Sunday, May 24, 2009

Long-Term Contracts: Another Look

Back in March, T.J. offered his own two cents about long-term contracts. I recommend following the link and reading the preceding question for a full explanation. Today, I'll look back at some real life long-term contracts in my A.L. and add a few of my own observations.

2006 Long-Term Contracts, BABG
PlayerSal
Yrs
$06
$07
$08
AVOLC
Ron Belliard
$7
L2
$9/NL
NL
NL
$4.5
Jeremy Bonderman$7L2$16$3-$2$10.5
Jorge Cantu
$15L2$8
-$1/NL
NL$3.5
Coco Crisp
$16L2
$14
$19$17$16.5
Bobby Crosby
$15L2$5
$5$7$5
Chone Figgins
$12L3$31
$32
$18
$27
Craig Monroe
$8L2$16
$4/NL$3$10
Justin Morneau
$15L2
$33
$23
$28
$28
B.J. Ryan
$15L2$42
-$1$25$21
Juan Uribe
$8L2$9
$9$5$9
Average
$122.1
$18
$9$10$13.5
AVOLC = average value over life of contract

Even with a couple of absolute bombs like Crosby and Cantu, this group turns a $6 profit in Year One of the contract. However, if this were one aggregate player - as opposed to 10 unique players - it barely would have been worth giving out the contact.

Clear Winners (3): Figgins, Morneau, Ryan
Winners (2): Bonderman, Monroe.
Slight Gain or Loss (3): Belliard, Crisp, Uribe.
Losers (2): Cantu, Crosby.

Even in the first year of the deal, only half of the players here were worth giving a contract in terms of returning clear cut value on your investment. However, looking at the second year in these terms paints an even bleaker picture:

Clear Winner (1): Figgins.
Winners (1): Morneau.
Slight Gain or Loss (4): Bonderman, Crisp, Morneau, Uribe.
Losers (3): Cantu, Crosby, Ryan.
National League (1): Belliard.

I certainly wouldn't complain about Morneau's overall value, and getting a $23 return on a $15 player in an off-year certainly isn't a bad thing. But the rest of these players are examples of why you probably don't want to give out contracts unless you're giving them to elite players at the top of their games.

Belliard, Crisp and Uribe were all solid players, but probably weren't hitters with a lot of room for growth. Bonderman and Ryan looked safe, but pitchers being what pitchers are regressed in Year Two. Even Cantu and Crosby - young players who seemed like they had a little improvement potential based on where they were in the growth curve - were treated somewhat too aggressively by their owners. Giving a $10 L2 to either one of them probably would have been sensible. Shelling out $15...too much.

Every year works out differently. But you probably want to stick with guys like Justin Morneau as the template for giving out contracts: young top prospects with future growth potential who will "hurt" you by helping less when they fail.

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