Another Free Agent?

[johnnydakota]

Front loading a contract to say Garza make sense not only for the teams Payroll, and future ability to have some space, but it would make sense if the Twins went further then 31 million in the 1st year, say they paid him 40 million this year ,and only 4 million per ,for the last 3 years.

The Twins would only have to insure the 1st year of his contract, allowing them to save on insurance premiums over the last 3 years.and it would make him a valueble trading chip.

Imaging in 2015 having a #2 type pitcher who is only owed 8 million for 2 years combined

[jay]

I hope this site doesn't turn into consistently breaking someone else's post into selected snippets with a counter point for every single one. It is so extremely contextually dangerous.

[JP3700]

The simpler explanation isn't that all the teams have unified as one to deny this to players (when does that ever happen when it comes to these things?) but that the actual union is the one keeping it off the table?

 

So what's simpler to explain? How a unionized force is acting in a way to increase their bargaining position or that 30 teams of very smart people are intentionally or unintentionally overlooking more ideal ways of offering contracts?

 

That every team in the league has joined together in stupidity, solidarity, or something to not front-load deals.

 

 

 

The simple explanation is that teams think individually and they all understand that back-loading a contract is much more beneficial for the reasons stated.

 

There isn't some collusion between teams. Back-loading is just the better business move. They don't have to join together to realize it.

 

Even though all of us could come up with situations in which it would be a brilliant move by teams to engage in. With so many savvy front office people, surely some of these situations would be more recognized and taken advantage of. But they don't.

 

I can't think of any situation in which it would be a brilliant move for the team. That's likely the reason that it rarely happens.

 

I don't deny it's speculative

 

The contrary thing to believe would be your position.

 

Mine, along with dozens of credible writers. Some of whom are involved with the game and some with the business aspect of it.

 

I'd rather take that position over speculation.

[TheLeviathan]

The simple explanation is that teams think individually and they all understand that back-loading a contract is much more beneficial for the reasons stated.

 

So let me get this straight: Back-loading a contract is always the smarter way to do things? If teams had their way, they'd always choose back-loading?

 

Here are just a few scenarios where it wouldn't be:

 

1) Resigning an aging player well into their career arc.

2) Better align payroll flexibility with player development (Think how many of us would love to do that right now. Including the initial poster I responded to. And he's right, it would make sense)

3) Increased trade flexibility as players age

 

These scenarios happen semi-regularly and would very much benefit small and mid-market teams who rely on rebuilding through their farm. The notion that there is no such scenario it would make sense is a bit breathtaking. I'm not sure how you could arrive at such a conclusion.

 

The truth is, teams would do this in these situations. And if they did, with some consistency, there would be union pushback so they didn't lose negotiating power. So it starts and stops with players who, afterall, have majority of the power in free agency negotiating.

[nicksaviking]

I hope

 

Hope is dangerous and only wishful speculation. Stick to stats and facts.

[old nurse]

Ian Kinsler had a front loaded contract.

A reason for a team to front load a contract would be anticipated cash flow. St Louis can anticipate revenues and project in 2-3 years. If Miller, Wacha et al continue to develop, St Louis in a couple of years would have a payroll issue.

 

It would make sense to pay the player according to anticipated decline. When does baseball and contracts make sense?

 

There is the reason to backload the contract. As time goes on the money is worth less.

If you think the contract makes the player's contract an albatross consider the team either way is paying for the player. Either paying the money upfront, or at the end to another team like the Cubs did to get rid of Soriano. Either way the origional club is paying, but the dollars are worth less.

 

3/30 may be a reasonable contract for Drew. He turned down 1/14. To get 2 more years and 16 million would represent a real loss for Drew in the negotiations. His agent is Boras. When was the last time Boras lost with a major free agent?

[stringer bell]

Ian Kinsler had a front loaded contract.

A reason for a team to front load a contract would be anticipated cash flow. St Louis can anticipate revenues and project in 2-3 years. If Miller, Wacha et al continue to develop, St Louis in a couple of years would have a payroll issue.

 

It would make sense to pay the player according to anticipated decline. When does baseball and contracts make sense?

 

There is the reason to backload the contract. As time goes on the money is worth less.

