The worst contract in baseball

The names are easy. Barry Zito, Darren Dreifort, Mike Hampton. Juan Gonzalez, Alfonso Soriano, Carlos Lee. Anyone who’s hung around the baseball blogosphere for more than a couple months has seen a list or 12.

Identifying the worst contract in the game is really little more than a matter of taste. Do you prefer the “well, that sure got ugly” type? Have a Vernon Wells. Or are you more into “how did that ever happen in the first place?” I’ve got a Gary Matthews Jr. for you. Of course, you might go for the rare “only a fan even remembers this one” variety. Jason Schmidt‘s your man.

Yes, every contract listed above fits quite nicely into the “worst ever” conversation. And it’s a discussion that’s been going on for a long time. My work for last week’s article, though, got me thinking. What if we’re looking at only half the problem? The bad deals above represent a sizable-but-shrinking segment of the player population, athletes whose salaries and performance levels got on the wrong escalators. What about the players’ on the complete opposite end of the spectrum?

See, there’s this hitter. He’ll be 24 next season, and he’s made the All-Star team each of his first two years. His OPS+ during those campaigns? 127 and 130. What’s more, he plays superlative defense at a position in the heart of the defensive spectrum. And if you’re a fan of shiny objects, he’s also got a Rookie of the Year award, a Gold Glove and a Silver Slugger to his name. Bottom line, this kid’s just fabulous. Without a doubt, there’s not a hitter in the game with a brighter future.

And there’s this pitcher. He’s also entering his third big-league season, and he’ll be just 22. His ERA+ in those years was 98 and 141. He’s averaging over a strikeout per inning in his young career, and he gave up just seven home runs in moe than 170 innings last season. Pitchers have funkier development patterns than hitters, but there’s not a pitcher in the game with a brighter future.

The pitcher will probably make less than $500,000 next season. The hitter will make just about double that amount. Yet, by the time the pair would be expected to be eligible for free agency, the pitcher will most likely have made tens of millions of dollars more than the hitter. Why? Because Clayton Kershaw is going year-to-year, and Evan Longoria is bound by the worst contract in baseball.

In 2008, just a week after making his major league debut, Evan Longoria signed the next nine years of his life over to the Tampa Bay Rays. The contract was a stunner. It guaranteed Longoria $17.5 million over his six years of team control, and the Rays hold options for 2014-16 at $7.5, $11 and $11.5 million respectively.

We can play with those numbers for a while; they don’t really get old. Longoria will make less at 30 than Tim Lincecum will at 26. And Timmy is slated to hit free agency on time. Matt Kemp, a year older than Longoria in age and service time, will make more in 2010 and 2011 than Longoria will in 2012 and 2013. And Kemp, too, is slated to hit free agency on time.

Longoria has a sympathetic ear in the Sunshine State, though. Hanley Ramirez also signed a long-term deal which ties him to the Marlins for the first nine years of his career. But it’s not quite the same; if both players’ contracts play out as expected, Longoria will have made about $44 million as a big leaguer by the time he can hit free agency at 31. Ramirez will have pocketed over $70 million before hitting the market at the same age.

So the question bothering me is this: What in the world was Longoria thinking? From what point of view was getting just $17.5 million for his entire time under club control an acceptable decision? And what possessed him to give the Rays those options? Looking back, his deal just puzzles me. The easy answer, of course, is risk management. Lock in that one big payday so that, even in the event of a career-ending injury, you’re good to go. I get it. But isn’t that what Lloyd’s of London is for? Young, with no injury history, and playing a relatively “safe” sport, Longoria could have easily put some of his $3 million signing bonus to insuring himself against a career-ending injury.

And it’s not as if the market for arbitration-eligible players was particularly ominous at the time. Justin Morneau avoided arbitration with the Twins in the offseason before 2007, settling for $4.5 million as a 26-year-old player in his first year of arb eligibility. Longoria, a year later, agreed to a deal that wouldn’t pay him that much until his fifth year in the bigs. In the months prior to Longoria’s deal, first-time eligibles Garrett Atkins ($4.3875) million, Brad Hawpe ($3.925 million)\, and Scott Kazmir ($3.785 million) all collected nice sums while not pushing back free agency one bit.

