The Ten-Year Contract
What would you do if you knew your next ten years of earnings were gauranteed? No matter what you do, no matter you perform at work, you’ll be paid every dime owed to you during that ten-year deal. Now imagine as part of that deal you’re going to be paid a heck of a lot more than you make now. That’s the future of baseball in a nutshell. The question is; Are these deals smart?
In the history of the game, there haven’t been very many ten-year contracts. There have been exactly eight such contracts signed by the following players:
Wayne Garland
Richie Zisk
Dave Winfield
Alex Rodriguez x2
Derek Jeter
Albert Pujols
Joey Votto
Unlike the NFL, where a player’s contract is almost meaningless and a team can tear it up at any point, baseball contracts are guaranteed. Despite injury, performance, poor attitude, etc, the players who sign these deals will be paid. And as their getting paid, they can be slowly killing the team for which they play.
After going 20-7 with a 2.67 ERA with the Baltimore Orioles in 1976, Wayne Garland signed a free agent contract with the Cleveland Indians for ten years, $2.3 million. Richie Zisk, after making his first All-Star Game in his lone year with the White Sox, signed a ten-year contract with the Rangers worth $3 million.
Dave Winfield was coming off four straight All-Star appearances and two Gold Gloves with the Padres when he signed his ten-year, $23 million contract with the Yankees. Alex Rodriguez changed the landscape of ten-year contracts. His first, with the Texas Rangers, came after years of success with the Mariners. He signed a ten-year, $249 million deal with them, only to eventually get shipped to the Yankees where he would negotiate another ten-year deal. With the Yankees, Rodriguez signed a ten-year, $275 million deal. His teammate, Derek Jeter, also signed a ten-year deal back in 2001 worth $189 million. This past offseason, Albert Pujols played the free agency lottery for the first time and won. He got a ten-year, $254 million deal with the Angels. Finally, Joey Votto and the Reds just agreed to a ten-year, $225 million deal.
It’s incredible to see how quickly the contract values increased with that list. From Garland’s $2.3 million to Winfield’s $23 million, to Rodriguez’s $275 million. Regardless of the team’s financial situation, they are strapped with these contracts and must pay no matter the consequences. With that said, I thought it would be interesting to examine the affects of these deals on the teams that offered them.
Wayne Garland/Cleveland Indians
Garland’s contract (even considering inflation and its 2012 equivalency of $8.6 million) was not a big contract. The Indians were not a cash-strapped team in 1977, and they were looking for pitching help to push them over the top. The move didn’t quite work out as the Indians never finished higher than fifth out of seven.
Here’s a look at the Indian’s average wins preceding the signing and their average after the signing:
Before – 73.9
After – 71.9
It’s easier to look back on these early ten-year contracts and say they had little bearing on the outcome of those ten years for the organization. Because Garland’s contract was just $2.3 million, it’s difficult to say he was an albatross. From a performance standpoint, he certainly didn’t help the Indians much. His 20-win year in 1976 seemed to have been a fluke as he never won more than 13 games again in a season.
Yet the money involved in his contract leads me to believe the opportunity cost of signing Garland was not such that it prevented the Indians from getting other players that could have helped them.
Richie Zisk/Texas Rangers
In 1977, Richie Zisk hit 30 home runs and drove in 101 runs. He was an All-Star with the White Sox and finished 14th in MVP voting. That year was enough for the Rangers to offer and sign Zisk to a ten-year deal. The contract, like Garland’s was not huge. It was ten years, $3 million. In 2012 dollars, that equates to about $10.5 million. Much like another ten-year deal the Rangers would offer a player in the future, the Zisk deal didn’t quite work out. After three years he was traded to the Mariners.
Here are the Ranger’s average wins for the six years (they were the Senators prior to 1972) prior to the Zisk signing and the three years while he was there (as part of his ten-year contract):
Before – 74
After – 82
The before numbers are heavily skewed by two incredibly bad years as the Rangers tried to get on their feet as a new franchise in Texas. But Zisk’s numbers certainly don’t meet the expectations the Rangers likely had for him when giving him the ten-year contract. His triple-slash for his three years with Texas was the lowest of any of the teams he played for at .271/.339/.435.
Again, Zisk’s contract wasn’t so high that it prevented the Rangers from unloading him or making other moves. However, the fact that he was locked into a ten-year deal likely kept the Rangers from even looking at other outfield/designated hitter options for the three years leading up to his trade to the Mariners. Therein lies the problem with ten-year contracts.