Friday, January 14, 2011
Mega-contracts piling up this offseason
By Jayson Stark ESPN.com
On Tuesday, it was Carlos Gonzalez, smiling for the zoom lenses after signing a seven-year, $80-million contract with the Rockies.
Last week, it was Adrian Beltre, trying on his new Rangers cap after agreeing to a five-year, $80-million deal with Texas that could grow to six years and $96 million if he stays healthy into his mid-30s.
Troy Tulowitzki is set to earn $157.75 million over the next 10 years.
Before that, there was Cliff Lee signing for five years (and $120 million) with the Phillies. And Jay Bruce agreeing to a six-year extension (worth $51 million) with the Reds. And Jayson Werth and Carl Crawford raking in massive seven-year free-agent deals with the Nationals and Red Sox, respectively.
And then there was the whopper of the winter -- Troy Tulowitzki tacking six years and $119 million onto the four years and $38.75 million the Rockies already owed him, for a grand total of $157.75 guaranteed mega-millions heading his way over the next decade.
So if you're arithmeticing along at home, that's seven longgggg contracts that have been signed this offseason, worth a staggering total of $718 million (or, if you want to include all 10 years of Tulowitzki's dollars, $756.75 million). And yeah, you read that right. That's around three quarters of a billion dollars -- for seven players.
But here's what you really need to know about the wild and crazy offseason of 2010-11:
The dollars haven't even been the big story.
It's the years.
And not just for the big boys.
"This year, it feels like more players are getting that [extra] year," Marlins president David Samson said. "Your one-year players are getting two. Your two-year players are getting three. And your three- and four-year players are getting five or six or seven."
Well, it isn't just his imagination. It's a fact. Already this winter, we've seen 16 free agents sign contracts of three years or longer -- twice as many deals that long as all of last winter (eight). And that figure doesn't even count the Twins' three-year deal with posted Japanese infielder Tsuyoshi Nishioka.
Now suppose we look at all the multi-year contracts (i.e., two years or longer) this winter. We find there have already been 36 deals like that to players who filed for free agency, three more to players who got non-tendered (Bobby Jenks, Matt Diaz and D.J. Carrasco) and a 40th for Nishioka. There were 26 free-agent contracts like that during the entire 2009-10 offseason. And remember, there could be more multi-year deals coming over the next few weeks to free agents such as Carl Pavano and/or Brian Fuentes.
So this winter is going to wind up producing the most multi-year contracts, and the most deals of three years or longer, of any offseason in four years. And that's a fascinating development, since it comes at a time when the national economy is still sputtering and teams might have more info about the risks of long contracts than at any time in history.
But it's those XXL contracts that really intrigue us. So what's up with them? Let's take a look behind the thinking on some of these deals, examine how they measure up against the risk-reward data and do our best to assess the meaning of all this Multi-Year Madness:
Lucky Sevens -- Crawford and Werth
We knew going into this offseason that Crawford and Werth were the two big-ticket items in this free-agent showroom. What almost no one would have figured was that they'd both sign for seven years.
So how unique was that? To find the last time two free-agent position players signed contracts of seven years or longer in the same offseason, you have to go back a decade to 2000-01, when Alex Rodriguez signed for 10 years and Manny Ramirez signed for eight years.
Carl Crawford signed a seven-year, $142 million contract with the Red Sox last month.
But here's a warning for the Red Sox and Nationals: If their big signings work out as well -- at least on the stat sheet -- as the A-Rod and Manny extravaganzas, they should consider themselves extremely fortunate.
The Crawford and Werth contracts are the 14th and 15th free-agent deals in history that totaled six years or longer and guaranteed the guys who signed them at least $100 million -- and the 24th and 25th contracts at that level handed out to any player, free agent or otherwise. It's safe to say that very few of them have had happy endings.
