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Tuesday, December 31, 2019

Twins Have Made 4-Year Offer To Josh Donaldson

The Twins entered the offseason seeking “impact” starting pitching, but it doesn’t appear they’ll succeed in that quest. They agreed to one-year deals with Rich Hill and Homer Bailey on Tuesday, and with no high-end starters left on the market, their heavy lifting could be done in that area after also retaining Jake Odorizzi and Michael Pineda.

Although the Twins may be finished picking up notable starters, that doesn’t mean the reigning AL Central champions are content to enter next season without adding at least one more established contributor to the roster. On the contrary, they’re still chasing the premier free agent available, Josh Donaldson, and have made the third baseman a four-year offer, Dan Hayes of The Athletic reports (subscription link).

Financial details of the Twins’ proposal are unknown, but it could well be in the neighborhood of $90MM. As of two weeks ago, the Nationals were reportedly willing to go to that range for Donaldson, who has also drawn attention from his previous team, the Braves, as well as the Dodgers, Phillies and Rangers this winter. All of those clubs could still conceivably make a splash at the position.

The hot stove doesn’t take time off to prepare for the return of the Roaring Twenties.

 

QLE Posted: December 31, 2019 at 11:32 PM | 20 comment(s) Login to Bookmark
  Tags: hot stove, josh donaldson, twins

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   1. Walt Davis Posted: January 01, 2020 at 02:17 AM (#5912085)
Depends on dollars, deferments, etc. but 4 years seems at least a year too long, takes him through age 37. That aside, this seems a great short-term move by the Twins. I assume they're planning on Sano to 1B. No doubt they'll get some regression from guys like Garver and Kepler but that should still be a pretty fearsome lineup. Nice to see they are not gonna let Cleveland get away with twiddling their thumbs and trying to make sure the White Sox don't catch up.

If Sano doesn't take to 1B or Donaldson's defense declines, it's not the end of the world. Cruz is only signed through 2020 so one could move to DH then and Sano is FA after 2021 which would open 1B for Donaldson if necessary.
   2. DCA Posted: January 01, 2020 at 08:53 AM (#5912094)
You have to go at least a year too long to sign a desirable free agent with multiple suitors (like Donaldson). Winners curse.
   3. Walt Davis Posted: January 01, 2020 at 07:05 PM (#5912202)
No, you just have to make the best offer which means either a higher AAV (by NPV) or a greater length or various places in-between. Now sometimes the best offer by AAV and by length may be about the same -- i.e. if it's gonna take 3/$90 then you might as well offer 4/$100-105 which might the team might prefer anyway. But if 3/$80 would be the best offer (via 3/$75), that's a whole lot better than going to 4/$100. So sure, there's a winner's curse but the goal is to minimize the winner's curse and an extra year will rarely do that.

There are possibilities like maybe he'd prefer to play in Atlanta (say) than Minneapolis and is willing to forego $5 M over 3 years to avoid Minneapolis ... in which case the price of the "best offer" for the Twins goes up but that doesn't change the basic choice between AAV or length.
   4. bfan Posted: January 02, 2020 at 11:58 AM (#5912326)
Minnesota's state tax bite on high income earners (and people making about 5% of what Donaldson will make hit this definition, in Minnesota) is 9.85%, vs. 6% for Georgia. Minnesota doesn't suck money out of your pocket the way California does, but this could be a (slight) consideration. Donaldson will do very well for himself, but he isn't making Machado money.
   5. Zonk Wants Justice for Carolyn Gombell Posted: January 02, 2020 at 12:55 PM (#5912342)
Based the FA signings this offseason and since the beginning of time, I believe it’s time to stop pretending that taxation has even the remotest and slightest impact on where players sign.
   6. Tom Nawrocki Posted: January 02, 2020 at 01:02 PM (#5912344)
Has any player or agent ever said that state taxes had an effect on their signing decision? If so, I have missed it.
   7. jmurph Posted: January 02, 2020 at 01:11 PM (#5912347)
In addition to 5 and 6, it remains true that a simple This State's Tax Rate vs That State's Tax Rate is also not how this works. The math is more complicated than that.

