Category: Contracts

Crime and Punishment

A few weeks ago the child of a good friend got in trouble at school. When the dust settled and the punishment was doled out, he/she was suspended for five weeks. You read that right, he/she was essentially given a grade-level death sentence. I am not sure what the school hoped to accomplish with this draconian measure, but I doubt the intent was to essentially cause a student to have to repeat a grade. After some much-deserved push-back, the school reduced the sentence to five days. Considerably more appropriate – at least in terms of time. It seems to me that an institution filled with academics could come up with a more productive punishment – one that would benefit the student, the school, and the community at-large, all while acting as a deterrent for potential future offenders. Alas, it was not meant to be.

So, if a private school that prides itself on its progressive policies, a place of higher learning that hopes to usher out into the world fully-formed, quality human beings, cannot figure out a proper penalty for aberrant behavior, I am not sure how we can expect a major sports league to do so. We have seen, time and again, the NCAA, the NFL, the NBA, and of course, MLB, bollox this up twenty-six ways from Sunday school.

Last week I was playing in my weekly softball game and, as one might expect, we started talking about the Houston Astros. To a man (there were no women in the dugout), the belief was that the Astros should have the book thrown at them. Unfortunately, there isn’t really an appropriate book. One suggestion was that the team should be disbanded. Another was that they should have to vacate their 2017 World Series title. And my favorite: they should be forced to play without a shortstop next season.

During our game, while I was playing first base, a call came from the dugout asking my opinion (these are pretty informal affairs). I quickly said, “Well, the max fine is $2 million, so…” and then I had to field my position. But like the echo in Casey’s at bat, there was an immediate response from the mound: “There is no way that $2 million is the most they can fine them,” and then he threw a pitch. This led to another conversation, wherein I promised to do the research.

Insofar as the U.S. Constitution is getting a lot of run these days, it seems fitting to look at the MLB Constitution. I will quote the entirety of Article II, Section 3, with specific highlights:

In the case of conduct by Major League Clubs, owners, officers, employees or players that is deemed by the Commissioner not to be in the best interests of Baseball, punitive action by the Commissioner for each offense may include any one or more of the following: (a) a reprimand; (b) deprivation of a Major League Club of representation in Major League Meetings; (c) suspension or removal of any owner, officer or employee of a Major League Club; (d) temporary or permanent ineligibility of a player; (e) a fine, not to exceed $2,000,000 in the case of a Major League Club, not to exceed $500,000 in the case of an owner, officer or employee, and in an amount consistent with the then-current Basic Agreement with the Major League Baseball Players Association, in the case of a player; (f) loss of the benefit of any or all of the Major League Rules, including but not limited to the denial or transfer of player selection rights provided by Major League Rules 4 and 5; and (g) such other actions as the Commissioner may deem appropriate.

So, the pitcher and I were both correct. $2 million is the maximum fine, for each offense. However, I am not sure how “for each offense” is actually applied. Let’s take a look at some precedent.

In 2017, after a lengthy investigation and a federal trial wherein a former Cardinals executive was sentenced to 46 months in prison for hacking into the Astros database (why are the Astros always in the middle of these things?), MLB handed the St. Louis club a $2M fine and the loss of two later round draft picks (together worth about $1.8M). According to the plea agreement, the executive hacked into the Astros’ system at least five times. Could that have been five “offenses” resulting in a $10M fine? Who knows. What we do know is that that didn’t happen. Further, Commissioner Rob Manfred determined that the executive was a “rogue operator” and that the club did not know or suspect the behavior. Thus, he declined to level the above-referenced $500,000 fine. But it sure seems like he could (should?) have.

With the Astros, we already have at least two “offenses,” and I have no doubt that upon further inquiry, many more will be determined. Was this behavior so egregious that more than $2M could be assessed? We know, from the email discovered by Ken Rosenthal and Evan Drellich that Astros executives were in on the potential cheating, asking scouts to get video of other teams’ dugouts. So, an additional $500,000 is definitely in order.

Let’s play this out. Let’s say Manfred discovers 25 can’t miss violations, and he determines that ten executives were in on it. And let’s say he interprets the “for each offense” to include each offense (for you attorneys, how about that for strict construction; and for you Brady Bunch fans, how about that for exact words). And he throws the whole library at the Astros to the tune of $55M ($2M x 25 plus $500K x 10). Does that do the job? According to Statista, as of 2019, the Astros are worth $1.8 billion. A $55M fine is just 3% of the team’s value. A drop in the bucket – or in Houston terms, a dribble in the spittoon. But, if you base the fine solely on revenue, it is considerably heftier. The Astros had $368M in revenue this year, so a fine this large would represent a 15% hit. Now we are talking behavior modification-type money.

But despite protestations otherwise, money is not everything. The team will get a ton more of that next year, and could simply cut payroll or raise ticket prices to offset the loss. More needs to be done. Let’s take another look at the precedent.

Last year a video appeared showing the Giants CEO, Larry Baer, forcibly struggling with his wife with her eventually ending up on the ground. Manfred reviewed the tape and concluded Mr. Baer’s conduct was “unacceptable under MLB policies and warrants discipline…In determining the appropriate level of discipline, I find that Mr. Baer should be held to a higher standard because as a leader he is expected to be a role model for others in his organization and community.” Baer was suspended for half the season.

If the facts lead where we believe they will, should MLB suspend Jeff Luhnow for half the season? If you will recall, Brandon Taubman, the assistant general manager, was already fired for being a horrible human being, so that would/could leave the Astros without its top two baseball operations executives until July. To make it really hurt, they could extend this until August 1st so the Astros would be without Luhnow for the trade deadline?

And what about A.J. Hinch? The manager either knew or should have known what was happening just outside his dugout? In the NCAA they call that a lack of institutional control. Should he be suspended for half the season? More?

Now let’s get creative and more dicey. What about Alex Cora, the Astros’ 2017 bench coach? He knew – or should have known. Regardless of the fact that he is now the Red Sox manager, he too should face discipline. And my favorite, how about Carlos Beltran? He was the veteran presence on that 2017 Astros club, who showed the younger players how to take certain advantages. My guess is that the investigation will cast a negative light on him as well. How Mets would that be to have their new manager suspended before he ever takes the field?

But since a federal crime only netted two later round draft picks for the Cardinals, I cannot imagine what some sign stealing would garner. How about a loss of the Astros’ 2020 first round pick (#30). And loss of $5M in bonus pool money (essentially their first round allocation). And, as a kicker, the loss of their international bonus pool as well. There is precedent for this, as MLB wiped away the Braves’ international bonus pool for their international signing violations in 2017.

Back to the softball field, it is unrealistic to take the Commissioner’s trophy away from the 2017 club. And, to be fair, there were no trash cans being banged in Dodger Stadium when Yu Darvish got shelled in Game 7. That was on him; and it was on the Dodgers for failing to capitalize on seven baserunners in the first three innings. Plus, if the Astros didn’t win that night, then does Carlos Correa propose to his wife on the field? Do we nullify their marriage, too?

Speaking of Correa, I am not sure Houston should have to play without him next year. I know Alex Bregman feels confident enough to cover the entire left side of the infield, but that seems like a non-starter.

And we can’t disband the team. What would happen to “Deep in the Heart of Texas” if it was not sung 81 times a year in Minute Maid Park?

Our friend’s school meted out a punishment that didn’t fit the crime. Luckily, they corrected their error. I fear that MLB will under-correct in the other direction. The Astros need the professional sports equivalent of a five-week suspension; they need a reprimand that requires them to “fail” next season; they need a rebuke that tells the world that this behavior will not be tolerated. Manfred is in an uneasy spot – he is required to penalize one of his bosses. Heavy is the head that wears the crown. But if we are going to be forced to live in a country that more and more looks like an autocracy, it is time for at least one person to lawfully execute his plenary powers.

PLAY BALL!!

