MLB Free Agency: The albatross contract faces extinction

Jamie Squire

With money flowing into the game from local television deals, big contracts don't pose the same risk they once did.

You will see the term used to describe some contract signed this winter. If Robinson Cano gets anything close to the $310 million he is seeking, it will probably be applied to that deal hundreds of times over. It could be applied to Jacoby Ellsbury's new deal or Brian McCann's next contract.

Any deal for one of the top free agents on the market might earn the label this off-season, but as the trade that sent Prince Fielder to the Rangers for Ian Kinsler illustrates, the idea of an albatross contract is quickly becoming obsolete, as Sam Miller and Ben Lindbergh discussed recently on the Effectively Wild Podcast.

Not long after Fielder signed his nine-year/$214 million deal with the Tigers, Rob Neyer of Baseball Nation asked the question, "Will Prince Fielder's Contract Rank Among Worst Ever?" It was a reasonable possibility to consider. Fielder was only 27 when he signed that deal and he had been one of the best players in the National League despite being a liability in the field and on the bases. However, his body-type signaled an early breakdown and the lack of value everywhere but at the plate made it easy to see how the deal might haunt the Tigers for years and years.

But that won't happen now.

Fielder may still breakdown and become an extremely overpaid, under-performing DH, but he won't hurt the Tigers in the least, because he now plays for the Rangers. Texas could certainly come to regret the trade, but the Tigers sent $30 million south with Fielder, so the Rangers are on the hook for just $138 over the next seven years. If the worst-case scenario were to happen, that would still be a tough hit to take, but many teams team today would be willing to sign Fielder to that exact deal right now if he were a free agent. If he declines rapidly, there will very likely be some chance in the future for Texas to cut bait, pay some portion of his remaining contract and walk away. Free agency ensures a fluid series of needs in the market and the current compensation system carries disincentives for signing qualified free agents, making such trades more appealing. Prince Fielder will need to age at a historic rate for Texas to be crippled by his contract.

The trend has been building for some time. The fluidity of the largest contracts appears to have increased steadily right along with baseball's profitability.

In 2001, the Rangers overextended to sign the best player in the game to what was the largest contract in history at that point i(t remains second on that list). Alex Rodriguez was everything they could have hoped for, but his contract, combined with mismanagement by ownership, left them unable to assemble a competitive team around him (or so the story goes). Despite carrying the highest price tag in the game, Rodriguez was traded not once, but twice. Before the 2004 season, a deal with the Red Sox was blocked by the MLBPA, but a second deal sending him to the Yankees freed Texas of the burden.

Moving Rodriguez was simply a matter of finding a team that could afford the deal that Texas couldn't. He was still an elite player and any team would have been happy to have his production if they could afford him. In recent years, however, even unproductive players can be shipped away with a little patience and effort. In December of 2006, the Blue Jays extended CF Vernon Wells with a seven-year/$126 million contract. He was 27-years-old and he had just hit .303/.357/.542 while playing solid defense in center. Few people could have imagined then that he would become one of the least productive players in baseball over the next seven seasons, but that is exactly what happened. Despite his complete collapse, the Blue Jays were able to find a way to get out from under the deal. They had to suffer through two lousy seasons, but when he was slightly above average in 2010, they were able to ship him and $80 million of the debt owed him to the Angels. The Angels weren't as lucky and Wells was much worse there, but they still dodged around $13 million of his cost by sending him to the Yankees during the 2013 season. Over the course of his deal to this point, Wells has been the tenth worse everyday player according to fWAR, but neither the Blue Jays nor Angels had to bear the full brunt of their own poor decisions.

The television industry is at a crossroads as downloadable content and potential deregulation gives consumers the freedom to watch around their own schedules. To address this threat to their business model, cable companies and their advertisers have doubled down on sports programming and baseball, with its 162-game schedule, delivers the most content bag for their buck. The result is a booming middle-class of clubs, as Pete Grathoff of the Kansas City Star describes here. Back in 2004, the Red Sox and the Yankees were probably the only two clubs that could afford A-Rod and post a record to justify the expense. Now with spending more closely tied to a team's current TV deal and their chances of winning, a larger number of teams can take on $200 million-plus risks. Today, even the Royals and Brewers, who play in the two smallest markets in MLB*, can top $80 million in payroll (according to Cot's contracts). Like any newly affluent class, smaller market teams are running out to buy things that they couldn't afford before. In baseball, that means high-cost, long-term deals.

*Market-size data doesn't necessarily depict team's potential audience size accurately since it often misses the impact of secondary markets. Other factors such as baseball tradition, accessibility and fan identification also affect potential spending.

The Reds, playing in the third smallest market in the game, have extended 2010 NL MVP Joey Votto twice now committing $263 million total from 2011 to 2024. Such a deal would probably be impossible if the Reds did not earn $30 million from their local TV deal, a larger sum than twelve other teams, according to Steve Watkins of the Cincinnati Business Courier. Even with their television revenue, that deal and the extension they gave Brandon Phillips would almost certainly be too risky for Cincinnati if they were doomed to carry it through to the end regardless of the outcome. The team has felt the financial pinch already and they are looking to deal Phillips as a result. They shouldn't have too much trouble getting BP's money off their books if they aren't looking for much in return, either.

The albatross contract isn't completely gone. Alex Rodriguez's current deal looks as immovable as a deal can right now. The Angels will need a serious bounce-back performance from Josh Hamilton to get him off their books and Albert Pujols' contract might be even tougher to escape from. Should Votto decline rapidly, his deal could haunt the Reds something fierce. A few special cases could leave teams hamstrung for years, but the current MLB environment mitigates that risk extraordinarily well.

Signed Prince Fielder to play on a team with two other first base/DH types and fall short of a championship? Just send him away for another player on a pricey extension who fits the team better. Failed miserably in an attempt to build a contender in a single off-season? Send everyone who isn't Giancarlo Stanton up to Canada for salary relief and a haul of prospects. Regretting a series of high-priced signings and extensions after your clubhouse descends into chaos? Don't worry, the Dodgers will take $250 million in salary of your hands and send you some intriguing arms in the process. For a team that can afford the first few years of a deal on a player they like, this wild, new, pro-trade market encourages paying whatever is needed and worrying about the back-end later.

Ironically, that is probably what will save the albatross contract from extinction. The lack of consequences for signing players to deals that pay too much and last too long is only going to encourage GMs to take even bigger risks. Eventually, a few of those risks will be so ill-advised that they will offer no escape plan. High revenues might endanger the albatross contract, but as long as there is someone willing to overextend, their population will survive.

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