Longoria lost compared to the other young stars who signed extensions, too. As mentioned above, Hanley Ramirez’s deal dwarfs his. Grady Sizemore signed a long-term deal in 2006 with just one full season under his belt, and he’ll earn $31.95 million and be under club control for a year less. Joe Mauer got $33 million with just two full years’ experience–and he didn’t even have to delay free agency! Ask him this morning how that worked out. Chase Utley signed a seven-year, $85 million extension rather than go to arbitration with the Phillies. The Mauer and Utley deals, too, were on the books well before Longoria even sniffed the majors. The young Ray was just as highly regarded as any of the players mentioned above. He didn’t need to do this deal.

The grisly side of it isn’t the paltry $17.5 million Longoria will get for his first six years. In my opinion, guaranteeing that amount before you’re hit with your first major league pitch is plenty reasonable. But those back-side options are just killers. $7.5 million as a 28-year-old? $11 million at 29? $11.5 at 30? This is the kind of thing that should get agents fired. Those three years must net a player with Longoria’s performance and service time more than $60 million. And what’s worse, the option years pretty much ensure he won’t get a mega-deal when he finally hits the market; he’ll be heading into his age-31 season. Coincidentally, the Yankees will be preparing to pay 41-year-old Alex Rodriguez $20 million for his 2017 services. Think teams will be eager to put Longoria in the same position? I doubt it.

This season should have been Longoria’s last as a slave to the system. Next winter, he could have easily challenged the record for a first-time arb-eligible hitter. Instead, he’ll draw humble paychecks while his contemporaries rocket past him on the earnings scale. And then he’ll sit back and watch as the younger players, too, blow him out of the water. And as his draft-class peers finish their sixth years of club control, he’ll get a letter in the mail telling him that he’ll be playing the next season for a fraction of his worth. Similar letters will arrive during the next two offseasons, as well. All because he couldn’t wait just a year or two. It’s the worst contract in baseball.

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Comments

  1. Wade said...

    From outside the box, aren’t most (if not all) contract judgements made from the crystal-clear view of hindsight?  Many of the “What were they thinking?” ones were doled out to studs who subsequently flopped.  Hampton was peaking at his “ridiculous” signing, but then he signed a long term deal with the DL shortly thereafter.

    Ramirez and Longoria are obviously progressing in the opposite direction.  If they, too, would have failed to live up to their PROJECTED talent, we’d be saying their contracts were horrible going the other way.

    There just seems to be too many peripheral elements that are ignored when analyzing just the numbers vs. productivity angle (injury, family security, happiness in a given city or with a certain team, youthful excitement, agent mismanagement, bad advice both ways, poor talent projections, etc., etc., etc).

    I just dn’t feel that there is any level of standardization for categorization until ex post facto in most of these scenarios.  There will always be exceptions, but they are…exceptions.

    Besides, aren’t Tampa and Florida “small market”?

    Just playing devil’s advocate here.  I did enjoy the article.

    Have a great Tuesday everybody.

  2. Joshua Fisher said...

    I’d be remiss if I didn’t mention Paul, whose comment to my article last week got me interested in digging into Longoria’s situation a little deeper. Thanks, Paul!

    And Wade, I agree that this is certainly easy in hindsight. I’d say, though, that the contract was very unfavorable to the player from the moment it was signed.

  3. Detroit Michael said...

    Could Longoria, as a rookie just called up from the minors making the major league minimum, have really obtained an insurance policy for $17.5 million protecting a projected income stream?  If so could he have afforded the premimums?

    It seems to me that he felt the first $17.5M held much greater utility than getting tens of millions more than that.  I don’t know that “buy insurance” adequately addresses Longoria’s viewpoint.

  4. High Ping Bastard said...

    JF, hope you are doing well nice article. OT: When I selected “Print this Article” the web produced the page with all the hyperlinks printed out longhand. For example…
    The names are easy. Barry Zito (http://www.fangraphs.com/statss.aspx?playerid=944&position=P) ,
    Darren Dreifort (http://www.fangraphs.com/statss.aspx?playerid=647&position=P) , Mike Hampton
    (http://www.fangraphs.com/statss.aspx?playerid=430&position=P) . Juan Gonzalez
    (http://www.fangraphs.com/players.aspx?lastname=Juan Gonzalez) , Alfonso Soriano
    (http://www.fangraphs.com/statss.aspx?playerid=847&position=2B/OF) , Carlos Lee
    (http://www.fangraphs.com/players.aspx?lastname=Carlos Lee) . Anyone who’s hung around the
    baseball blogosphere for more than a couple months has seen a list or 12.

