Times are tough all over. You know it and so do I. We get a whiff of an economic recovery in the United States only to have the head of the International Monetary Fund tell us the burden of household debt in that country will hold back any meaningful recovery. I turn the TV on and hear a couple of candidates who want to run for president of the US tell me they will rescue the country from its financial apocalypse. So I shake my head one more time and acknowledge the obvious. It must be true: times are tough all over.
Now believe me when I say I really am trying to write about sports here. But these days the only way you can do that, it seems, is to moonlight as an economist. Look at what has happened in baseball over the past few months during such dire economic times. Albert Pujols signs a contract for US$240 million with the Anaheim Angels and shortly afterwards Prince Fielder inks one with the Detroit Tigers for US$214 million.
This week the Cincinnati Reds locked up Joey Votto for 12 years on a US$251 million deal, while the San Francisco Giants inked pitcher Matt Cain to a meagre US$141 million, six-year contract. That's close to a billion dollars on four players and while none of them will probably have to worry about the burden of household debt, imagine how much these guys could make if the economy was healthy.
Yeah, it's tough all over, but nowhere more so than in the ownership of baseball teams. As the 2012 season officially opened in the US this week, after a dress rehearsal in Tokyo a week earlier, these poor owners were trying to figure out how to pay their players. I mean, you would have to be an idiot to want into this ownership thing. Nobody has money to go to baseball games anymore and that's why the Los Angeles Dodgers were sold last week for a mere US$2.15 billion, basically the price of nine or 10 front-line players.
A group fronted by former Los Angeles Lakers superstar Magic Johnson bought the club from the genuinely reviled Frank McCourt. But don't be fooled here. Magic is not writing the cheque for a couple of billion because his net worth is only US$500 million. Oh sure, Magic had to ante up a bit just so he could officially say he had some skin in the game. But he is merely the megawatt smile behind this whole thing.
The real money guy is a gentleman named Mark Walter, who is the CEO of a group called Guggenheim Partners, a privately held financial services firm. Guggenheim claims to have more than US$125 billion under management and I know what you are thinking Dodger fans, now you have to worry all over again about the team meeting payroll on time. Hopefully, though, those days ended with the departure of McCourt.
