Even after I dissected Longoria’s base contract and three option years, there’s still some confusion in the blogosphere about why Evan Longoria’s new contract is a great deal for the Rays. Here are some answers to common questions and arguments:
Why couldn’t the Rays have waited a year or two to make sure Longoria is actually any good?
They could have, but the price would have gone way up. Considering the contract is pretty cheap for what Longoria might become, the only reason he signed it is to assure himself financial security for the rest of his life. The closer he gets to arbitration and free agency and the more it becomes apparent he is a star (instead of going-to-be a star), the more money he can demand.
If Longoria doesn’t pan out, the Rays could have saved themselves some money by waiting. But they would have cost themselves even more money if Longoria does become a stud.
Longoria’s only played six games in the majors — how do we know if he’ll be any good in five years?
How do we know Albert Pujols will be any good in five years? Longoria has a top notch college track record, is a good fielder, is young, and tore up the minors (.301/.386/.534 in 881 PAs). By looking at minor league numbers in the right way, you can predict future performance almost as well as by looking at major league numbers. Yes, prospects flame out. But so do major league veterans.
Is cost assurance really that important? What do the Rays gain by knowing how much they’ll be paying Longoria for the next six years?
I don’t like the term cost assurance, because the benefit isn’t knowing how much they’ll be paying Longoria, it’s knowing that they’ll probably be paying him less than he’s worth. If Longoria becomes an All-Star, his arbitration salary would be more like $10-12MM per season and his first three free agent seasons might cost $20MM each. The Rays will only be paying an average of $8MM for those six years. That’s a net gain on the order of $50MM. That’s $50MM the team can spend on free agents or use to sign more of their young talent to beneficial contracts.
Since they have such a small payroll to start with, how can the Rays afford to risk $19MM? If they lose this bet, won’t it kill them for years?
No, for the simple reason that they’re insuring Longoria’s contract with other similar contracts with James Shields, Carlos Pena, and probably more in the next couple years. The odds of one player tanking is significant. But the gains from the other contracts will offset that “mistake”.
In addition, $19MM isn’t actually that much money. It’s not like the Rays are giving Longoria $19MM per season. Spread over six years, the Rays’ are only out $3MM per season.
Why would Longoria sign the deal if it’s so great for the Rays? Isn’t this a zero sum game?
An individual is more risk-averse than an organization because he’s only betting on himself while an organization is betting on a whole bunch of players. The Rays have also signed Carlos Pena and James Shields to long-term deals and will continue to lock up their young, talented players. The more players they sign, the less one flam-eout will hurt because the others are saving you money. To Evan Longoria, the first $19MM he makes in his career is much more valuable than the next $50MM. As of yesterday, he’s financially secure for the rest of his life. Future earnings are just icing on the cake.
This salary system seems so unfair to young players.
I agree, but that’s the system MLB has in place and it’s the system that the players’ association agreed to. My guess is that as more and more of these deals are signed with young players, it will become more of an issue. (Remember Jon Papelbon’s mini-tirade during spring training?) Paying young players adequately will probably be the next hot-button labor issue.
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Sky is a baseball fan and racket sport afficianado living in upstate NY. His favorite color is orange and is just about ready to give up on his life-long dream to become the next Magnus ver Magnuson (World's Strongest Man). His favorite baseball teams are the Yankees and Red Sox, proving that there's hope in the Middle East.
April 25th, 2008 at 3:51 pm
Didn’t Markakis have a little hissy-fit about his contract too this winter? While MLB contracts are structured the way they are - with all that money guaranteed, unlike in the NFL - I don’t see much changing for the younger players. It is truly high-risk, high-reward for any MLB team to sign one of these guys. As we all know, there are plenty of top draft picks and MiLB stars that don’t do squat in the majors. Will be interesting to see how it plays out though. Does seem like there was more outcry among the young stars this year.
April 25th, 2008 at 4:20 pm
I agree most minor leaguers tend to be overhyped. It’s like looking at all of college football and thinking everyone’s going to turn into an NFL player. But once you get to the NFL draft, even the media is able to realize there’s only seven rounds worth of talent that might contribute, and that’s with 53-man rosters. If you (or the Rays) were to only focus on the that same percentage of players that are in the minors, it’s surprising how projectable the top talent is.
http://www.tangotiger.net/MLE.html
Maybe I’ll do a post on it at some point, but check out these major league equivalencies,which take minor league stats from 2001-2003 and translate the performances into major league numbers (it’s like park-adjusting, but with leagues — oh, and there’s no regression, these aren’t projections). Most of the top names at each position are recognizable. And if you pay attention to the ages, it’s obvious the red guys aren’t prospects and the green guys outperform their rank in that list. Now, notice that MOST lwts scores (runs above average) aren’t that high, meaning it’s tough to project a minor leaguer to be a really good major leaguer. But you can pick out the ones that are the best bets, like in football. And, like in football, it could be argued that the best guys deserve some financial assurances before playing a down in the majors.
How to do that? Arbitration after the first season? Other ideas?
For more fun, scroll through the VORP ranking at BPro from 2003. How accurate is that ordering going forward? Most of those names stayed in the majors, but the quantity of their current peformance is all over the place. Not that much more in order than the MLE list.