Carlos Correa has more or less telegraphed that he will decline his player option with the Minnesota Twins and become a free agent for the second consecutive offseason. That news led me to thinking, “Why do MLB teams give player options?”
Think about it: Correa signed a three-year deal for about $105 million, with player options that he can exercise after each of the first two years. If he exercises the option after the first year, he has a full no-trade clause that extends through the remainder of the contract. In other words, this contract gives Correa maximum leverage, and the Twins none.
An argument can be made that such a deal was the only way the Minnesota Twins, not usually a hot free agent destination, could have enticed a player like Correa to sign with them. But it stands to reason that the only way Correa would have exercised the option for 2023 would have been if he got hurt or had a terrible 2022 season. Neither of those took place, which gives him every reason to believe that he can get a better deal by shopping himself on the open market.
Among the other players with expensive options for 2023 are Jacob deGrom ($30.5 million), Nolan Arenado ($35 million), Chris Sale ($27.5 million), and Justin Verlander ($25 million). All of these guys are in their 30s, which might make them more inclined to value security than income. Sale and deGrom, in particular, have been unable to stay healthy in recent years, so free agency is probably not a lucrative option for either of them.
Sale, in particular, is a case in point where the team involved might just want to cut their losses, but the player will choose otherwise. Sale signed a five-year deal with the Red Sox before the 2020 season worth $145 million, and has thus far provided Boston with a total of six wins. If the Red Sox pursue new deals with guys like Rafael Devers and Xander Bogaerts this offseason, they will be hard pressed to add much more to their pitching staff, which ranked 25th in MLB in ERA in 2022, without going over the luxury tax threshold.
If Sale is healthy, he could be part of the solution, but that’s a huge risk to take given his recent history. Since Sale has a player option, the Red Sox have no choice.
Arenado’s deal is an example of a player option blowing up in a team’s face. The Rockies signed him to an eight-year, $260 million deal before the 2019 season, with a player option after 2021. When it became clear that Arenado would decline his option, Colorado dealt him to St. Louis in a deal so lopsided that not only did Colorado get little of value in return, they had to send $50 million to St. Louis to help pay his salary.
Clearly, MLB teams give these options because they wouldn’t be able to sign the player otherwise, but doing so imposes a level of risk in many cases that they should probably avoid.
The Houston Astros got great value from Verlander last year and probably won’t regret it when he exercises his 2023 option, but it’s easy to envision another scenario where, at age 40 and recovering from major arm surgery, his player option became a sunk cost.
Some teams can do this because they figure they can afford to deal with whatever the player does, either by writing off the cost of a bad investment or by replacing a player who declines his option. It’s more of a risk for smaller market teams. and it’s a huge risk with options like Arenado’s, when a long-term deal has an opt-out after just a few years.
In that case, the team is essentially hoping that the player will flourish enough to justify the salary while also maintaining enough loyalty that he won’t be motivated to seek greener pastures. That’s a tough needle to thread, which is why they turn out badly so often.