(Spending 10 seconds thinking about it I imagine Atlanta would still come out ahead, given a bunch of division games in Florida also get factored in, but still, the point remains.)
   8. Zonk Wants Justice for Carolyn Gombell Posted: January 02, 2020 at 01:19 PM (#5912350)
Yeah - my bet is that if you’re making 8 figures, your best bet would be living and working where you want and spend your math free time comparison shopping accountants and financial planners....
   9. Rally Posted: January 02, 2020 at 01:28 PM (#5912355)
Has any player or agent ever said that state taxes had an effect on their signing decision? If so, I have missed it.


I don't know if he ever said anything about it, but in 2014 Vernon Wells made 21 million after the Yankees released him (Angels of course picking up most of that). Had he signed on with any team as a backup outfielder, he would have had to pay state taxes based on where he played his games. For athletes, even if they play and live in a state without income tax, they pay prorated tax for the states they play road games in.

However, if Vernon sat on his butt in his home state of Texas, he would pay zero in state taxes. Which is what he did. Playing anywhere else (even for the Astros and Rangers, because of road games) would have likely cost him 7 figures.
   10. Zonk Wants Justice for Carolyn Gombell Posted: January 02, 2020 at 01:31 PM (#5912358)
As a 35 yo corner OF whose once-fine glove was blah coming off a 233/282/349 season - I'm not entirely sure sitting on his butt was his decision alone....
   11. Misirlou cut his hair and moved to Rome Posted: January 02, 2020 at 02:29 PM (#5912388)
(Spending 10 seconds thinking about it I imagine Atlanta would still come out ahead, given a bunch of division games in Florida also get factored in, but still, the point remains.)


Would that be true though? I don't know exactly how it works, but I imagine a system in which a player's road taxes offset a portion of his home state taxes, and thus if he plays in a tax free state, that in effect means he pays his home state tax on those games.* Imagine an extreme situation in which only Georgia has a state income tax. I doubt that GA would forgo taxes on half of the Braves payroll.

*Like a player makes X, he owes his home state Y, minus Z, which is the sum total of taxes paid to other states. If some of those states don't have tax, they contribute $0 to Z.
   12. Lance Reddick! Lance him! Posted: January 02, 2020 at 02:40 PM (#5912392)
Has any player or agent ever said that state taxes had an effect on their signing decision? If so, I have missed it.

Gary Sheffield blocked the Piazza trade until the Dodgers agreed to give him more money to make up for the tax increase.
   13. jacksone (AKA It's OK...) Posted: January 02, 2020 at 03:01 PM (#5912402)
   14. bfan Posted: January 02, 2020 at 04:01 PM (#5912430)
sed the FA signings this offseason and since the beginning of time, I believe it’s time to stop pretending that taxation has even the remotest and slightest impact on where players sign.


The input above shows this to be untrue on an absolute basis, and if your point is that plenty of players sign with New York and California teams (the teams in states with the highest state tax rates I think), it could be that the Yankees/Dodgers/Angels are offering more money, too.

I now understand that there is some allocation of taxes based upon where you play, where your home team factors in at 50% (I would guess), and your division teams could make a difference too, but the pure fact is that at California's 13.3% rate (I know it is not that on the first million earned, but this is a back of the napkin calculation), Manny Machado would pay $39.9 million in state taxes over the life of his Padres contract. If 60% of his games are in California and that is the relevant number, we are down to roughly $24 million. If his agent didn't explain that number to him and he did not consider it in his decision, then one of them committed malpractice and the other is a fool.
   15. What did Billy Ripken have against ElRoy Face? Posted: January 02, 2020 at 04:13 PM (#5912437)
The input above shows this to be untrue on an absolute basis, and if your point is that plenty of players sign with New York and California teams (the teams in states with the highest state tax rates I think), it could be that the Yankees/Dodgers/Angels are offering more money, too.
Plus, looks at the rush of players wanting to sign with the Marlins and Rays.
   16. Walt Davis Posted: January 02, 2020 at 04:33 PM (#5912445)
And you probably need to be careful about which state you buy your Lamborghini in. And I assume that states with no/low income tax then have higher taxes elsewhere, maybe especially property tax rates so you would have to balance all that stuff out. Heck just the rent and cost-of-living differences between spending half your season in San Fran or NY rather than Mpls must add up. Maybe the new indy league team in Bluefield will pay Donaldson $25 M a year to play there. :-)

