With contracts escalating on a yearly basis and the sports world in an epic stare down with the current economy, teams are striving to find innovative ways to ensure that their clubs will be competitive in the near future as well as hedging their financial gambles long-term. Talk about risky business.
But at a time when we believe dollars are scarce and jobs are dissipating – and yes, they are on both counts – baseball is taking a new path towards keeping their talent at home, and thus giving fans a reason to continue to fill the ballpark. The transition from free agent mega-deals to long-term contracts for arbitration-eligible players is in full flux and baseball is better for it.
It is becoming commonplace for clubs lock up their young talent to multi-year contracts in the ultimate win-win negotiations. It used to be pretty simple. Franchises won in the short term by having an exceptional player under cheap team control, benefiting from using his services at a price well below his true market value. For being a prime talent, all the player had to do was make it to free agency and then he won by signing his name to a contract that will rival any Super Lotto figure.
That play-now-paid-later pattern is still relevant today, naturally, because that’s how any profession works. You earn your money. But there’s less and less of it now, because teams and players realize the benefits of reaching an agreement in the early stages of a promising career. A third-year superstar wants his dream pad now (in addition to receiving financial security), and his club wants to make sure he stays in their uniform into his prime. Sounds good to me.
The idea of rewarding young players with long-term deals before the club has to started gaining momentum in 2006, when the Cleveland Indians signed Grady Sizemore to a six-year deal worth $23.45 million. The Indians saw Sizemore as a future impact player, and three seasons later, they have a top-10 player in the whole sport signed to a contract with an average annual value that is less than what the Chicago White Sox just paid for a year of Bobby Jenks. That’s like buying Jamaica for a turkey sandwich and a fungo bat.
The New York Mets followed in August of 2006, signing shortstop Jose Reyes to a four-year, $23.25 million deal. New York now has an All-Star shortstop under contract for two more seasons. It takes Derek Jeter about six weeks to make what Reyes averages per year on that deal. Three days later, the Mets locked up David Wright to a six-year, $55 million and, as much money as fifty-five million bones is, Wright would be worth double that on the open market.
Four more clubs jumped on the Instant Riches bandwagon in 2008, and no deal was more lucrative than the one the Florida Marlins gave to shortstop Hanley Ramirez. Ramirez is on the short list of players any reasonable GM would choose to build their team around, so the Marlins paid him like such. Hanley inked ‘Marlins’ across his chest for six years and $70 million. That deal ensured Ramirez more money than he could dream of growing up in the Dominican Republic, while the organization was able to buy him out of three arbitration stints and three free agent years.
Troy Tulowitzki was rewarded by the Colorado Rockies with a six-year, $30 million deal after stepping into the spotlight and leading the club to the World Series. Tulowitzki receives immediate financial security, while Colorado gets an elite shortstop who is already worth well more than five million dollars per year. The smooth-fielding infielder will be a major piece of the face of baseball for the next decade because of his passion and swagger.
Ryan Braun signed the richest deal in Milwaukee Brewers history after committing for eight years and $45 million . The overall value of Braun’s deal could stretch to $51 million if he qualifies for “Super Two” arbitration status after the 2009 season. Nonetheless, the Brewers have an elite power hitter signed below his market value for all arbitration years plus two free agent years.
After barely spending a week in the big leagues, the Tampa Bay Rays knew they had something special in Evan Longoria. The Rays had no reason to wait to make him a staple of the future. Longoria accepted a six-year, $17.5 million deal that includes an option for 2014 with a subsequent two-year option for 2015-2016. If all options are picked up, this deal will reach $44 million and buyout three years of free agency from Longoria. After winning Rookie of the Year in 2008 and looking like the only third baseman in the American League who, talent-wise, can rival Alex Rodriguez, there isn’t a word that does this deal justice on the management side. “Steal” and “bargain” don’t come close. The Rays, as a small-market team, have to use creative measures to lock up their talent for the long term, and this move fits the bill perfectly. The intitial criticism directed at the organization for taking such a gamble on a player with less than a week of service time was severely misguided.
All of those deals were made before the economy turned sour and clubs had more flexibility than they do now. In the first few weeks of 2009, baseball is beginning to fully adopt this policy and now I can’t imagine any young, dynamic player that won’t be signed long-term early on.
The Boston Red Sox rewarded 2008 AL MVP Dustin Pedroia with $40.5 million over six years with an option for 2015. That deal takes Pedroia through three arbitration years and two free agent years. Pedroia plays the game like two dogs scuffling in a sandbox. Clawing, scratching, and biting ensue only to be hid by a thick puff of dust. That’s the MVP and that’s why he is so beloved in Boston. He is a ballplayer, nothing else, and I’m sure there are still some people doubting him. Nothing new for Pedroia.
Kevin Youkilis missed out on the MVP, but GM Theo Epstein didn’t miss his .312 BA/.390 OBP/.569 SLG line with 29 homers last season. The Red Sox signed Youkilis to a four-year, $40 million deal with an option for 2013. That’s two arbitration years and two free agent years Boston doesn’t have to worry about, and Youkilis gets paid fairly according to the current market.
Cole Hamels pitched the Philadelphia Phillies to the 2008 World Series title and was paid $500,000 for it. Not any more. The Phillies knew their ace would be looking for a steep upgrade heading into arbitration, but they beat him to the punch. The Phillies came to an agreement with Hamels on a three-year, $20.5 million deal. The young left-hander will still get one more shot at the arbitration process due to his "Super Two" status, but locking him up now gives Philadelphia the cost certainty it was looking for. With an arbitration nightmare expected with Ryan Howard, it's hard not to like what they did.
The Baltimore Orioles stepped up to the plate in a huge way this winter as well, locking up Nick Markakis. Markakis, only 25 years old, is on the verge of becoming a superstar, and it’s safe to say his new contract will open that door for him. He will anchor Baltimore’s lineup for the next six years for $66 million. The contract includes a mutual option for 2015, and it buys out three arbitration years plus three free agent years.
This change in culture is more than a fad and greater than a trend. The players love it because they get big money early and feel like they are appreciated for performing at a high level, not taken advantage of because the rules limit their salaries for three to six seasons. The clubs love it because they get a premium talent for multiple years at a discount. These deals have something for everybody.
On the surface, it doesn’t make sense to spend more money now that the economy is suffering. But these contracts could actually be wise business investments on the part of organizations because they are actually saving money over the duration of the contract. They pay more than mandatory immediately, but pad their wallet overall. Players deserve to be paid their market value, and teams deserve to save money for their generosity and willingness to consider the player’s best interest. Resources are tighter than ever, but there only seems like one move to make. Sign the checks.
Teddy Mitrosilis is a sophomore pitcher at Long Beach City College in California. Teddy also serves as a co-host of Around The Majors On Blog Talk Radio. You can reach him by sending an email here.