We took a look at all of the 13 previous contracts in that group that are now either at least four years old or have been served in their entirety. We wanted to give each season in those contracts a grade, so we made this arbitrary call:
If a position player got at least 400 plate appearances and had an Adjusted OPS-Plus of at least 125, according to baseball-reference.com, we gave him credit for a "productive season." For pitchers, the minimum was at least 20 starts or (for relievers) 50 appearances -- with an Adjusted ERA-Plus of 125 or better.
So what did we find? Of the 13 monster contracts we looked at, there were only three in which the player had a "productive season" in every year of the deal: A-Rod's 2001 contract, Manny's 2001 deal and Albert Pujols' seven-year 2004 contract with the Cardinals, which is now about to head into its option year.
If you use Wins Above Replacement (WAR) instead of OPS-Plus for Derek Jeter, he could also be in that mix. But you get our drift. Any team that hands out a contract that large, with the thought that it's all going to work out great, is living in dream land.
But at least the Red Sox and Nationals seem to have a clear sense of what's realistic and what isn't.
"You have to accept the fact that the back end of these contracts probably won't be as valuable as you'd like it to be," Red Sox assistant GM Ben Cherington said. "You're basically paying a tariff at the back end to get significant production in the early years. But if those early years are at age 29, 30, 31, 32, that's more likely than if you're getting 32, 33, 34, 35 in the early part."
The Red Sox place a major emphasis on getting as many "prime years" in long-term deals as possible. And because they're also contemplating a second contract in this range, with Adrian Gonzalez, they seem confident they're doing business with the right two players. Both will play at 29 years old next season. So a seven-year deal wouldn't carry both players past age 35.
Nevertheless, they're not deluding themselves into thinking that even great players in their early 30s will always be great, every day of every season.
"We have to assume that even in a player's prime years, there will be down seasons," Cherington said. "There may be some freaks who have great seasons every year. But with most players, they're going to have seasons with an .800 OPS instead of .950. But when it happens at 32, based on how players age historically, you feel more confident that that guy has a chance to bounce back and have good years. If you see that decline at 35 or 36, there's not as much hope that the player is going to bounce back."
In the case of Werth, though, the Nationals aren't dealing with a player still in his 20s. Werth will play next year at 32, so this is a contract that will take him through age 38. We'll get into the dangers of deals like that later, but it isn't as if Nationals GM Mike Rizzo is just ignoring those perils.
Rizzo has made it clear that, in a perfect world, he wouldn't be throwing around contracts this long to a player of this age. But he's well aware that's not the world he's working in.
"Yes, it's a long, big contract," Rizzo told ESPN.com's Jerry Crasnick last month. "But when you're in a position that the Washington Nationals are in, you at times have to pony up for an extra year or some more money to get the player. When you're [competing] with the Red Sox and Yankees and teams that can win instantly, often times you have to better to them financially or term-wise. We felt comfortable doing that."
Some day -- if Werth, Ryan Zimmerman, Stephen Strasburg and Bryce Harper elevate the Nationals to a loftier place, where they're a more attractive destination -- Rizzo would like to think he won't have to toss in those extra years and dollars. But in truth, he shouldn't be so confident of that. Even the elite teams can get so seduced by the chance to add a star that they wind up making offers they never thought they would make. And here's the proof
Cliff Walking -- The Lee Deal
There were more than 60 free-agent starters on the market this winter. Exactly one of them has come away with a contract longer than three years.
It sure wasn't Ryan Rowland-Smith.
The pitcher who hit that Super Lotto was Cliff Lee, of course.
RATING THE MEGA-CONTRACTS
Of the 23 previous contracts of at least six years and $100 million, 13 are either now complete or (in the case of current deals) at least four years old.
Here's a look at how many "productive seasons" each of those contracts has produced ("productive season" equals 400-plus plate appearances and an OPS-Plus of 125-plus for position players, 20-plus games started and ERA-Plus of 125-plus for starting pitchers):
8 of 8 (100 pct.)
