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.
Dave Winfield/New York Yankees
Dave Winfield’s was the first contract to set the stage for huge paydays in baseball. His 1981 free agent deal with the New York Yankees was for ten years, $23 million. That $23 million in 1981 equals about $60 million in 2012. Still, this contract was a far cry from what we would see in the future, but it certainly paved the way for big-time deals.
Winfield was very productive with the Padres and he continued that production with the Yankees, but let’s look at the Yankees’ average wins for the ten years prior to the deal and the eight years after (Winfield was traded to the Angels in the middle of his ninth year with the Yankees, and I am excluding the 1981 shortened season because it will skew the numbers):
Before – 90.2
After – 84.3
It would be very difficult to say the Yankees struggles after signing Winfield were a result of his addition. He was an All-Star in eight straight years, he hit 205 home runs with the Yankees, and he was worth 25.6 WAR. There weren’t many better options in the outfield than Winfield at the time, so this was a contract that probably didn’t hurt the Yankees too bad. The fact that the Yankees held on to him for nine years, and only traded him after a slow start to the 1990 season means this is probably the best example of a ten-year contract working out.
Alex Rodriguez/Texas Rangers
It would be 20 years after Winfield singed his ten-year deal that we would see another one. In 2001, the Texas Rangers made their franchise’s second ten-year contract offer, this time to Alex Rodriguez. Alex Rodriguez was perhaps the best player in the game at the time. He hit .309/.374/.561 in his seven years with the Mariners. He was closing in on 200 home runs. He was good, and the Rangers needed a boost. So they gave him a ten-year, $249 million contract. The deal was the biggest ever offered in baseball by far. It made Alex Rodriguez just the first player to earn $21 million, $25 million, and $27 million in a single season (his contract was structured to increase his pay each year).
How did the contract work out in terms of wins and losses? The Rangers ended up trading Rodriguez to the Yankees in 2004, so we’ll look at the average wins for the Rangers in the previous ten years and the average wins in the three years that Rodriguez was there:
Before – 79.5
After – 72
The signing definitely did not help the Rangers win more games. In fact, the contract was so over-the-top, the Rangers struggled to sign other players they needed. It finally got to the point where the Rangers had no choice but to trade Rodriguez and absorb a huge chunk of his contract. When they traded Rodriguez to the Yankees, the Rangers agreed to pay $67 million of the remaining $179 million on Rodriguez’s deal. This left the club in financial ruin and eventually bankrupt.
If Winfield’s contract is the best example of a ten-year deal working out, Rodriguez’s is the best example of such a deal not working.
Derek Jeter/New York Yankees
In the same season Alex Rodriguez was moving to the Texas with a lot more money in his bank account, Derek Jeter received his own ten-year contract with the Yankees. Jeter was a three-time All-Star at the time of his ten-year contract. He had won Rookie of the Year in his first full season. He could flat-out hit. The Yankees gave him a ten-year, $189 million dollar deal to keep him around.
Here’s the Yankees’ average wins for the ten years before the contract and the ten years after:
Before – 87.1
After – 97.3
Jeter’s contract did not affect the Yankees ability to win games. Did it enhance their ability? Perhaps. Jeter is 12-time All-Star, has the most hits in Yankee history, and has helped New York win five World Series. The Yankees did not lose out on much if anything in opportunity cost by giving Jeter this contract. The same may not be true of Jeter’s most recent deal, but that contract was more of a symbol. This ten-year deal was given to Jeter when he was just 27 years old, and it essentially required him become the face of New York Yankees baseball. He lived up to those expectations, and this ten-year deal would rank second on my list right behind Winfield’s.
Alex Rodriguez/New York Yankees
Prior to the 2008 season, the Yankees and Alex Rodriguez were in the midst of tense contract negotiations. It looked as if the Red Sox may be able to lure Rodriguez away from New York. But then, George Steinbrener dug deep into his pockets and gave Rodriguez the second ten-year contract of his career, a $275 million deal. Rodriguez again set the record for largest contract in baseball history and became the first player to earn $27 million in a season.
I won’t go into the average wins because this contract is so recent, it wouldn’t make much sense to do so. The Yankees have the means to sign a player to a contract like this and it not hurt them no matter the output. However, Alex Rodriguez has performance very well since 2008. He has hit 284 home runs with the Yankees and is closing in on 3,000 hits. It’s hard to fault the Yankees for giving this contract, but had it been any other team, it could be crippling.
Albert Pujols/Los Angeles Angels
After 11 incredible years in St. Louis, Albert Pujols is now a member of the Angels. The Cardinals simply weren’t willing to make the offer necessary to bring him back. But Art Moreno and the Angels were. To the tune of ten years, $240 million the Angels proved they truly wanted Pujols. It’s a contract much like the ones Alex Rodriguez saw, but will the results be the same?
The Angels have been sputtering on offense the last few seasons while their pitching has improved. The addition of Albert Pujols can be one of those rare additions that actually makes the difference between making the play-offs and not. However, the Angels have put themselves in a position in which they can not even consider unloading Pujols for the majority of his contract. It is unlikely that any team would accept a trade straight up, so if the Angels realize they simply can’t afford Pujols or want to go another direction, they won’t be able to. A ten-year contract worth as much as Pujols’ is risky.
Joey Votto/Cincinnati Reds
Not that I think Joey Votto will lose his ability to crush the ball or suddenly forget how to hit at an MVP level, but this ten-year contract from the Reds just feels like disaster. They’ve never been huge spenders, and now they’ve locked up Votto for ten year, $225 million. Sure Votto is worth the average $22.5 million he’ll get over the contract’s life, but what will the Reds have to do to ensure they can pay it?
Last year, Joey Votto wasn’t even the highest paid Red on the roster. Brandon Phillips was. With Phillips contract and Votto’s much larger contract now to pay, the Reds may be losing out elsewhere on pieces they now can’t pursue. This is a team looking to seize on the potential fall of the Cardinals and Brewers. Signing Joey Votto long-term was not a mistake. However, a ten-year contract may have been. Like Albert Pujols’ contract, we have no idea how it will play out. For now, we can just guess.
***
The ten-year contract is the rarest of all contracts in baseball. Teams are afraid to offer them, and for good reason. In baseball, unlike football, these contracts are guaranteed. If the player signing the deal suffers a career ending injury in year two of the deal, the team still must pay the remaining eight years. On the flip side, securing a player that can elevate your team above the rest for ten years is huge. Ensuring this star player will never jump ship to a rival team and will instead be in your dugout helping the team win, can make the reward outweigh the risk. Perhaps, these ten-year contracts will be a normal occurrence going forward. We have the data on Alex Rodriguez and Derek Jeter’s deals. Now, we must wait and see how Albert Pujols and Joey Votto play during their deals.
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