If you think the contract makes the player's contract an albatross consider the team either way is paying for the player. Either paying the money upfront, or at the end to another team like the Cubs did to get rid of Soriano. Either way the origional club is paying, but the dollars are worth less.

 

3/30 may be a reasonable contract for Drew. He turned down 1/14. To get 2 more years and 16 million would represent a real loss for Drew in the negotiations. His agent is Boras. When was the last time Boras lost with a major free agent?

Didn't Kyle Lohse get less per annum than his qualifying offer? I think he's a Boras client.

[JP3700]

I hope this site doesn't turn into consistently breaking someone else's post into selected snippets with a counter point for every single one. It is so extremely contextually dangerous.

 

I'm definitely guilty of this.

 

A while ago, I had read that responding to full posts were filling up pages, making them harder to read. I also noticed that several other posters would break down posts to make them shorter, easier to understand and respond to.

 

I was never attempting to remove context from the posts I replied to. My thought was that since their post was already up, I could shorten my responses while making it easier to understand what I was specifically replying to.

 

If posting this way is considered bad form, I apologize to you and anyone else that this bothers. I'll refrain from doing it from now on.

[JP3700]

So let me get this straight: Back-loading a contract is always the smarter way to do things? If teams had their way, they'd always choose back-loading?

 

Here are just a few scenarios where it wouldn't be:

 

1) Resigning an aging player well into their career arc.

2) Better align payroll flexibility with player development (Think how many of us would love to do that right now. Including the initial poster I responded to. And he's right, it would make sense)

3) Increased trade flexibility as players age

 

These scenarios happen semi-regularly and would very much benefit small and mid-market teams who rely on rebuilding through their farm. The notion that there is no such scenario it would make sense is a bit breathtaking. I'm not sure how you could arrive at such a conclusion.

 

The truth is, teams would do this in these situations. And if they did, with some consistency, there would be union pushback so they didn't lose negotiating power. So it starts and stops with players who, afterall, have majority of the power in free agency negotiating.

 

I think you're thinking of it from a fan's point of view. I'm thinking of it from a business point of view. Because at the end of the day, the team is a business.

 

Inflation is obviously the biggest factor. I believe the assumed inflation rate for baseball salaries is 5% a year. That's a significant amount of money when you're talking yearly salaries in the eight figure range.

 

As for your scenarios:

 

1) When you sign an aging player, it is understood that you are getting his best season(s) early in the contract. Back-loading the contract allows you more flexibility to invest elsewhere those season(s). Maximizing your investment.

2) This may be the only scenario where it could make some sense, but it's also nearly impossible to perfectly align player development with free agency since you never know exactly what you have with prospects. That's why teams who aren't ready to compete generally stay away from free agency or stick to short term deals. Only in a perfect scenario where a team has a lot of young proven talent and an excess of revenue would this make some sense. Which is likely the Cardinals' reasoning for front-loading Peralta's deal.

3) You can still eat a certain amount of salary on the remaining contract. Either way you are paying the contract.

 

Once again, inflation also factors in to all three of these scenarios.

 

Back-loading contracts maximizes value and mitigates risk for the team/business.

[old nurse]

Didn't Kyle Lohse get less per annum than his qualifying offer? I think he's a Boras client.

 

3/33 versus 12 in the offer. Is that really a significant difference? Bourn was right at the offer

[TheLeviathan]

Inflation is obviously the biggest factor. I believe the assumed inflation rate for baseball salaries is 5% a year. That's a significant amount of money when you're talking yearly salaries in the eight figure range.

 

It can be the biggest factor, and likely is in the largest contracts, but that reasoning doesn't hold in a situation like Drew's. Front-loading a 3/30 deal or a 4/52 deal is not nearly as impactful with inflation as a 7/200 deal. You're talking a couple million dollars in order to save much more than that in payroll flexibility.

 

Say, for instance, we gave Garza 20-20-7-6 instead of 13M per. The first two seasons are basically at market value, but you lose maybe 1M in inflation. The subsequent seasons are closer to 1.75M. So you lose 4.5M over the course of his contract in terms of inflation value. But what you gain in 2016 and 2017 is

 

A) Potential trade value (low pay for high rewards)

Significant advantage in payroll flexibility

C) Maximizing that you are paying the player the most money when they are most likely to contribute.

