Archive for February 2018

Texas Rangers Give Tim Lincecum Major League Contract

February 28, 2018

The Texas Rangers have reportedly agreed to give Tim Lincecum a major league contract to pitch for them pending a physical.  The amount of the guarantee hasn’t been reported, but I would guess it’s between $1M and $1.5M, given Lincecum’s veteran status and how they intend to use him.

In his recent showcase, Lincecum reportedly hit 90-93 mph on the radar gun and his breaking ball was sharper than when last seen.  The early word is that the Rangers intend to have Lincecum pitch out of the bullpen, and there is even a possibility he could compete for the closer role.

Lincecum famously wanted to continue to be a starter, but with a year away from the game, he may be willing to do whatever the Rangers want.  Lincecum has only pitched in relief in eight regular season games.  However, he has also made seven relief appearances in the post-season and was terrific in those appearances, mostly pitching long relief throwing at least 1.2 IP and as many as 4.1 IP in six of the appearances.

It will be interesting to see if Timmy can claw back a little of his old glory.  As a Giants fan, I will always root for him to succeed, and I’m also glad he didn’t sign with the reportedly interested Dodgers.

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Minnesota Twins Sign Logan Morrison Cheap

February 26, 2018

The Twins have reportedly reached a deal for Logan Morrison that guarantees him $6.5 million with a possibility of $16.5 million over two seasons if Morrison plays as well in 2018 and 2019 as he did in 2017.  That is a real bargain, at least compared to the three years at $36 million guarantee mlbtraderumors.com predicted.

Logan Morrison is expected to mainly DH for the Twins, since Joe Mauer, the better fielder, will be playing almost every game in the field he’s healthy enough to do so.  Looking at their roster, it’s doesn’t look like the Twins really needed Morrison, but at this price, why not?

Paid as a well-paid veteran platoon player, Morrison surely makes the Twins stronger against right-handed pitching this year.  If Morrison plays well and the Twins go deep in the post-season, the Twins will likely execute his option even if he doesn’t get to the 600 plate appearances he needs for the second year at $8 million guaranteed plus escalator clauses and plate appearance bonuses that could bring the second year amount up to $10 million.  The Twins are loyal by MLB standards to players who have played well for them and helped them win, particularly if they are of Morrison’s complexion.

I’m surprised the Royals didn’t sign Morrison.  He was born in Kansas City, although his family then traveled around a lot, and the Royals were certainly in need of a 1Bman once Eric Hosmer committed to the Padres.

Apparently, the Royals are so committed to “rebuilding” that both Frank Schwindel and Ryan O’Hearn have serious shots at making the major league club out of Spring Training.  It hadn’t even registered until now that the Royals had traded Brandon Moss and $4 million of his 2018 salary to the A’s along with LHP Ryan Buchter for RHPs Jesse Hahn and Heath Fillmyer.

If the Royals don’t surprise everyone and sign one of the remaining top free agents, it’s pretty clear that going into the 2018 season, they are determined to be as bad as possible as fast as possible, so that they can start getting top draft picks again.  That’s basically the formula that got them all the top draft picks that were the core of the 2015 World Series Champs.

Perverse Incentives

February 22, 2018

On the subject of Kenta Maeda‘s contract with the Dodgers, one obvious problem with the contract, at least as far as Maeda is concerned, is that none of the incentives are applicable to relief pitching.  This could create perverse incentives for the Dodgers going forward.

Two off-seasons ago, Maeda signed an incentive laden deal that guaranteed him $25 million over eight seasons, but could be worth $105 if every performance incentive is achieved.  Maeda made just over $20 million over his first two seasons of the deal, because he met many of the performance incentives.

However, by the end of the 2017 post-season, it’s a real question how much longer Maeda will be a regular major league starter.  He made 25 starts in 2017, but was dropped from the Dodgers’ deep starting rotation several times. At the same time, in 10.2 relief innings pitched in the post-season against the highest level of competition, Maeda allowed only a single run, suggesting that his MLB future may eventually come down to pitching out of the pen.  Needless to say, some Japanese ace starters in NPB have proven more effective as relievers in MLB — see, Kohi Uehara.

