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Tuesday, February 26, 2019

Why Bryce Harper would take short Dodgers deal over long Phillies’

I know Boras works for Harper. I just can’t see Boras and the union signing off on Harper going shorter term with a high AAV.

The Dodgers can show Harper everything — except the money. They have had a policy under president of baseball operations Andrew Friedman to avoid mega-long-term deals, and they have the leverage in this situation to stick with this strategy because without Harper, they are still heavily favored to win a seventh straight NL West title.

What the Dodgers are willing to do is make Harper the annual value champion, so at least $35 million a year, perhaps closer to $40 million, but only for three or four seasons — perhaps five years to get a deal done. So to just give a guesstimated total, $150 million.

Jim Furtado Posted: February 26, 2019 at 10:36 AM | 29 comment(s) Login to Bookmark
  Tags: bryce harper, dodgers, free agency, phillies

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   1. jmurph Posted: February 26, 2019 at 10:52 AM (#5818261)
I know Boras works for Harper. I just can’t see Boras and the union signing off on Harper going shorter term with a high AAV.

Why not? 4 years and $160 million returns him to free agency at age 30. It's a bet that he'll be good enough to get another big contract at that age, but not a very risky one, given he'd be locking in $160 million.
   2. Nasty Nate Posted: February 26, 2019 at 11:09 AM (#5818270)
Why not? 4 years and $160 million returns him to free agency at age 30. It's a bet that he'll be good enough to get another big contract at that age, but not a very risky one, given he'd be locking in $160 million.
It's likely that he'll be able to get the chance to go to free agency at 30 via an opt-out, plus get the big guarantee in case he doesn't play well enough to use it.

Maybe it will change at some point, but the AAV at which superstars (in general, not Harper specifically) would take a short deal has been too high to be palatable for teams.

Also, winning bidders are usually the ones optimistic about a player's longevity, otherwise they wouldn't be the winning bidders.
   3. What did Billy Ripken have against ElRoy Face? Posted: February 26, 2019 at 11:11 AM (#5818273)
If the union tries to interfere in a situation like this, they shouldn't wonder why they tend to lose the PR battles.
   4. snapper (history's 42nd greatest monster) Posted: February 26, 2019 at 11:12 AM (#5818274)
Why not? 4 years and $160 million returns him to free agency at age 30. It's a bet that he'll be good enough to get another big contract at that age, but not a very risky one, given he'd be locking in $160 million.

Per Nate, the Phillies will probably give him 10/300+ with a 5 year opt-out. Best of both worlds.
   5. jmurph Posted: February 26, 2019 at 11:13 AM (#5818276)
Nate/snapper: Sure, but at $10 million less per year.

EDIT: I'm not arguing that 10/300 isn't more guaranteed money, that's objectively true. I'm just saying it's not a big risk, and he's locking in 4 years of record money. To play for a World Series favorite rather than the Phillies.
   6. Nasty Nate Posted: February 26, 2019 at 11:19 AM (#5818286)
Nate/snapper: Sure, but at $10 million less per year.

EDIT: I'm not arguing that 10/300 isn't more guaranteed money, that's objectively true. I'm just saying it's not a big risk, and he's locking in 4 years of record money. To play for a World Series favorite rather than the Phillies.
OK, I see what you mean, and 4/$160m might be equally attractive to some Machado-esque offer.
   7. snapper (history's 42nd greatest monster) Posted: February 26, 2019 at 11:24 AM (#5818291)
Nate/snapper: Sure, but at $10 million less per year.

Right, but 120/4 (w/opt-out) vs. 160/4 means you're giving up $40M in upside for $140M in downside protection. That seems like a good trade.

Now if the Dodgers want to go 200/4, sure. But, a high AAV short deal is actually stupid for the Dodgers, since they'll be paying luxury tax and penalties because of it.

