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Sensible Contracts for Hitters and Pitchers

By Mike Silva ~ December 27th, 2011. Filed under: Business of Sports.

In recent months I have discussed the dangers of long-term deals, specifically when it came to the Mets signing Jose Reyes. The years, more than the dollars, is usually the problem. Long-term contracts lead to teams paying premium dollars for players past their prime. The average annual value is often skewed because you have situations (see the Miami Marlins) where you backload a contract for various reasons, usually to put off paying the bill. You shouldn’t criticize a situation unless you have a solution, so I thought about what would be acceptable terms for pitchers and hitters.

It’s obvious that offensive players are less of a risk than pitchers. With that said, very rarely do contracts of more than 5 years work out. Position is important, but Jason GiambiMike PiazzaKen Griffey Jr., and Carlos Beltran all had injuries/declining productivity during the later third of deals that were in excess of 5 years. All played positions with various levels of wear and tear. If you think about it, players usually break into the league at about the age of 22. If they don’t receive a long-term deal during their arbitration years, they hit free agency smack in their prime at the age of 28. A five year deal brings them to 33 years old, also known as their late prime. In a league where amphetamines or PED’s that could help the healing process are banned, staying on the field with mileage has become difficult. Even if they do, the performance is usually not at the level for which you originally paid.

Pitchers are a little trickier, as age sometimes has nothing to do with a decrease in performance or breakdown. First and foremost, a team should look at their mechanics, which normally will tell you the odds of an elbow or shoulder injury. Biomechanical analysis would be a requirement if I owned a team. It’s hard to look at history and predict whether a pitcher will get injured or not. Some have pointed to Pitcher Abuse Points, but Livan Hernandez was one of the most “abused” young pitchers in 1999 and he was still throwing for the Nationals this past season. Andy Pettitte was on that list as well, and he retired voluntarily after the 2010 season.

Because of the volatility of pitchers, contracts of more than 3 years are very undesirable. Everyone criticizes Omar Minaya’s Oliver Perez signing (rightfully so), but the alternative was Derek Lowe for 4 years. For as bad as Perez was during that period, it still was better than giving Lowe the extra year at his age 38 season. The Braves just unloaded the final year of Lowe’s contract on Cleveland; paying $5 million of the remaining $15 million owed. I am surprised they got away with eating only a third of the remaining money.

To keep that deal in perspective, although overpaid, Lowe was decent the first two years (31-22, 4.33), especially in September of 2010 when he was 5-0 with a 1.17 ERA, helping the Braves return to the playoffs for the first time since 2005. Atlanta did find a taker for Lowe on the final year, but had to absorb $5 million, when keeping the deal to 3 years would have given them 2 quality seasons from Lowe before the wheels came off (9-17, 5.05) in 2011. The Mets paid dearly for the Perez mistake, but could you imagine if they gave him a 4 or 5 deal, something that looked possible for a young left-hander after he posted back-to-back solid seasons in 2007 and 2008? Perez reputation preceded him around the league, except with Minaya.

Of course, these principals don’t work when there is heavy competition for a players’ services. The Mets had to work hard to pry Beltran away from Houston, and even then he offered his services to the Yankees for an $18 million dollar discount. Mike Piazza was essential for them in the late nineties, as years of losing hurt the franchise at the gate. The boost in attendance alone probably makes swallowing years 6 and 7 more palatable. It’s hard to criticize the Reds for giving Ken Griffey Jr. a long-term as he was a 29-year old physical specimen. Even at 5-year deal would have turned out bad for Cincinnati, as Griffey spent years 2 to 5 of his 9-year deal injured. I think we all know why the Yankees should have foreseen the risk associated with Jason Giambi’s body long-term.

The one long-term deal that would have worked out perfectly was A-Rod’s original 10-year $252 million dollar deal.  Only Albert Pujols was more valuable (source: BR Reference WAR) during that period of time. Yes, he was too expensive for Tom Hicks and the Rangers, but that financial situation was an entirely separate issue. The 2007 opt-out forced the Yankees to add another 10 years, which will ultimately see Rodriguez as a gimpy designated hitter that pops about 25 home runs a year. A memorabilia tour so to speak. Considering Rodriguez is a physical freak of nature, it’s safe to say he is the exception, not the rule. The Yankees also have a sliding salary going forward so they were smart not to backload the contract. Still an overpay, but not dangerous.

Will we ever see a team adhere to my player contract criteria? I think we are seeing some of it come to fruition, but there will always be an owner with deep pockets who wants to win and believes Jayson WerthJose ReyesMark Buehrle, or Heath Bell will get them over the top (hint: they won’t). Even Albert Pujols, for as much as he will improve the Angels, wasn’t worth the risk of more than 5 years. That goes double for Prince Fielder. Again, the heat of the moment makes owners and GM’s do crazy things. When they sober up they wind up footing a very expensive bill for their mistake. That’s why the lessons of Mike Hampton, Vernon Wells,  and Alfonso Soriano are doomed to be repeated.

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2 Responses to Sensible Contracts for Hitters and Pitchers

  1. Ken Bland

    I don’t think the number of years on the Pujols deal is what should be looked at. I think the total number of dollars is all that really matters. In fact, the high dollar total might actually work to the Angels advantage by being spread out over a longer period of time. I can’t even pretend to know what hard dollar amount is the wise sum to invest in him. One never knows exactly how the public will respond with spending, and all the sources of revenues derived from his being part of a certainly more recognizable brand name are not an area of expertise to me. But I suspect the club is going to make a killing off his being an Angel, and even with less production in his waning years, the overall investment should be pretty positive. But this guy is a rare species among ballplayers. It’s possible they wind up losing money off the deal, but I doubt it, and will guess it’s not a significant sum. For all I know, crazy as it sounds considering the many millions involved, they might pay off the obligation in 3 years, and then does it really matter how ineffective he is the last 3 years or so of the deal?

  2. M. Scott

    1. Jeter’s 10 year contract was not too out of whack with his performance and Mussina’s was pretty good as well.

    2. Add Carl Crawford to the list of disastrous long term contracts.

    3. Total price of contract might be one way of looking at it (especially if you’re a “flags fly forever” guy) but it’s not just the sunk cost of Arod’s or Pujols’ contract — it’s the opportunity cost. The contracts tie up dollars that might be spent otherwise, and the players soak up roster spots and ABs.

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