 

And here is where I take my biggest issue: It's a bit disingenuous to say it's "understood" that it has to be that way. It's only "understood" to pay more on the back end because that's the environment players have demanded.

 

As the original poster in this discussion mentioned - the Twins are precisely in Scenario B. (And I would suggest the idea we're the first to ever be in this scenario to be a bit unlikely. It happens, and not rarely) We have a rough idea of when the kids are arriving. We have payroll flexibility now and can anticipate wanting more later. Could we lose a million or two in inflation dollars to front-load Drew? Yes, but I guarantee a savvy GM would see that as minimal risk for the idea of having 5-7M more in payroll flexibility and the extremely high value of perhaps having a pretty good SS making 3-4M when you are looking to add more to your roster. (He has high trade value now and he's giving you huge bang for your buk when you need it most)

 

Teams like Oakland, St. Louis, Tampa, etc. where they are very savvy and buyout arb. years to extend the life of retaining players could certainly utilize this strategy with some regularity. Yet....it doesn't happen.

 

And the reason for that is it is a threat to player negotiating power and the union discourages it. I have no doubt that for teams this often works well for them too, but the buck ultimately stops with those with the most to lose and those most in control of the terms. In free agency that's the player, not the team.

[TheLeviathan]

Ian Kinsler had a front loaded contract.

A reason for a team to front load a contract would be anticipated cash flow. St Louis can anticipate revenues and project in 2-3 years. If Miller, Wacha et al continue to develop, St Louis in a couple of years would have a payroll issue.

 

This is another reason similar to my second scenario. You have a variety of arbitration players coming up in staggered years so you front end a few of them so that you can afford to keep them all long-term.

 

Again, something many mid to small markets could utilize. Only the Cardinals have seemed to do so at all. I'm going out on a limb to suggest the Cardinals are not doing this out of ignorance or stupidity about inflation. More likely, they see those lost value dollars as considerably less important than retaining all their players.

[jay]

I was never attempting to remove context from the posts I replied to. My thought was that since their post was already up, I could shorten my responses while making it easier to understand what I was specifically replying to.

 

I am by no means the forum expert on proper form (nor much of anything else, really). It just seemed like a newer phenomenon here that I've seen used poorly elsewhere. You're absolutely right that there's a balance to strike between quoting a whole thousand-word post and zeroing in on what you're responding to.

[jay]

A) Potential trade value (low pay for high rewards)

Significant advantage in payroll flexibility

C) Maximizing that you are paying the player the most money when they are most likely to contribute.

 

There are certainly plenty of logical reasons to front-load a contract from both the team and player perspective. I think this is why it gets thrown out so frequently, despite only happening in such rare occurances.

 

Kind of like talking about moving to get out of this ridiculous cold... great idea and logical in many ways, but we just don't end up doing it.

[TheLeviathan]

Kind of like talking about moving to get out of this ridiculous cold... great idea and logical in many ways, but we just don't end up doing it.

 

We could always live in Yatusk right?

 

The funny thing is, for the very reason it is often smarter for teams to backend for inflation, it's pretty much always smarter for players to front end to maximize value.

 

I find it dubious that the party largely in control in free agency (players) would allow the other party to dictate the terms. It's far more likely they are dictating the terms against their own immediate self-interest for the larger best interests of the union and future players.

 

And to you AHsaves - maybe times, they are a'changing. I have read palers front ending to avoid tax hikes down the road. MAybe its a new trend, its certainly happened more in the last year than it had in years. if true, it speaks to my point about players deciding that.

[jay]

I'd throw in a dash of ego. I've always assumed it doesn't happen much because player X says 'I'm looking for Y dollars'. Some GM says he can make that happen, but only by backloading (and inflating) the dollars.

[cmathewson]

I'd like a right handed power bat, and there are a few left. It looks like we can get a bargain.

[ScottyB]

Mod hat: I think this has been a good debate, and I've enjoyed it. Hats off to all.

 

Carry on.

