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May 24, 2010
Checking the Numbers
The Trade-Me Clause
Over the weekend news broke that Roy Oswalt’s agent, Robert Garber, had gotten in touch with Astros owner Drayton McLane in order to request that the veteran ace be traded to a sunnier situation. Oswalt is in his 10th season with the Astros, having spent his entire major-league career in Houston, but likely realized that his time as an elite hurler is running out and his current employer has no true direction or blueprint for success. It is truly a dreadful situation in Houston: the Astros have a terrible farm system and the valuable pieces on the major-league club realistically needed to be traded two years ago in order to extract a return capable of seriously enhancing their talent level. Now, in order to receive anything of value for players like Oswalt or Lance Berkman, the Astros will have to eat a heftier chunk of the remaining change on their contracts. Consider this to be a rant on the Oswalt situation to be used as the foundation of a brief transactions primer.
Oswalt should be traded, because the Astros aren’t going anywhere and he is one of very few players that could conceivably be traded who would have a more than marginal impact on a playoff race. However, I am frankly getting tired of players demanding or requesting to be traded, and the majority of fans then empathizing with them, finding ways to justify why the player should receive a sendoff following the request. Some will say that the Astros owe it to Oswalt, an organizational warrior, to trade him somewhere with a chance to win. But to that I ask: Why?
The Astros have paid Oswalt handsomely over the course of his career and, while the cliché dictates that money doesn’t always buy happiness, he signed a contract to pitch for the team for five years after the 2006 season. If the contract did not include any type of an out clause, he should have little say or influence over who signs his checks throughout those five years. Nowhere in his contract, or any other major-league contract, does it say that if the player isn’t happy at any point he can ask to be traded and the team must oblige. Certain players receive out-clauses in their contracts, meaning that if, after a few years they want to test the free-agent waters again, or are unhappy in their current situation, the remainder of the contract can be voided. Oswalt is not one of those players.
One of the major issues with the situation is that, as I mentioned above, Oswalt really should have been traded a couple of years ago, when his value was at its highest point and both parties could benefit. The pitcher could have been shipped to a team that would better utilize his services and the Astros would have received several pieces to enhance their future. Or, before re-upping with the team, he should have made sure that he agreed with their plans for the future. It’s not like if he went year to year and then left via free agency that nobody would have paid a pretty penny for his services. And it’s not like a player asking about the team’s future is taboo or frowned upon in negotiations.
The extension afforded him security, trading free-agent eligibility for the guarantee of being able to play on a certain team and receive lucrative stipends for several years, but that was a tradeoff benefiting both he and the team. Now, even though things aren’t working out, a move sending him to another team should be contingent upon general manager Ed Wade and Drayton McLane feeling comfortable with what they can get in return and not based on what Oswalt desires. If Wade and McLane think that trading Oswalt is better for the long-term future of the team—and it really is—they should move him.
Wade responded to the request by commenting that Oswalt has a no-trade clause built into his contract, not a trade-me clause, which seems simple enough to understand, but is often lost upon the majority of fans when these requests surface. It seems that whenever players request a trade, reactions involve immediately drawing up scenarios as if a trade is imminent and all requests are met, as if the simple act of making the request automatically results in the team bending over backwards to appease the player. What makes the situation worse is that the publicity surrounding Oswalt’s request hurts the Astros' leverage in trade talks. Teams will certainly benefit from adding a pitcher of Oswalt's caliber to their rotation, but if they know the Astros need to trade him, they can likely pony up less.
Factor in his no-trade clause and we could potentially be in line for a detrimental situation; Oswalt might only want to go to a couple of teams, which lowers the Astros leverage even further, and his salary—$15 million this year, $16 million in 2011, and a $16 million club option for 2012—could scare off some potential suitors. This would require the Astros to pay more of his salary than they would like to even extract Grade C prospects in a trade. The Astros might not have had much leverage to begin with given that most other teams better assessed the situation in Houston than Wade and McLane. Oswalt’s request effectively wiped away whatever semblance of leverage remained. He is a high-paid player who wants out, and has ultimate say on where he wants to go—not exactly the easiest type to trade.