I don't understand the Dodgers aversion to a long deal. They can easily absorb $30M in dead money 6-10 years from now. They were absorbing more than that recently.
   8. Infinite Yost (Voxter) Posted: February 26, 2019 at 11:38 AM (#5818296)
I'm not sure the union has a say over whether a member strategically takes a shorter, higher AAV deal. In fact I'm fairly sure it doesn't.
   9. Banta Posted: February 26, 2019 at 11:39 AM (#5818297)
If it ends up being 300/10, I still think the opt out will be much sooner than year 5. Two maybe three.

300/10 has always been the baseline, I can't imagine Boras accepting anything lower (or again, even that without an opt out to try this thing again while Harper's in his 20s).
   10. jmurph Posted: February 26, 2019 at 12:00 PM (#5818302)
If it ends up being 300/10, I still think the opt out will be much sooner than year 5. Two maybe three.

Machado's is after year 5, it appears.
   11. Steve Parris, Je t'aime Posted: February 26, 2019 at 12:18 PM (#5818316)
Max contracts could be on the table in the next CBA negotiations. I wouldn't say they're likely, but if there's even a remote possibility Harper should get as much in years/dollars as he can now.
   12. TDF, trained monkey Posted: February 26, 2019 at 12:52 PM (#5818337)
I agree with those who say 10/300M with an opt out is preferable to 4/150 or 4/160. But at 4/200? I would take the shorter deal.
Max contracts could be on the table in the next CBA negotiations. I wouldn't say they're likely, but if there's even a remote possibility Harper should get as much in years/dollars as he can now.
If the union agrees to max contracts in 2 years, (1) they better be getting something huge in return (like FA after 2-3 years service time) and (2) it should be higher than the $30-35M Harper's being (supposedly) offered now.
   13. Bote Man Posted: February 26, 2019 at 01:31 PM (#5818369)
The Luxury Tax line is not some lethal third rail that teams simply will not consider. I don't know the specifics of this particular case (I doubt anybody outside the team and Boras know), but if you're talking about locking up Harper for 3-digit money then a tax hit of $4-5 million is a rounding error. Flags fly forever, ancillary marketing revenue, face of the franchise, blah, blah, etc. It's not just the pure lines on a P&L statement alone.
   14. Walt Davis Posted: February 26, 2019 at 04:01 PM (#5818453)
The tax is 20% for 1st time, 30% for 2nd time and 50% for 3rd time. The Dodgers are already near the threshold so if they signed Harper for something like 5/$200 they'd be paying about $8 M in tax. With that big of a contract and their other commitements, I assume they'd be over again next year but maybe not as much, call that another $6 M. I suspect they'd be over for a 3rd year, again not by much, but call that $5 M. So they end up paying about $20 M extra over the first 3 years of the deal while maybe getting back below the threshold in year 4.

So they'd have to pay 5/$220 for Harper ... with Harper of course getting only $200 M of that. A deal like this is pretty much exactly what the lux tax was intended to prevent. It doesn't make sense for the Dodgers to toss in an extra $20 M to no benefit... and if one team is willing to pay 5/$220 for Harper, there should be another team, not at the threshold, also willing to pay 5/$220 (or even 5/$210) with all of it going to Harper.

By the way, per Wiki, the Dodgers averaged about $30 M a year from 2013-17; the Yanks have averaged over $20 M a year from 2003-17. Per Wiki, over the last 15 years, a bit over $500 M has been paid, almost all by Yanks and Dodgers. That's not a HUGE deal over 15 years but it ain't nothing and explains a piece of the reduced players' cut of the revenue. (some of the lux tax money does go to MLBPA and I don't know if that's included in the calculation of the players' share.)
   15. Howie Menckel Posted: February 26, 2019 at 04:44 PM (#5818481)
I want the Phillies to do what the 'sharks' on Shark Tank like Mark Cuban do when a businessman/woman starts dicking around with them - just announce "I'M OUT" and make a pissy face.
   16. Bote Man Posted: February 26, 2019 at 04:51 PM (#5818483)
It doesn't make sense for the Dodgers to toss in an extra $20 M to no benefit

DING! DING! DING!

