Clayton Kershaw’s Big Pay Day
As everyone has heard by now, the Los Angeles Dodgers signed Clayton Kershaw to a seven-year $215 million contract, the richest for any pitcher in baseball history.
Certainly, Kershaw deserves to the be the highest paid pitcher in baseball, particularly given that he plays for the Dodgers, one of the five highest revenue teams in MLB. The main question with a contract of this size is whether or not Kershaw can remain reasonably healthy for the next seven years.
Kershaw pitched 665.1 innings in the three seasons before turning age 25 last March, and that’s an awful. Baseball history suggests that pitchers who throw a lot of major league innings before age 25 don’t tend have much left by the time they reach 30. Dwight Gooden and Larry Dierker are good examples, and they’re hardly the only ones.
Another key element of Kershaw’s new contract is that it allows him to opt out after five years if he so chooses. Generally, I think it’s tremendously foolish for a team to give a player an opt out on a long-term contract regardless of how good or desirable the player is. Kershaw’s contract guarantees him the most money of any pitcher in baseball history, no matter how he pitches in the future. That’s the player’s upside on the long-term deal.
By letting a player opt out, if he plays well and chooses to opt out, the player is getting all of that upside as well. The opt-out the Rangers gave Alex Rodriguez has clearly blown up on the Yankees, his current team, and it’s almost certain the opt out given to CC Sabathia will blow up on the Yankees also.
In other words, the opt-out virtually guarantees that the signing team will be on the hook for several seasons in which the player is massively and painfully overpaid relative to his performance. While one can certainly argue that the signing team saves money on the initial contract guarantee by granting an opt out, I think it highly unlikely that any other team came close to the ten years and $254 million the Rangers initially gave ARod or the seven years and $161 million the Yankees initially gave CC.
In fact, in the long run, the Yankees probably will not save any money as a result of ARod’s one-year suspension, because the player they get back in 2015 (a 39 year old who hasn’t played baseball in a year) to whom they still owe a total of $61 million is unlikely to have any value whatsoever, while he might still have some utility if he had played in 2014.
You can also be damn well sure that the players’ union will fight tooth and nail to make sure the Yankees pay all of the monies owed to Rodriguez for 2015 and beyond. The MLBPA may have let ARod’s boatload of attorneys take the laboring oar in ARod’s suspension arbitration, but the union isn’t going to let anyone get in the way of its defense of guaranteed player contracts if the Yankees try to weasel out of the $61 million they still owe ARod after the suspension. I also can’t imagine a reputable labor arbitrator giving the Yankees any kind of a break on this remaining $61 million, since ARod has already been fully and fairly punished for his misdeeds.
All that being said, the opt-out the Dodgers gave Kershaw isn’t all that terrible, because Kershaw can’t opt out until after the fifth season. The deal is back-loaded, with Kershaw to be paid $150 million (including all of the signing bonus) in the first five season and $65 million in the last two.
If Kershaw is pitching so well (and the market price for starting pitching has gone up so much) by the end of the 2018 season that he’s willing to walk away from two seasons at a guaranteed $65 million, then its a pretty good bet Kershaw will continue to pitch well into his mid-30’s if the Dodgers choose to re-sign him. In fact, a new contract would most likely allow the Dodgers to pay Kershaw less in 2019 and 2020, as the new deal would presumably back-load payments into later seasons.Los Angeles Dodgers, New York Yankees, Texas Rangers