What are no-trade clauses? The term has become so prominent over the last decade that it is easy to forget how rare they were for a while. No-trade clauses are contractual provisions designed to entice players into signing with a team based on the value of the provision in addition to the salaries offered. The clause, which can be either full or limited, gives the player say over whether he can be traded, and where he can be traded. They first rose to prominence in 1975, when Andy Messersmith, a Dodgers starter, sought assurance that he would not be traded. The Dodgers' refusal to grant a no-trade promise, as well as their offer of a slight increase in salary, led to Messersmith playing the season without a contract and eventually led to the creation of free agency.
A limited no-trade clause allows a player to pick a certain number of teams to whom his current employer cannot deal him. Jimmy Rollins, for example, gives the Phillies eight teams every year he does not want to play for, in the off-chance the team decides to move the shortstop. A full no-trade clause, on the other hand, like the one in Oswalt’s contract, gives the player ultimate say in his destinations. The clauses have monetary value as well, because some players require extra payment in order to waive the clause. For example, in order to entice Gary Sheffield into accepting a trade from the Marlins to the Dodgers, both teams coughed up $2.5 million to the former All-Star. Agent Scott Boras considers the provision to be family-based, noting how many spouses desire no-trade clauses in contracts, as it would prevent having to be uprooted every couple of years. Owners consider them to be money grabs, as in Sheffield’s scenario.
A famous case involved Fred McGriff in 2001, when he played for the Devil Rays. McGriff got off to a scorching start, hitting .336/.403/.553 with 14 homers at the end of June. The first-place Cubs took notice and wanted to trade two prospects to Tampa Bay to bring the slugger on board. Though no-trade clauses are often waived in order for the player to move to a contender, McGriff mulled over his decision for a long time given that his family lived in Tampa and that was a bigger priority than winning. He eventually waived the clause and hit .275/.368/.534 with 17 homers for the Cubs.
The issue with these clauses is that, in a situation like Oswalt’s where he is high-priced, it limits the pool of potential suitors even further, because teams that could afford to take on his salary could be eliminated by the player. The Orioles could conceivably afford his salary, but why would Oswalt want to go to a team already out of contention? However, even if the Astros didn’t include a full no-trade clause in Oswalt’s contract, the righty would have garnered no-trade protection next season under the 10-5 rights of the Collective Bargaining Agreement that first came into effect in 1973. The labor law provides that players with 10 years of service, the most recent five of which have been on the same team, can veto any trade. This is Oswalt’s 10th season, but his actual service time is around nine years, meaning he would not receive these rights until sometime in the near future.
Though Wade’s reaction to the trade request involved the tongue-in-cheek mention of the lack of a trade-me clause, such clauses existed in one form or another in the past. In a compromise featured in the CBA effective from 1976-79, any player with five years of service time could demand a trade from his current team. If the demand was not met, he would become a free agent, with the stipulation that he could not again become a free agent until five further years of team control had passed. The clause eventually evolved into what I like to call the Javier Vazquez Rule, since the pitcher is one of few players to use it to his advantage.
The Vazquez Rule provided that players with five years of service time who were traded in the midst of a multi-year deal could demand a trade or release from the acquiring team after the season. The team would then have to try to work out a trade and, if they couldn’t, the player would become a free agent, voiding his remaining contract. If a trade was worked out, the player would lose no-trade or trade-me rights as well as losing free agency rights for three years. Vazquez had signed a four-year extension with the Yankees worth $45 million prior to the 2004 season, and was traded to the Diamondbacks the following year for Randy Johnson. He demanded a trade after the 2005 season and was sent to the White Sox. Due to these rules, which were eliminated under the current CBA that went into effect in 2007 and expires after next season, Vazquez was able to demand a trade. Though the clause has since been removed, players who signed multi-year deals before 2007 are still eligible.
This removed clause does not apply to Oswalt. While he was going to earn no-trade protection under 10-and-5 rules even if a clause was not included in his contract, he is not of benefit from any type of trade-me clause. It is in the Astros best interest to send him elsewhere given that he is the most valuable asset on their books, but it is silly to think that the team owes it to Oswalt to follow through on his request just because he has pitched well for them. Hopefully, however, this is the first step in a much-needed overhaul of the Astros, as that will be the only way the franchise will have a chance at being relevant in the next decade.