Money for Nothing – Why Give Pre-Arbitration Raises?

As I may have previously mentioned, I am a very lucky guy. Among the many reasons, I married a woman who doesn’t know a ton about baseball, but is always interested in learning. And, for that reason, she has no compunction about listening to me drone on about the game’s minutiae for long soliloquies.

Over a glass of wine a few weeks ago, the conversation turned to baseball free agency. My wife wanted to better understand how it works, so I started by explaining how players are locked into their “rookie” contract for their first three years, and then become arbitration eligible for their next three, all prior to becoming a free agent. For the sake of ease and our marriage, I did not delve into “Super-2 Status”, but I did briefly touch on service time because, who wouldn’t?

The starting point was the Major League minimum salary, and how teams have the right to give a player whatever raise they want for years two and three (at or above the minimum, of course). And then my wife asked me the most simple question: Why? Why, if the team has total control, and the player has no other options (within the confines of MLB), would the team pay the player a nickel above the minimum? It was such an obvious question, and yet I had no real response. I fumferred something about a small raise for a job well done; I tried to make a case for building loyalty that may/might be rewarded down the road; I said something about how it has always been done.

And yet she trumped me with another “why?” She tolerated the idea that a player could be entitled to a raise if he earned it. But, she asked, if he didn’t play well enough, couldn’t the team cut him, which I had to acknowledge. So, she said, signing him for another year was its own reward – and it got him another year closer to arbitration and ultimately free agency. All good points.

She then questioned the concept of loyalty. She asked me if there is any research on players choosing to stay with their team in free agency based on how they were paid in years two and three. I told her I was certain that someone at Baseball Prospectus or FanGraphs had written an article about this – what haven’t they written an article about? – but I did not know off the top of my head. But, I said, using my overall knowledge of baseball, representatives, and free agents, I doubted that teams curried too much favor by giving players big raises in those years. Thwarted again.

And her reaction to the “that’s how it’s always been done” justification was “that’s stupid”. She then added, “haven’t you been telling me how smart and analytical front offices are…?” I had no response for that.

The MLB minimum salary this season is $555,000, and is subject to a cost of living increase in each of 2020 and 2021. The COLA for last year was 2.8%. Assuming next year is roughly the same, a player would get a $15,000 increase just for being on the roster – whether he deserves a raise or not. While not the $30M that the superstars are getting paid, $570,000 and then $586,000 is nothing to sneeze at. So why pay more?

Now, to be clear, I think the MLB salary structure is totally out of whack. With more and more free agents being skipped over for younger, salary-controlled players (see above), veterans who spent their careers waiting for a big payday are finding themselves unemployed. Two weeks before the 2019 Opening Day, Jayson Stark was able to put together a pretty heady lineup of unemployed players. And the reason for this, as I alluded to above, is that front offices have become smarter and ever more efficient with player acquisitions and long-term contracts. Teams no longer pay for past performance – only for tomorrow’s.

So why do they pay additional during team-controlled seasons (i.e., when the don’t have to)?

Below is a list of the Top 11 rookies from 2018 (based on Rookie of the Year voting) and their team-determined 2019 salaries. The first two names (Otani and Acuña) won the ROY.

2019 Salary Increase Above Req’d
Shohei Otani $650,000 $95,000
Ronald Acuña $560,000 $5,000**
Miguel Andújar $617,600 $62,600
Juan Soto $578,300 $23,300
Gleyber Torres $605,200 $50,200
Walker Buehler $570,000 $15,000
Joey Wendle $570,400 $15,400
Daniel Palka $567,000 $12,000
Brian Anderson $585,000 $30,000
Ryan Yarbrough $563,400 $8,400
Jack Flaherty $562,100 $7,100

 

**Acuna signed an 8/$100M extension after his 2019 salary was determined.

And how about these: The Yankees only had to pay Aaron Judge $545,000 last season, but they paid him $622,300; and they only had to pay him $555,000 this season, but they are paying him $684,300. They were required to pay Gary Sanchez $545,000 last season, but they paid him $620,400; and instead of $555,000 this year, he is getting $669,800.

Cody Bellinger won the ROY in 2017, and got a $50,000 raise (in lieu of the requisite $10,000). He had a subpar sophomore year (14 less HRs, OPS down 119 points), and was rewarded with another $20,000 raise (the Dodgers could have given him a $30,000 pay cut). We could go on and on.

Which brings me back to wife’s thoughtful question: Why? Why did teams pay the 14 players listed above a total of $618,100 more than they were required? Do we believe that anyone of them (Acuña excepted) is more likely to sign a long-term contract come free agency because they got a $7,100 or $8,400 or even a $62,600 raise in one of their team-controlled seasons? Maybe. But that seems like a very risky proposition. There are countless more just like these.

There are exceptions, of course. The Angels gave Mike Trout a $1M salary in his third year, and he then signed a 6-year extension. Was giving him double the minimum in his third year the reason? Maybe. Most people tend to look favorably upon an employer who gives you a $500,000 raise.

But Bryce Harper got more than four times the minimum (a $1.5M raise) between years two and three, and that didn’t compel him to sign a long-term deal with the Nationals. Mookie Betts got a $384,000 raise between years two and three, and yet Red Sox fans throughout New England are sweating out a potential Betts free agency. Sully and Murph sitting on stools at the Cask ‘n Flagon aren’t too sure that that third year salary is going to make any difference in Mookie’s ultimate free agent decision.

So, if teams have all the leverage, and general managers have all the analytical tools, and every dollar saved is either a dollar in the owner’s pocket or a dollar that can be spent gaining a competitive advantage elsewhere in the organization, it begs the question: Why give raises at all?

The answer, unfortunately, may be the same as why Coke changed its flavor in 1985: No one knows.

PLAY BALL!!

Who Do Agents Represent?

Shortly before I graduated law school, I decided I didn’t want to be a lawyer (well planned, I know). So, nearly six figures in debt, with graduation on the horizon, I visited a corporate consultant to figure out what the “anything” is that you can do with a law degree.

I sat in that office for more than an hour, filled out a few questionnaires, and answered a bunch of questions. When my time was up, I was told I should be an agent. Armed with that information, after graduation and the bar exam, I went to work for a talent agency.

My tenure at the agency didn’t last long, but that had more to do with money (or lack thereof) than desire. Nearly a decade later, when the company I was working for was sold, I briefly flirted with following my passion and becoming a baseball agent. But the constant travel, cut-throat competition, and lack of clients thwarted that ambition.

For more than two decades I have worked on the corporate side of the ledger. And events over the past few weeks have made me appreciate that choice all that much more.

As many you have probably read, the Writers Guild of America has declared war on talent agents. Simply put, the WGA believes that agents are guilty of self-dealing and breach of fiduciary duty. The guild feels as if the agents, rather than representing their clients, are putting their needs, desires, and financial interests first. Insofar as I don’t represent talent, I am not in a position to judge or even truly opine. Suffice it to say, the whole thing is a mess.

Now for the more obscure. I am sure most of you by now know that Mike Trout signed a 10/$360M extension with the Angels; that Bryce Harper got 13/$330M from the Phillies; Manny Machado will spend the next 10 years earning $300M with the Padres; and Nolan Arenado received an 8/$260M extension from the Rockies. But unless you follow the game super-closely, you probably missed some of these smaller deals:

  • Ronald Acuña, Jr. (Braves): 8/$100M
  • Blake Snell (Rays): 5/$50M
  • Aaron Nola (Phillies): 4/$45M
  • Luis Severino (Yankees): 4/$40M
  • Ozzie Albies (Braves): 7/$35M
  • Paul DeJong (Cardinals): 6/$26M
  • Brandon Lowe (Rays): 6/$24M

So what do all of these deals have in common? For starters, none of them had to be made – all of these players were still under team control (a quick reminder: players get paid the Major League minimum (or close to it) for their first three years, and then are arbitration-eligible for the next three).