    Hope the webmaster can fix that in the future, keep up the good work. Oh yeah I’m using XP w/Firefox

  5. MoroseMoose said...

    $11 million a year and we are supposed to feel sorry for him.  The average football player makesa lot less and faces career ending injuries 30 times a game. I will probably make less than $1 million my entire life. Did he sell himself short, yes.  But I won’t feel sorry for someone who is making $44 million to play baseball.

  6. Ben said...

    @MoroseMoose But Longoria isn’t the equivalent of the “average football player.” He’ll most likely be the best player at the position when he enters his prime. Nobody is asking you to feel sorry for him, that’s not what Joshua is arguing. He’s simply arguing that Longoria will vastly underpaid relative to his peers during his prime seasons.

  7. Dan said...

    This certainly didn’t turn out well for Longoria, but hindsight is 20/20. The most comprable player I can think of is Alex Gordon (3B, college star, top draft pick), and I bet he’d be pretty happy if he had signed a Longoria deal.

  8. Skip said...

    “He’s simply arguing that Longoria will vastly underpaid relative to his peers.”

    I hope that we can look back at this 10 years from now and say, in hindsight, that many players were OVERPAID in this era.

  9. Joshua Fisher said...

    Dan—

    I’m so glad you brought up Gordon. Had the Royals signed Gordon to the exact same deal, they would still figure to get their money’s worth by the time the guaranteed portion of the deal is up. That’s how insanely favorable this pact was to the club. It’s just not all that hard to give $17.5 million of value over six years, especially at third base. Gordon’s career is wasted to this point, but if he even becomes a decent major leaguer, he’d be a bargain at $17.5 million for his first six years.

    That’s what gets me about the deal…it’s just so unbalance. Yes, you have to manage risk. But this was Howard Hughes-level paranoia on Longoria and his agent’s part. Giving the club three ridiculous option years in exchange for guaranteed cash in hand of about $10 million (should things hit the fan) was just a bad, bad decision.

    Josh

  10. E Rosen said...

    ” I will probably make less than $1 million my entire life”

    If you start working out of HS and retired at age 65 and worked full-time at the *current* minimum wage [$7.25], you’re are nearly $700k.

    Over the last 30 years, minimum wage has increased by about 4.5% per year on average.  So, figuring that into the above, an 18 year old playing on working full-time minimum wage positions until 65 would be expected to make $2.3M

    A college graduate going into a profession where he’d start at $35k per year, where the average yearly increase is about the same of minimum wage [good or bad assumption?], would be looking at double that, $4.6M through age 65 [and figuring in nothing from age 18-21].

  11. Jim Gagne said...

    I’m with you, Skip. Is it possible some people don’t play the game for the money? Maybe some of them aren’t ego driven enough to care what other people are making; they’ll scrape by on a few million. Or are things so bad that it just means they have incompetent agents?
    Another young star with a long term contract “on the cheap” is Ryan Braun. Many in Milwaukee are nervous about how he’ll feel if the Brewers pull out all the stops to sign Prince Fielder to long term contract.

  12. 33problems said...

    I see what you’re doing, but contracts like those given to Wells, Zito, Matthews, Castillo, et al are much worse for 3 reason. They tie up money that could be used for other quality players while, the Rays may be able to keep Crawford or Pena because of they money saved at 3rd base. They make players trade value sky-rocket, what do you think the Rays could get in exchange for Longoria with his current contract? If Adrian Gonzales had a bloated contract he would be a Red Sox right now. Team valued contracts also move the sport in a more sustainable direction, the Scott Borasing of Baseball is heading us towards a labor dispute in the not so distant future.

  13. Brandon H said...

    What if…What if…Longoria is thinking about his legacy. He sees a team that is built on quality players and has a strong foundation. Maybe he’s set on winning and being a “Derek Jeter”?

    Or, maybe…“I’ve just made a huge mistake”

  14. bobby baseball said...

    any baseball fan worth his salt knows how good langoria is and probebly will be…sorry to be harsh, im sure your a good guy, but within the confines of todays society, and economic climate, along with skewed values- please dont ever argue in favor of atheletes or celebrities being overpaid, regardless of the parameters of the discussion… the whole thing is obscene. nurses, and teachers, and others who make daily life and death committments are treated like pebbles on the beach. i will never agree with any argument that endorses celebrity compensation. and just for the record, langoria and the team both got some value here….a bad contract is one with little value to the team and the fan…. see vernon wells

  15. Contraster said...

    Just in comparison: Eric Hinske got a Rookie of the Year award too, at 3B for the Jays, and signed a 5-year deal. Yeah, that worked out well…

  16. Moe said...

    @Contraster

    Actually, the Jays got their money’s worth for Hinske. The only year he was terribly overpaid was the last year of his deal when he was with the Red Sox.

