Talent wins baseball games.

Talent costs money.

The A’s finished last season 10 games under .500 because of a lack of talent, not funding. They spent over $79 million on player salaries alone and then they spent another $3.9 million on bonuses for their 2007 draft class. That’s a minimum $83 million invested directly into the on-field talent, factor in the salaries of the minor league minions and the A’s owners spent over $85 million just to get the guys on the various rosters to show up. The results were completely unacceptable. The big league team finished 76-86 and the farm system ranked as one of the five worst in baseball.

Spending money is not the same thing as acquiring talent.

Currently, the A’s are 10 games under .500 (again) and have one of the top three farm systems in baseball. They did this by trading proven big league talent for minor league prospects and re-directing funds towards acquiring highly rated amateur talent. The 2008 Opening Day payroll stood at just under $48 million and the in-season trades of Blanton, Harden and Gaudin shaved about $4.3 million from that original figure. Factor in the April signing of Frank Thomas and the A’s have dedicated roughly $44 million towards the major league payroll, a drop of $35 million from last year yet the on-field results (as of Friday afternoon) are identical.

Trades alone were not what revitalized the farm system, a system which is expected to feed talent to the big league club and grow a new dynasty in the Oakland/Fremont area. This year the A’s spent more then $6.1 million in signing bonuses for their 2008 draft class, including over-slot paydays to seventh round pick RHP Brett Hunter ($1.1 million) tenth round pick Rashun Dixon ($600K) and twenty-eighth round pick Dusty Coleman ($675K). This was huge, and for the A’s, practically unheard of. Signability issues caused these three to fall lower in the draft then their natural talents warranted and the A’s essentially bought themselves a supplimental first and two mid-second round picks that they didn’t have when the draft started. To get a bit better perspective on this, consider that the A’s spent $600,000 MORE in the 2008 draft then they spent on signing bonuses in the 2007 and 2006 drafts combined! On the international front, the A’s made headlines by giving a record $4.25 million bonus to Dominican RHP Michael Inoa; a player the A’s consider a once-in-a-decade prospect. They also signed 5 players out of Venezuela for an undisclosed amount of money.

All told, the A’s spent $10.5 – $11 million on amateur talent this season. That’s roughly equivalent to what they spent the last three seasons COMBINED.

So what’s next?

The purpose of this rebuild is to make the Oakland A’s a contender again, and soon. Beane and his people have revitalized a destitute farm system and it is imperative that they continue to expend the necessary resources to keep the young talent flowing. Fortunately the economics involved in keeping a well stocked farm system are fairly low, all things considered. It is unlikely that the A’s will spend anywhere near $11 million a year on amateur talent in the future, after all, once-in-a-decade talents don’t come along every year! Beane could budget $8 million annual towards the draft and international signings and that should provide him with plenty of flexibility to go after the athletes he chooses. As we saw from the 2007 numbers there is a lot more cash available to finance the big league roster.

The A’s are at an interesting transition point. Over the next two seasons there will only be four critical players eligible for arbitration. (I figure guys like Bowen and Denorfia will go the way of Marco Scutaro before they get expensive.) Of those four players, Duke is currently a year away from free agency and Casilla isn’t eligible until after next season while Street and Cust are both scheduled to get raises the next two years. Matt Murton will also be eligible for arbitration by 2010 but who knows how important he’s going to be? The A’s also owe Crosby and Chavez $16.5 million next year, with Chavez looking at another $12 million in 2010 and a team controlled option at $12.5 million or a $3 million buy-out in 2011. The rest of the roster (as currently constructed) will make less then $450K a head annual through the 2010 season! I’m not the best at trying to determine arbitration figures and the like, but figuring on the high side I have the A’s 2009 payroll at approximately $39 million. I see a golden opportunity to pursue a significant free agent contract even after factoring in the $8 million we’ve set aside to sign amateur talent.

It’s rare that the A’s have the budgetary flexibility to carry two 8-figure contracts but that window will exist through the 2010 season. After that, the young players we’ve seen the last two seasons will be looking for hefty raises and the A’s need to be able to pay them. Fortunately, 2011 is probably going to be Chavez’s walk year so there shouldn’t be a problem. The line-up has several holes in it and adding an impact bat would be a major step in the right direction. Keep in mind though, there isn’t a single bat scheduled to hit the free agent market in the next two off-seasons that could “fix” the A’s putrid offense. Nor can the A’s afford to sign two free agent bats, because it would hinder the team’s ability to retain the players it develops over the next couple years. Fortunately there are eight hitters scheduled to hit free agency in the next two off-seasons who represent a serious improvement over the bats currently in place. The A’s should be able to land one of them if they put out the effort.

Some may argue that going after expensive free agents isn't the way the A's do business. That's been true in the past, but when was the last time Beane dropped $4 million on a 16 year-old Dominican pitcher? The way things were done before no longer work and if you can't adapt you are going to wither and die. The A's have the depth to pull off a major trade that could help the big league roster, in fact there's a plan I'm working on right now that could represent a significant upgrade to the line-up. Having the prospects to pull off such a deal is certainly an asset, but being liquid and having the cash available to add to the talent level of the entire organization is also an asset and one the Beane needs to exploit in the next two off-seasons.

I’ll discuss the FA options another day. Enjoy the 3-day weekend.