8 of 8 (100 pct.)
7 of 7 (100 pct.)
5 of 8 (62.5 pct.)
5 of 8 (62.5 pct.)
5 of 10 (50 pct.)
3 of 6 (50 pct.)
2 of 4 (50 pct.)
3 of 7 (43 pct.)
Ken Griffey Jr.
2 of 9 (22 pct.)
0 of 8 (0 pct.)
0 of 4 (0 pct.)
0 of 4 (0 pct.)
But you know what was so surprising about that? Not that Lee didn't sign with the Yankees or Rangers. Not even that he took a five-year deal with the Phillies instead of six- or seven-year offers from the competition.
It was that the team that signed him had to blow up all its own rules about how long a contract it would give any pitcher -- whether it was Cliff Lee or Cliff Clavin.
Since the arrival of Pat Gillick in Philadelphia in 2005, the Phillies have stuck fervently to the Gillick doctrine. Which goes kind of like this:
Never, ever sign a pitcher to a contract longer than three years. The only exception to this rule is if you're extending a pitcher in the final year of his current contract. Then never extend him more than three years. No exceptions.
And so for five years, the Phillies made no exceptions. None. Not even for Roy Halladay, whose trade to Philadelphia almost self-destructed because the Phillies were so adamant about only adding three years to Halladay's old deal with Toronto.
But then Lee came along.
And once the Phillies started swishing around the prospective taste of owning a potentially historic, four-ace-deep rotation if they bent their own rules, you know what happened.
They bent their own rules.
Why? Because this was "a special circumstance," GM Ruben Amaro Jr. said last month. There aren't many opportunities in this sport to assemble a rotation this deep and star-studded. So after lots and lots and lots of debate, it was Amaro, team president David Montgomery and even Gillick himself who decided to sign off on this move because, from a baseball standpoint, they concluded it was, as the GM said, "absolutely the right thing to do."
"If you're strictly talking business, it may not," Amaro admitted. "This is too important to the organization, and I think it was too important to the present and future of our franchise not to go forward and do it."
Ah, but was it really as good for the "future" of the franchise as this team envisions? It's safe to say not everyone we've surveyed is convinced.
"We would never do something like that for any pitcher, ever again. Never," said an official of one team that has had more than one disastrous experience with its own long deals for pitchers. "I'm sure Dave Montgomery knows that the 'out' years of that deal have a chance to not be real pretty. Not that you're not running risks with position players, but you run a huge risk with pitchers. And they're going to pay for it."
Other teams' officials agreed.
"That's an interesting deal," an official of another club said. "Because they got a good contract relative to the competition, to what other teams were offering. But that's kind of the perfect free-agent storm. You can beat your competition by being a place the guy really wants to go to and still wind up with a contract that's extremely risky."
So how risky is it? Lee is the sixth pitcher in history to sign a $100 million contract. Of the other five, CC Sabathia's first two years (of a six-year deal) in New York have gone great. But all of the other four -- Kevin Brown, Mike Hampton, Barry Zito and Johan Santana -- have landed somewhere between injury-plagued and outright nightmares. Or both.
Now take into account that Lee will be 32 years old when he throws his first pitch with the Phillies and 37 when that contract hits the finish line. It's the perfect segueway to look at the greater dangers of giving long deals to players in their 30s.
30 Rock -- An Age-Old Question
What do Lee, Werth and Beltre have in common these days? All of their contracts will guarantee them mucho dinero beyond age 35 -- Beltre to age 36, Lee to age 37 and Werth to age 38. And in the age they play in, that places them in their own unique free-agent danger zone.
