The Fallacy of the Mega Contract

There are those who say money doesn't buy happiness. This adage may not always be true, but it certainly seems it is among professional baseball players. The players union and players agents work their best to force top players to take the most money available, irrelevant of all other considerations, teams fight against each other in million dollar bidding wars to over inflate prices and over zealous fans push their teams into over spending by complaining about frugality. In the end, the expectations are all a lie. Players think that the money will make them happy, the teams think they are getting a great deal and the fans think they will have someone to root for over the next decade. Everybody is completely wrong.

Big Money Means They'll Stick Around
The first fallacy is that of the misguided fans who use selective memory to think that their team will be the one to keep their new superstar. Read out the chart below for a reality check.

Top Contracts

The pie charts above show the results of the top 50 highest contracts signed in baseball history (actually 55 due to ties). On the left are players who stayed with the team they were with the previous season. This includes players like Chipper Jones, who played his entire career with the Braves and Adrian Gonzalez, who played just a single season with the Red Sox before signing a big deal. The pie on the right shows players who signed with a new team. Some players, like Alex Rodriguez and C.C. Sabathia, are on both sides as they have more than one of the 50 biggest contracts. In the key, active means the players is still with the team they originally signed with and free agent means they made it through their entire contract with that team, but didn't re-sign when it ended.

Something should be incredibly obvious at first glance of the two charts. Players who sign those mega deals rarely stay still. Of the 23 players who signed a deal with a new team, 11 were traded before it was over. Most of these deals were in the final year of the contract, like with Manny Ramirez in 2008 and Carlos Beltran in 2011, but recently there has been a disturbing trend. In the past two seasons, teams have been showing buyers remorse and a lot of these big names have been moving within the first two years of their new deal. The most recent of these was Prince Fielder going to the Rangers, but last season it was a common occurrence with Jose Reyes going from Miami to Toronto and Carl Crawford leaving the Red Sox for the Dodgers.

The corollary of this is almost no players make it all the way through to free agency. Only three of the 55 players looked at here did so (Mike Piazza, Torii Hunter and Jason Giambi) and all three had seen their skills markedly decline. This brings us to the second fallacy.

More Money = More Wins
Teams don't sign these players to such lucrative contracts to make fans happy (except in the case of Nick Swisher, who doesn't make enough to qualify for this case), they sign them to win baseball games. Generally the idea is to sign great players long term, essentially under paying them for the present, but over paying them for the latter years of the deal. This leads to many unfortunate situations. In almost every case, the team and the player were not on good terms by the end of the contract. This has lead to many of the trades mentioned earlier, but brings about more animosity and vilifying behavior. The most extreme example of this is Alex Rodriguez and he is good for two.

First, Rodriguez knew he was the most valuable asset in baseball and decided he should be paid for it. Rather than sticking with the Mariners, he urged a bidding war that saw him end up with a record contract with Texas. After just three seasons, A-Rod learned that location can be more important than money (where are you going to spend $252M in Texas?), so he talked himself into a trade with New York. He has never been happy there either, but still signed another record deal in 2008 to keep him around for the rest of his career. Now, the two sides despise each other, Rodriguez is suing the league and the Yankees are trying to void his contract, but they are married to each other through 2017.

His isn't the only case, the already mentioned Ramirez, Mike Hampton and Alfonso Soriano all talked their teams into trading them with different amounts of aloofness while many other teams have simply regretted their deals very quickly as players like Barry Zito, Ken Griffey, Jr. and Carl Crawford under performed their expectations. When you are expected to be the best player in the world, it is easy to fall below that expectation. Even considering players still with their new teams, one has to wonder how long things will last. Albert Pujols is still an All-Star, but is he worth $240M at his current level? The same could be said about Josh Hamilton and Mark Teixeira. How much longer will their teams tolerate their struggles/injuries.

