MLB: The Dangers of Long Term Free Agent Contracts
By Joshua Mayer
Every offseason, MLB teams hand out long term contracts to top free agents. More often than not, they come to regret that decision.
With the offseason only a few months away in the MLB, the buzz of free agency is already starting. This year’s class seems rather weak but still has some intriguing names, including Edwin Encarnacion, Aroldis Chapman, and possibly Yoenis Cespedes just to name a few.
Many teams are already looking forward to the offseason as this year may have not gone as planned. Even teams in contention are always paying attention to the future as well. With that in mind, I wanted to take a look back at how the big free agent contracts of the past offseason have panned out thus far to give teams a bit of guidance in deciding what kind of contracts to offer this offseason.
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I want to sort these contracts of last year into two sections: short-term and long-term.
Men who received contracts of five or more years (long-term) included Jason Heyward, Zack Greinke, David Price, Johnny Cueto, Justin Upton, Jordan Zimmermann, Chris Davis, Jeff Samardzija, Mike Leake, Wei-Yin Chen, and Ian Kennedy.
Players who received contracts allowing them to re-enter free agency after the year (short-term) went out to Yoenis Cespedes(opt-out), Ian Desmond, Dexter Fowler, Hisashi Iwakuma, and Doug Fister among others.
For the purpose of this argument I am excluding guys on two to four year deals like Ben Zobrist, Alex Gordon, Daniel Murphy, Howie Kendrick, Denard Span, and others. Likewise, we will exclude guys who signed their qualifying offer.
The players who signed long-term deals got the financial security that they deserved after years of productivity. But did it take some of their motivation and drive? Let’s take a look.
| Name | 2015 WAR | 2016 WAR so far | Difference | Contract |
| Jason Heyward | 6.5 | 1.0 | -5.5 | 8 YR, 184 M |
| David Price | 6.0 | 2.8 | -3.2 | 7 YR, 217 M |
| Zack Greinke | 9.3 | 2.2 | -7.1 | 6 YR, 206.5 M |
| Johnny Cueto | 3.9 | 4.2 | +0.3 | 6 YR, 130 M |
| Justin Upton | 4.4 | 0.1 | -4.3 | 6 YR, 132.75 M |
| Jordan Zimmermann | 3.5 | 0.7 | -2.8 | 5 YR, 110 M |
| Chris Davis | 5.2 | 2.6 | -2.6 | 7 YR, 161 M |
| Jeff Samardzija | 0.2 | 1.7 | +1.5 | 5 YR, 90 M |
| Mike Leake | 2.9 | 0.6 | -2.3 | 5 YR, 80 M |
| Wei Yin Chen | 3.8 | -0.1 | -3.9 | 5 YR, 80 M |
| Ian Kennedy | -0.4 | 3.0 | +3.4 | 5 YR, 70 M |
| Totals | 45.3 | 18.8 | -26.5 | 1.46 B |
As shown above, six of the seven players who signed 100+ million dollar contracts in the offseason have regressed significantly thus far. Now I know that there are about 35 games remaining, but barring a significant late season surge by one of these players, they will not even approach their win-level from last year. Johnny Cueto is the one exception as he struggled upon being traded to the Royals at the deadline last year dwindling his WAR number.
It should be said that WAR is not the only way to measure a player’s value, but it is quite obvious by looking at any stat or metric that Justin Upton, Jason Heyward, Zack Greinke, and Jordan Zimmermann have all taken a step back this season compared to last.
Now let’s take a look at the guys that are possibly playing for a new contract in 2017:
| Name | 2015 WAR | 2016 WAR so far | Difference | Contract |
| Yoenis Cespedes | 6.3 | 2.6 | -3.7 | 3 YR, 75 M (opt-out) |
| Ian Desmond | 2.0 | 3.0 | +1.0 | 1 YR, 8 M |
| Dexter Fowler | 2.2 | 3.0 | +0.8 | 1 YR, 8 M |
| Hisashi Iwakuma | 2.2 | 2.7 | +0.5 | 1 YR, 12 M |
| Doug Fister | 0.2 | 1.8 | +1.6 | 1 YR, 7 M |
| Mike Napoli | 0.4 | 1.1 | +0.7 | 1 YR, 7 M |
| Totals | 13.3 | 14.2 | +0.9 | 117 M (67M) |
Note: Did not count Austin Jackson, Alex Avila, David Freese and others who have not had expectations of a big payday within the last few years.
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The players with big contracts have earned an average of 77.6 million per one win above replacement thus far. The players with shorter contracts have earned a much more affordable 4.72 million per one win over replacement assuming Cespedes opts out. Though this may be a moot point since the players with longer contracts have much more time to accumulate more WAR, it still most likely stings the front offices of teams like the Tigers, Cubs, and Diamondbacks as they expected immediate results from their prized signings.
The seven players above all have major talent but had mild to extremely disappointing 2015 seasons. Before that year, most were expecting big contracts. Desmond turned down a 100+ million extension, Fister was coming off a season with a 2.41 ERA, and Iwakuma had a bigger offer only for it to be rescinded after failing a physical.
They all took either one year contracts, or contracts with an opt out available after the first year. This was meant to build up their profile to get that big payday that guys like Heyward and Upton got. The motivation is certainly there for them this year. But can the same be said for the guys who already locked up their big contracts?
There are a variety of factors involved as it is not as simple as a big contract creating less success for a player. The team a free agent signs with can have a big impact, as well as his health and age.
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Still with all the evidence above, I would not blame a team for being wary of handing out a big contract to anyone less than a superstar this upcoming offseason. At the same time, players coming off big seasons deserve their long-term deals and will get paid on the open market. But is it worth it to hand out a long term deal this offseason? That’s the question every time will be debating in November.