Happy Thanksgiving! Regularly Scheduled Articles Will Resume Monday, December 1
March 23, 2007
Doctoring The Numbers
Worst. Contract. Ever.
As sports fans, we love to make lists. They're easy to devise, they're always good for hours of heated debate, and they can be constantly revised and updated as current events dictate. Fans who wouldn't know Jose Tabata from Jose Cuervo nonetheless will argue whether, at #22, he's too high or too low on our Top 100 Prospects list.
And few lists are more fun to break out than the list of the worst free-agent contracts of all time. We love any excuse to mock owners for their reckless decisions; plus, as fans, we have a morbid sense of pride in having been forced to taste the bitter fruit of those moves. Darren Dreifort,
But all of these lists are utterly one-sided--they only look at the question from the team's point of view. What about the reverse--the worst contract ever signed by the player? What player has screwed himself out of the most money by signing a deal that vastly underpaid him relative to what he was worth?
To answer this question, we have to define it a little better. Miguel Cabrera delivered an MVP performance last year for $472,000…obviously, he was underpaid, and just as obviously, he didn't sign a "bad" contract--he signed the only contract he could get with the leverage that he had. Which, as a zero-to-three player, was none. When we talk about a bad contract, we mean one that was signed when a player had other options at his disposal, such as signing with another team, or waiting another year until free agency.
(Also, I'm talking about terrible contracts that a player did sign. We'll have to save the list of players who turned down good contract offers because of an inflated sense of self-worth, then settled for an NRI offer two months later, for another day. So Jody Reed is safe.)
In general, contract negotiations are a zero-sum game; a good deal for the player is bad for the team, and vice versa. So we could start our search for the worst player contract by looking at the contracts that have been considered the model for teams to pursue, i.e. the John Hart model of signing players at the beginning of their arbitration years to long-term deals that buy out their first year or two of free agency, ideally with a team option year or two tacked onto the end.
Certainly, some of these deals have worked out very well for the teams, and the players that signed them have wound up with far less money than had they simply signed one-year deals every year. But in this case a good deal for the team doesn't have to be a bad deal for the player. Some contracts really are win-win. Travis Hafner, to pick a random example, will make $3.95 million this year, and $4.95 million next, per the terms of a four-year contract he signed before the 2005 season. Had Hafner not signed a long-term deal and was arb-eligible over the next two seasons, he likely would stand to make about twice as much money each year.
But was this really a terrible deal for Pronk? At the time he signed it, he had already agreed to a contract for 2005 that paid him $377,400, after making less than that the previous two years. Good money for you and me, but not nearly enough to guarantee a lifetime of financial security in the event of a career-ending injury or other worst-case scenario. By signing the contract, Hafner was guaranteed a minimum of $7 million over three years--enough money to insure that whatever post-baseball career he chose for himself wouldn't be for the money.
This is a form of what is called the St. Petersburg Paradox--people will sometimes make the rational decision to take a smaller amount of money that is guaranteed than a larger expectation of money that involves some risk. If I offered you the choice between 1 million dollars, or a 50/50 chance of winning 2.2 million dollars (and a 50/50 chance of winning nothing), most of you would take the guaranteed million. Why? Because that first million dollars would do a lot more to change your life (marginal utility) than the second million.
(Before you flood me with e-mails, I know that's not precisely what the St. Petersburg Paradox is about. Humor me here; I'm trying to make a point about baseball, not economic theory.)
Signing a long-term deal early in one's career not only can guarantee financial security, it sometimes can turn out to be a way for a player to cash in at the moment his perceived value peaks. Take Angel Berroa. (Please?)
So how would we define a baseball contract that was truly a terrible deal for the player? It would be signed by the player when he was a free agent, and so had complete leverage. It would be a deal signed at below-market value. And it would give the team that signed him the ability to keep the player at below-market rates for a long time, while not giving the player any security in return.
The first contract usually mentioned in the discussion of bad player contracts is the one Andruw Jones is about to complete. Not that I would turn my nose down if Prospectus Entertainment Ventures offered me a six-year, $75 million contract, but there's a good reason why the players' union put up a mild ruckus when Jones signed the deal over the pleas of his agent, one Scott Boras. Jones was a year away from free agency when he signed before the 2002 season; he would have been, at age 25, the second-youngest major league free agent (behind only Alex Rodriguez) in history; and he was the pre-eminent center fielder in the game at the time, at an age where he was still getting better. He probably left somewhere between 15 and 30 million dollars on the table he used to sign the contract on.
But even Jones' contract had mitigating circumstances. For one thing, he was young enough at the time that he has a chance to make amends when his contract expires next winter, when he will still be just 30 years old. He's made it clear that this time there will be no hometown discount.
