Money Haul – Signing High Priced Free Agents Is Not Always The Answer

By Mike Moosbrugger

I originally wrote this article near the end of the 2014 season. 2015 is now over and we are now officially entering into the off season free agency feeding frenzy. I figured it might be a good time to re-visit the state of the “big contract” in Major League Baseball. Fans want the big players and along with that comes some big risks. I identified 19 out of the top 30 highest paid players in 2014 that were a flop as compared to what they were being paid. Many of those players will never regain the form that earned them the contract in the first place. Be careful what you wish for folks. You just might get it!

Originally written in August 2014:

the Yankees signed C.C. Sabathia to an 8 yr. / $128 mil contract in 2009. First 4 years were great. The last 3 were awful with one year left to go.

The Yankees signed C.C. Sabathia to an 8 yr. / $128 mil contract in 2009. First 4 years were great. The last 3 were awful with one year left to go.

The numbers are staggering when you start to break them down by the player, years; annual salary etc. $100 to $150 million contracts are becoming common in baseball. However, what is not common is for those contracts to yield productive results from the players throughout the duration of the deal. There is no shortage of contracts in the $150 to $200 million range as well. There are very few over $200 million but some none the less. Every which way you look at the highest paid players in baseball and the seasons that they are having in 2014 you can’t help but scratch your head. Billy Beane, the Oakland A’s general manager, and his “Moneyball” philosophy looks smarter and smarter every day. Moneyball was a book published in 2003, about the Oakland Athletics baseball team and its general manager Billy Beane. Its focus is the team’s analytical, evidence-based, sabermetric approach to assembling a competitive baseball team, despite Oakland’s disadvantaged revenue situation. A film based on the book starring Brad Pitt was released in 2011.

I took a close look at the top 30 highest paid players in MLB for 2014. I was surprised but not shocked at what I found. Keep in mind that in 2014 Mike Trout is making $1,000,000. His big contract of 6 years / $144 million contract starts in 2015. Clayton Kershaw is only making a salary of $4,000,000 in 2014. He appears on the list because he had a huge signing bonus in 2014. His 7 year / $215 million contract starts in 2015. Giancarlo Stanton’s $325 million contract kicks in for the 2015 season. The outcome of those deals will remain to be seen.

RANK NAME TEAM POS SALARY YEARS TOTAL VALUE AVG ANNUAL
      1 Zack Greinke LAD P $ 28,000,000 6 (2013-18) $ 147,000,000 $ 24,500,000
      2* Ryan Howard PHI 1B $ 25,000,000 5 (2012-16) $ 125,000,000 $ 25,000,000
      3* Cliff Lee PHI P $ 25,000,000 5 (2011-15) $ 120,000,000 $ 24,000,000
      4 Robinson Cano SEA 2B $ 24,000,000 10 (2014-23) $ 240,000,000 $ 24,000,000
     5* Prince Fielder TEX 1B $ 24,000,000 9 (2012-20) $ 214,000,000 $ 23,777,777
     6* Cole Hamels PHI P $ 23,500,000 6 (2013-18) $ 144,000,000 $ 24,000,000
     7* Mark Teixeira NYY 1B $ 23,125,000 8 (2009-16) $ 180,000,000 $ 22,500,000
      8 Albert Pujols LAA 1B $ 23,000,000 10 (2012-21) $ 240,000,000 $ 24,000,000
      9* Joe Mauer MIN 1B $ 23,000,000 8 (2011-18) $ 184,000,000 $ 23,000,000
    10* CC Sabathia NYY P $ 23,000,000 5 (2012-16) $ 122,000,000 $ 24,400,000
     11 Felix Hernandez SEA P $ 22,857,142 7 (2013-19) $ 175,000,000 $ 25,000,000
     12* Masahiro Tanaka NYY P $ 22,000,000 7 (2014-20) $ 155,000,000 $ 22,142,857
     13 Miguel Cabrera DET 1B $ 21,943,026 10 (2014-23) $ 292,000,000 $ 29,200,000
     14 Adrian Gonzalez LAD 1B $ 21,857,142 7 (2012-18) $ 154,000,000 $ 22,000,000
     15* Matt Kemp LAD OF $ 21,250,000 8 (2012-19) $ 160,000,000 $ 20,000,000
     16 Jacoby Ellsbury NYY OF $ 21,142,857 7 (2014-20) $ 153,000,000 $ 21,857,142
     17* Carl Crawford LAD OF $ 21,107,142 7 (2011-17) $ 142,000,000 $ 20,285,714
     18* Matt Cain SF P $ 20,833,333 6 (2012-17) $ 127,500,000 $ 21,250,000
     19* Jayson Werth WSH OF $ 20,571,428 7 (2011-17) $ 126,000,000 $ 18,000,000
     20* Justin Verlander DET P $ 20,000,000 7 (2013-19) $ 180,000,000 $ 25,714,285
     21 Adam Wainwright STL P $ 19,500,000 5 (2014-18) $ 97,500,000 $ 19,500,000
     22* David Wright NYM 3B $ 19,329,646 8 (2013-20) $ 138,000,000 $ 17,250,000
     23 Mark Buehrle TOR P $ 19,000,000 4 (2012-15) $ 58,000,000 $ 14,500,000
     24 Clayton Kershaw LAD P $ 19,000,000 7 (2014-20) $ 215,000,000 $ 30,714,285
    25* Alfonso Soriano NYY DH $ 19,000,000 8 (2007-14) $ 136,000,000 $ 17,000,000
    26* Brian McCann NYY C $ 17,000,000 5 (2014-18) $ 85,000,000 $ 17,000,000
     27 Adrian Beltre TEX 3B $ 17,000,000 5 (2011-15) $ 80,000,000 $ 16,000,000
    28* Josh Beckett LAD P $ 17,000,000 4 (2011-14) $ 68,000,000 $ 17,000,000
    29* Tim Lincecum SF P $ 17,000,000 2 (2014-15) $ 35,000,000 $ 17,500,000
    30* Josh Hamilton LAA OF $ 17,000,000 5 (2013-17) $ 125,000,000 $ 25,000,000