  17. Daniel W. said...

    Maybe he’s okay with his bad contract given the fact that it frees up millions of dollars per year for his team to spend elsewhere, helping them contend in one of the toughest divisions in the history of the sport. That would be cool

  18. Jason S. said...

    These contracts have risk both ways, which you seem to forget.  Suppose that we go back in time and look at Jeff Francouer.  A few years ago he was offered a multi-year deal similar to what Brian McCann signed and turned it down thinking he could get more without it.  That was his decision, but it proved to be a bad one.  I bet you that if he could go back in time he’d sign that contract.  The Braves ended up being very glad he didn’t accept that offer.  And if you want to talk about someone selling himself cheaply, I’d argue that McCann’s contract is even worse than Longoria’s.  There is no guarantee that rookies will avoid injury or continue to perform at a high level.  If Longoria felt like taking the sure thing, who are we to say he was wrong?

  19. D Leaberry said...

    If the economy double-dips, it might not seem too bad a contract for Longoria.  With the economy stagnant, the owners have most of the power now unless you are Pujols, Texeira or Holliday.  Remember, paying big bucks is risky for the owners, too. Here in Washington last year, the Nats owners did the right thing and signed Adam Dunn to a $ 10 million deal, a much smaller deal than he would have received in 2008 due to the economic collapse.  Dunn performed well and the Nats improved not, at least in the standings. More painful is that the Nats paid Austin Kearns something like $ 8 million a year for the last two years when he was the worst offensive outfielder in the major leagues.  Now that smarts.

  20. Greg Simons said...

    It seems that Skip, Jim Gagne, 33problems and Jimbo work for, or are, MLB owners.

    Billions of dollars are flowing into MLB’s coffers, inflation is a fact of life, and corporations and individuals have been pouring a higher and higher percentage of their income into entertainment over the last several decades.  Attendance figures of three million a year for teams is commonplace now, whereas it used to be that one million was a good season for most teams.

    What this boils down to me is: the money is going into the game no matter what, so who should get the biggest cut, the players or the owners?  I’ve never gone to a game to see an owner in their suite.  I go to see the players, so I pull for them to get as big a piece of the pie as they can.

    I don’t begrudge them their millions, because if they don’t get it the billionaire owners will.  The link between player salaries and ticket prices is tenuous at best, so don’t blame the players for making attending a game more expensive.  Teams charge what the market will bear for tickets.  It’s simple supply and demand.

    Also, MLB revenues over the last ~15 years have tripled, while the average player’s salary has doubled.  Where do you think this excess revenue has gone?  The owners, of course.

    If you’re going to be mad at somebody, direct your anger at the “insanely greedy” owners – the ones with all the brand-new stadiums we’ve built for them – instead of at the “merely-as-greedy-as-you-and-I-would-be” players.

    Because, face it, if someone offered you millions of dollars to play baseball, you’d take it, wouldn’t you?

  21. fan of evan said...

    Here’s why the contract is a good deal for the player even in hindsight.  Before ever suiting up in the majors, he guaranteed himself $17.5 million during his time under club control, setting him up for life.  On the other hand, if something happens to Kershaw before or even during the early part of his time of arb eligibility, he will not have long-term financial security.  And if he continues to be a top 3B, then he’ll just announce in 2014 that he won’t play for the team option (because sitting for a season and losing out on $7.5 million when you are worth $20 million isn’t exactly a bad decision), forcing either the Rays or someone else to give him a deal with new money in line with his value at the age of 28.  That new deal presumably would also probably tie him to that particular club for the rest of his career, making a resolution attractive for both parties. 

    At the time he signed the contract, could he have done better over his first 6 years?  Yes. But if he continues playing as well as he has over the last few years, then he will get paid at 28. Hopefully by that time he’ll have retained Scott Boras and jettisoned his current agent.

  22. Greg Simons said...

    @fan of evan, thanks for the reminder of a potential holdout.  The thought crossed my mind yesterday, but I had forgotten about it by the time I got around to typing up my comments.

