MLB: Recognize the Power of Three (year contracts)

Good day and welcome to my blog! Some days the topics are as random as they get and others I am very driven to box up a specific point (of view) and deliver it to my readers. Today is one of those such days!

Anyone who knows me knows that I am an avid baseball fan. My primary team of focus is the Cleveland Indians with a minor in following the St Louis Cardinals. The Cardinals association was one that came about through natural proximity as I have lived on the outskirts of St Louis from infancy through now. As a fan I get emotionally invested in my team’s transactions and on-field performances. But from a macro perspective, I also like to look at things that affect all the teams and form my own opinions accordingly. Keep in mind that I am not a lawyer or a cosmic mathematician. However, I do like to offer some suggestions from the fan perspective with a thumbprint of logical flow behind them.

In case anyone is interested, I have a treasure trove of ideas to improve and maintain the greatest game on the planet (unbiased factual statement I’m sure is duly noted). But for this piece I will try to stay on topic about a single idea. I think the maximum length of a player (or manager) contract should be three years. The proviso to this concept is that there can be a fourth year featured as a mutual option. This proviso would mean that after the three year pact has expired, the ‘what-if’ year number four would only go into effect if both parties wanted it based on the financial stipulations contained therein.

Rob Manfred, the present commissioner of Major League Baseball, if he is listening or reading (or his designated powers of support), please consider suggesting format this to the players association and owners of course. I implore him, and everyone really, to think back over the last 30 years or so. How many of those long term contracts have gone sour? And some of them went sour very quickly. Here are a few names from recent memory to drive the point home:

Jason Heyward. Prince Fielder. Mo Vaughn. Ryan Howard. Josh Hamilton. Nick Swisher. Alex Rodriguez. Mike Hampton. Dexter Fowler. Robinson Cano. Albert Pujols. And more!

Here are 11 examples of ‘bad’ contracts. If you polled a number of baseball writers worth their salt at covering the sport, I am pretty sure they would agree with this short list…and probably have another dozen or two to add to it. Long term deals based on (historical) player performance do not always deliver value going forward. These educated (hopeful) projections rooted in player performance often times fail as the contract and player ages. Sometimes the production declines as player skills erode and in other instances non-production is attributed to player injuries but it comes out to the same. Once this happens, the franchise has an asset that is viewed as more of a liability. They are then forced to either dump the player with huge financial repercussions against their current business plan or they can continue to let that player eat up a roster spot (and playing time) in the desperate hopes that the player can become productive again. This latter scenario often does not play out with positive results for either side. Usually by the end of the contract, the player is moved to another team with the former team paying a large chunk of the remaining salary in exchange for future player prospect(s) that are years away from being major league ready (if ever).

From a player’s perspective, he will have the financial security of a long term deal based on their resume and potential upside to be. But sometimes the long term deal also costs the player more earnings. Talented players who have started to gain footing as everyday players and are showing incremental improvement year by year, often get offered a longer term deal for a bit more money than the league minimum or what they might get in the early rounds of arbitration. In exchange for this carrot, the team extends the contract to cover the first few years of the player’s free agency eligible years. Often times these contracts work in the team’s favor, not the player’s. As the player matures and begins outproducing his peers, he might be in a situation where he is being compensated less than another player who signed a recent free agent deal at the current market value (more salary). So in this instance, the players could conceivably also benefit from the Power of Three contract rule.

Before we start dancing on the next cloud, let’s not get this twisted. The Major League Baseball owners are business people. One of their primary goals, like any other industry, is to have the the most profitable product(s) in the hopes that it garners the most market-share with long term positive returns (aka winning). But just like in Corporate America, when there is success, the contributors expect to be (well) paid. The same parallel applies to the players in MLB. Without them, there is no marketable, sustainable product.

So if you will humor me, I hereby propose the max three year contract rule (plus one mutual option). If you look at some of the most successful players and their associated franchises, their respective runs of success do not always coincide. Bryce Harper is a phenomenal player as is Mike Trout…but neither of their associated franchises (The Nationals and The Angels) has been to the World Series with them playing on their respective rosters. Great players both but overall their team success hasn’t been there. Not their fault, it’s just a really difficult sport to become champion of each year. So what if those two iconic players had hit the free agent market before now and maybe moved to another franchise? How might the landscape of the league look different? A superstar player could come in and dramatically change a team positioned for the now as opposed to waiting on the ramp up period. LeBron James anyone?

I’m sure all of the people with legal expertise and research backgrounds have been waiting to point out the flaw of the mutual option at the end of the (three year deal). What if the team exercises the option but the player declines it? Or vice versa? To try to placate those individuals, in that scenario where the team declines the mutual option, the player is simply an unrestricted free agent to sign elsewhere and the declining team is entitled to no further compensation. But if the player declines the option and the team accepts it, then the team can enforce the fourth year with the following stipulation: the team must pay that player based on the average of the five highest paid players at that position (based on the just expired playing season) or the highest paid year of the expiring contract plus a 15% increase in salary (whichever is higher). If this happens, then the following year the player is an unrestricted free agent to sign elsewhere with no compensation to the former team.

Obviously this is an over-simplified solution and both sides I’m sure would have issues with it from their respective standpoints but it makes sense (to me at least). The era of the five, eight or ten year contracts should be a thing of the past. Almost all of the front offices for these baseball franchises have embraced the analytics movement to try to hit the secret winning Powerball code of winning; so why not welcome in sanity and logic to avoid these awful long term deals? On the wings of this proposal, the prime players can get their well-deserved paydays based on their current market values more often. The benefit to the league is that more teams can be more financially flexible and competitive without having to wait half of a decade to escape poor deals. There will be more teams in play to compete for prime players more often. More teams will have the ability to attract more casual fans to their franchises (see increased ticket revenues, merchandise sales, etc.) if they have the financial flexibility to pursue the Harpers and Trouts of their sport.

Think about when the Mega Millions or Powerball jackpots get to be ridiculously large and all the once in awhile players start to get excited and play. To a lesser degree it could have the same effect on each market’s baseball franchises. Now this is just one proposed fix and should really be looked at in conjunction with the six years of team control that baseball franchises enjoy over their players but for this piece were are pretending that doesn’t exist.

For the players, if they are good they will still get paid and maybe really well (above market value for shorter deals). For smaller market teams, they won’t have to mortgage many years down the line to try to win right now. It’s a win-win in my opinion. Baseball isn’t hurting for money but some markets are hurting for impact-ful ‘now’ players. If the league wants to help level the playing field and have more franchises legitimately competing, then let’s see those impact guys more available for all the teams to try to acquire. Maybe the Reds want to contend for real in four years, if Bryce’s deal is up by then, they can strategize and be ready to pounce! Stranger things!

As a final thought on this suggestion, it would make the transaction crazed baseball world even more interesting. The Hot Stove League and trading deadlines are always fun to monitor as a fan. But much of the rumors we hear have zero chance to come to fruition because a player is owed too much money and there’s too many (projected unproductive) years left. But if all these deals were naturally shorter, then the ability to move these contracts becomes much easier and financially more sound.

Thank you for reading my piece. Hopefully I filled in enough of the planks for this rope bridge across the gorge in order for you to get from one side to the other. If you have any topics you would like to discuss or for me to expound upon, please let me know!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s