Maeda isn’t likely to take the Dodgers closer role from Kenley Jansen in the short term absent the latter’s injury, but it’s easy to imagine Maeda becoming the Dodgers’ top set up man.  The Dodgers will have to make that decision based on what is best for the team, but if Maeda as a top bullpen pitcher comes to pass, Maeda is screwed.

Maeda’s agents negotiated a contract based solely on Maeda as a starter.  If he becomes a top Dodger reliever, he’ll only earn $3.275 a year.  Brandon Morrow, the Dodgers’ top set-up man in 2017, just signed a two-year $21 million deal with the Cubs.  You can see the potential unhappiness that Maeda will feel if the Dodgers decide that his greatest value is in the bullpen.

Precisely because no one can predict the future, if I were the Dodgers management, I would offer to re-open Maeda’s contract now solely for the purpose of creating some performance incentives for relief appearances and games finished.  Maeda wants to be a starter, and the Dodgers want Maeda to a starter, but if it becomes apparent that Maeda’s greatest value to the team is out of the bullpen, then that’s what has to happen.

The Dodgers should get ahead of the situation by negotiating some relief pitcher incentives with Maeda.  They wouldn’t necessarily have to be too generous, since all the parties realize the Dodgers don’t have to renegotiate relief incentives in the first place.

Performance Incentives and Contract Negotiating Inertia

February 22, 2018

Years ago before I started this blog in April 2009 I wondered why you didn’t see major league contracts that contained as much or more incentive money than guaranteed money.  It seemed fairly obvious to me that for players over 29 or 30 coming off a bad year following at least some very good years in the not too distant past, they would be ideal candidates for contracts that didn’t guarantee much up front but could pay the player generously if he was able to recapture a some portion of his old magic.

At the time, I more or less assumed that there were limitations set by the collective bargaining agreement regarding just how much of a major league contract would be in the form of incentives.  However, since starting this blog, I’ve looked through the collective bargaining agreements and never seen anything that limits the amount or percentage of the contract that can be payable as performance incentives that have to be earned.

Instead, I do believe there are written or unwritten limits on the nature of performance incentives.  You can’t get a performance incentive for winning 20 games or hitting 30 home runs, but you can get an incentive based on playing in a certain number of games, accumulating a certain number of plate appearances or pitching a certain number of innings.  You can also get performance incentives for winning or finishing in the top five of Cy Young or MVP voting or by making the All-Star team.

In the last few years, we’ve seen all kinds of contracts which are mostly performance incentives.  Today, Chris Tillman finalized a deal with the Orioles that guarantees him $3 million, but contains an additional $7 million in innings pitched incentives.  Two off-seasons ago, the Dodgers signed Japanese hurler Kenta Maeda to a deal that guaranteed Maeda $25 million over eight seasons but could be worth a potential $105 million if all of the many, many different performance incentives were achieved.

Assuming that there were in fact no collectively bargained limitations on contracts for which 70% to 80% of the value of the contract was in the form of performance incentives, why did it take so long for teams and players to reach the kinds of deals that we see routinely now?  It is particularly strange when you consider that for a very long time minor league contracts for veteran players have routinely provided the player 7 to 10 times as much money for major league roster time as for minor league roster time.

I think that a lot of it has to do with the inertia of past contract negotiating practice, as I suggested in one of yesterday’s posts.  In the past, a player worth a guaranteed major league contract (and his agent) expected that most of the money of the contract would in fact be guaranteed.  That was the whole purpose of collectively negotiating for guaranteed annual contracts.  Everyone in MLB was a little suspicious of the idea of major league contracts that provided more than t0% or 20% of the potential contract amount as unguaranteed performance incentives.  So long as both players and managers took for granted certain salary structures, there wasn’t much reason to adopt a different form of contract, even if it would have made a great deal of sense to do so.

Why have things changed in recent years?  I think Maeda’s contract really changed the way everyone in MLB viewed MLB contracts, and his contract was based on certain somewhat unique circumstances that at the time seemingly applied only to him.  As a Japanese star, Maeda was basically guaranteed a four-year $20 million contract in NPB when he became a free agent.  NPB limits free agent contracts to a maximum of four years and has a de facto salary scale that made Maeda’s future NPB earnings highly predictable.

