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Saturday, December 08, 2012

Clubhouse Confidential | Network on shorter contracts

In a recent discussion on the site about Josh Hamilton, there was a discussion about the length of contract he will receive. In this segment Brian Kenny provides some information about the on-going trend in MLB free agent market, shorter contracts. Teams are getting smarter.

Jim Furtado Posted: December 08, 2012 at 08:35 AM | 18 comment(s) Login to Bookmark
  Tags: economics, free agency, sabermetrics

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   1. McCoy Posted: December 08, 2012 at 09:31 AM (#4319883)
Teams aren't getting smarter and thus not giving out long term contracts. They aren't giving out long term contracts because the players they would give long term contracts to are not hitting free agency yet because teams have already locked them up to long term contracts.
   2. eddieot Posted: December 08, 2012 at 09:34 AM (#4319885)
I wonder if the trend of shorter contracts might not put MORE money overall into the players' pockets in the long run? True, there will be fewer albatross-type deals and teams won't be paying the odd A-Rod or Pujols above-market salaries in their decline years, but it seems to me if the AAV of contracts continues to rise for younger free agents at the rate it is now, the wealth will be spread a bit more evenly to the rank-and-file players. And the growing trend of buying out players' arb years and signing long-term deals in their pre-peak years is also spreading the wealth. Teams seem willing to pay a higher AAV for less long-term risk. In the end, I bet AAVs rise at a faster rate.
   3. Jim Furtado Posted: December 08, 2012 at 03:42 PM (#4320040)
McCoy, when a team signs a player out of his first few years of free agency it's smart because the team is getting those years much cheaper than it would otherwise. That's smart and a real improvement over what had been done the first 25+ years of free agency.
   4. Walt Davis Posted: December 08, 2012 at 03:47 PM (#4320043)
Not gonna watch the video but I call shenanigans for the same reason McCoy does. Within the limits of b-r reporting

The franchise faces:
Longoria: now at 15 years, extension in 12
Zimmerman: now at 11 years, extension in 12
Adam Jones: 7 years
Mauer: 8 years signed in 11
Votto: now at 13 years, the extension was I think 10, signed 2 years early
Braun: 8 + 5
Tulo: 7 + 6
Molina: 5 + 5?
Castro: 8 years signed in 12
Kemp: 8 years starting in 12

contract starting in:

Reyes: 6 years
Fielder: 9 years
Pujols: 10 years
Hamels: 7 years (starts next year)
McCutchen: 6 years
Bumgarner: 6 years
AGon: 7 years
Montero: 6 years

Werth 7
Bruce 6
Tabata 6
Crawford 7
CarGo 7

Howard? 5 year extension 2-3 years ahead of time
Holliday 7 years
J Upton 6 years

CC: 8 years
Tex: 8 years
Markakis: 6 years
Pedroia: 6 years
Hanley: 6 years

AROD: 10 years
Shields: 6 years
Cabrera: 8 years (might be an extension in there)
Rios: 7 years
Morneau: 6 years
Wells: 7 years
Wainwright: 6 years

McCann: 7 years
Utley: 7 years
Soriano: 8 years
Zito: 7 years

In 2007, there was one 7 and one 8 year FA signed. In 2008, there was AROD. In 2009, 2 8-year contract. In 2010, a 7-year contract. In 2011, two 7-year contracts. In 2012, a 10, 9 and 6-year contract. That's not a declining trend.

If there are trends, they're the "standard 6-year arb/FA buyout" and the "super-long multi-extensions". It is interesting that, starting with Howard I think, teams are not afraid to make the 2nd extension offer many years in advance. For example, Braun was already signed through 2015 when the Brewers gave him the 5-year extension through 2020. Votto, Longoria, Tulo and I think Zimmerman are similar.

And of course the trend of not letting your players become FAs.
   5. Jim Furtado Posted: December 08, 2012 at 04:57 PM (#4320070)
Extensions <> free agent contracts. What are the AAV of the contracts? How old were the players when they were signed to the extensions? Again, extending a player through his first few free agent years can save considerable money. It's smart and it's a change from the way teams dealt with contracts in the first 25-30 years of free agency.
   6. Ray (CTL) Posted: December 08, 2012 at 05:08 PM (#4320076)
Yes. As I said in the other thread:

Essentially, the effects of the two most recent CBAs - revenue sharing, the luxury tax, caps on drafting and the international markets - have resulted in a net effect of forcing teams to lock up their own players, sometimes years before their current deals are up. See, e.g., Tulowitzky, Braun, and Longoria, who were signed to extensions many years out long before their current deals were up.