I knew it wouldn't take long.
   17. bfan Posted: February 26, 2019 at 05:35 PM (#5818500)
California's top income tax rate is 12.3% and they charge a 1% surcharge on incomes of over one million. For a $30,000,000.00 a year contract, that is almost $4,000,000.00 in state income tax. Over 10 years, that is almost $40,000,000.00. It is interesting that 3 of the teams in on, Harper are in CA; 1 is in Illinois, which is a high tax state, and one is in DC, which is I would guess also a high tax jurisdiction.

I bet the high end FAs really miss when the Texas and Florida teams get in the bidding, as we are talking about real money here.
   18. Adam Starblind Posted: February 26, 2019 at 06:16 PM (#5818508)

Per Nate, the Phillies will probably give him 10/300+ with a 5 year opt-out. Best of both worlds.


The Phillies should withdraw their offer. He clearly doesn't want to play for them. F him. Maybe it'll cost him a few bucks from another suitor if they do.
   19. bfan Posted: February 26, 2019 at 06:20 PM (#5818509)
The Phillies should withdraw their offer. He clearly doesn't want to play for them.


Yeah; if he wants the whole franchise to move to another city, that is just too much to ask.
   20. Adam Starblind Posted: February 26, 2019 at 06:39 PM (#5818511)


Yeah; if he wants the whole franchise to move to another city, that is just too much to ask.


Unless it's Wilmington, which is right there.
   21. the Hugh Jorgan returns Posted: February 26, 2019 at 08:02 PM (#5818519)
But at 4/200


There is no f*cking way that anyone is paying $50 mil/per to Bryce Harper. Not in his lifetime unless he manages to string together like (4) 10 WAR seasons.

We are reasonably sure the Nats tabled a 10/300 offer to start and the Phils apparently are right there. But now it just looks like Boras and Heyman trying to get the Phils to bid against themselves.
I'd love for Harper to sign elsewhere and then have Phils win the Series next year, that'd be a hoot.
   22. Infinite Yost (Voxter) Posted: February 26, 2019 at 09:34 PM (#5818532)
California's top income tax rate is 12.3% and they charge a 1% surcharge on incomes of over one million. For a $30,000,000.00 a year contract, that is almost $4,000,000.00 in state income tax. Over 10 years, that is almost $40,000,000.00. It is interesting that 3 of the teams in on, Harper are in CA; 1 is in Illinois, which is a high tax state, and one is in DC, which is I would guess also a high tax jurisdiction.


I suspect, as at this level this is mostly about egos and there's not much you could buy with that much money that you couldn't already buy with the money you get playing in a high tax state, that this plays little role for a lot of guys. If it did, you wouldn't see the constant flow of free agents to the Dodgers and the Yankees that you do.

A-Rod happily went from Texas to New York for the chance to win and be on TV more often. Stanton seems to have been fine going from Florida to New York for the same reasons. Manny Ramirez didn't let the tax burden of Massachusetts dissuade him from signing there. Machado just signed with the Padres so he can have the nice, round $300M number.
   23. Belfry Bob Posted: February 27, 2019 at 01:20 AM (#5818562)
I was just saying to my wife tonight how galling it must be to the Phils knowing that so much of these numbers being 'held out for' is all for posturing purposes, and nothing else. If Harper doesn't get what he wants and still ends up with the Phillies because nothing else works out, I'd imagine his displeasure might carry over to his game. So, since they seem to be bidding against themselves, a lot of the money being offered is not to pay Harper what the market demands, but what it takes to get an engaged player. Unusual times...
   24. Tony S Posted: February 27, 2019 at 05:18 AM (#5818570)
I was just saying to my wife tonight how galling it must be to the Phils knowing that so much of these numbers being 'held out for' is all for posturing purposes, and nothing else. If Harper doesn't get what he wants and still ends up with the Phillies because nothing else works out, I'd imagine his displeasure might carry over to his game. So, since they seem to be bidding against themselves, a lot of the money being offered is not to pay Harper what the market demands, but what it takes to get an engaged player. Unusual times...