A decade ago -- before the crackdown on steroids, amphetamines and other PEDs -- it wasn't such a terrifying prospect to commit to a player in his late 30s, or even his early 40s. Nowadays? It's scarier than a Stephen King classic. Consider that in 2010 no hitter 35 or older (as of July 1) did any of this:
Hit more than 25 home runs
Drove in 100 runs
Had a .500 slugging percentage (with at least 400 plate appearances)
Had a .400 on-base percentage (with at least 400 plate appearances)
If you lower the plate-appearance bar to 300, you could add Jim Thome, who slugged .627 and had an on-base percentage of .412 at age 39. You could also toss in Ramirez, who had a .409 OBP at age 38. But neither of those guys fit the mold of the true everyday player anymore.
So to find the last regular player with no PED allegations who got to the plate 400 times and reached all those plateaus at age 35 or older, you have to go back to Chipper Jones, who did it in 2007 (at 35). The only two players who have gotten there in the last nine seasons, after age 35 (i.e., at 36 or older), are Barry Bonds (twice) and Ramirez (in 2008). Insert whatever PED footnotes here that you like.
Now how about pitchers? The portrait isn't much more picturesque
In 2010, there wasn't a starting pitcher 36 or older who won 15 games and had an ERA under 3.50.
The only starter in that age group who did get to 15 wins or more was Derek Lowe (16, at age 37), but he had a 4.00 ERA and a below-average 98 Adjusted ERA-Plus, according to baseball-reference.com. Just one starter in that age group had an ERA under 3:50: Andy Pettitte (3.28, at age 38), but he was only healthy enough to make 21 starts. And even if you lower the threshold to age 35, the only starter who won 15 and had a sub-3.50 ERA was Chris Carpenter, who turned 35 last April, but even he staggered to the finish line (1-4, 5.34 ERA in his final five starts).
So what's the moral of this story? It isn't complicated. In this era, there's no more precarious business decision -- or baseball decision -- a team can make than guaranteeing large paychecks to players in their late 30s, no matter who those players are.
"I'll be honest, to be in St. Louis' situation right now with Albert Pujols, that's not a position I'd ever want to be in, where you're looking at having to do a long, long deal with a guy who's already past 30," said one official quoted earlier. "I know this sounds crazy, but I'd either trade him or not sign him if I were in that position."
Then again, that's easy for him to say. He doesn't have to fear the wrath of Cardinals fans if they don't sign Sir Albert. But it does bring us to the case of a team that was willing to walk away from a long deal with a player it really wanted to keep.
Brave New World -- The Uggla Deal
Eighteen times next season, the Florida Marlins are going to take the field and have to look at one of their favorite players, Dan Uggla, sitting in the other dugout. That would be the dugout of the Braves, the team the Marlins traded Uggla to this winter because they balked at giving him a five-year extension as he approached age 31.
The Marlins offered him four years and $48 million to hang around. Uggla's side dug in at five years. So the Marlins finally gave up, dealt him within the division and watched the Braves sign him for five years and $62 million.
"Believe me, there was a lot pressing on us to sign him," Marlins team president David Samson said. "He was a team leader, our home run leader, a very good player. But when all the elements are put in the equation, it becomes a situation where you just don't budge. And the result was the result."
And the result was the result because, for this team, policy was policy. The only contract longer than four years the Marlins have doled out since owner Jeffrey Loria took over the franchise was the six-year extension they bestowed on Hanley Ramirez -- at age 24. And that's been that.
In the case of everyone else, their strict philosophy, Samson said, is "putting a value on a player in years and dollars and not straying from it." The biggest mistake a team can make, he said, is "when you stretch past that line, because that's where you need to go to get a deal done. We won't stretch past that line. But there's always another team that draws the line differently."
So will the Marlins spend more money as they head into their new ballpark in 2012? Yes. Will they stretch past the line, especially for players in their 30s? Don't bet on it, because they've done plenty of studies on aging players. And they're not inclined to roll the dice on anybody who is likely to be a mid-30s, big-buck underperformer. Those are the kind of players, Samson said, who "can cripple a team."
"There are only 30 irreplaceable people in baseball," Samson said. "And that's the 30 owners. There's always another team president. There's always another head of marketing. And there's always another player. Always."
