ acquired Escobar, he still had all three years of arbitration to go through. The team got a shortstop with upside, knowing they’ll have him at a discounted price for 3 years. It turns out the team signed him to an extension, which could keep him in Toronto through 2015.

How does this apply to your finances? Find ways to control costs in your life. Don’t resign yourself to things like car payments or buying too much house. You only have so many dollars to spend, finding areas to cut back on is a good thing.

Buying Assets When Nobody Else Wants Them

Over the last year, tension began to form between highly regarded center fielder Colby Rasmus and St. Louis Cardinals manager Tony LaRussa. Combine that with an off-year, and it appeared the once blue chip prospect would be traded from St. Louis.

Enter Alex Anthopoulos.

The Jays’ GM orchestrated a three team deal, landing the prize he so wanted, Rasmus. The young center fielder has the potential to be a superstar, both offensively and defensively. He’s just 25 years old. He’s just the type of player to build a team around. And, for the most part, the Jays got him for spare parts.

Like any good investor should do, the Jays acquired an asset when he was undervalued. Time will tell how well the transaction works out, but the Jays look like the clear winners of the Rasmus trade.

Hard Work Is Rewarded

AA is relentless when it comes to exploring trades. He’s notorious for following up on every rumor he hears, maintaining contact with every GM in the league. When he hears a player he wants is available, he’ll tirelessly work to bring that player to Toronto. His work ethic is widely known. Time will tell, but Anthopoulos is getting results by working hard.

So there you go. Like any business, running an MLB team is a tricky proposition. Just like the now infamous Moneyball philosophy of the Oakland A’s, a GM can turn a team into a winner by being smarter than his competition. Only time will tell whether the Toronto Blue Jays will become a playoff team under Anthopoulos, but they’re off to a good start.