Next, for most of these players, their new contract represents a vast underpay. Some pundits are speculating that Acuña left anywhere from $100-$150M on the table. Snell, Nola, and Severino were all in line to earn nine figures down the road, but gave that up for lesser, but still life-changing, generational money. There is an argument to be made that Albies could have made the same $35M through his arbitration years, and come out a free agent with the world as his oyster. Instead, he gave up at least two years of free agency, but most likely four, at $7M/season.

If we were to channel the cynical thought process of the WGA, one might wonder if there was something else at play. When negotiating these deals so far in advance of arbitration and free agency, there is a question as to whether or not the agents were working in the best interests of their clients?

Most of the players referenced above are represented by smaller agencies. None of them has Scott Boras or Dan Lozano or the Wasserman Group in their corner. And, as you know, agents can only commission deals they make. So, if Acuña or Snell or Albies elected to remain on their rookie deals, and then jumped ship to a larger agency when free agency came around, the agents who discovered, nurtured, and guided these players to superstardom would be left holding 4-5% of maybe $10-$20M in total – for upwards of a decade or more of work. And then the big-name/big-firm agent could “poach” the client, sign the high eight-figure or potentially nine-figure deal, and take 4-5% of that.

Sure, the new agent would bring large-scale negotiation experience to the table. Sure, the new agent would leverage relationships with front offices honed over years of deal-making. Sure, the new agent would earn his/her keep. But that is of little consolation to the agent who repeatedly flew to the Dominican Republic to scout an unknown kid; or who hung around the stands at some podunk high school on a cold March day to speak with a 17-year old and his parents; or who helped navigate the back roads of the minor leagues, coaxing and cajoling, challenging and inspiring a player to have a short memory and to keep his eyes on the prize. Those agents are left at the altar, only to see the prettier lady swoop in, sign the player and the big contract, and enjoy the riches gleaned therefrom.

So what is a little(r) agent to do? Maybe, and this is just speculation, maybe that agent signs the big-money contract before the client has a chance to split. As you can see, these deals are for considerably less money than those signed in free agency; but 4-5% of something is a whole lot better than 4-5% of nothing. Maybe the idea is to cash in now. Make the $40M deal and get a $2M commission rather than waiting three or four years for the player to potentially get double that on the open market – but with a different agent – leaving you holding the (empty) bag.

Are agents always acting in their client’s best interests? That would be my hope. The WGA doesn’t seem to think so. Many baseball writers are a bit dubious. And there are plenty of savvy general managers who are preying on agent’s greed(?), lack of scruples(?), exploitative desires(?) to make a quick deal heavily in favor of the team. And yes, in these cases, the player is set for life. And yes, we as outsiders have no way of truly knowing what motivated the player to sign early. And yes, absent a serious injury, all of these players should have another chance to sign a big-money contract down the road. But that doesn’t mean we shouldn’t look at these deals with a critical eye.

To take it back to Hollywood, we can certainly view agency productions as creating more jobs. We can reason that packaging fees save clients from paying a 10% commission. But, that doesn’t mean we shouldn’t look at those deals with a critical eye.

Hell, it all may be much ado about nothing. It may be that every agent is looking out for his/her clients and living up to their fiduciary and ethical duties. But it’s not beyond the pale to ask the question.

But unlike the WGA, I don’t already have the answer.

PLAY BALL!!

Crushed Davis

I moved to Los Angeles in the summer of 1979. At that time, the Dodgers had an impenetrable infield, with Cey, Russell, Garvey, and Lopes.

Davey Lopes was in his eighth big league season, and he would go on to play in eight more. But by 1981, Lopes was beginning to see the end in L.A. The Dodgers had two second base prospects on the farm, Jack Perconte in Triple-A, and Steve Sax in Double-A. I was always confused as to why Sax leaped over Perconte. But my scouting skills shone bright when Sax won the Rookie of the Year in 1981, and Perconte played a total of 433 big league games. (I whiffed again (or did I?) when I vocally endorsed Chip Hale over Chuck Knoblauch to play second base for the Twins in the early ‘90s, but I digress.)

In the first week of the 1983 season, coming off that ROY, Sax made an errant throw to home plate in the ninth inning of a game against the Expos, and a switch flipped. By the All-Star Break, Sax had committed twenty-four errors, on his way to a total of 30 for the season. Fortunately, Sax was able to get his “yips” under control, and go on to play eleven more seasons, eight of them as a second baseman.

After 1983, fans and the media began referring to what happened in Los Angeles as “Steve Sax Syndrome.” But to baseball aficionados, it really was “Steve Blass Syndrome.” In 1971, Blass won 15 games with a 2.85 ERA, helping the Pirates win the World Series. In 1972 he was an All-Star, winning 19 games with a 2.49 ERA. But in 1973, he lost the ability to pitch. He walked 84 batters in 88 innings (triple his previous walk rate), hit twelve batters, threw nine wild pitches, and saw his ERA balloon to 9.85. Blass retired after pitching one game in 1974.

Mackey Sasser was a promising catcher for the Mets in the late ‘80s. His troubles began in 1990, exacerbated by a leg injury that forced him to remain crouched when he threw the ball back to the pitcher. It got to the point that Sasser simply could not throw the ball 60 feet to his battery mate, committing fourteen errors in just 87 games. Sasser caught half as many games in 1991, basically half as many as that in 1992, and then only sixteen more before he retired three years later.

This list could go on and on. We could include the aforementioned Chuck Knoblauch and Rick Ankiel and Jarrod Saltalamacchia, but there is no need to dig that deep. You get the point.

The reason for rehashing the syndromes of these players is in an attempt to make sense of what happened and is happening to Orioles 1B/DH Chris Davis. As recently as 2013, Davis led the league in homeruns (53) and RBI (138), won the Silver Slugger, and came in third in MVP voting.  In 2015, Davis hit another 47 dingers to lead the league, and then the Orioles signed him to a 7/$161M contract.

In 2016, Davis had a career high in strikeouts with 219 (only a 5% increase from his previous high the year before), but he also hit 38 homeruns. All seemed right with the world.

In 2017, Davis missed 34 games, but still managed to strike out 195 times, while hitting a swarthy .215 and slugging .423. A keen eye may have seen trouble on the horizon.

2018 is when the Crush Davis became Crushed Davis. He played in 128 games, struck out 192 times, hit .168, and slugged .296. And when the season ended, the Orioles still owed him $92M. The baseball world was agog with Davis’ performance; but, it should be noted, he has been forthright about his issues.

There was some hope that time away from the game and some tweaks with his mechanics would lead to better outcomes for the remaining three years of his deal. File that in the best laid plans category. As of this writing, Davis has yet to record a hit this season. He has struck out 13 of the 27 times he has come to the plate. If you go back to last season, he is 0 for his last 44 with 24 Ks. He is 1 for his last 55 with 27 Ks. In his last 559 PAs, he has 79 hits, 16 HRs, 46 walks, and 209 strikeouts! We could take these stats back to last his last 1,000 or 1,500 at bats, but they wouldn’t look any better.

I don’t relish listing any of the above. I have provided this information to denote that the yips are not the exclusive province of defensive players. It is quite clear that a couple of seasons ago, a switch flipped, and Davis can no longer throw the ball to first base, or back to the pitcher, or to home plate. He can no longer hit a Major League baseball. Sure, the broken clock theory is in play and he makes the occasional contact. And if the bat is in the right place at the right time, he is still strong enough to hit the ball really far. But, as a practical matter, Davis is more Steve Blass than Steve Sax.

I am not sure if there is a “right” thing to do. Far be it for me to tell a guy to hang ’em up and walk away from nearly $90M. Far be it for me to tell the Orioles to cut a franchise player or send him down to the minors. What I do know is that it is not fair to the team, the fans, but most especially, Chris Davis, to keep sending him up to the plate just to fail and flail – spectacularly – again and again.