The Dodgers eight year $25 million offer beat any guarantee Maeda was likely to get from an NPB team (plus, of course, Maeda was determined to test himself against the best in MLB).  Also, Maeda is a small right-hander who had thrown a lot of NPB innings.  MLB has had a long-standing prejudice against small right-handed pitchers, particularly when they’ve already thrown a lot of innings.

I think Maeda’s contract was something of a revelation for MLB teams.  Reliable MLB 4th and 5th starters now command $6M to $10M a season (see e.g., Jhoulys Chacin), and the Dodgers were getting someone potentially better than that for a guarantee of less than $4 million a season.

Meanwhile, the contract has worked out for Maeda, who has pitched well enough and often enough to make far more money pitching for the Dodgers than he could have made in Japan.  In fact, I suspect that the Dodgers in 2017 made it a point to get Maeda his 25th start, when another performance incentive kicked in, because Maeda was clearly worth the extra money and the contract hadn’t taken into account that Maeda might be highly valuable to the the team as a sometime relief pitcher.

The other big factor is how much starting pitchers are now worth.  Chris Tillman was really good from 2013 through 2016, but was pretty awful in 2017.  He isn’t worth more than a $3 million guarantee based on his age (30 in 2018) and his 2017 performance, but if he returns to his 2013-2016 form in 2018, a reasonable possibility, he could easily be worth $10 million.  He’s going to have to be pretty good to pitch 200 innings, when the last of the incentives kicks in, in a season in today’s game.

Once one team and player do something obvious but contrary to prior practice, then all the other teams quickly jump in.  You could say the same, for example, for the Dodgers signing Jackie Robinson in 1946.  However, until that first team and player do it, everyone is worried about the possibility that a dramatic change will upset the apple cart.

Teams have always wanted to pay players based on their immediate past performance and anticipated immediate future performance.  It’s just taken awhile for the contract negotiators to catch up.

 

San Francisco Giants Sign Tony Watson

February 20, 2018

The Giants gave lefty short-man Tony Watson two years for at least $8 million but with a player option that could (probably will) bring the deal to three years and $10M.  It’s merely one more indication the Giants are all in for 2018.

Watson is 33 in 2018, and he seems clearly on the down-phase of his career.  He peaked in 2014 and 2015 at the ages of 29 and 30, and his 3.38 ERA in 2017 split between the Pirates and the Dodgers wasn’t particularly impressive.

What Watson has going for him is that he’s veteran pitcher who can pitch.  He can close out games for you if your main closer gets hurt or is ineffective.  The odds that he’ll help the Giants in 2018, if he stays healthy, are good, but 2019 and 2020 are far more uncertain.

If all the oldsters can stay healthy, and that’s a big, big if, the Giants should be a lot better in 2018 than they were in 2017, but that’s no guarantee of the play-offs.

Diamondbacks Did Well to Sign Dyson

February 20, 2018

The Arizona Diamondbacks reportedly just reached a tw0-year deal with Jarrod Dyson for $7.5 million guaranteed.  That’s a lot less (proportionately) than the $12 million predicted by mlbtraderumors.  In Dyson’s case, I think it’s age discrimination.

Dyson will be an old 33 in 2018, but he’s the kind of player who ages well because he runs so well.  Fangraphs says that Dyson was worth $16.9M in 2017, mainly because of his still great defense.  Fangraphs also says that Dyson is coming off a five-year period in which he’s been worth as much as $24.8M and never less than $14.6M in a season.

The teams have not been kind to over-30 free agents this off-season, and this is the latest example.  Dyson’s value afield will likely dip in 2018 given his age and the overall trend of the last four seasons, but at worst he’ll be an above average defensive center fielder.  Playing half his games in Arizona, he may yet have his best offensive season in 2018.

$16M for two seasons would be a more realistic bet for Dyson’s value over the next two seasons, but why pay more?  Apparently, only Arizona thought he was worth $7.5M for two seasons, and only because they just lost J.D. Martinez.  Teams have been more than willing to sign free agents in Dyson’s expected contract range this off-season, so it seems likely there really wasn’t much interest anywhere until Martinez committed to Boston.

The Dbacks weren’t going to replace Martinez’ bat.  So why not add defense?  Martinez’ defense is pretty bad, so Dbacks pitchers should get two outfielders better in 2018 with the addition of Dyson.