The average annual salary for the top 30 highest paid players in baseball for 2014 is $21.1 million. 19 of those top 30 (* next to the 19 players) highest paid players have either been injured for part or most of the season or are having a very unproductive year or both scenario’s combined. Several of them are out for the year. In the case of Alphonso Soriano he is not even playing anymore, just mail him the $19 million and thank you so much. Soriano was released by the New York Yankees earlier this year.  The Cubs paid $14 million of that bill and the Yankees are only responsible for $5 million of Soriano’s 2014 salary, a mere bag of shells for the Bronx Bombers. Also keep in mind that the Yankees Alex Rodriguez is not even part of the top 30 because he was suspended for the year for violating the league drug policy. Arod was due to earn $25 million in 2014 which would have put him in the top 5 but due to the suspension the Yankees are only responsible to pay him $3.8 million for this season.  Below I have listed a few of the most egregious contracts the way that I see it. My assessment of the worst contracts listed below is based on a combination of salary, age of player, production, team financial health etc. The players are in no particular order. Bad is bad.

Joe Mauer C Minnesota Twins: Contract Status-Mauer is in the middle of an 8 year 184 million contract. He will make $23 million this year. I like Joe Mauer. Everybody likes Joe Mauer. Mauer’s contract? Nobody likes that, least of all the Twins. I think if the Twinkies could have a do over on this one they would never have signed Mauer to this kind of deal. It made very little sense at the time and makes even less sense today. Small market teams like Minnesota have much less margin for error. The contract is an anchor that they are now saddled with. Mauer is often injured and no longer is a catcher. He has been moved to first base in an attempt to keep him healthy. He has never hit 30 homers in a season and never driven in 100 runs. Don’t look now folks but Mauer has been in the league for 10 years. That kind of money at the very least should be reserved for major run producers. Mauer has averaged .313 with 8 homers and 54 rbi’s in the first three full seasons of this deal prior to 2014. That kind of production can be had by many players in the league for about $5 to $7 million a year. Case in point is James Loney in Tampa Bay. He will probably put up the same or better numbers than Mauer in 2014 and he is only making $6 million this year. Loney has a salary of only 1 million but has a signing bonus for $5 million for this year. A difference of $17 million from what Mauer is making.