I did have one thought: Mr. Davis could head about nine hundred miles southwest to Dothan, Alabama. Drive over to the campus of Wallace Community College and look for the baseball field. Seek out the head coach. I am sure Mackey Sasser – who came to grips with his yips with the help of Dr. David Grand – could have some helpful advice.

When he was at his best, Crush Davis was a joy to watch. No one hit the ball farther with less effort. He hit 223 homeruns over a six-year span. As a baseball fan, I sure hope he gets back there again.

PLAY BALL!!

Belt Tightening

Disclaimer: I may be biased.

I have spent the entirety of my career (save for four months at the very beginning) on the management side of the table. Agents and lawyers representing talent have been my professional foe for as long as I have drawn a paycheck. And while I am often exasperated by their efforts on behalf of their clients, I try to take solace in the fact that they are doing nothing more (or less) than providing zealous representation. I hope they feel the same about me.

When negotiating with talent to work on a collective endeavor, whether it is sports or entertainment, the game is non-zero-sum. In fact, the goal should be to have a winner on both sides. If management wins, they ostensibly have more resources to dedicate to the effort, which makes the likelihood of overall success that much higher. It doesn’t matter if you are talking about a movie deal or a baseball team. If the talent wins, they will be more inspired to excel and produce the best possible product. It doesn’t matter if you are talking about a Broadway stage or the friendly confines of Wrigley Field.

All of which makes baseball’s arbitration system so bizarre. For those of you unawares, baseball arbitration – which is available to players in years four through six of their career – works as follows: the player and his team exchange their desired salary. If they cannot agree, they submit the same to a three-judge panel. Each side is given one hour to argue their case, followed by a thirty minute rebuttal. After hearing both arguments, the panel decides which salary to award. There is no “meeting in the middle” or “splitting the baby.” There is a winner and a loser. In a non-zero-sum arena, this is a zero-sum game.

And here is the kicker, where things get really wonky: MLB rules require that the player be present for the hearing. So, when his team makes their 90-minute presentation to the panel justifying why the lower salary is appropriate and why the player’s higher ask is not, the player is forced to listen to all of the ways in which he is not as good as he thinks he is. Imagine asking your boss for a raise, and then having a seasoned trial attorney spend an hour and half telling you, to your face, why you don’t deserve it. I think I would prefer a simple “no” than suffer that humiliation. The player thinks he is the next Joey Votto, only to be told that he is really the next Joey Cora.

And when this process ends, win or lose, the player must suit up for an organization that told him how they truly feel. Talk about your labor relations.

This system, for the reasons stated above, is totally flawed. But it is the system that was collectively bargained for. Teams and players are incentivized to do their homework, prepare their case, and make their best presentation. By design, one side wins, one side loses. I am certain there are countless other ways in which a just result could be reached. But within the confines of what MLB and the MLBPA negotiated, players go into arbitration seeking to maximize their pay, while teams go in trying to minimize it. The goals are patent; there is no secret.

So when The Athletic reported last week that, at the end of year, when MLB teams have their annual arbitration seminar, they give out a belt to the team “that did the most to achieve the goals set by the industry,” there was a predictable outcry. Tony Clark, the MLBPA executive director responded by saying, “That clubs make sport of trying to suppress salaries in a process designed to produce fair settlements shows a blatant lack of respect for our Players, the game, and the arbitration process itself.”

Really? Is that what they are doing?

Isn’t this much ado about nothing? Why is Tony Clark suddenly clutching his pearls and claiming that teams are making “sport” of the process? Why is Clark totally fine with players being forced to sit idly by while they are run through the ringer in front their bosses, and then told to be happily on their way? With all of the talk about a minor league offers for major league players, and languishing free agents, and service time manipulation, does the fact that teams celebrate the one who was the most efficient really rise to the level of outrage? Don’t we have bigger issues to deal with?

And the idea that celebrating winning (however gauche a belt may be) shows a lack of respect is the same argument that flipping a bat is disrespectful to a pitcher. How can Clark take issue with trying to suppress salaries? Isn’t that the MacGuffin? Wasn’t the system put in place specifically to either suppress or expand salaries?

Belts aside, salaries have expanded…bigly. My questions for Clark would be: Should teams be offended and crying a lack of respect if Nolan Arenado’s representatives had a victory dinner when he received a record-breaking $26M arbitration award? Or if Mookie Betts and his team did a little victory dance when he won his arbitration and was awarded $20M. How about when Josh Donaldson got $23M coming off an injury-shortened season? What about Jacob deGrom’s $17M (up from $7.4M) or David Price’s $19.75M (a 41% raise)? Those salaries didn’t seem too suppressed.

As The Athletic article points out, according to MLB, players have won 18 of 32 hearings in the past two years, a 56% clip (up from around 40% historically). Teams gave out more than three-quarters of a billion dollars this past off-season to arbitration-eligible players. Marc Craig’s article intimates that the fight is unfair insofar as the teams have more information at their disposal, and they share that information amongst themselves. But the statistics above belie that. Players who have the goods, and who make the better presentation, get paid what they believe they are worth.

And let’s not lose sight of what is happening here. Teams are awarded the belt for a job well done. That is, they have taken their ninety minutes and convinced a group of neutral arbitrators that their position is correct. Players have that same opportunity. If you don’t want the batter to flip his bat…make a better pitch. If you don’t want teams to celebrate salary suppression…make a better case.

Again, teams could be a little more circumspect about the manner in which they celebrate their victories, but a $20 plastic belt certainly shouldn’t be the object of our derision. Now, if they gave a belt to the team that best suppressed service time, well, them be fighting words.

As a fan I worry that Tony Clark and the MLBPA are losing the forest for the trees and focusing on the wrong battles. And that makes me very nervous for the next CBA negotiation after 2021.

We are about a week into what looks to be an incredible season. Maybe the belt talk can go away. Maybe we can talk about Fernando Tatís Jr., Pete Alonso, and Chris Paddack breaking camp despite their rookie status; maybe we can talk about Bryce Harper making a home in Philadelphia; or Christian Yelich picking up where he left off. Maybe we can spend less time worrying about the inane actions of front offices and more time just enjoying this wondrous game.

PLAY BALL!!

Rich Beyond the Dream of Avarice

Bud Fox once memorably asked: “How many yachts can you waterski behind?”

I have thought about that question many times these past few days as Manny Machado, Nolan Arenado, and now Bryce Harper, have found themselves tuning in to Yacht Rock on Sirius Radio.

All three of these guys were rich on November 1st, and all knew they would soon be a lot richer – two via the free agent market and one via arbitration. Money was never going to be an issue. And yet, for at least one of these players, money was always going to be the issue.

Bryce Harper planned for this week (or a week like it) for nearly a decade. In June of 2009, Harper famously appeared on the cover of Sport Illustrated under the headline “Baseball’s Chosen One.” Shortly after that issue hit the newsstands, Bryce took the G.E.D. so he could leave high school after his sophomore year, enter junior college, and speed up the timeline for the day on which he would sign the richest contract in the history of North American sports.

And everything went according to plan. Harper became the number one draft pick in 2010, was Rookie of the Year at age nineteen in 2012, and won the MVP after his fourth season. Harper was shaping up to be an all-time great. Past success, however, is no guarantee of future performance. Harper – who is always mentioned in the same breath as another player from his 2012 class, Mike Trout – found himself consistently outpaced by that same guy. So even when Trout signed a 6/$144M extension after his third season, the baseball world knew that Harper – led by uber-agent Scott Boras – would never sign a team-friendly extension. No, the goal had been set, and it was always about the having the biggest, getting the most.