Boston Red Sox Reportedly Reach Agreement with J.D. Martinez

February 20, 2018

The Boston Red Sox have reportedly reached an agreement with J.D. Martinez on a five year contract that guarantees Martinez $110 million and contains opt-outs after both years two and three of the deal.  The deal is front-loaded with Martinez earning $50 million through the first two seasons and $72 million through the first three seasons but only $38 million over the last two seasons.

Martinez is guaranteed a full $40 million less than mlbtraderumors.com predicted, but he gets the two opt-outs.  The effect of the deal is that it is much more future performance driven that the free agent contracts of old, as Martinez will almost certainly opt out if he has seasons in either 2019 or 2020 in which he plays in 150 game and has an OPS at the average of his last four seasons (2014-2017).

What I find interesting about this contract and to a lesser degree with Eric Hosmer‘s recently reported contract with the Padres is the degree to which the contract is front loaded.  In years past, teams always tried to push the highest paid seasons toward the end of the contract term in order to take advantage of the time value of money.  When added to the 100 year old tradition of paying superstars more as they got older, even as their performances began to decline, the time value of money was a powerful incentive for teams to back-load contracts.

What is clearly going on is that teams no longer want albatross contracts, where the teams are paying massive amounts of money for poor performance later in the contract period.  In particular, wealthy teams like the Red Sox expect to contend every year and certainly do not intend five year rebuilding periods that small market teams resign themselves to.

Teams are now obviously more concerned with paying top dollar for the years they reasonably anticipate getting top performance and paying less as the player gets older.  Teams are realizing that no matter how wealthy or poor they are, they have a certain budget for player salaries each season which increases over time at a fairly predictable rate in line with predicted future revenue increases.  If you push back free agent contract compensation to the later years, those are years in which the team is predictably resigning itself to mediocrity or worse.  Added to this are the incentives in recent collective bargaining agreements which punish teams for going over an imposed salary cap.

In the late 1980’s Bill James wrote an article about how the New York Yankees under George Steinbrenner were on what amounted to a second-place treadmill.  At that time the Yankees were building their teams largely around elite free agents, who were really good only for a year or two and then became expensive mediocrities that prevented even baseball’s richest team from building a truly great ball club.  It’s taken awhile for teams to learn the point that James was making all those years ago, but it now seems the teams have learned it.

As time passes, we will see more contracts which reject the old rules of free agent contracts.  I’m certain of this, because we’ve seen over the years the way in which free agent contracts have evolved, for example using team options, player options and opt-out clauses.

Also, I took a sports law class in law school in which the students negotiated various player contracts.  Coming into the practice negotiations with fewer preconceptions about what the contract should look like and negotiating only on the basis of the factual situations involving the player and the team, we came up with some pretty wild contracts.

In representing an imaginary football player in negotiations with an imaginary team that was hoping to win it all the next season and had the money to spend now, I negotiated a two year deal in which the player received 85 or 90% of the contract amount in the first season with most of the 85 or 90% in the form of a signing bonus, so that the money would already be paid out to the player even if he got hurt as soon as he started play for his new imaginary team, since NFL contracts are typically not guaranteed due to the frequency of serious injuries in football.  Also, I wasn’t taking into account taxation or the fact that young athletes tend to spend money as they make it and won’t necessarily be prepared to save enough in year one to handle the steep drop in compensation in year two.

In the real world, past practice tends to shape contracts in the short term, not to mention the fact that the parties involved in the negotiations are better aware of all the real world variables.  Over time, however, real world contracts will ultimately get to roughly the same place as law school experiments if the factual situations are roughly the same (and taking into account all the real world variables).

Owners would love to get back to the world before free agency, not only when players could not access a free market of teams competing for their services, but also when a player’s compensation was determined a year at a time and was thus largely linked to the immediately preceding year’s performance and thus anticipated next season performance, and could be quickly reduced if the player ultimately had a bad season the next year.

Both Martinez’ contract with the Red Sox and Yu Darvish‘s recent contract with the Cubs require the players to perform at an extremely high level in the early years of their respective deals to fully reap the potential benefits of the contract.  That is well to the advantage of their signing teams, and this year the teams have been able to impose these terms on these players.  We’ll see what happens next off-season, but I think we’ll be seeing more of the same.