The Perils of the Long-Term Contract in Major League Baseball

*Wins Above Replacement = Amount of wins you gain your team by playing*

This past offseason in Major League Baseball will be forever remembered as the offseason when Manny Machado signed with the San Diego Padres and Bryce Harper signed with the Philadelphia Phillies. Machado signed on with the Padres for 10 years and $300 million, which at the time was the largest free-agent contract of all time. A week later Harper decided to put an end to the circus and signed on with the Phillies for a whopping 13 years and $330 million—which broke the record set a week earlier for biggest free agent signing of all time.

Meanwhile, before these two signed their record breaking contracts, MLB players all over were crying out due to the “broken” free agency system because neither Harper or Machado had signed on by the time February came around.

See Justin Verlander:

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And now many of the biggest stars in baseball have been given huge amounts of money over the past month. So much for collusion.

The thing is, Verlander may have a point. When two of the premier stars in the game are available at such a young age, it is only logical that teams should be lining up to gain their services. That hasn’t been the case this offseason. Whether that be because of the amount of “tanking” teams in baseball or simply the unwillingness of the owners to dish out mega-contracts, your guess is as good as mine.

In saying that, both Machado and Harper had large contracts offered to them far earlier in the offseason. Harper received a $300 million offer from the Nationals after the 2018 season ended and Machado had an offer from the Whitesox for up to $350 million after incentives. The offers were there. Maybe, just maybe, the reality is that the owners are getting smarter. If history has shown us anything, it is that long term contracts have rarely, if ever, worked out. In this piece, we will analyze the five largest position player contracts in baseball history and compare the performances of each player before their contract and during their contract. The hope is that—by the end of article—we will be able to better understand why owners have become so hesitant to give such large commitments to one player.

We will begin with Alex Rodriguez, who signed with the Texas Rangers following the 2000 season. Rodriguez’s contract was, at the time, the largest in the history of sports — coming in at a total of $252 million over ten years. I should mention he was traded to the Yankees before the 2004 season, but that doesn’t impact the contract whatsoever, so that is besides the point. Up to the point of signing the contract, Rodriguez had been one of the bright young stars of the game, accumulating a career WAR (Wins Above Replacement) of 38.1 through 2000. He was also averaging a .309 average, 27 HR’s, 85 RBI’s, and 5.4 WAR per season. Essentially, he was being paid $6.6 million per each point of WAR accumulated up to the point of signing the contract.

To build a comparison model, we will take the amount that the team paid per each point of WAR, and compare the number before the player signed the contract and after the player signed the contract. If the monetary value is lower than the base number (which in Rodriguez’s case is $6.6 million per each point of WAR), it means the player is exceeding expectations and playing above the pay-grade. If the monetary value is higher than what it was pre-contract, then the player is playing below his pay-grade

From the signing of his first mega deal in 2001 through 2007 (when he eventually signed a mega-extension with the New York Yankees), A-Rod’s average season consisted of a batting average of .304 with 47 HR’s, 130 RBI’s, and 8.1 WAR per year (for a total of 56.4 total WAR from 2001-2007). He also collected 3 MVP awards over the span of those 7 seasons. The Yankees were paying $2.8 million for each win that Rodriguez accounted for. A-Rod was a huge deal, and he completely lived up to his first contract. Let’s see if that trend continues as we move on through the next couple of mega-deals.

Shockingly enough, the second mega-deal looked at in this article will be the second mega-deal that A-Rod signed in his career. Following his 3rd MVP award in 2007, the Yankees decided to extend him. The extension totaled $275 million over the 10 year span of 2008 to 2017. Rodriguez was about to enter his age 32 season before he signed the extension, so naturally there were worries about whether he would maintain his torrid pace. Unfortunately, Rodriguez really struggled to live up to the hype over the span of his second contract. As I mentioned earlier, the Yankees were pretty much paying Rodriguez $2.8 million for every win he accounted for from 2001-2007. From 2008-2017, the Yankees paid Rodriguez $11.8 million for every win he accounted for. His decline came, and his decline came fast. Not only was he suspended in 2014 for PED usage, but he retired following the 2016 season, so he didn’t even play out his contract. It is safe to say that A-Rod’s second mega-deal didn’t go as well as the first, and ultimately ended up being a flop.

After reviewing the first two contracts, the overall consensus is that while Rodriguez’s first contract was worth it, his second was not. The owners are batting .500 when it comes to dishing out mega-contracts up to this point.

Next, we will turn our heads to one of the more well known—and currently ongoing—big time deals of Major League Baseball. I am talking about the contract of Albert Pujols who, following the 2011 season, signed on with the Los Angeles Angels for $240 million over 10 years (2012-2021). During his time with the St. Louis Cardinals from 2001 to 2011, Pujols was arguably the most feared hitter in baseball. His average season consisted of 40 HR’s, 121 RBI’s, a .328 batting average, and 7.9 WAR. Over that span, he accumulated 86.4 WAR.

