A Torrid Love Affair

AP Images/Kathy Willens

Well, it’s done. The Yankees have signed Rafael Soriano for three years and $35 million dollars. Given that Cashman said he was not interested in giving up the first round pick, it came as a bit of a surprise. In retrospect, though, everyone should have expected this.

Two words: Scott Boras. Boras and the New York Yankees have a long history, tied together by big numbers made by superstar players. This isn’t the first time Boras (with some help from the Yankees ownership) has managed to wiggle his grubby little hands deep into pinstriped pockets. As a matter of fact, it’s happened over and over. It makes perfect sense that the team with enormous financial power spends a lot of time dealing with the agent known for record-breaking contracts. Two powerhouses with complementary results should go hand-in-hand, but most of the time, both sides can’t win in a negotiation.

Exhibit A: In 1998, Bernie Williams was coming off a .328/.408/.544 season where he banged 21 homers and 100 RBIs. The offseason started off pretty bleak, though: George Steinbrenner had made it quite clear that his highest offer for the beloved center fielder was five years and $60M and not a dime more. Boras insisted that he had seven- and eight-year offers from mystery teams. There were plenty of people who thought this was a load of bull, but Boras held his ground, so the Yankees eyed Albert Belle instead. But Boras fought. He brought up meetings with both the Diamondbacks and the much-hated Boston Red Sox, who had were rumored to offer our dear Bernie seven years and $90M. When Belle signed with the Orioles, Boras pounced, and before anyone knew it, Williams was a Yankee to the tune of seven years and $87.5M, way above what Steinbrenner originally wanted to pay. In the end, the contract was a pretty good one: Belle suffered hip issues that knocked him out of baseball just two years later, and Bernie hit .298/.386/.480 and signed on for one last year in 2006.

Exhibit B: Alex Rodriguez. People could write books about the Rodriguez-Boras relationship, to say the least. In another example of shrewd Boras negotiating, Alex Rodriguez snapped himself up a 10-year, $252M contract from the Rangers. The franchise seemed to have forgotten they actually had to have that money to pay it, and began searching for trade options. In 2003, there was an attempt to trade Rodriguez to the Red Sox, but the complicated negotiation would have involved losing $30M. Interestingly enough, the trade fell through not because of Boras (who was fine with Rodriguez losing the cash), but the MLBPA, who felt that losing guaranteed contract money set a bad precedent. As per usual though, Red Sox loss was Yankee gain, and the Yankees acquired Rodriguez in February of 2004. But where Boras really showed off his skills was when Rodriguez opted out of the remaining three years and $72M of his contract in 2007 in favor of renegotiation. This decision, as I’m sure you all remember, was leaked during the 2007 World Series and I bet the New York Post had some really, really good front covers discussing the matter in their, ah, unique way. To calm the storm of New York rage, Rodriguez tried to soothe things by contacting the Yankees office directly, at the advice of Warren Buffet. As Rodriguez attempted to repair his public image (never his strong front) Boras took advantage of the fluctuations of the Yankees front office to secure the absolutely insanely absurd 10 year/$275M contract Rodriguez plays under today. He had a bigger hand in the incentives: each time Rodriguez passes a person on the all-time home run list, it’s an additional $6M in his pocket. If Rodriguez becomes the all-time home run leader, his contract will exceed $300M, the first ever in professional sports. I’m sure I’m not the only one who grimaces and tries to ignore how much we’re paying A-Rod in favor of the numbers he puts up, but Boras will be Boras. Truly the best worst contract ever.

I’m glad to say that the story for Johnny Damon is much shorter and sweeter. It was December 2005 and the Boston Red Sox  refused to budge on their 3-year contract offer for their center fielder, the caveman-like Johnny Damon. Damon, who had already admitted that he doesn’t want to be a Yankee, was looking for more than three years, and the Sox would not negotiate down from Boras‘ five-year plan. Boras even tried to get in contact with the Sox’s owner, Larry Luchino, but to no avail, and soon enough, Damon was a Yankee to the tune of four years and $52M. He would go on to hit .285/.363/.458 in the pinstripes and looked significantly less like a yeti, both great things about his tenure in the Bronx. I’m pretty sure I’ll always remember his 2009 double steal against the Phillies. The story has a sad note for everyone who loved Damon as a Yankee, though, and for once Boras’ demand for cash came back to bite his client. Damon demanded no less than the $13M he was paid for any further deals, and the Yankees said no. When they refused to budge, Damon was forced to take a one year, $8M offer for the Tigers. He’s a free agent now, so we’ll have to see how that ends up.

The story continues. In 2008-09 offseason, the Yankees were coming off their first season without October baseball since the strike, and they were out for blood. What do you do when you’re the New York Yankees and you want to win? You use your biggest advantage: in a mindboggling display of financial might, the Yankees signed Mark Teixeira, CC Sabathia, and AJ Burnett. Teixeira, another Boras client, picked up the record for highest paid first baseman with an eight year, $180M contract of his own. While Teixeira’s 2009 numbers were strong (he lead the league in RBIs and home runs), his glacially slow start in 2010 contributed to a down season. Here’s hoping that he’ll be make himself close to worth the $22.5M he’ll be getting in 2011.