In 2014, Giancarlo Stanton signed a 13-year extension with the Miami Marlins worth $325M. While the average annual value (“AAV”) of that deal was not the highest, the total value of the deal – if Stanton does not exercise his opt-out after six seasons – was the largest in the history of the sport. That became the bullseye that Boras and Harper honed in on. There really was never a moment when one reasonably believed that Harper would sign for a dollar less than $325M.

There have been countless articles written in the last few days about Harper signing with the Phillies. This has been anticipated for months, so it really wasn’t too much of a shock. Not to break my arm patting myself on the back, but about four weeks ago I predicted a deal with the Phightins at 13/$338M (that would have outpaced Stanton by $1M/year). I was about 98% correct. But I digress.

According to NBC Sports, the Giants offered Harper 12/$310M, which would have been a higher AAV than the deal he signed with Philadelphia. But that couldn’t happen because (checking my math) $310M is less than $325M.

Also according to NBC Sports, the Phillies came up with $330M, but wanted flexibility with the Competitive Balance Tax, so offered that sum over 15 years. But $22M/year was too paltry for Boras. Fourteen years? $23.57M/year didn’t quite cut it. Okay, 13 years it is. Deal done.

Of course it was; it was always $325 or bust. Jon Morosi of MLB Network reported that the Dodgers offered Harper 4/$180M – yes $45M/year. As I previously wrote, a deal like that might make sense because these are Harper’s prime years, and if ever there was a chance to bleed value from a monstrous contract, this was it.

Ken Rosenthal sent out a tweet over the weekend that the Dodger offer was actually three years for less than $40M/year. Let’s assume, for giggles, that the number was $38M/year – the highest AAV ever by nearly $4M. Harper was never taking either version; and you know how I know that? Because neither was larger than $325M in the aggregate. As long as that number was available – somewhere – that is what Harper would sign.

Greed may be good; but greed is often short-sited. Let’s look at the two scenarios that were potentially on offer from the Dodgers. In one, Harper makes $114M over three seasons, and becomes a free agent at age 29. In that version, Harper would need only sign a 10/$216M deal to get whole. In the other, Harper earns $180M over four seasons, becomes a free agent at 30, and is only chasing 9/$150M. In either case, a year less or a dollar more and he is better off than the deal he signed with Philadelphia.

And let’s remember, Arenado just signed a contract extension worth $32.5M/year; and before Harper would have been a free in three or four years (depending on which option was actually available), both Trout and Mookie Betts will have signed new deals – ostensibly setting records with each contract. With those deals, and potentially Alex Bregman, too, it is pretty safe to conclude that Harper could have wrung another $150-$216M out of the rest of his career.

Which makes the idea that Harper “didn’t want any opt-outs,” “this is where I wanted to be,” “we wanted stability,” all that much more disingenuous. My guess is that John Middleton said to Boras: “Look, I am offering your client one-third of a billion dollars – the most any player has ever been guaranteed on this continent – and I am not going to get “A-Rod’d” after five or seven years when you demand more money to finish the deal. You either want the $330M or you don’t.”

And, lest there be any mistake, he wanted the money. There is no shame in that. Just don’t try to spin this into something it’s not.

Now, maybe all the bravado, all the hair flipping, all the “clown question, bro,” is an act, hiding an inner insecurity. Maybe Harper fears he won’t perform and thus could not get another deal that would have exceeded the $330M in toto. Possible, but doubtful. Harper is nothing if not confident.

He wanted the most money any player has ever been guaranteed. Period. And what makes that so ironic is that inside of two years, he will be second and most likely third on that list. He passed on a chance to make even more just to hold the crown for less than two seasons. Heavy is the head, indeed.

I don’t begrudge Harper for taking the money. And I don’t begrudge the Phillies for paying it – it’s their stupid money. I just don’t buy the after-the-fact explanations. But, at the end of the day, who cares? We are half way through Spring Training, and for Harper and everyone else, it’s time to…

PLAY BALL!!

Patience is a Virtue in Dodgertown

Living in Los Angeles this winter, after two consecutive seasons of “what-ifs,” two consecutive years of watching other teams celebrate on the green grass of Chavez Ravine, two consecutive years of sitting idly by, waiting for the deep-pocketed, second-largest market, mega-TV deal, Dodgers to spend on an impact free agent, has been trying, to say the least.

Sure, the Dodgers ponied up an additional $28M to keep “the franchise” in town for an additional year. Sure, they guaranteed A.J. Pollock $60M over four years to patrol center field for those games (how many, TBD) that he is not injured. Sure, the team made a qualifying offer to Yasmani Grandal, who elected to take $325K more to catch for openers in Milwaukee, rather than Kersh, Buehler, Ryu, and Jansen in SoCal.

But all we have heard for a few years now is that the Bums were looking to get under the luxury tax threshold so that they could reset the penalty and start spending like drunken sailors when the free agent class of 2018-19 became available. Fans and front offices were salivating over the likes of Kershaw, Kimbrel, Keuchel, Corbin, and, of course, Harper and Machado.

But since the Dodgers never intended to let Kershaw get to the open market, he came off the board. And since they signed Jansen to the second-richest relief contract in history, they didn’t have room for Kimbrel. And since they didn’t want or need another left-handed starting pitcher, Keuchel didn’t make much sense. And since Corbin decided to get off the market as quickly as possible, the Dodgers may never have had a chance to make a bid.

Which brings us to the two crown jewels. The two 26-year old free agent stars who were looking to set AAV and total compensation records. The two guys who were looking to be locked up for a decade or more. The two guys who the league has been waiting for to reverse two years of moribund free agency. And yet, a funny thing happened on the way to the market – the market changed and their performance waned.

It is a truism that players shine in their walk year. I guess these  guys didn’t get the memo. Harper decided to hit .239 with a career high in strikeouts and his worst defensive season to date. Machado told the world that hustling is for suckers, and showed the world that other teams’ defenseless infielders were open prey. So when Machado turned a shot off the top of the wall in the World Series into a single, and when Harper more than hinted that ten years was not a long enough contract, the market reacted. Just not in the way that either player or the MLBPA had hoped.

According to Chelsea Janes of the Washington Post, the Nationals offered Harper 10/$300M before the hot stove got cooking. There are some who believe that the Nationals made that offer so their fans knew they “tried,” all the while knowing that Harper would pass. And those same people believe Harper’s agent, none other than Scott Boras, leaked the offer to set a floor for future offers. To date, we have heard of none (except, maybe, the Nationals increased their offer).

According to Bob Nightengale of the USA Today, the White Sox offered Machado 7/$175K. To you and me, a cool $25M/year is pretty good scratch. For a guy who was expecting $300M and hoping for $400M, the numbers seemed a little underwhelming. And his reps were quick to condemn the reporting, but nothing has happened since, so who knows.

Which brings us back to the Dodgers.

Should they jump in with both feet and a large checkbook to sign either star? Are either worth the money? If you are the Dodgers, does – should – money even matter? Stan Kasten, in a clumsy interview with the Los Angeles Times seems to think so; but he doesn’t think enough of the average fan to explain why.

If you have followed the Dodgers under their new ownership group, and with Andrew Friedman at the helm, you know that signing long-term deals over $100M is anathema to them. You had to see this coming – that the team would be considerably more circumspect about spending upwards of $200 or $300M for either guy. And that was before Machado fell down striking out to end the World Series and Harper turned in a 1.3 bWAR season.

So before we castigate the front office for sitting on its hands and having short arms, let’s look at this unemotionally.

I am not a huge Corey Seager guy (I tend to think, advanced metrics aside, that he is overrated). But, would you rather have Seager at $4M for 2019 or Machado for $34M (guesstimating)? And keep in mind, Seager has two more years before he is a free agent. Even assuming he gets Mookie Betts-type arbitration money (say, $10M in 2020 and $20M in 2021), you are still $68M ahead of the game going into 2022, without having another seven-ish years of commitment to a player heading into his thirties. A player you have seen up close and know he ain’t the hustling type.