The second side of this coin is that teams that sign these monster deals rarely succeed. Of the 21 teams to sign a free agent to a mega-deal (that went at least through 2010), only 12 have made it to the post season since 2010. Of the 13 teams that signed more than one, five have been unable to get to the play-offs. No team has more than four of these players, but the Angels are one of the eight teams with three or more and they have finished third in their division in three of the last four years. To make things even more embarrassing, the two teams that regularly finish ahead of them, the Athletics and the Rangers, have just one mega deal between them and it was to retain a player (Elvis Andrus, $120M through 2022).

It turns out that teams that pay to retain their players may be even worse off. Teams with small pay-rolls, like the Twins, Rockies and Mariners have been held back by gigantic contracts given to their superstars. In order to keep the likes of Joe Mauer, Troy Tulowitzki and Felix Hernandez, these teams have lost almost all ability to sign and retain other players to fit around them. While the Twins can say, "come and see the greatest catcher in Minnesota history," they won't be able to say, "come see the Twins in the play-offs," until Mauer's contract is out. The only team to avoid this fate completely seems to be the St. Louis Cardinals, who have been able to retain most of their great players (with the exception of Pujols) and have turned it into four World Series appearances and two wins since 2004. By no means are they a small market club, but they still deserve some credit for doing things the "right" way.

Get it While You Can
Finally, there is the players side of the argument. It has already been mentioned how those who chose the biggest deal are often unhappy with their new team. Within six months of signing with the Red Sox, Manny Ramirez was already begging to be traded back to the Indians and there have been slips of similar regret from C.C. Sabathia, Soriano and others. They want the prestige of the big contract, but also the ability to play for the team they want to.

This is a lie perpetrated by the agents and unions. There is very little real difference to the player between making $15M a year and $18M, but to the team that difference could be being able to pay a signing bonus to a draft pick or bringing in a couple role players. If players were willing to take just a slight cut in pay from the maximum possible, they could play for whatever team they wanted to. Instead, while in the hunt all the emphasis is based on total dollars and years and it isn't until after that they actually think about what they want in life. I guarantee Ramirez would have been happier in the end had he stayed in Cleveland for $50M less, but at the time it would have been unthinkable for him.

The real reason for these contracts is that the players want to be set for life and they want it guaranteed. Of course if this was true for everyone, then why did Rodriguez need to get another $275M in his latest contract after just banking a $252M deal, but that is unimportant at the time. What is important is that many of these players are actually costing themselves hundreds of millions by signing these long term deals. Inflation in baseball is increasing much more rapidly than expected and regular $30M a year contracts seem just around the corner. Players like Max Scherzer, who will be free agents shortly are set to take advantage of this, but there are some who can't, like Buster Posey, who is locked in through 2021 and Andrus, who is signed through 2022 (with an option for 2023). By the time the next decade starts, these players who are being paid about $15M a year, may be the cheapest available options. 

If players are truly going for the money, they should stick with short one to three year deals, bouncing from team to team to maximize their money until they hit their 30's, when they should try to saddle a team that has no financial common sense (like the Yankees) into a ten year deal. This way, they would take advantage of their prime years, making as much money as possible and taking advantage of the crazy baseball inflation and still get that retirement deal in the end. For a player with no loyalty to the team that drafted and developed him, there should be no problem with this strategy. While there is a slight chance of career ending injury, even one of these three year deals would be enough for a regular human to retire on and the chances of that are pretty unlikely with the state of today's medicine. More likely, teams would be willing to give out higher yearly salaries with the knowledge that they wouldn't be stuck with the player after four years if they did have an injury or attitude problem.

Mo Money Mo Problems
In the end, players will keep going to where the money is and the Yankees will keep giving it to them. At least there are more teams competing for those big contracts (like the Mariners signing Robinson Cano for $240M), even though they are still franchise ruiners for most teams. Hopefully, this will just make some fans happier when their team doesn't get that coveted free agent or misses out on retaining their super-stars for all eternity.

About Joseph Coblitz

Joseph is the primary writer and editor of BurningRiverBaseball.com and has been since it's inception in 2011. He is a graduate of the University of Akron and currently resides in Goodyear, Arizona.

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