 

How is 5 pages of discussion about Stephen Drew (who was never mentioned by the Twins as a potential free agent the Twins are going after) a good thing. The discussion was SUPPOSED to be about Gardy's comment on circling back on someone the Twins had actually been tied to this off-season. The only ties I've seen between the Twins and Drew was by someone nationally who said the Twins should go after Drew, not by the Twins themselves. This thread has been co-opted. I'm glad CMath attempted to get back to the original topic. I have no problem with a discussion on Drew, but it should be in it's own thread, not this one which was supposed to speculate about potential free agents the Twins might reactivate discussions with.

[Hosken Bombo Disco]

Re: front loading contracts: maybe it boils down to a player not wanting to take a steep pay cut before he is forced to?

[Willihammer]

http://i.imgur.com/y0kCyFR.jpg

[Craig Arko]

Based on Barardino's quotes from Ryan, I'd say it's a better than even chance they are talking about Johan.

[Kwak]

RE: front-loaded contracts

 

Example: 4 years $52MM total; $20MM, $20MM, $6MM, and $6MM. It would be easy for a negotiator to conclude that a team is willing to pay $20MM per season and to conclude you are willing to pay $20MM per season for his client. At best the team would negotiate was the final two years would be at player option--a really bad deal for the team. They might just as well offer a two-year contract at $20MM each and eliminate the risk of the last two seasons.

[ScottyB]

Based on Barardino's quotes from Ryan, I'd say it's a better than even chance they are talking about Johan.

 

This makes the most sense.

[AlwaysinModeration]

If front-loaded contracts--or "aging curve" contracts were regularly instituted, it would cut out a lot of these bloated albatross contracts like Wells and Matthes and Soriano and Howard and Pujols; they could be built so that they were much lower dollar figures in the far years.

 

Tom Tango has for years done great work on calculating, extremely accurately, what sort of contracts free agent players should, and do get. In his calculations, for players in the decline phase (usually post-29), he factors in a .5 WAR decrease per year. At a going rate of 6 million/WAR, it would make a lot of sense to have contracts that look like, in Drew's case: 3/30, with the years being 13/10/7. That would also mirror his expected contribution to the team, and would make his 2016 salary palatable (and maybe more platoonable.)

 

I also thought declining contracts didn't really ever happen, though, but they do, albeit infrequently, and this conversation has helped illuminate this.

 

I also think Drew for 3/30 would be a great deal, cheaper than he is worth.

[cmathewson]

Berardino did quote Ryan as saying that some of the remaining free agents have draft compensation issues, "which is scaring away other teams" [emphasis mine]. The two left with those issues are Morales and Drew.

[johnnydakota]

Well Garza is gone

[twinsfanstl]

Sounding like arroyo per wolfson. No contact regarding cruz drew or e santana/himenez

[Willihammer]

If front-loaded contracts--or "aging curve" contracts were regularly instituted, it would cut out a lot of these bloated albatross contracts like Wells and Matthes and Soriano and Howard and Pujols; they could be built so that they were much lower dollar figures in the far years.

 

Frontloading would give the illusion of better value in the final years only by accelerating the inflation of the price of a "Win." In other words, the back end of these deals would be better values because by the time a player reaches year X the price of a Win would have already risen to 12 million instead of just 10, even though the player performs the same.

 

Back loading on the other hand makes the final years appear to be lousy values only because they have helped stall salary inflation and keep the price of a Win rising only to to 10m in year X instead of 12m (or whatever).

 

There's a shared incentive to backload and I have to think anyone who bucks this trend gets a phone call or communication from MLB about it.

[big dog]

 

...There's a shared incentive to backload and I have to think anyone who bucks this trend gets a phone call or communication from MLB about it.

 

I also remember reading something a few years ago suggesting the union opposed the idea, worrying that those artificially low salaries would somehow be used as comps to keep salaries low for younger players with similar production at the time. Doesn't seem like a very good reason to me, but that wouldn't keep people from worrying about it.

[JP3700]

And here is where I take my biggest issue: It's a bit disingenuous to say it's "understood" that it has to be that way. It's only "understood" to pay more on the back end because that's the environment players have demanded.

 

 

 

What's disingenuous is completely changing what I said in an attempt to somehow support your point.

 

This is what I said:

 

When you sign an aging player, it is understood that you are getting his best season(s) early in the contract.

 

I'm pretty sure this is more disingenuous:

 

It's only "understood" to pay more on the back end because that's the environment players have demanded.

 

Considering it is pure speculation stated as fact.