And, this analysis is only necessary because Machado insists that he is a shortstop – not a third baseman. This, despite the fact that he is in the conversation for the best defensive third baseman in the entire game (I see you Nolan Arenado and Matt Chapman). Let’s assume Machado gets over himself and agrees to play third base. What do you do with fan-favorite Justin Turner, who is owed $39M over 2019 and 2020? Do Dodgers fans think Machado is $31M better at the hot corner over the next two seasons?

Before any of you Boys in Blue answer, look at this:

Turner bWAR Machado  bWAR
2014 4.3 2.3
2015 4.0 7.1
2016 4.7 6.9
2017 5.8 3.4
2018 4.5 5.7
TOTAL 23.3 25.4

 

And from 2016-2018, Machado laps Turner by a whopping 1.0 bWAR. Still want Machado?

Now let’s talk about Harper.

When the Dodgers shipped the corpse and dead money of Matt Kemp and the rollercoaster that is Yasiel Puig to the Reds for a bag of balls and a contract they immediately ate, the conventional wisdom was that they were opening up right field for the slugger from Vegas with the flowing locks. But Andrew Friedman seemed to ask himself the following question: “Why would I do that?”

He must be thinking: “I have made it to the World Series the past two years without him, and Harper would not have made Yu Darvish pitch any better in Game 7 or Kenley Jansen pitch any better in Game 4.”

He might be thinking: “$300M is a lot of depth, a lot middle relievers, a lot guys who can carry us deep into October again…and again.”

The truth is that Harper is good, and may one day become great. But he ain’t “great” today. And it doesn’t matter what Scott Boras includes in his 75-page briefing book, it cannot change the fact that Harper came into the league in 2012 with a 5.2 bWAR, had a 10.0 in his MVP year of 2015, and has never cracked 5.0 in any other season. Is that guy worth $35-$40M per year? Maybe. Is he worth that for 8-10 years? You don’t need to be Harvard-educated (or even Tulane-educated) or a quant to answer that question.

So it seems, as per usual, the Dodgers are playing this smartly. They are keeping their powder dry and giving themselves payroll flexibility (insert billionaire joke here) so that they are ready to pounce before the July trade deadline. The Dodgers have gotten a ton of grief for being parsimonious, but to quote Bob Sugar, “it’s not show friends, it’s show business.” And these guys have shown, time and again, they know the business of baseball better than most. Have they made some mistakes, sure. Have they missed some opportunities, of course. But ask yourself this, do the Dodgers want to be spending $35-$40M/year on a 35-year old Bryce Harper in 2027? If you need some help with that one, drive a few miles down I-5 and ask Arte Moreno about paying Albert Pujols the back half of his contract. And before you tell me that Pujols was older when he signed his deal, know that in his age-35 season, Pujols had a 3.0 bWAR and earned $24M (and followed that with seasons of 1.3, -1.8, and 0.5, all while taking home $78M).

The Dodgers play the long game – both for the season and for their future. By not overspending in the winter, they can properly spend in the summer. At the 2017 deadline, they grabbed Yu Darvish, Tony Cingrani, and Tony Watson – all helpful pieces on their way to the pennant. Last year they acquired Machado and Brian Dozier – great and needed additions. People revere the Patriots for thinking long-term and building for sustained success. The Dodgers front office deserves the same benefit of the doubt.

Relax Blue Nation, patience is indeed a virtue.

PLAY BALL!!

Bryce Harper is NOT a Superstar

I am not trying to be provocative; this is not a “hot take”; I am not in the business of taking unnecessary shots.

Bryce Harper is good, very good. Harper may, in fact, be great. But Bryce Harper is not a superstar. Now, past performance is no guarantee of future results. As such, Mr. Harper may become a superstar. He may start his ascent this season, keep getting better into his mid and late twenties, and retire as one of the best to ever play the game. Who knows? But with all of this talk of $300M, $400M, $500M contracts in the ether as Bryce heads into free agency, I think it is important to step back and look at the facts. And by facts, I mean numbers.

About eighteen months ago I wrote an article comparing Harper to Mike Trout (who IS a superstar; and who, barring injury, will be (if he isn’t already) one of the best to ever play the game). Nothing has fundamentally changed since that analysis was completed after the 2016 season.

What has changed is that Harper had another good, but not great, season; and Trout had another brilliant (if injury-shortened) one.

When people speak of Harper, they do so in hushed tones. They hearken back to the teenage phenom on the cover of Sports Illustrated and the reported 570-foot homerun in Las Vegas at age 15. And then, inevitably, the conversation turns to Harper’s 2015 season in which he led the league in homeruns, runs, slugging, OBP, OPS, and WAR. With those numbers, he was the league’s Most Valuable Player.

Every season Harper is a perennial MVP candidate. And every season – save for 2015 – something happens to dash those hopes. In 2013 it was a knee injury; in 2014 it was a thumb injury; in 2016 it was a slew of walks by the Cubs in May that through him off the scent; in 2017 it was another knee injury. And this season – which started with a lot of promise with eight homeruns and a 1.265 OPS in his first 17 games – it seems like impending free agency is causing him to press, expand the strike zone, thus leaving him hitting .232 (albeit with a tie for the league-lead in homeruns with 13 and a .931 OPS*).

But if we break down Harper’s first six years, we see the following:

fWAR OPS RUNS
2012 4.4 0.817 98
2013 4.1 0.854 71
2014 1.6 0.767 41
2015 9.3 1.109 118
2016 3 0.814 84
2017 4.9 1.008 95

 

These numbers are fine, but they are not half a billion dollars’ worth of fine.

And let’s take a look at that illustrious 2015 campaign – the one that is always referenced to reflect Harper’s potential, the reason people believe he is a superstar.

Harper had an 1.109 OPS that season, which ranks 79th all time. Here are the names of a few players who have recorded higher single-season OPS numbers:

  • Jeff Bagwell
  • Larry Walker (three times)
  • Todd Helton (twice)
  • Albert Belle
  • Carlos Delgado
  • Luis Gonzalez
  • Kevin Mitchell

Now, these are great players. And yes, some did this in the steroid era. But, numbers are numbers.

How about that 9.3 fWAR, which is Harper’s best season by nearly 200%? In the last 20 years, there have been 31 individual seasons of 9.3 fWAR or better. In fairness, that list is filled with Hall of Famers, future Hall of Famers, and should-be Hall of Famers (save for PEDs). But Jacoby Ellsbury is also on that list (a 9.4 season); and Kevin Brown recorded a 10-win season. Those numbers make a 9.3-win season, if not pedestrian, at least less stratospheric.

In any given year (again, save for 2015), Harper’s conventional stats are lumped in with the likes of:

  • Mark Reynolds and JJ Hardy (HRs in 2012)
  • Adam Lind (OPS in 2013)
  • Trevor Plouffe (Slugging in 2014)
  • Dexter Fowler and Jayson Werth (Runs in 2016)
  • Didi Gregorius and Kyle Seager (RBI in 2017)

If it seems like I cherry-picked those specific stats for those specific seasons, I did not. You could go year-by-year (excluding only 2015) and find Harper bunched with other good ballplayers in each column of his baseball-reference page. Last season Harper once again showed his potential, finishing in the top six of slugging, on-base, and OPS – but only if you set the parameters at 100 games. Harper played in only 111 games in 2017 due to the aforementioned knee injury. While stepping on a slick bag may not have been his fault, maybe running into a wall at full speed is; and diving head-first into a base definitely is. Regardless, we live in a no-fault world – and if you are paying a ballplayer $30M, or $40M, or (gasp) $50M per year, he needs to be on the field putting up those numbers over 150+ games. Harper has played that many games only once in his first six seasons.

Quiz time. Below is the average output of two different players through their first six years^ in the Big Leagues. Which would you choose?