Ryan Howard 1B Philadalphia Phillies: Contract Status – In the middle of a 5 year $125 million contract that expires after the 2016 season. He will make $25 million this year. In the first 2 years of his contract he was injured and averaged 75 games played with 12 homers and 49 RBI’s. This year in the third year he is hitting .220 with 18 homers and 77 RBI’s. Howard has at least been healthy and producing something. However, he is 34 years old and he simply looks lost against left handed pitching. He will struggle to keep his batting average above the Mendoza line going forward. The Phillies would love to unload him but alas there will be no takers unless the Phillies pay the bulk of the salary.

Jayson Werth OF Washington Nationals: Contract Status – In the 4th year of a 7 year $126 million contract. In the two full seasons of the deal that Werth was not injured he averaged .270 with 22 homeruns and 70 RBI’s. This season he projects to hit about .280 with 17 homeruns and 83 RBI’s. This is hardly the production worthy of over $20,000,000 a year. Werth never drove in 100 runs prior to the Nats signing him to this deal and he still has not done it till this day. This is a good example of an ill-advised signing that made no sense.

David Wright 3B New York Mets: Contract Status – In the second year of an 8 year $138 million deal. This one is off to a shaky start to say the least. Wright has not hit 30 homers in a season since 2008 and has not driven in 100 runs since 2010. He won’t drive in 100 this year either. With 6 years to go and what seems like a cavernous pitchers park in Citi Field I think the only way this one works out is if the Mets move the fences in and hope.

I think you all get the idea. You can do the math on other players like CC Sabathia, Carl Crawford, Matt Kemp, Josh Beckett, Josh Hamilton,Tim Lincecum etc. It is worthy of noting that the Dodgers and Yankees each have 5 players on the list. The Phillies are next with 3 players. In 2001 the Yankees signed Derek Jeter to a 10 year $189 million dollar deal. They got 10 years of all-star play from Jeter for their money. Jeter played every day and produced and was an outstanding post season player. That example is not the norm. 10 years is a long time to guarantee anything in this world let alone athletic performance.

The bottom line for me if I was a General Manager of a major league baseball team is simple. You have two choices to field a competitive team without taking huge monetary risks:

  1. Teams can try to sign players to deals for a lot less money when the team has control of the player’s future in the first 6 years of their career. If you believe in a player instead of paying him the major league minimum of $500,000 a year you could offer him more money up front to keep him happy and show good faith. However your real goal should be to buy out those arbitration years where the player is more likely to get more money if he has performed well. If you could buy out a year or two of free agency then you are really on to something. The Indians did something like this with Manny Ramirez in the late 90’s. Ramirez was paid the major league minimum in 1994 and 1995. Then he signed a 4 year / $10.1 million deal which was a lot more than minimum and much less than what he might have earned through arbitration. Ramirez out produced that contract by far and away. His next deal was for $160 million. The Astros attempted to do something like this with George Springer but Springer turned it down. The Mets, Cubs and Astros will all be faced with tough challenges going forward trying to keep good young talent.
  1. Teams can spend more money on scouting and player development for international players that don’t go through the amateur draft like a Yasiel Puig of the Dodgers or Jose Abreu from the White Sox for example. Abreu signed a 6 year $68 million contract with an interesting twist. He has the ability to “opt back in” to the arbitration process when eligible after completing his third season. He is due to make $10.5 million in 2017. If his performance warrants it then he may go to arbitration and get a raise. Puig signed a 7 yr / $42 million contract with the “opt back in” clause as well. Abreu is already out producing his contract as Puig has yet to fully develop. It will be interesting to see how it turns out when they are arbitration eligible.

I think it makes more sense to take risks with smaller amounts of money with multiple players very early in their careers then it does to drop $150 million on one player for 6 or 7 years and hope for the best. Chances are you would be signing that deal with the player after he has already been in the league for at least 6 years so who is to say when his performance will start to go down. Most players by then will be in their late 20’s and you would be signing them to deals taking them into their early to mid 30’s. Robinson Cano of the Seattle Mariners will be 40 years old when he plays the last year of his 10 year $240 million contract. Sounds like a ton of risk on the back end of that deal to me. Teams like the Mets, Cubs and the Astros will be interesting to watch over the next few years. Let’s see how they handle and keep all their young talent. They could be shaping the future economics of major league baseball payroll philosophy. The current philosophy leaves a lot to be desired and is unsustainable going forward.

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2 comments

  1. Pingback: Discover: Wednesday Wonderings « MLB.com Blogs
  2. Pingback: The Price Is Right for Park – The Tale of Two Teams « A View From The Bench

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