Free agency is dead. Yes, some stars will still hit it while in or just past their prime, but relatively few, and it simply is not something teams can bank on as a method for building. That's why the "Oh, next year's free agency class will include X, Y, and Z stars" columns are silly.

The "new thing" is extending players who are already under contract for several more years out several more years, by signing the player to a second contract -- not ripping up the first contract and starting over, but actually tacking a second contract on to the back end -- while his first contract still has years to go.

To make my point even clearer: This wasn't a "Hey, you're going to be a free agent in 3 years, let's sign you to a longterm deal now." [The Jon Hart strategy with the Indians in the 90s.] It wasn't "We've got you for 1 more year before you're a free agent again, let's rip up the contract and give you a longer one to avoid free agency."

This was a "You're under contract for 4 more years if we want you. Let's say yes to that now and sign you to a second contract for another 6 years for after this first one expires."

   7. JJ1986 Posted: December 08, 2012 at 05:45 PM (#4320084)
Tabata 6

I totally forgot this. Looks like a bad idea now.
   8. Walt Davis Posted: December 08, 2012 at 05:57 PM (#4320086)
Extensions ^= free agent contracts.

Yes and no.

The primary effect of the long extensions and the "double downs" is that elite players won't be hitting the FA market. It was generally only the superstars who got those long FA contracts so, if those superstars aren't available, we'd expect shorter FA contracts -- not because teams had learned not to but because the composition of the FA pool has shifted.

Still, note that almost every (position player!) star who has come up to FA has gotten 7+ years. And several questionable ones like Werth, Crawford and Soriano (no longer questionable) or Prince's 9-year deal.

Also many of the extensions listed in my post are traditional ones where the player was soon to be an FA -- Kemp, Hamels, AGon, Jones, Montero, Mauer (I think). And you have Cabrera (which was an 8-year signed after the trade to Detroit) which bought out 6 FA years. Those are not much different than FA contracts. I debated whether to include the more traditional buyouts ... probably would have been clearer if I didn't.

As Ray noted, these aren't (mostly) "3 arb years plus first 2 years of FA" buyouts here. These are guys signed through their mid-30s. Age at end of contract (extensions only, not including traditional arb/FA buyouts):

Longoria: 36
Zimmerman: 34
Adam Jones: 32
Cabrera 32
Mauer: 36
Votto: 93
Braun: 36
Tulo: 35
Molina: 34
Castro: 29 (4-5 FA years so more than a trad buyout)
Kemp: 34
Hamels: 34
AGon: 36
Montero: 33
Howard 36

Of the more traditional buyouts:

McCutchen 30, expect a double-down offer within 3 years
Bruce 29, don't expect a double down offer barring a big year soon
Tabata 27, no double down
CarGo 31, tough call
J Upton 27, expect a double down by new team
Castro -- already mentioned, maybe a double down offer in 4-5 years if he blossoms

Now here's an interesting thing ... almost all of these are NL players.

   9. Walt Davis Posted: December 08, 2012 at 06:00 PM (#4320088)
I totally forgot this. Looks like a bad idea now.

Tabata ... I had too but it's dirt cheap ... $15 M for the 6 years, top salary of $4.5 M. Maybe better than 4th OF money but as long as he's a 1-WAR backup, they're doing OK.
   10. Slivers of Maranville descends into chaos (SdeB) Posted: December 08, 2012 at 06:27 PM (#4320098)
Votto: 93

Bobby Bonilla is jealous.
   11. Walt Davis Posted: December 08, 2012 at 06:31 PM (#4320099)
Again, extending a player through his first few free agent years can save considerable money. It's smart and it's a change from the way teams dealt with in the first 25-30 years of free agency.