  GAMES RUNS HR RBI OBP SLUG OPS fWAR
Player A 135.5 86.2 13 60.2 0.344 0.429 0.773 4.1
Player B 128 84.5 25 76.7 0.383 0.512 0.895 4.55

 

They are pretty close, and if you squint, I think you would prefer Player B. Player A – also known as the aforementioned Jacoby Ellsbury – got a 7/$153M deal when he entered free agency at age 30, and that deal has been derided in the Bronx since the ink dried.

Does Player B – also known as Bryce Harper – look like he is worth two-times Ellsbury (based solely on performance to date)? Three-times?

Does your answer change if I told you that Harper would sign this deal at age 26 (rather than age 30)? Do those four years of production make him $150-$250M more valuable? One could argue that, at $11M per each single WAR, those four years (assuming Ellsbury is a zero-win player during the same period) make Harper worth about $50M more than Ellsbury. But $50M is a far cry from $150M, let alone $250M or $350M. Add $50 million to Ellsbury’s deal, round it up so the AAV looks good, and Harper could (should?) get 7/$210M. That seems reasonable.

Numbers are numbers, and facts are facts. Bryce Harper is not (yet) a superstar. Can we please dispense with that talk; and can we please dispense with the idea that Harper should get anywhere between one-third and one-half of a billion dollars when he signs next off-season?

Now, if we start talking about Manny Machado? Well, that would be an interesting conversation…

PLAY BALL!!

*All stats current as of May 17

^Ellsbury’s 2010 season was omitted as he played only 18 games that year.

A Deal Fit For a Kingery

When we last met, we were discussing the Philadelphia Phillies and their deft contracting for a seasoned veteran. In today’s installment of the Matt Klentak diaries, we will look into the Phillies’ deft contracting for an unproven rookie.

We begin our tale as Spring Training was winding down. The Phillies multi-faceted prospect Scott Kingery was preparing himself to head down to Lehigh Valley for Triple-A opening day. For various reasons – more on those below – Kingery didn’t think he would be breaking camp with the big club.

Kingery was a drafted in the second round in 2015 out of my alma mater, the University of Arizona. At 5-10/180, Kingery came into professional baseball playing multiple positions, with a great hit tool and plus speed. At his size, no one expected him to hit for power. But last year, Kingery hit 26 homeruns, stole 29 bases, and had a .889 OPS across two Minor League levels. Such production allowed Kingery to rise quickly up the ranks of the Baseball America and MLB prospect charts. And yet, no one expected young Scott to be wearing a Major League uniform on March 29th.

Kingery came to Florida in March and knocked the ball all over the yard. He hit .411, with 5 dingers and a 1.226 OPS during the spring. And yet, even with that performance, no one expected young Scott to be in the Majors on Opening Day.

As previously discussed here and elsewhere, even if the Phillies wanted Kingery with the big club, they had a financial incentive to keep him in the Minors for the first few weeks of the season. By doing so, the Phillies would delay Kingery’s service-time clock, giving the club an extra year of player control. In short, the Phillies planned to purposefully make themselves worse for a short period of time (three or four weeks) in order to potentially save some money six years down the road. The merits of this practice have been openly debated in many fora, but until the players change the CBA, teams are incentivized to take advantage of the rules, and disincentivized to bring young players to the big leagues – even when they are ready (see, Trout, Mike; Bryant, Chris; Acuña, Ronald; etc.). That, however, is a discussion for another day.

So, in order to avoid this “lose-lose-maybe we win some time in 2024” proposition, Klentak and Kingery’s reps at PSI Sports Management elected to negotiate a long-term contract for a youngster who had never played a Major League game. The Phillies and Kingery agreed to a deal that potentially runs for nine years, worth no less than $24M, and possibly as much as $65M (if the team exercises its three options). Here is an overview of the deal:

Year Salary
2018 $1,000,000
2019 $1,500,000
2020 $1,750,000
2021 $4,250,000
2022 $6,250,000
2023 $8,250,000
2024 $13,000,000

(Team Option; $1,000,000 buyout)
2025 $14,000,000 (Team Option)
2026 $15,000,000 (Team Option)

Why would the Phillies do that? And why would Kingery?

From the Phillies’ perspective, this was a no-brainer. If everything goes sideways, and Kingery is an all-time bust, they have a player on their roster through the 2023 season at an AAV of $4M. If you consider that the going rate for Wins Above Replacement (WAR) is $11M, Kingery could be a .06 WAR player for each of his six seasons and the Phillies still break even (Note: this math does not account for the price/value of WAR going up between now and 2023, which means Kingery could be even worse and the deal would still make dollars and sense).

And if Kingery is the real deal, the Phils have him under control for nine years at an AAV of $7.2M, which would rank him as the 180th highest paid player in the league (at current levels). To take this to its illogical conclusion, using 2018 values, if Kingery is worth exactly $15M (i.e., making him a 1.4 WAR player) in his ninth season (which begs the question as to why the Phillies would continue to exercise their options, but bear with me), the contract would still be a good value. If Kingery’s worst case is that he turns into Trevor Story or Max Kepler – by Year 9 – the Phillies will have won the deal.

One last thing: the Phillies got to bring Kingery, his wheels, his Swiss Army knife versatility, and his promise to the big leagues on Opening Day. They got a young ballplayer his baptism by fire, with a chance to help the club right away; he didn’t have to languish in the Minors, waiting for the sands in the hourglass to run out before getting “the call.”

So now we know why the Phillies would sign this deal, but why would Kingery? Why would a player with future “star” (if not “superstar”) written all over him give away not some, but all, of his negotiating leverage – three years of arbitration and three years of free agency – for a deal that, as shown above, is most likely way below market? One thing is certain, the MLB Players Association tried to talk him out of it. But the MLBPA doesn’t get to balance Scott’s checkbook or plan for Scott’s future (the MLB Pension notwithstanding, which kicks in if Kingery plays 43 days in the Majors).

Kingery was set to start the season in the Minors, and earn about $2,150/month. By signing this deal, he gets a first-year salary of $1 million, or $166,666/month (players are paid over a six-month schedule). A pretty nice raise. Sure, Kingery probably would have been in the Majors by May, and thus would have received the MLB minimum ($91K/month) for the remainder of the season. But that total salary would still be less than 50% of what he will make this year under the new contract.

What about Evan Longoria, people are yelling from the empty bleachers at the Trop? For those of you who don’t recall, Longoria signed a 6/$17.5M deal in 2008 after playing only six games for the (then) Devil Rays. Longoria protected himself with life-changing money, and played well enough to garner another 6/$100M deal four years later. Sure, Evan left a lot of money on the table by giving up three years of arbitration eligibility, but he still stands to make roughly $150M over the course of his career. That’s nothing to sneeze at.

To those screaming “Longoria”, I (and maybe Kingery, too) would scream “Singleton.” In June, 2014, Jon Singleton, a first base prospect in the Astros’ system (the third best prospect in the organization) got the call, and elected to sign a 5/$10M deal before he even put on his jersey. Singleton hit .168 in 95 games with the Astros in 2014; and .191 over 19 games in 2015. And that, my friends, is the sum total of Singleton’s Major League career. Singleton would have made a prorated MLB minimum over those two seasons, or about $320,000. By signing that contract – by mitigating his risk – Singleton made more than 30 times what he would have made otherwise. He protected his family and his future by signing early. If he not signed, do we believe that the MLBPA would be helping with grocery money today?

Had Singleton lived up to his potential, he may have been in line to be compensated like another Astros player who signed a similar contract a year earlier. A light-hitting second baseman secured his retirement by signing a 4/$17M deal in 2013. He then outperformed the deal, won some batting titles and an MVP, led the Astros to a World Series championship, and this off-season Jose Altuve was rewarded with a 5/$151M contract. But those riches were but a pipe dream in 2013 for a guy who, in 2006, had to sneak himself into a second tryout with the team. Altuve had no way of knowing that nine figures awaited him, so he took the sure money, and then earned the rest.

