Saturday Stew

July 11, 2009

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With the slotting of the weekly columns on Wednesday, Wednesday Wisps are probably going to be few and far between. Until the schedule is completely shaken out, Saturday Stew will take its place. Just like Wednesday Wisps, there will be a bunch of small ideas in the stew.

Baseball

Hermsen

Twins prospect B.J. Hermsen grew up a hop, skip, and a jump from my hometown. Iowa is, I’m fairly certain, the only state that has summer baseball for high schoolers – other states have it in the spring. This makes is fairly unusual for Iowa kids to get drafted very high, because they peak later than the other players, simply because the schedule is later (in fact, the season is still ongoing when the MLB draft occurs).

Last year, Hermsen dropped to the 6th round. He likely would have been picked higher, but he was also a stud quarterback in football, and there was uncertainty that he would sign. Well, the Twins offered him $650,000 and Hermsen signed.

At long last, Hermsen made his minor league debut on June 24. How did he do? He tossed six perfect innings. The bullpen closed the deal and they finished with a combined no hitter. Not a bad debut. Hermsen probably hated to come out of the game, but as a young kid who almost certainly was on a pitch count, the Twins front office probably would have fired the manager if he had pushed him too far in his pro debut!

How did he do for an encore? Not bad – he allowed 2 runs (1 earned), 4 hits, and a walk in 5 1/3 innings – pushing his ERA up to 0.79 for the season.

Hynick

And speaking of great pitching performances, Rockies farmhand Brandon Hynick was the Pacific Coast League pitcher of the week for the week ending July 5. He pitched in one game during the week, and threw a 7 inning perfect game. The teams were completing a suspended game that day, as well as playing another game, hence the shorter games (it is relatively common for minor league teams to play 7 inning games when there is a double header). It still counted as an official game, though – the 9th perfect game in the storied history of the PCL. The kicker? He did it at home, in the sky high altitude of Colorado Springs. If you think the air in Denver is thing, go to Colorado Springs some time!

Bluffer vs. Bargain

In January, I wrote an article entitled The Bluffer and the Bargain, highlighting Jason Varitek and Andruw Jones.  The gist is that I thought Varitek had overplayed his hand and that Jones  was a great pickup for the money, since the Dodgers were picking up nearly all his salary.

Nearly six months later, how are these guys doing?

Varitek is actually having a pretty good year, with  12 homers and a .825 OPS (through July 7).  This means I’m wrong, right?  Well, no.  In January, I said that he had put himself in a bad position by declining arbitration and would likely not sign for more than $5 million – half his 2008 salary.  What did he sign for – $5 million.  And most people felt that the Red Sox could have squeezed him a bit more.

Andruw Jones signed a $500K deal with the Rangers (don’t feel too bad for him, as the Dodgers are also paying him the remainder of a 2 year, $36 million deal he signed befor the 2008 season).  Jones has been a part time player and has been a bit up and down over the course of the season.  As I write this article on July 8, Jones just launched his 3rd homer o the game – bringing his season total to 14 homers in 160 at bats.  Bear in mind that a lot of players have around 300 at bats already.  This is great production from a $500K player.  Well played, Rangers.

Michael Jackson

Michael Jackson died with  a reported $400 million in debt, but also with substantial assets, including the rights to his own music and the music of other artists (including a share in the music of The Beatles).

I have a thought on a way for the estate to raise cash on pay off the debt.  Incorporate the major assets – form Michael Jackson Entertainment, Inc.  Then have an IPO.  Jackson fans – as well as other investors – could own a share of Jackson’s assets.  With the outpouring we have seen since Jackson’s death, what sort of money could an IPO raise?

Cars

I was discussing the auto industry with a friend of mine as we enjoyed lunch at the outside grill at Nelson’s Deli in Cedar Rapids (great burgers and brats!).  I began the conversation with this rather unconventional thought – “If we took all the money that was spent on research and development and infrastructure for cars and planes, we could build a nationwide teleporter network.  We’d only need one pod  per city block, since they would only be in use for a few seconds at a time.

