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  • SSTN Admin

How Baseball Is Like the Housing Market

Housing prices generally go up, unless of course, they go down. The funny thing is that when prices go down people tend to think of their house as being worth what it was at the top of the market. If you still believe you have a house that was worth $500,000 and the housing market slips 20%, you don’t have a $400,000 house, you have a $500,000 house that the market is undervaluing.

Of course, if you can sell only your house for $400,0000 today, any economist will tell you that you have a $400,000 house. That house could be worth $300,000 or $500,000 in 4 years. But it’s a $400,000 house today.

So what do many people do when the market values their house at less than what it’s “worth?” They don’t sell it until the market values it at what it’s “worth.” When I lived in Manhattan, I had friends living in a 1 bedroom apartment with 2 kids for ten years because the housing market was in a dip.

The point is that sometimes, human beings are slow to adapt to new economic realities. They delay making a decision until the last possible minute when market realities don’t jibe with their version of reality and value.

Which brings us to baseball. As we all know, four of the top free agents in this class (Machado, Harper, Kimbrel and Keuchel) are still free agents. They are waiting for the market to adjust to their thinking as to their “value.” And, to be fair, these players have been waiting for their big payday for years. It must be quite a shock to find out that this payday will be up to $100 million or more less than they expected.

But, for whatever reason, and this article was not written to speculate on that, a new day has dawned for big free agent contracts in baseball. Whether owners are cheap or they have finally realized that these large contracts make no sense, the conclusion is the same – the market has changed. And, at least for now, top free agents are not worth what they were. The market has moved.

The season is starting and decisions must be made soon. And whether the market is right or the market is wrong, the market is the market.

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