Other players, including Mookie Betts, Bryce Harper, and the aforementioned Ronald Acuña, have all been offered long-term deals at team-friendly prices, only to bet on themselves. And that is their right.

But more than a handful of players took the insurance policy that a long-term contract provides, and then bet on themselves to get even more money down the road. Among those who have done so: Salvador Perez (5/$7M initially, 5/$52.5M later); Troy Tulowitzki (6/$31M initially, 10/$157.5M later); Ryan Braun (8/$45M initially, 5/$105M later). And the following guys are in line to make plenty of money in the coming years: Paul Goldschmidt (5/$32M, expires after 2019); Madison Bumgarner (5/$35M, expires after 2019); Anthony Rizzo (7/$41M, expires after 2021).

We think we know these players, but we don’t. We don’t know their financial situations; we haven’t run around the bases in their cleats; we don’t know what motivates, drives, or frightens them. None of us – not the yahoos sitting in the stands, the MLBPA officials in New York, or even teammates in (theoretically) similar situations – can pass judgment on any other human being who accepts an offer of generational money, an eight-figure fortune – with no guarantee that any more will ever be available – just for the privilege of playing a kid’s game in a park six months of the year.

Not to be overlooked is the dearth of free agent signings this off-season. Was this year merely a blip on the radar, a bump on the road to riches; or was it a sign of the times? Many players (Jose Bautista, Melky Cabrera, Andre Ethier, Matt Holliday, John Lackey, Brandon Phillips, Mark Reynolds, Jayson Werth, and more) found this year’s free agent waters quite choppy, and, as of today, only a few have found buoys. Maybe Scott Kingery looked to the horizon and didn’t like the view. Maybe he chose safety and security over luck and the lottery.

As a baseball fan, I hope Kingery lives up the contract, becomes a star, and signs a massive deal the next time around. But on the off-chance that he flames out and finds his name on the list of all-time flops, I will be happy for him and his family that, if nothing else, he has financial security and the ability to buy a round drinks while he regales everyone at the bar with his stories of what might have been.

PLAY BALL!!

Playing Checkers

There are very few things more satisfying than the “jump” in checkers. And it’s rare when you can incorporate a kids’ board game into Major League Baseball, but Phillies GM Matt Klentak and uber-agent Scott Boras did just that in March when they negotiated for free-agent pitcher Jake Arrieta. Unless you were deep in the weeds of the Hot Stove (which was considerably cooler this winter), you may have missed the unique deal the Phillies and the right-hander closed a month into Spring Training (a deal unlike any I’ve seen before).

Before we get into the deal, a little background. Arrieta, the 2015 Cy Young winner, coming off four-plus successful years on the north side of Chicago, was arguably the most coveted starting pitcher on the open market this off-season. His agent, the aforementioned and inimitable Scott Boras, was looking for a five- or six-year deal of at least $200 million.

But as Thanksgiving rolled into Christmas, and the new year begat pitchers and catchers reporting to camps in Arizona and Florida, Arrieta found himself unemployed. This was a point on consternation for baseball fans and writers, but apparently not for Arrieta himself. If I were a betting man, I would wager that Boras assured his client that he – Boras – would pull another rabbit out of his hat, as he had so many times before.

When position players reported to Spring Training in March, however, it seemed as if the Copperfield act was getting stale. The Yankees and the Dodgers elected not to spend money and stay within the Competitive Balance Tax; the Cubs signed Yu Darvish; the Braves are still rebuilding; the Rangers elected to take a year off from contending; the Astros have a World Series title, two Cy Young winners (Dallas Keuchel and Justin Verlander), and landed Gerrit Cole in a trade; the Tigers are still in tear-down mode; the Angels won the Shohei Otani sweepstakes; and the Mets are chock-full of starting pitchers. The curtain was about to rise, and Jake didn’t have a ticket to the show.

The potential landing spots for Arrieta eventually narrowed to Washington and Philadelphia. The Nationals seemed like a natural fit, as Boras and Nats owner Ted Lerner have a great relationship. And this is “the” year for the Nationals, with Boras client Bryce Harper going into his walk season. It is win now…or potentially never.

The Phillies were an intriguing home, but they are not yet in win-now mode. Their rebuild is still in process, and are about two years away from contention. That said, one could argue that signing Arrieta would give them a rotation anchor who could lead them into their future. But one could just as easily argue that signing a 32-year old pitcher to a long(ish) deal does not comport with modern analytics and the conservative approach recently taken by the Phillies.

There has been very little reporting about any actual negotiations between the Nationals and Arrieta. And since neither Ken Rosenthal nor Buster Olney made mention of it, it’s plausible none ever occurred.

As a result, Boras found himself stuck with Klentak and the Phillies.

With but one buyer, Boras needed to be creative. For starters, Boras is well known for inserting opt-out provisions into his clients’ contracts. These give the player leverage if he over-performs his deal. In fact, just a few weeks earlier, Boras negotiated a contract for another client, J.D. Martinez, which gives the slugger not one, not two, but three opt-outs over a five-year period. As such, it stood to reason that if Arrieta wasn’t going to get a $200 million guarantee, Boras would want as much flexibility, and as many outs, as possible.

But Klentak and the Phillies understand market forces as well; and they could count the number of chairs available when the music stopped on Opening Day. They knew they potentially were the only game in town. Additionally, Klentak didn’t want to find himself paying a pitcher to (re)build his value, just to lose him – or be held hostage for huge dollars – right when his team is vying for the post-season.

So, Boras and Klentak decided to play checkers, and negotiated what, on its face, looked like a simple, front-loaded 3/$75 million contract. The deal would have $30 million payable in Year 1, $25 million payable in Year 2, and $20 million payable in Year 3.

But a deal like this had two problems for Boras: (1) If Arrieta performs in accordance with his pedigree, an average annual value (AAV) of $25 million is below market; and (2) Even if Arrieta performs, Arrieta will have earned only $75 million over the course of the contract, and will find himself a free agent as a 35-year old pitcher.

This deal had one major problem for the Phillies: They could lose their ace right when they become a force in the National League East.

It thus became time to start moving pieces around the checkerboard.

Boras bought himself protection. He, in my parlance, “jumped” Klentak by negotiating an opt-out after Year 2. Doing so made this a 2/$55 million deal ($27.5 million AAV), which is more in line with what other pitchers of Arrieta’s ilk make, and would allow Arrieta to go back into the market as a spry 34-year-old, not an old-timey 35-year-old.

But Klentak wanted and needed some protections as well, and this is where things get very interesting. He “jumped” Boras by giving the Phillies the right to “buy out” the opt-out by locking in Year 3 at $20 million (thus trumping the opt-out) and also extending the deal for two additional years at $20 million each. If Arrieta performs, and the Phillies are contending, they would have Jake on a 5/$115 million contact ($23 million AAV). And even if Arrieta under-performs in Years 4 and 5, that deal is below market and doesn’t crush their payroll.

But Boras can do math as well as I, and he understood that if Arrieta performs well enough for the Phillies to lock him in for three additional years (five in total), then Arrieta would be worth more than a $23 million AAV. So Boras needed to “jump” Klentak by building $5 million escalators into the deal based on (a) the number of starts Arrieta makes in 2018 and 2019, and (b) how Arrieta fares in Cy Young voting those seasons. If Arrieta lives up to his past level of greatness, he can add up to $20 million to the deal, making it 5/$135 million, and back to a $27 million AAV. And if that is how it ultimately ends, the Phillies will be more than happy with the deal.

With those final moves, all of the checker pieces were off the board, the game was over, and the parties signed the contract.

One last note: As we look ahead to a slowing free agent market, as teams become more cognizant of Competitive Balance Tax implications, and as front offices become ever more risk-averse, look for more contracts with this level of creativity. I may even dissect another one soon.

PLAY BALL!!