After Dave nearly spit Coke all over the table, he countered with a rational idea.  “How much cheaper would cars be if they didn’t include a warranty?”  At first, this seems like a crazy idea.  Who would buy a car without a warranty?  Warranties are a big reason why people buy new cars.

But take a deeper look at this.  Warranties, of course, are not free.  Car companies build the cost of warranty repairs into the cost of the car.  Basically, you are paying for the expected average cost of warranty repairs.  That doesn’t sound too bad, right?  Except that since warranty work can only be performed at authorized dealers, they’re building in the cost of dealership labor and OEM parts!  If you’re like me, you know a guy who can fix things with cheaper, non-OEM parts, as well as cheaper labor.  And my guy is just as good as the dealer (in some cases, clearly better than the dealer).

I don’t see this idea actually gaining any traction at all, simply due to the huge financial risk when it comes to cars.  Perhaps, though, there’s room for a warranty that only covers major repairs – perhaps with a $500 deductible.  How much money would this shave off the sticker price?

Wednesday Wisps

July 1, 2009

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The big news story of last week was the death of pop icon Michael Jackson at age 50.  News accounts have indicated that Jackson left behind $400 million.  Jackson’s estate does, of course, contain some valuable assets.  Most notable is his music portfolio, which includes his own music, as well as a portion of royalties from The Beatles.  The day after his death, 9 of the 10 most downloaded iTunes albums were Jackon’s.  This also underscores the ability of digital content providers to be able to seamlessly adjust to spikes in demand.  If stores like Wal-Mart, Best Buy, and Sam Goody sold out of Jackson CDs, they would not be able to satisfy the demand until they were able to restock.  Since the demand will likely dissipate as time passes, they will likely lose some of the impulse sales.  Digital providers such as iTunes are immune from this.  iTunes can’t “sell out” of a CD.  They just throw more hardware into the iTunes Music Store to handle the spike in volume.

Ponzi schemer Bernie Madoff was sentence to 150 years in prison.  If Madoff serves the entire sentence, he would be 221 years old when he is released.  Essentially, the judge gave Madoff a life sentence.  Madoff will likely spend his remaining years in a medium security prison (a prison with bars on the windows and a fence) rather than a country club of a minimum security prison, due to the length of the sentence and the corresponding flight risk.  The judge also ruled that Madoff must also forfeit $171 billion.  It seems impossible that such a large amount will be recovered.

Minnesota finally has a winner in their Senate race.  The state supreme court unanimously declared Al Franken to be the winner, and challenger Norm Coleman has given up his fight.  The win by Franken mkaes it easier for the Democrats to invoke cloture (a procedure to end a filibuster and force a vote on an issue; 60 votes are required for cloture).  I have a question, though – does Franken get paid the salary of a Senator for the last 8 months?  Or does the money that was allocated to his salary go somewhere else (Chrysler, perhaps?).  I wrote a humorous article about the Minnesota Senate situation a couple of months ago.

Another Airbus jet suffered a deadly ocean crash.  This time, a Yemeni jet plunged into the Indian Ocean with 153 people on board.  At the time this story was written, one child had been found alive, and authorities were hoping that other survivors would be found.  The Airbus jet involved is this crash is a different model that the Brazilian jet that crashed on June 1, leaving no survivors.

South Carolina governor Mark Sanford admitted having an affair with a woman in Argentina.  This came to light after Sanford recently was unreachable by his staff.  As it turned out, he was in Argentina at the time.  Many politicians include Lieutenant Governor Andre Bauer, have called for Sanford to step down.  If Sanford does step down, Bauer would stand to gain the most.  He would become governor, and this would greatly aid his 2010 run for the office, as he would be elevated to incumbent without being voted into the office.

Manny Ramirez will rejoin the Los Angeles Dodgers on Friday, after a 50 game drug related suspension.  Ramirez has played 5 games in the minor leagues in an effort to get back into playing shape.  I disagree with this aspect of the suspension.  Some would argue that preventing a player from playing in the minors during the suspension would essentially turn a 50 games suspension into a 55-60 game suspension.  My opinion is that if the player can’t hitting the ground running on day 1 after the suspension, that’s his problem, not mine.  He should not be allowed to play any games during the suspension, whether it be in the minors or majors.