LA Angels Thursday News Crash: Blue Jay Win

Yes and those two contracts have hamstrung the team given Arte’s strict budget. I am not saying Arte should spend like a drunken sailor. I am also not saying that Arte is cheap. But given those two contracts are producing approximately 1 WAR (for $80m) there is an argument that if Arte really wants to be “competitive” he should look at that Trout/Rendon money as a sunken cost and increase the budget by that amount (i.e. $80m) as though those contract do not exist (since they are not producing any value).

It is the same for a business that made a big investment four years ago in some technology and that suddenly finds it is not competitive since that technology is no longer productive. If it will take five more years to pay off or write off that old technology – does that business just keep the same budget until the old technology expense is paid off and then invest in new technology? I would argue that is a poor business practice since those years of having old and non-productive technology puts the business behind and maybe renders it irrelevant. Proper business practice in such a situation is to write off the old debt and invest in new technology to become more productive – even if that requires borrowing capital to do so.

That is why Arte’s strict budgetary measures are bad business. It is NOT because his budget is unreasonable or cheap under normal circumstances. It IS because 40% of the budget is taken up by old and unproductive technology and under those specific business circumstances, the budget should go significantly up^ essentially writing off and ignoring the non-productive debt.