Well, there may be some truth in that, but there are only so many centerpiece players you can build a team around. Just ask the newest of the big spenders, those Colorado Rockies.
Liong May You Rock -- The Tulo and CarGo Deals
The No. 3 hitter is 25 years old and just finished third in the NL MVP voting. The cleanup hitter is 26 and just finished fifth in that same MVP election. And here's the other thing we now know about Gonzalez and Tulowitzki:
They're going to be the heart of the Rockies for a long, long time.
Over the last month and a half, the Rockies have done something only the Yankees are supposed to do -- tie up Gonzalez for the next seven years and Tulowitzki for the next 10. But it isn't only the length of those deals that has the industry buzzing. It's that the Rockies didn't have to do it -- because, in theory, both players were under control for another four years.
But in practice, said GM Dan O'Dowd, this was the Rockies' only real time frame to get these deals done. True, Tulowitzki's old contract contained an option that tied him up through 2014, but if the Rockies didn't -- or couldn't -- sign him and decided they had to trade him, any deal would have voided that option. So in fact, O'Dowd said, "the window was closing."
And Gonzalez is a Scott Boras client, meaning he belongs to a species that customarily never gives away any free-agent years. Not a one. So with a player like this, even though he has only a year and 59 days worth of big-league service time, "your only chance to do it is when he's a long ways away from free agency," O'Dowd said.
Now, $199 million later, these two guys are a long way away from free agency. But is that the good news or the bad news? Even the GM who did the deal said he recognizes it's both at once.
"Oh, there's a risk," O'Dowd said. "We know that. I've talked to Tulo. I told him we know there are years he'll probably overperform the contract and years he'll probably underperform the contract. So we go in with our eyes open."
It's hard to argue with the concept here. O'Dowd said the Rockies are "trying to buy stability." And, thanks to the unfortunate lessons that free-agent deals with the likes of Mike Hampton taught them, they were convinced of two things: A) "If you're trying to build continuity," the GM said, "do it with a guy on your own team, who you know," and B) make sure you do it with guys who are still ascending toward their prime.
"We've done all the age-regression studies," O'Dowd said. "CarGo can be a free agent at 32. Tulo runs out at 35, with an option at 36. Where you run into problems is with guys who become free agents at 29, 30, 31 and then you commit to a long-term deal. We didn't want to get into a position with Tulo where he becomes a free agent at 30 and wants an eight-year deal, and now you're into paying a guy until he's 38 or 39. That won't work. Same with CarGo."
So this was a decision that was totally well-reasoned and thoroughly researched and thought out to the last detail. Yet, it's still open to endless second-guessing. And that second-guessing will be hanging over Coors Field through every slump, every injury, every glitch either of these players runs into for the life of his deal.
"You have to remember these are completely guaranteed," said one skeptic. "These are long-term, guaranteed deals. It's not like football. So any deal that long -- 10 years with Tulowitzki, seven years with Carlos Gonzalez -- the odds simply are not with you. That's just the reality of it."
On the other hand as O'Dowd said, "Every organization needs stars to build around." And that, in seven words, is where contracts like these are born. Every business needs something to sell. This just happens to be a business in which the product you're selling happens to be a very expensive -- and risky -- proposition to invest in.
And that brings us to the ultimate lesson we've all learned from the latest outbreak of Multi-Year Madness. These teams know the dangers of the contracts they've handed out. They've studied the research. They've seen enough Alfonso Sorianos and Mike Hamptons to recognize they could live to regret these deals.
But there are always going to be times they just can't resist the temptation to reach for the stars -- whether their conscience and spreadsheets tell them it's a good idea or not.
Jayson Stark is a senior writer for ESPN.com. His latest book, "Worth The Wait: Tales of the 2008 Phillies," was published by Triumph Books and is available in bookstores and online. Click here to order a copy.