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Saturday, December 16, 2006
Wells is due $5.6 million next season in the final year of his old contract. The extension calls for a $25.5 million signing bonus, payable in three $8.5 million installments each March 1 in 2008, 2009 and 2010. He will receive a salary of just $500,000 in 2008 and $1.5 million in 2009, but his salary jumps to $12.5 million in 2010 and $23 million in 2011. Wells receives $21 million in each of the final three seasons.
The deal also includes a full no-trade clause and an opt-out clause that Wells can exercise after 2011. I was against the opt-out clause, but given the structure of the contract it looks like the Jays protected themselves well. If Wells does opt-out, the Jays will have paid him 68.6 million over 6 years. Given the current market, that’s well below what he could get as a free agent next year.
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1. Best Regards, President of Comfort, Esq., LLC Posted: December 16, 2006 at 03:19 PM (#2263127)J.P. has slightly redeemed himself after a mediocre performance as GM so far.
I've never done an NPV in excel before, I generally use my HP12c, but I left it at work - but this seems to work out to only about 84m in NPV terms, which is a tremendous bargain. Assuming i=.1.
Of course it isn't a tremendous bargain if he goes back to posting .260 EQA's like he did in 02, 04 and 05.
Not to mention the
Rick DiPietro contract in the NHL. 15 years? For a goalie?
I think the biggest issue with signing contracts is flexibility for the team. I find it very unlikely (at least in the context of the uncertainty surrounding teams) that the Jays would have trouble trading Wells at any point of this contract without having extracted proper value from the deal, which is basically the best you can hope for in a long-term contract.
There is risk in any contract, but if you refuse to assume ANY sort of good risk for talented players, you end up like the Pirates.
Ahh... he has a no trade clause. and 2) I expect that it will be tough to trade a player making 20m a year if he has an average bat... which is what Wells had two of the last 4 years. Given I don't expect it to continue... but that is a realistic scenerio that I could see him being tough to move even if he was willing to waive his no trade.
I thought it was Jay's owner that pushed for this deal not J.P.
Best Regards
John
"I have a chance to take care of my family for a couple generations," said Wells.
Yeah, no ####!
Even if his claim had any validity how can he be sure that she wasn't just flossing her teeth?
Best Regards
John
Censorship!!!!!shiftplusone!!!!!!
Fair point.
Living up to your handle, I see. ;)
How do you define ridiculous? Baseball has a huge amount of revenue -- not as much as the NFL, but much more than the NBA or NHL (if that's even considered a major sport anymore). Compared especially to the NFL, baseball players have much lower injury risk and longer careers. Compared especially to the NFL, every baseball position is a "skill" position. Compared to all three but especially the NFL and NBA, you can't fill next year's team's need by drafting cheap college players this year. Finally, MLB has the strongest union. It makes perfect sense that MLB contracts would be generally longer and for more money than in the other sports.
The union point illuminates another issue with your use of term "ridiculous." From the players' perspective (well, FA-eligible ones at least), the contracts in the NHL, NFL and NBA are more ridiculous than those in MLB. Why assume the owners' perspective? It really shouldn't matter to you as a fan one way or the other really -- it doesn't really impact on ticket prices and I'm pretty sure that MLB tickets are cheaper than the other 3 sports anyway. And there's still plenty of baseball on free TV (not as much as football in percentage terms obviously) and basic cable.
Where MLB is probably "ridiculous" compared to the other sports is in the bonuses handed out to draft picks -- they're usually years away from contributing and are significant risks to produce nothing at all. MLB is also "ridiculous" in the whole reserve/arb/FA structure -- not in the sense that arb is ridiculous but in the sense that a player has to be underpaid (usually severely) for 6 years before being paid "too much." That one is mainly the Union's fault.
One thing to keep in mind however is that MLB salaries have been rising more slowly than revenues over the last 10-15 years. And the last numbers I saw (a few years ago at least, maybe the last CBA) showed that MLB players received the lowest percentage of revenues of the major sports -- which is "ridiculous" (and I suspect tied to the wacky salary structure) -- and I suspect has gotten "worse" in the last couple years.
I thought he meant "ridiculous" to mean weirdly-structured. A 7/$126 contract COULD mean a contract that pays $18 million per year for 7 years. Instead, this one includes a $25 million "signing bonus" - that gets spread out over three years - and includes annual salaries that range from $500,000 to $23 million. Not to mention the opt-out clause.
All of that said, I think this is a good deal for both Wells and the Jays.
Quick, what is the second highest paid position (by average salary) in the NFL?
What is the point of calling part of Wells's pay "salary" and part of it "signing bonus"?
Might they be treated differently for breach of contract or luxury tax purposes?
Well, as I read the intro - and I could be wrong - in this case, the difference is the timing of when he gets paid. In 2008, he makes $8.5 million on March 1 and then gets paychecks based on a $500,000 salary. This should be better from Wells' perspective - he gets 94% of his income for the year on March 1st. If he's willing to take less money because of this (say $9 million paid this way = $9.5 million paid normal), then it's also to the Jays' benefit.
In what sense? Luxury tax is based on AAV over the life of the contract, including signing bonuses. Also includes any incentive bonuses earned. If signing bonuses didn't count, the Yankees could avoid paying luxury tax by simply restructuring a few of their big contracts, and it would be really hard to imagine a reason why they wouldn't do so. Of course, I don't expect Toronto to exceed the luxury tax threshold anytime soon, even with this contract on the books.
Well, you'll have to compare the cash value of the two methods to be certain.
Yes, I should have said, "it could also be to the Jays' benefit" - in terms of luxury tax, for example, or, are benefits (as they apply to "luxury tax" calculations at least) perhaps tied to "salary" rather than total compensation?
Compared to most NFL "star" contracts which are like 7 years/$56 M, except only 2 years are guaranteed and $20 M of that is signing bonus paid out over three years? :-)
Bigs spenders, this Wells family.
Imagine what it will be worth. Unless you and your direct offspring are putting that $5 million in a mattress or letting Lenny Dykstra handle your investments, then you're not going to have trouble living a comfortable middle class lifestyle. Well, you better have good health insurance.
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