Naturally, when Pujols hit free agency after his age 31 season, he was the most highly sought-after name on the market. But, similarly to Rodriguez, there were concerns about his age and a significant drop off. If we go back to our comparison model, the Angels were paying Pujols $2.78 million per win he had accounted for over the first 11 seasons of his career. What the Angels got was nowhere near the Pujols that everyone had become so accustomed to. Since 2012, Pujols has amassed just 13.3 WAR — which is extra shocking considering the fact that in 2009 he had 9.7 WAR in one season. Over the first seven seasons of Pujols contract, the Angels are paying him $18 million for every single win that he brings back to the team. They are paying 9x more than what they expected to get out of Pujols. He has been the poster child for why it is a bad idea to hand out long-term deals to players in their 30’s. His numbers have dropped off drastically, and given that he probably wont experience any kind of career resurgence over the last three seasons of his contract, I have no choice other than to label this contract a big failure as well.

After reviewing three mega-deals, the owners are batting .333. The only deal that has worked out so far was A-Rod’s first long term deal.

The next contract we will discuss is more unique based on the fact that it is only half way over at this point, we’ll have to project forward a bit. Robinson Cano was a star with the Yankees from 2005 to 2013 — before he decided to go to the Mariners in free-agency. From 2005 to 2013, Cano gathered 45.5 WAR as well as averaging 23 HR’s, 91 RBI’s, and 5.1 WAR per year. Those numbers are incredible for a second basemen, usually you don’t expect that kind of offensive production out of his position. It only made sense that because of his age and stature as being widely regarded as one of the best second baseman in the league, he would get a very hefty sum of money. Well, he did. The Mariners and Cano ended up settling on a 10 year, $240 million contract from 2014 that would last through the 2023 season. Since signing, Cano has experienced quite the rollercoaster ride.

If we look at the bigger picture, Cano has already experienced a slight/moderate decline. Since 2014, Cano has gathered only 23.6 WAR, for an average of 4.7 WAR per year. This number is slightly down from the 5.1 WAR per year that he averaged with the Yankees, but the drop isn’t that significant. If we look at his offensive numbers, Cano is batting .013 points lower (.309 to .296), is averaging 2 less HR’s per season (23 to 21), and is also averaging 9 less RBI’s (91 to 82). To be fair, none of those drops are too alarming, and to add on top of that the RBI is an outdated stat anyways because driving a run in mainly depends on the lineup ahead of you getting on base. On the other hand, Cano was suspended in 2018 for PED usage — so it’ll be interesting to see if his numbers drop off even more this upcoming season.

If we look at the season by season picture, Cano has had 3 all-star appearances since 2014, but has been inconsistent in his season outputs. His OPS (On base % + Slugging %) outputs have varied from .779 to .882, and his best OPS (.882) with the Mariners is still .047 points lower than his best OPS (.929) with the Yankees. Honestly, that stats are pretty close, there is a slight decline, but is it significant enough to say the contract will be a flop? If we look at the financial side of things, the Mariners were paying Cano $5.7 million per win, and have paid him $5.08 million per win. The financial side of things say the contract has been a success so far, but after breaking Cano’s case down, I am going to have to consider this contract to be a bad contract as well. My first reason behind this lies in his PED suspension. The second reason lies in his already slightly declining statistics. My final reason, and my biggest, is that Cano is now on the latter side of 35. A larger decline in bound to happen over the next 5 seasons.

We have now reviewed 4 of the 5 contracts we will discuss in this post. So far, 3 of the 4 have been deemed bad contracts. The owners are only batting .250 now. Let’s see if the final mega-contract can save the owners.

The final contract displays that of a cautionary tale. When the Detroit Tigers signed Prince Fielder to a 9 year, $214 million contract following the 2011 season, they expected Prince to be a cornerstone for the franchise for years to come. Prince was only 28 entering his first year of the contract, so it wasn’t like he was very old. Through the first 2 years of his contract, Fielder continued to prove his generational power was never a fluke. In 2012 and 2013, Fielder averaged 28 bombs and 107 RBI’s per year, great power numbers for a guy being paid to produce runs in the middle of the order. Unfortunately, the path became a bumpy one from there. Following the 2013 season, Fielder was traded to the Rangers, where he would hit only 34 homeruns over the next 3 years combined. After undergoing multiple neck injuries over the span of only a couple of years, Prince retired from baseball in 2016. Through 2020, the Texas Rangers owe $106 million to a guy who will never have another at bat. Because of the injuries woes, Fielders contract must also be labeled a bust.

If there is anything we learned over the span of this article, it is that large contracts tend to be a bad idea. 4 of the 5 contracts that we covered in this article failed in some capacity, some of them being catastrophic failures. It makes sense why this would be the case, by the time baseball players are eligible for these big-time contracts, they are in their late 20’s or early 30’s— at or near the decline of their respective careers. I’m not saying this will be the case for Machado, Harper, Trout, or any of the guys that have recently signed huge deals. What I am saying is owners should proceed with caution when it comes to these large contracts. Justin Verlander may have complained about collusion, but in reality, owners are just getting smarter. And to learn why, all you have to do is look back at how history has played out.

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