    I know holdouts in baseball are extremely rare, and I don’t know if Longoria would have the Players’ Associations’ support, but it would be an extremely interesting situation.

    Only four more years until the fun potentially begins!

  23. Josh Fisher said...

    My point here isn’t to say “poor Evan, he’s only going to get about $10 million for his first 6 seasons in the majors.” It’s that Longoria made a serious mistake in signing this contract. In my opinion, a player shouldn’t agree to limit his earning potential while young unless what he’s getting back could truly be called lifetime security. Longoria’s guaranteed money—the bonus plus the first six years—is not adequate for this purpose (in the context of baseball players).

    In the case of a career-ending injury very early in the deal—the ONLY situation in which this travesty of a contract would look like a wise decision—Longoria wouldn’t have enough money to live how he wanted to live for the rest of his life. This is just terrible work by his agent.

    Obviously, Longoria can direct his agent, Paul Cohen, to sign whatever sort of deal Longoria wanted. But look at Cohen’s client list…Longoria, Tulowitzki, Hudson, Crosby…if I’m a major league team, I’m seeking out Cohen clients in the draft (like GM’s often avoid Boras clients). All these guys have to do is wait a year or two before signing these deals. That’s a very acceptable level of risk for the potential reward.

    Andrew Friedman probably had to go to confession after coaxing those option years out of Longoria and Cohen.

  24. Griff said...

    Great work, Josh.

    Worst contract in sports? Brad Childress. Any of you out there play Madden? Hiring Chilly as your head coach gives ALL players a “bonus” of -5 Awareness. Basically, this means that (like in real life) Brad Childress makes everyone around him worse. 5 year extension!? HAHAHA. As a cheesehead I’m lovin it!

    Oh, and Longoria should more than make up for his paltry contract in endorsement deals. That’s what happens when you’re good. Just ask AP (unfortunately another Vikings reference)

  25. sliver7 said...

    @Contraster: Funny you should mention Hinske.  Hinske was Longoria’s teammate in 2008 and, according to Longoria, was influential in convincing him to sign because he should (I’m paraphrasing here) “never pass up his first fortune.”

  26. Paul Merlo said...

    Sure the deal isn’t much money but what is really bad is those team options for 2014-16.
    What is things go sour at the Rays- the clubhouse goes bad, he doesn’t get on the coach, ownership spends nothing on the team, no-one turns up for games. But he’s stuck there cos’ the Rays have options. He should’ve done the deal but with maybe only one option instead of three.

  27. Paul said...

    Great article Josh, I liked the contrary view of looking into bad contracts for the opposite reason than normal

    and lots of relevant comments bringing up Gordon and Braun especially.

    Braun’s contract is also team friendly, but I think it kicked in a nice chunk of extra money if he was a super 2 (which he was surely?) – that would have been nice for Longoria.

    The notion of lessening risk to Longoria (~20 mil guaranteed worth more than more risky possible 50 mil) was also lessened by the 3Mil signing bonus he got from the draft

    The only mitigation I can see is that signing the contract meant that there was no reason for the Rays to dick Longoria around on service time to delay arbitration (which they had a history of doing, Young, Upton),

    ergo he’s in the majors as early as possible to maximise his numbers and potential to win a ring – maybe the glory, early start is worth more to him than the cash

  28. fan of evan said...

    @Josh Fisher: I honestly think that Longoria was viewing himself and his wealth potential relative to general society when he signed his deal.  Perhaps the type of player who selects Cohen as his agent is very risk averse by nature.  This strategy is all well and good for getting started with one’s professional career ASAP, because it eliminates speed bumps related to the business side of the game.  However, it is a bad strategy when one proves to be clearly above average or, in Longoria’s case, exceptional at an early age. 
    The fact that the aforementioned players didn’t get new representation after producing above expectations in the majors is surprising.

  29. Jimbo said...

    I don’t disagree with any of the factual statements made. In current economic landscape of MLB, this is an immensely good contract for the Rays.

    I’m with bobby baseball though on everything else. IMO, Evan should be put on a pedestal for not milking the system “just because everyone else is doing it.”

    Ultimately, it is the fans who pay Longoria’s salary. If he is content with “only” a low-eight-figure contract, God bless him. Seems to me this article is putting him down for leaving $$ on the table. Why ridicule someone simply for lacking greed??

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