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Monday, March 31, 2008

MLB Teams Eat Big Contracts

Bob Nightengale of USA Today wrote this article in today's edition about the Orioles' release of Jay Gibbons (whom they owe more than $11 million) and the Astros' release of Woody Williams (whom they owe more than $6 million). I give both teams' credit for making what had to be tough decisions (because not every team is named the Yankees or the Red Sox). It makes you wonder the thinking that must be going on in Philadelphia, where Adam Eaton is owed $16 million (and still penciled in as the #5 starter). Yet, if you think the Phillies' have problems, the Giants still owe the farm to Barry Zito, who had a horrible year last year and doesn't project to do much better this year.

So what does all of this mean? In a game defined by statistics, and where the stats have become much more insightful and pronounced, teams will scrutinize much more significantly whether they'll ink players to long-term deals. Sure, there will be an occasional market feeding frenzy (such as the one that got Aaron Rowand $60 million over 5 years last year, precisely because the Giants had to do something), but I think the trend will be to shorter (and perhaps slightly bigger dollars) contracts along what Andruw Jones signed with the Dodgers in the off-season (2-year deal at at least $12.5 million per).

Why? Because Zito proves that hurlers aren't worthy of long-term deals, and Tommy Glavine also proved that his recently concluded four-year contract with the Mets was only a break-even proposition. Three-year deals could well be the norm within the next five years, with four years being the max for pitchers. Position players could do slightly better.

And then there's the issue of position played and body type. For example, the Phillies and Ryan Howard apparently remain "far apart." Does that mean the Phillies are in the $14-$16 million range for a five-year deal and Howard wants $20 million per year for 7 years? Can that gap be bridged? Do the Phillies commit that much money to a big person? I know that might sound silly, but Baseball Prospectus has the numbers on the longevity of big players. Which is why the Phillies might be reluctant to give a 7-year deal to a 28 year-old player. Fortunately, they dodged an awful bullet when Scott Boras and Kyle Lohse rejected a three-year, $21 million offer after last season; Lohse re-signed with the lowly Cards for one season at $4.25 million.

Put differently, the more data that exists, the more scrutiny teams will give to player contracts. It could well mean that the extremely well capitalized teams fare better, because they'll be better able to eat their mistakes. But for most of the teams, going out five years on a guaranteed deal for a big-name player is a risky proposition.