Baseball’s Biggest Bargain

Lincecum gets a pay raise:

The Giants and Tim Lincecum have reached agreement on a one-year, $650,000 contract, a source told The Chronicle. Lincecum then confirmed the figure. That constitutes a 62 percent raise over the $405,000 he earned last year. There is actually a split component to the deal. If Lincecum somehow wound up in the minors, he’d be paid at an annual rate of $243,000.

In baseball terms, this is a heck of a bargain for someone a pitcher who went 18-5 with a 2.62 ERA and 265 strikeouts while winning the Cy Young Award. But remember, this is just the way the baseball salary system works.

Indeed. Most of the folks who complain about baseball players being overpaid in free agency seldom mention how most are underpaid while they’re still obligated to the team which drafted them.

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Comments

  1. Pete Toms said...

    Bang on C.  This is also consistently overlooked in the annual bleating about the pounding the owners take every year in negotiations with arb eligible players.  How long till Lincecum gets the long term deal?

  2. philosofool said...

    This is probably the single dumbest deal of the offseason. Okay, that’s an exaggeration. However, the right move was to offer a buyout of his arbitration years. Unless he’s injured or tanks this season, Lincecum should be able to ask about $10-15M a year in arbitration next year. Lincecum should move straight to the realm of a free agent in terms of $$/Win above Replacement. A much smarter move for the giants is to see if he’s willing to take a much smaller payoff to start getting a payoff next week. Say, $10 million over the next three years. Now the giants actually get some serious value from Lincecum. I’m not exactly sure what the buy out rate on arbitration years is, but I think Lincecum is a perfect candidate for doing it.

  3. Ron said...

    I’m sorry, but no one is underpaid when their minimum guaranteed salary is 400,000.

    They might be able to claim they are worth more, but they are NOT underpaid. In any sense of the word.

  4. Pete Toms said...

    Sorry Ron, revenues have been outpacing salaries these past handful of years.  Put another way, don’t feel sorry for the owners.

    What is astounding is the grotesque amounts of money that a relatively small group of performers generates.  Supply and demand.  We’re the suckers, we’re paying for it.

  5. Jim said...

    What about in the sense that he is being PAID an amount that is UNDER the amount of value he generates to the franchise? Or that he is being PAID an amount that is UNDER the amount that someone else would offer him if his rights weren’t controlled by the Giants?

  6. Andy said...

    But the people who ‘complain about baseball players being overpaid’ don’t think in terms of economic value.  I mean, come on, he’s a baseball player and he’s making more than the President!  Even the bank execs are now limited to $500K.  He’s making more than them!

  7. Ron said...

    Tom

    I don’t disagree with you. Maybe its just a matter of wording.

    Jim,

    Thats the point I was trying to make, just didn’t get there.

  8. obsessivegiantscompulsive said...

    There is a time limit to resigning, if I remember right, the Giants could always sign him to extension without the time pressure later.  They have already signed Lowry then Cain to such deals, so they are not new to this, and it takes two to tango and get a deal done, you don’t know what Lincecum’s side is asking for.

    There are great reasons why young players get much less than they are “worth” in their early years.  One is that they might have had a lucky year, so you don’t want to pay a lot and get his true lower talent performance level afterward.  Another is that the team invests in dozens of other prospects before getting this one player who finally pays off, and the lower pay reflects payback on that.  You pay for an awful lot of bonuses and minor league salaries for players who never make it, a huge cost when totalled for all the crap you pay for before you get the good player, the pre-free agent years help repay all that.

    I think of how Babe Ruth once replied when it was noted that he was paid more than the President of the U.S.:  “I had a better year.”  Presidents are underpaid, so it is not useful to compare their salary with others, plus they gain a lot afterward with their stature, writing deals, financial deals they get brought into, that don’t show up in their salary.  And the perks, Air Force One, Secret Service for life (or ten years now if you are not in danger; I think that’s a mistake, someone will target one of our ex-Presidents for a symbolic hit because of this, shameful penny-wise pound-foolish).

  9. Aaron Moreno said...

    I just hate when Page 2 put out articles on the best contracts in baseball, and every entry was a star who had no contract leverage, either taking his league minimum or arbitration deal. Lincecum has no leverage now, so you can’t really knock him for taking what he can get. Oddly, I think the Giants have an interest in upping his pay his pay a bit as a sign of goodwill for future negotiations.

  10. Corey Mitchell said...

    The fact is that he is going to be worth a lot more than $650,000 this next season.  The Giants are getting one of the biggest young stars in baseball for a bargain of a price.  I agree with Craig, the Giants should have tried to buy out his arbitration option.  Lincecum will see success this next season, and see a lot more money next year. 


    Corey M.
    Los Angeles bankruptcy lawyer

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