So I have a new favorite candidate for title of "worst contract signed by a player." This one has no mitigating circumstances. It was signed less than two years ago, on April 19th, 2005, by a veteran pitcher who had already made his millions, and who was a free agent at the time. This pitcher, who was about to complete a three-year deal that paid him a little north of $13 million, agreed to a one-year extension worth 4 million dollars--a one-year deal, and a pay-cut, even though said pitcher had just gone 12-10 with a league-average ERA the year before. At the time he signed the extension, he had started the new season 2-0 with a 1.37 ERA; he would finish 16-12 with a 4.15 ERA.
That information alone is enough to place this contract among the worst ever. Then keep in mind that this pitcher had gone 22-12 the two years before that, with ERAs of 4.09 and 2.81 (the latter was 4th-best in the league). This pitcher was in his 13th major-league season and had never suffered a significant arm injury.
So let's see…an above-average major league starting pitcher, showing no signs of decline, with a stellar health record, signs a one-year, $4 million deal. About the only good thing we can say is that he only had to wait another year to sign a better contract.
Oh, but if only Tim Wakefield's contract were that. If he had signed a one-year extension in 2005, he would have hit the market again this winter, and even though he went 7-11 with a 4.63 ERA, and suffered an oblique injury that limited him to 140 innings, he undoubtedly would have taken advantage of the wacky market for pitchers this winter, possibly even doubling his salary. Who would you rather have over the next three years: Wakefield or Miguel Batista?
But Wakefield not only signed a 1-year, $4 million deal (with a little over $1 million in incentives), he gave the Red Sox a perpetual option on the contract. I can't overemphasize how astonishing that is. The Red Sox can keep renewing Wakefield's contract, one year at a time, for the same salary, from now until forever. In return, Wakefield gets…um, absolutely nothing. The moment he loses it, the Red Sox can cut him, with no buyout and no future contract obligations.
In effect, Wakefield has bonded himself to the Red Sox franchise for the remainder of his career, without being compensated one iota for his allegiance. We used to have a term for this type of contract in the annals of baseball history. What was it…oh yeah, we called it the Reserve Clause.
Wakefield has essentially turned back 35 years of bitterly-fought labor victories by the players' union. He has signed a one-year contract with a perpetual option to renew. To the best of my knowledge, since the dawn of free agency, no player has signed a comparable contract. (The Royals dished out "lifetime contracts" to players like George Brett and Dan Quisenberry in the early 1980s, but those contracts were less like the Reserve Clause and more like business partnerships--the players became real estate investment partners with then part-owner Avron Fogelman.)
I understand the stated reasons why Wakefield signed the contract: he loved Boston, he loved the team, and he wanted to pitch for them for the remainder of his career. So he made the team an offer they couldn't refuse.
I understand that Wakefield's contract was an expression of loyalty to his team. But what about the team's expression of loyalty to him? If Wakefield had signed the same one-year contract, and made it clear to the Red Sox that he would be interested in continuing his employment under the same terms indefinitely, he would have shown the exact same amount of loyalty, while keeping his options open for a worst-case scenario.
Walter Alston is in the Hall of Fame, and deservedly so, with four world championships and seven NL pennants dotting his resume. He never worked with a multi-year contract, having famously signed 23 one-year contracts in a row to serve as manager of the Dodgers. Alston was famous for his loyalty to the team and to owner Walter O'Malley, but he showed that loyalty in part because O'Malley was equally loyal to him.
If O'Malley had sold the team to George Steinbrenner's meaner, more penurious brother, Alston could have bolted at any time. But if kind old John Henry sells his stake in the team to, say, Larry Dolan, Wakefield is just going to have to suck it up and do whatever new manager Isiah Thomas tells him to.
(Let's hope that Wakefield at least received a no-trade clause in return, so that he can't be forced to show his loyalty to the Nationals instead. But if there is a no-trade clause, we haven't heard about it.)
Loyalty is a two-way street. Wakefield's decision to give the Red Sox ownership of his baseball career isn't loyalty, it's capitulation.
Still, as irrational as Wakefield appears to be for signing this deal, I have to admit there's something oddly endearing about it. Sports are, in a purely utilitarian sense, irrational. Love is irrational. It's hard not to be at least a little impressed when a sports figure professes his love for his team, his teammates, and his fans by making such an irrational decision.
If nothing else, the next time someone bemoans the state of modern sports, spouting off the usual nonsense about how today's players are mercenaries whose only loyalty is to Ben Franklin, let them know that out in New England, there's a player who has offered to his fan base one of the purest and most expensive forms of loyalty ever seen from a professional athlete.
Everyone knows that the Red Sox are blessed to have revenue streams that non-Yankee teams can only dream about, one that allows them to go to war every year with a nine-figure payroll. But in employing the services of one of the most underrated starting pitchers of our generation at 50 cents to the dollar--with no downside risk to speak of--they have another sizeable, if unseen, advantage.
As an analyst, I think Tim Wakefield is nuts. As a fan…I just wished he pitched for my team.