Sunday, January 24, 2021

Front Loading a Young MLB Superstar's contract early on may be the key to keeping them beyond six years.

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. 

As it turns out, either of the Indians offers may turn out to be better because of the impact that the Coronavirus has had. But based on the published numbers which do not show any Coronavirus impact, Mr. Lindor will receive 52 million through his sixth season. Assuming his free agency lands him a 30 million a year contract, add two years in at 60 million for a total of 112 million. For a paltry 7 million "extra dollars",  Mr. Lindor will have to wait until his 9th year in the league to come out ahead when he could have come out ahead 7 tears earlier! And, if Mr. Lindor had made any kind of wise investments with a front loaded contract, the front loaded contract probably nets him anywhere from 5 million to 25 million extra since it was all guaranteed up front early on.

Mr. Lindor really has yet to see a return on his decision to wait it out. Lindor never delivered a championship season in Cleveland and his leaving does tarnish his overall love of the game reputation just a bit since in Cleveland not only was he highly regarded, but his health was valued and he was never rushed or forced to play when injured.

Mr. Lindor tries to take the position that he has never said he could lead or carry a team on his shoulders to a championship, and yet, he wants to be paid like someone who can.

Possibly the cruelest irony is Francisco Lindor is from Puerto Rico and the Cleveland Indians are the Puerto Rico of MLB, too poor to buy a championship, but too proud and strong enough to run together an impressive 7 years of .500 or better baseball and one of the best winning percentages during that seven year in all of baseball. 

The Indians never made it clear to Lindor that winning a championship in Cleveland would be almost identical to Puerto Rico winning the World Series and that this could happen if Mr. Lindor did not tie his value to getting the biggest contract possible. 

It appears Mr. Lindor wants to be on a team that can afford to pay their top 2 or 3 players 30 million a year. Yet that is a song and dance that has torpedo'd other teams with 2 or more future Hall of Fame players such as the Detroit Tigers and the California Angels.

It is very rarified air to find teams that can pay 2 players 30 million or more each, per season and still win a championship. It may be even thinner air to find a team that can pay 2 players 30 million a year and also be a perennial playoff and championship caliber team.

The Indians now face a similar situation with their star pitcher, Shane Bieber. It is my personal opinion that Mr Beiber's stuff did not look as good as the Yankees Gerrit Cole during the 2020 playoffs. And yet, during the regular season Beiber looked fantastic. 

Cole appears to throw about 3 to 4 miles an hour faster on his fastball and his pitches have an unhittable rise to them. Beiber seems better at pin point accuracy but it seems in terms of raw pitching, Cole has strike out pitches and Beiber has fake out pitches. During the regular season fake out pitches work well because a pitcher is constantly facing new opponents and he can feast on the more average teams. However, a disciplined team may not bite at Beiber's fake out pitches and suddenly he may only be a 5 or 6 inning pitcher.

Do the Indians risk a front loaded contract on Beiber or has he already maxed out and may ultimately be the second best pitcher on the team, rather than the best? Or is Bieber's work ethic and overall mental make-up and his overall demeanor a keeper and the Indians should make an effort to keep him here long term?

And if the Indians do make a long term offer, do they front load it, or not?

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