Bryce Harper can play wherever he wants to play and be financially set for several centuries. He's just being a slave to his precious ego.

If the team he signs with tanks and the Nats win 116 games next year without him, let's just say few tears will be shed from here...
   25. . . . . . . Posted: February 27, 2019 at 07:25 AM (#5818572)
I suspect, as at this level this is mostly about egos and there's not much you could buy with that much money that you couldn't already buy with the money you get playing in a high tax state, that this plays little role for a lot of guys. If it did, you wouldn't see the constant flow of free agents to the Dodgers and the Yankees that you do.


No, it’s more that the tax analysis being done here is not so simple because professional athletes are working all over the county. There’s a difference, sure, but it’s around half of what’s theorized here. When you factor in extra endorsement money it’s probably a wash if you sign in a rich MSA like LA/SF/NYC.

Also, people on this site perpetually overstate how much money eye these guys are getting. Their expenses are much higher than a typical earner, their taxes are higher and their agent gets a cut. It’s a lot of money, sure, but it’s in the ballpark (pun intended) for career earnings for the highest paid professionals, like bankers and lawyers and such. The studies I’ve seen estimate around 10,000-20,000 people in the country with these kind of career earnings - they just either spread it out over a much longer career or get it all at once when they sell a business.
   26. Tony S Posted: February 27, 2019 at 07:33 AM (#5818574)
Their expenses are much higher than a typical earner, their taxes are higher and the agent gets a cut.


Besides the agent and taxes (which are a function of the contract), how are their expenses necessarily higher than those of the typical earner?
   27. . . . . . . Posted: February 27, 2019 at 07:56 AM (#5818578)
- Most athletes don’t want to move their kid around from school to school so pick a city and stick with it. That means they need a house for 6 weeks for spring training and often an in-season house and their regular off-season house.

- Many pro athletes often have one or more of a personal trainer, coach, or nutritionist.

- someone at Harpers level also probably needs PR on retainer and other public figure-type expenses like extra security, can’t really fly commercial or take public transit, etc. Also limited to living in doorman apartment or gated community (or paying for 24/7 security with enough land to build back from the road)

- Lots more entertainment expense, which is quasi mandatory for good relationships with the rest of the team.

My seat of pants guess is that a star pro athlete likely has $1M+ of additional expenses per year compared to Joe the PE Partner commuting to Darien.
   28. bfan Posted: February 27, 2019 at 08:01 AM (#5818581)
I suspect, as at this level this is mostly about egos and there's not much you could buy with that much money that you couldn't already buy with the money you get playing in a high tax state, that this plays little role for a lot of guys. If it did, you wouldn't see the constant flow of free agents to the Dodgers and the Yankees that you do.


That is a fair comment and it makes sense. Add in that if you are inclined to pad the income with endorsement opportunities, I think there are more of those or at least higher-paying ones in the larger markets. It is funny that I am sure Boras would love to squeeze $4 million a year more out of one of the Harper bidders, while locating in the state of Texas or Florida (if there was the opportunity to do so) instead of California gets you there.
   29. Steve Parris, Je t'aime Posted: February 27, 2019 at 10:00 AM (#5818617)
No, it’s more that the tax analysis being done here is not so simple because professional athletes are working all over the county. There’s a difference, sure, but it’s around half of what’s theorized here. When you factor in extra endorsement money it’s probably a wash if you sign in a rich MSA like LA/SF/NYC.

Right, they have to pay taxes for where their road games are as well. My guess is that someone playing for the Astros, Rangers, or Mariners would have the smallest state income tax burden. Besides home games, two of your divisional opponents are in states with no state income tax.

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