Anyway, I assume Boras has people to take care of this and, when it matters, I'm sure it plays into his salary negotiation. But the other side of all this is that it's just not that big of a deal. Even if it was just straight simple state tax differences, a 3% difference (which is pretty big by state tax standards) on $25 M is $750,000 which (a) is defenitly worth avoiding but (b) is a pretty trivial amount in the salary negotiation. Deferments and signing bonuses can make differences of tens of millions in NPV so are more likely to play a key role.

Still, whether we hear about it or not, no doubt these things play some role. I always wonder about the occasional weird contract where the total adds up to something like 3/$19.75 (Brad Hand) which is 3/$18 with a $1.75 signing bonus. $1.75 is a funny number to come to ... does that bring the NPV up to $20 but the team didn't want to pay a reliever $20? It was with SD so it wasn't about lux tax, was that a "Brad wants 3/$18 but taxes are higher here" concession? But he wasn't an FA yet so ....

I'm just always mildly fascinated by these sorts of things -- the stuff after the decimal, the use of a corp box for 12 home games a year, 6 flights on the owner's private jet, the bizarre structure of Scherzer's contract, etc. Does Boras just randomly generate that number of home games a year or does he actually price out and neogotiate over 10 vs 12 games? Or is it just accepted that the rate is about 1/2 a game for every million AAV (for players making at least $22 AAV)? (For those of you who have seen "A Marriage Story" (good film), there's a scene near the end that might capture this phenomenon nicely.)
   17. Zonk Wants Justice for Carolyn Gombell Posted: January 02, 2020 at 04:36 PM (#5912446)
The input above shows this to be untrue on an absolute basis, and if your point is that plenty of players sign with New York and California teams (the teams in states with the highest state tax rates I think), it could be that the Yankees/Dodgers/Angels are offering more money, too.


Yes....

Congratulations.

I think you may have discovered why - despite their outsized tax rates - we still continue to see an uneven distribution of high income earners in high tax states.
   18. Zonk Wants Justice for Carolyn Gombell Posted: January 02, 2020 at 04:51 PM (#5912456)
Anyway, I assume Boras has people to take care of this and, when it matters, I'm sure it plays into his salary negotiation. But the other side of all this is that it's just not that big of a deal. Even if it was just straight simple state tax differences, a 3% difference (which is pretty big by state tax standards) on $25 M is $750,000 which (a) is defenitly worth avoiding but (b) is a pretty trivial amount in the salary negotiation. Deferments and signing bonuses can make differences of tens of millions in NPV so are more likely to play a key role.


Considering the Borascorp headquarters is in Newport Beach, California.....
   19. bobm Posted: January 02, 2020 at 10:29 PM (#5912537)
[6] Has any player or agent ever said that state taxes had an effect on their signing decision? If so, I have missed it.

SI: "Shin-Soo Choo, Rangers agree to seven-year, $130 million deal"

LORENZO ARGUELLO
DEC 21, 2013

Free agent outfielder Shin-Soo Choo has agreed to a seven-year, $130 million deal with the Texas Rangers, according to Jon Heyman of CBS Sports. [...]

A big reason Choo agreed to go to the Rangers instead of taking more money from the Yankees is the lack of a state income tax in Texas, according to Ken Rosenthal of Fox Sports. New York reportedly would've had to offer a contract totaling around $147 million just to match Texas' offer at a post-tax level.


"How Shin-Soo Choo landed in Texas"
By JERRY CRASNICK via SPORTSCENTER
December 21, 2013, 5:57 PM

Texas has no state income tax, and the Rangers play a lot of road games in Seattle and Houston, where visiting players aren't subject to a tax on their earnings. The number crunchers at the Scott Boras Corp. concluded that he would have had to sign a deal for roughly $148 million with the Yankees to compare to the $130 million he'll receive from the Rangers
   20. A triple short of the cycle Posted: January 03, 2020 at 12:12 AM (#5912554)
Donaldson was putting up 7.5 WAR for $500K with Oakland, glad he is getting paid now.

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