It has been happening more in recent years, but Friday's announcement that Yoenis Cespedes had agreed to a 3 year, $75 million deal to remain with the New York Mets. He was traded to the Mets at the trade deadline last year, and had an ideal right-before-free-agency performance. Paced out over 162 games, his stint with the Mets would have yielded 48 HR, 125 RBI, and a .287/.337/.604/.942 slash line with a 157 OPS+.
While nobody thought he would replicate that performance, conventional wisdom would indicate that he would receive AT LEAST 5 year, $100+ million contract. FanGraphs' Dave Cameron projected him to receive a 7 year, $150 million contract. Jim Bowden, former GM of the Reds and Nationals, had a more conservative projection of 6 year, $126 million contract. While there were many credible reports that he did receive a 5 year, $100 million contract from the Nationals, he ultimately turned down that contract to return to the Mets.
Now this is no ordinary contract. A decade or two ago, you would have assumed it would be an evenly-space or slightly backloaded deal. But this contract is FRONTloaded, with $27.5 million coming in the first year. Additionally, he has the option to rejoin free agency next year when there will be a significantly weaker group of outfielder free agents. More and more, teams and players are agreeing to contracts that are less straightforward, with multiple wrinkles that effects the years and money distribution of the contract.
Max Scherzer's contract was for 7 years, $210 million but paid out in $15 million increments for 14 years. Giancarlo Stanton's ridiculous 13 year, $325 million contract is insanely backloaded with an opt-out before the bulk of the money comes. The new deal that Chris Davis signed last week will pay him $17 million for the next seven years (the duration of his playing commitment) and then $4.2 million for the following 10 years.
These contracts and many others that have been signed in recent years have been stuffed full of opt-outs, deferrals, and ultra-specific incentive clauses that have created a significant increase in fan attention towards contract details. What has caused this shift in the way contracts are structured? There are two main factors that I see here.
First, I think that Major League Baseball players and their agents are becoming craftier with maximizing their compensation. Think about the deal that David Price signed with the Red Sox this season. Price will earn $30 million annually for the first three years, after which he can opt-out. If he is as good has he has been his whole career, he will probably opt-out and be able to get a deal for around $35 million annually after the 2018 season (considering inflation and continued revenue growth). In this scenario, the Red Sox only get him for three years. The other scenario is that he underperforms, in which he won't be able to get $30 million annually on the free agent market in 2018, so he will opt-in to the rest of his contract. If this happens, the Red Sox will be stuck with an aging player who is nowhere near worth the $31.75 million they will be paying him for the next four years.
Another factor is that owners and front offices are learning more about how players age and how risky they can be. Overpaying for a player for a near decade can be disastrous for your franchise. Overpaying for only 1-3 years, though, like the Mets may possibly be doing with Cespedes, will be tough but not a terrible burden long term. Rarely do teams get bailed out like the Dodgers did for Boston in 2012. Front offices are more aware of the fact that players often age faster than they would like, and have adopted the mentality that it is better to lose a player a year before he drops off than be stuck with him for a year too long.
These opposing forces have manifested in an increased complexity of players' contracts. It's rare that both sides will agree to a straight-up, equally spaced contract if the player will be older than 30 at any point in the deal. It seems like this will only increase in future years, and I predict that opt-outs will become the default for deals of three years or longer.
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