Nobody's saying these are bad contracts. Nobody's saying this isn't a new way of approaching the MLB labor market -- heck, as far as I know, I was the first person talking about how this was affecting the FA market (see last offseason's Cubs threads and others). That effect is precisely our point:

1. Stars are now generally signed to long-term extensions -- much longer than buying out the first 2-3 years of FA in a traditional arb/FA buyout. Some of these have been traditional very long extensions close to FA (e.g. Kemp, AGon, Cabrera) but the interesting ones are the double downs.

2. The length of these contracts clearly contradicts the claim in the intro that teams are "getting smarter" and avoiding long-term commitments. They still are making lots of long-term commitments, as long or longer than ever, just not in the FA market.

3. These long-term extensions change the composition of the FA pool to the extent that superstars will rarely hit the FA market now. Maybe that was always true (I mean it was usually never more than 2 big time guys in an offseason) but it looks even worse for the future. If the elite players don't make it to FA, we would expect shorter FA contracts -- not because teams have learned their lesson but because the quality of the FAs has declined.

4. Except it's not clear 3 has held as we've seen 7+ year contracts to pretty much every major FA to hit the market in the last 5-6 years. Rather than learning the lesson that a Soriano/Zito don't deserve 7-8 year contracts just because they're (among) the best available that offseason, Werth and Crawford signed nice, long contracts. If anything, there's a pretty clear pattern among the big name FAs and extensions (AROD and Pujols aside):

Werth 38
Fielder 36
Tex 36
Holliday 36
AGon 36 (for comp purposes)
Mauer 36
Wells 35
Howard 36
Braun 36
Soriano 38
Crawford 35

Looks like 36 is the magic cut-off date that determines contract length. It probably always has been. I'll note that Hunter and Lee just had their age 36 seasons. Hamilton will be entering his age 31 season ... he will likely get a 5-6 year offer but may be able to push it that extra year a la Werth and Soriano.

EDIT: regarding #2, they maybe are getting smarter regarding the discount on these extensions saving money ... but that's not what the intro claims (or seems to be claiming).
   12. The Anthony Kennedy of BBTF (Scott) Posted: December 08, 2012 at 06:38 PM (#4320101)
I knew the Votto contract was long, but wow! 93! No way he doesn't make the HoF given what his counting stats will be, right?
   13. Ray (CTL) Posted: December 08, 2012 at 06:52 PM (#4320105)
2. The length of these contracts clearly contradicts the claim in the intro that teams are "getting smarter" and avoiding long-term commitments. They still are making lots of long-term commitments, as long or longer than ever, just not in the FA market.

It seems that teams have decided to lock their own star players up from 25-35, rather than lock other star players up from 30-38.
   14. Tulo's Fishy Mullet (mrams) Posted: December 08, 2012 at 09:20 PM (#4320147)
and now Grienke gets 6/147 from LAD. is that long?
   15. McCoy Posted: December 09, 2012 at 12:16 AM (#4320226)
McCoy, when a team signs a player out of his first few years of free agency it's smart because the team is getting those years much cheaper than it would otherwise. That's smart and a real improvement over what had been done the first 25+ years of free agency.

Teams are buying out their young players but that doesn't mean they won't sign free agents to long term contracts. When young or youngish FA have hit the market they have given those players long term contracts. Basically CC ran a filler story during the offseason much like some reporters will file filler stories during spring training about some player being in the best shape of their life.

As for buying out players being an improvement over the first 25 years the issue with that is that it wasn't necessary and they certainly didn't have to buy out some player's future after a year or two or in some cases even before they've played a whole season.
   16. McCoy Posted: December 09, 2012 at 12:22 AM (#4320228)
Back in the days when teams didn't "get it" most A and B level free agents hit FA for the first time around age 30. Most teams were able to keep their players for more than the basic 6 years.
   17. bachslunch Posted: December 10, 2012 at 03:07 PM (#4321172)
There isn't a thread that deals with these particular aspects of CC, so I'll ask them here:

--Kenny almost never seems to use WAR, OPS+, or ERA+, and in fact sometimes seems a little uncomfortable with the first of these. Is there some reason why he doesn't use these stats on a show that purports to use them in an intelligent manner?

--Kenny's evaluation of the VC candidates struck me as perfunctory and dismissive.

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