Soriano is only another chapter in the long story between Boras and the Yankees. “Like Williams and Rodriguez, he secured himself an exorbitant amount of money; his numbers from the previous year were stellar enough to pretend to justify both the years and the cost, at least for the Yankees. think it’s safe to say that Soriano and his three year, $35M contract won’t be the last time these two powerhouses meet. Andrew Brackman, for example, is a Boras client, and I’m interested to see how he develops as a pitcher and what Boras can do for him. While Boras clients almost never completely live up to their contracts, there is no doubt many of his clients have been incredibly important and still quite valuable to the current Yankees and those of the recent past. Let’s hope Soriano continues this trend.

On extensions and Phil Hughes

One of the reasons Rays fans were happy (read: smug) to see Matt Garza dealt to the Cubs last week was because they expected the money saved on Garza to go towards other pursuits.  One option bandied about was signing a right-handed bat like Manny Ramirez or Andruw Jones. Another was attempting to lock up some of their young talent, particularly David Price, to a long-term deal. It’s doubtful they expected that money to go to Kyle Farnsworth, but hey, that’s life.

Regardless, getting Price to agree to a club-friendly long-term deal would be another coup for a Rays management team who set the gold standard for long-term deals with Evan Longoria.  The Longoria deal is perhaps the most team-friendly contract in all of baseball: a six year, $17.5M contract with three club options of $7.5M, $11M and $11.5M.  In all likelihood they’ll control Longoria for nine years and pay him $44.5 million dollars.  If you buy into the UZR-component of fWAR, his production value exceeded the total cost of his contract at the end of the 2009 season, after only two years.

It seems as if there’s been a rash of these kinds of deals in recent years. Players who have gone this route recently include Troy Tulowitzki, Carlos Gonzalez, Justin Upton, Adam Lind, Ryan Braun, Adam Wainwright, Josh Johnson, Felix Hernandez and Justin Verlander.  Other players have elected to forgo the extension and attempt to reach free agency as quickly as possible.  These players, often clients of Scott Boras, assume the risk of going year to year in exchange for the potential of higher annual paydays. Prince Fielder is a good example of this. After making under a million a year in his first three years with the Brewers, he’s netted $7M and $11M in his past two years and is eligible for a higher payday in his final trip through arbitration again this offseason.

There are pretty simple cost/benefit calculations being made by both the player and the organization. When a player signs an extension, he hedges his risk and gets decent (by MLB standards) guaranteed money early in his career.  This ensures lifetime financial security in the event that the player is unable to net another big payday due to injury or decline in performance.  It also allows him to hit the free agent market while still in his prime. For instance, Justin Upton will enter the free agent market after the 2015 season as a 27 year old after having made $51.5 million.  It’s likely that he could have netted more going year to year in arbitration and then hitting free agency two years earlier, but that’s part of the tradeoff.

The organizations are performing a similar calculation. On one hand, the club can save money by avoiding the arbitration process, which can quickly escalate compensation levels from year to year.  The club also gets cost certainty, and is often able to gain control over some of the player’s free agent years.  For their part, the clubs are wagering that the players will by and large stay healthy and give expected levels of production.  This article from MLBTR explains the rationales even further.  The downside to these deals is that the player could get injured or decline, making the contract a burden.  Scott Kazmir was a tough case for the small-budget Tampa Bay Rays.  The anchor of the rotation for years, Kazmir received $3.785M in his first arbitration-eligible season.  Shortly into the 2008 season, the Rays signed him to a three year deal for $28.5M, buying out a year of free agency, with a club option of $13.5M for the final  year.  Yet one year later Kazmir had struggled with elbow problems and performed terribly.  The Rays decided to cut their losses and were lucky to get someone to take on his contract, unloading Kazmir to the Angels.  It was a misfire for Tampa.

The Yankees have a slightly bigger budget than Tampa, but they must at least be considering what they should do about their young, cost-controlled starter Phil Hughes.  Hughes has just over two years of MLB service time, and becomes eligible for arbitration for the first time this offseason.  The Yankees will control Hughes for just three more years, through the 2013 season, before he becomes a free agent.  Hughes pulled in a little under $500K in 2010, and should be due for a decent sized pay day in 2011.  His traditional stats, favored by arbitrators, were solid: 18-10 record with a 4.19 ERA in his first full season as a starter in the American League East.

Interestingly, the Boston Red Sox were in a similar situation two years ago.  Jon Lester had just completed his first full year as a starter in the major leagues, throwing 210.1 innings with a 3.21 ERA.  His strikeout rate (6.5 K/9) and walk rate (2.8 BB/9) were decent, leaving him with a respectable 2.30 K/BB ratio.  The Red Sox clearly anticipated that Lester’s season was a harbinger of things to come, no surprise given his talent and pedigree, and signed him to a 5 year, $30M extension with a $13M club option for 2014.  The contract is backloaded, paying Lester $1M in 2009, $3.75M in 2010, $5.75M in 2011, $7.625 in 2012 and $11.625 in 2013.  All told, the Red Sox will pay Lester $43M for his 6 years of service, two of which would have been free agent years.  Lester has been dominant in the two years since signing the contract, averaging a 3.14 FIP and a strikeout rate over 9.

