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Thursday, December 18, 2008
Today at THTSorry for the late start today, but I was up late last night watching a fantastic movie. And it wasn't just entertaining. I learned something to keep in mind when conducting research: When you go looking for something specific, your chances of finding it are very bad. Because of all the things in the world, you're only looking for one of them. When you go looking for anything at all, your chances of finding it are very good. Because of all the things in the world, you're sure to find some of them.
So there's that. Anyway:
I've mentioned several times before how difficult it might be for a young player to resist an Evan Longoria-style early deal rather than wait until they can hit the free agent market or at least arbitration. Sure, the deals are technically "under market" for many of these guys -- Longoria is going to be baseball's biggest bargain very soon -- but it's a lot of money, and who are we (or their agents) to tell them not to set themselves and their family up for life at the first opportunity? Still, it's worth realizing how much is left on the table when a player makes this kind of deal, and to do that, let's do a quick and dirty case study.
Jhonny Peralta, while not signing as early as some of the more recent dudes, did sign a deal that basically bought out arbitration with a team option for what would have been his first year of free agency. His annual salaries so far are as follows (note: he also had a $1.25M signing bonus)*
2011 Club Option for $7M ($250K buyout).
*note: he was up for half of 2003 and for a cup of coffee in 2004, during which he made a pro-rata of $300K.
So, assuming his option is exercised, Peralta will have made $20,066,700 through what, all things being equal, would have been his first year of free agency. At the end of that he has nothing guaranteed.
Rafael Furcal went through arbitration and then entered free agency. His progression looks like this:
Through those first same seven years (six pre-free agency and first year in free agency) Furcal made $21,175,508, or a bit over a million more than Peralta. The big difference, of course, is that at that same point in time, Furcal had an additional two guaranteed years ahead of him worth $29 million bucks, whereas Peralta has nothing. Sure, barring injury or major face plant Peralta will sign some kind of deal for 2012 and beyond, but that's a long time from now, and even if he stays healthy, I question whether he can expect to sign a deal averaging close to $15M per year. And that's even before you adjust Furcal's numbers upwards for the 5-6 years of inflation to account for the differences in ages. After all, you know that Furcal would have made more than the $2.2-5.6M he made in arbitration if those arbitrations had happened in 2006-2009 instead of when they did.
The upshot of all of this is that no matter what you or I would have done in his situation, Peralta did leave a decent amount of money on the table by signing early. If I had to ballpark it, I'd say that you take the actual $1M less he did make, add in a couple of million more for the inflation factor, and then guesstimate something like $3-5M a year less for 2012 and 2013, resulting in something north of $7M bucks less than Furcal through a comparable portion of his career. Maybe it will be even more.
Maybe that changes the calculus, maybe it doesn't, but there is no escaping the fact that these kinds of deals are quite team friendly, and as players are signed earlier and earlier, they are getting more team friendly as time goes on.
And remember, people: Keep moving every few months. Stay out of Westernized countries for a while. Don't carry too much cash on your body. Give incorrect information everywhere, and never use your real name.
Posted by Craig Calcaterra at 10:23am
The Zero Effect is an awesome movie. I have no idea how it got overlooked when it came out. Hilarious.
Posted 12/18 at 11:36 AM
I think you’ve oversimplified the Peralta-Furcal comparison a bit; first of all, Furcal is probably a better player than Peralta (and certainly is viewed as such, which generally drives salaries) - while Peralta is a bit better offensively, Furcal’s defense (and to a lesser extent, speed) more than make up for that; when healthy, Furcal is a plus defender, while Peralta may be moved off of shortstop before too long.
Basically, my point is that when you say that 2012 is ‘a long time from now,’ you’re right, but an injury this year means Peralta’s actually made a good deal, one next year means he’s only slightly worse off, and 2011 is the only year that really screws him over.
Posted 12/18 at 03:12 PM
I agree whole heartily with both of the comments above. So I guess I have nothing to add.
Posted 12/18 at 07:45 PM
You get to watch movies, write about baseball and fantasize about dames, scotch and being a gumshoe? Sign me up! I want your life! And Alan Cumming? Sexy beast. Yeah, I know, but didja see him in “Cabaret?”
Posted 12/18 at 09:12 PM
Craig Calcaterra said...
It’s a dangerous life though, baby. One day you’re walking tall, and the next day you’re getting hot lead in the groceries.
Posted 12/18 at 09:27 PM
Danger is my middle name.
Posted 12/18 at 10:26 PM
I haven’t seen the movie (or heard of it, actually), but what you said about finding something is one of the best descriptions of basic scientific research I’ve ever heard. It’s right along the lines of an Einstein quote: “If we knew what it was we were doing, it would not be called research.”
Posted 12/18 at 11:14 PM