Many MLB teams are gleeful when one of their young prospects practically becomes an instant star. The young baseball player is under "team control" for the first six years of their career and he return on investment during those first three years can be a remarkable value to a many teams.
However, something definitely went "wrong" perhaps a decade or more ago when arbitration started amping up arbitration eligible players by surprising amounts. Teams that thought they had at least 5 years of affordable control found the fifth year could suddenly cost them 17 million. A four year player could command 10 million.
Even more frightening, players that had poor seasons or missed most of the season due to injury STILL got a raise.
It was as if 6 year control was really 3 year control and then hope that the fourth year was not too high of a jump so that maybe they could keep the player for the fifth year.
However, sometimes creative math can rebalance the playing field. For every player who is truly going to have a prolific career there are several others who may peak early, or, turn into solid players with untapped upside that may not reveal itself until their 7th or 8th season.
If a team is certain a player is going to be a can't miss then perhaps a front loading contract pricing strategy needs to be considered. If MLB arbitration players can now reach 22 million to 25 million by year six, then maybe the lure of front loaded contracts may be the next best move for an MLB team that wants to try and squeeze one or two more years from their young stars before they lose them to free agency.
Let's take a look at the Cleveland Indians Salary obligations for Francisco Lindor. The jump from season three to season four is remarkable. There is literally a 1,500% increase in Salary.However, it should also be noted the remarkable return Mr. Lindor contributed over his first four seasons. The Indians tried to lock up Mr. Lindor after his second season. Lindor's first season was a mid season call up so it was his second season that counted towards his six years. The rumor I heard was the Indians offered around 105 million for probably 7 more seasons for a total of 8 seasons plus the 2/3's of a season that did not count towards his six year commitment.
Unfortunately for the Cleveland Indians, between the signing bonus money Mr. Lindor received, PLUS the New Balance Contract Mr. Lindor already had signed, Mr. Lindor felt comfortable biding his time until his six years were up.
In an ironic twist early on, Lindor's call up was delayed so the Indians could get an extra 2/3's of a season that would not count towards his six years. The irony was that was the year the Indians barely missed the playoffs and maybe if Lindor had been called up early enough, maybe he is a difference maker. Although, it can also be argued that Jose Ramirez, who was called up first in that same year, got invaluable time at shortstop that help with his development.
Either way, how could the Indians have structured their offer to lure Mr. Lindor into staying in Cleveland for a couple more years?
Assuming the Indians did offer Mr. Lindor 106 million for a 7 year extension after his first official year in Cleveland, they probably offered something like 1 million, 5 million, 10 million, 15 million, 20 million, 25 million, 30 million.
I am totally ball parking the numbers but they probably are close enough to the offer that was made.
This is what I would have offered Mr. Lindor, a front loaded conract.... 15 million, 15 million 15 million, 15 million, 15 million, 15 million, 15 million
In the front loaded version after 4 years Mr. Lindor gets 60 million, in the original offer, after four years Mr. Lindor gets 31 million.
The front loaded contract gives Mr. Lindor 14 extra million after year one, a total of 24 million after year 2, and a total of 29 million more after year three, a serious chunk of front loaded money to reinvest. While more conventional contracts are back heavy, the front loaded contract gives Mr. Lindor more opportunities to immediately start getting a bigger return on his contract which can also be a hedge in the event there is any kind of performance or injury clause in the contract.
Even if there is no injury or performance clause, the odds are the front loaded contract might be worth signing since it is overall a better deal and does not put off paying Mr. Lindor in the future what he can earn today.
Now lets compare the front loaded deal to what Mr. Lindor has actually received.