By way of comparison, in Phil Hughes’ first full season as a starter he threw 176 innings of 4.19 ERA ball, with a 7.5 K/9, 3.0 BB/9 and a K/BB ratio of 2.50.  The ERA (and FIP) are higher than Lester’s, but the strikeout rate and K/BB ratio are better.  While no one expects Hughes to replicate Lester’s 2009 season this year, hopes are high that he can build on his performance.  So given what we know about performance and injury risk, should the Yankees extend Hughes now, should they extend him after the 2011 season or should they continue to go year-to-year until he reaches free agency?

The largest factor to consider is Hughes’ health.  Hughes has never thrown 200 innings in his entire career, and prior to the 2010 season had a reputation as being injury-prone.  He tore his hamstring in Texas in 2007, and then sprained his ankle rehabbing the hamstring tear.  The following year he injured his ribs and missed most of the season.  In 2009 he stayed healthy in the bullpen, and then followed that up with another healthy year in 2010.  The injury history isn’t great, but there was never a major shoulder or elbow injury for Hughes.  Another factor to consider is his performance.  Simply put, what do the Yankees expect him to become?  Is he going to take a huge step forward in 2011 like Lester did in 2009, improving his peripherals and expanding his pitch repetoire?  Or will he replicate his 2010 season?  Finally, how much will it cost the Yankees to wait on an extension?  Obviously a five year deal is going to be cheaper for the Yankees now than it would be if Hughes has a great year in 2011.  Is it worth it to wait?

All told it may be prudent to delay talks of an extension with Hughes until after the 2011 season.  He may go out and hurl 200 innings of sub-4.00 FIP ball with solid strikeout and walk rates this year.  It’s true that the price of an extension would be higher next winter, but the Yankees will have gained greater insight into what to expect from Hughes in the next half-decade.  Fortunately, increased price of an extension is hardly going to bust the budget for the Yankees, so they may be more interested in trading money for certainty.  Their money is a great asset, and it allows them a certain amount of patience that other clubs don’t have.  Yet just because they have this leeway doesn’t mean they should look past the potential benefit of an extension, and if Hughes blossoms in 2011 the Yankees should try to lock him up.  This will allow them to control his cost and keep him on the roster for longer, giving them more money available to put in the piggy bank with Justin Upton’s name on it.

Open Thread: Cut those sideburns!

What the ... ?

What the hell is that, Robbie? That facial hair makes him look like a skinnier David Ortiz, and I don’t like that at all. Well, unless he hits like 2004-2007 David Ortiz, of course. I’m cool with it if that happens. Robinson needs to learn a lesson from Don Mattingly and Mr. Burns and cut those sideburns! (h/t ‘Duk)

On a more serious note, here’s the video of Jack Curry’s trip to the Dominican Republic, where he followed Robbie around during his offseason workouts. It’s not long (about four minutes), and I suggest you give it a watch. Once you’ve done that, use this as your open thread. The Devils, Knicks, and Nets are all playing at different times, but talk about whatever you want. Treat the thread as you see fit.

Olney: Soriano deal was ownership-driven

Via Buster Olney, there was a difference of opinion among the Yankees decision makers regarding Rafael Soriano, and the decision to sign him was one driven by ownership. Bob Klapisch backed up Olney’s report, and Peter Gammons specifically mentions team president Randy Levine as the culprit.

This is generally bad news, because you want the baseball people making the baseball decisions while ownership worries about making money and doing whatever else baseball team owners do. Brian Cashman was given autonomy after the 2005 season, but since then the higher-ups have gone over his head for Alex Rodriguez‘s latest contract and now Soriano. This is not a good trend, and if it continues to happen the Yankees will be right back where they were in the mid-aughts.

The RAB Radio Show: January 14, 2011

With the Rafael Soriano signing in the books, Mike and I examine the move from both the near and far perspectives. There are plenty of aspects to consider, so we’re not short on words.

This deal has implications that stretch further than the bullpen. We go over those, which, as you might imagine, include Joba.

Podcast run time 27:17

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Intro music: “Smile” by Farmer’s Boulevard used under a Creative Commons license

Olney: Yankees tried a sign-and-trade for Balfour

Via Buster Olney, the Yankees tried to work out a sign-and-trade scenario with an unknown team that would have netted them Grant Balfour. Joe covered this exact idea back in December, though it was framed around Rafael Soriano. Basically, some team with a protected pick would sign Balfour and them trade him to the Yankees for a prospect that is equal to or greater than the value of the pick they gave up. Balfour would have had to consent to the trade per MLB’s rules since it would have occurred so soon after he signed.

Obviously this all took place before the Yanks agreed to sign Soriano and Balfour went to the A’s. I’m guessing that once they couldn’t get a trade for Balfour worked out, they decided to sign Soriano. If you’re going to give up the pick for the reliever, at least make it the best one available.

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