Tuesday, November 23, 2021

Newsletter Excerpt, November 23, 2021 -- "AL East Notes"


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Tampa Bay Rays

I wasn’t sure where I was going in this space, so here’s a hearty “thank you” to Wander Franco and the Rays for providing a topic.

As reported by ESPN’s Jeff Passan, the Rays and Franco have reportedly agreed on a contract that would guarantee Franco $185 million through 2032, with an option for 2033 of $38 million. The deal is the largest for any player with Franco’s limited service time -- he’s got just about 3 1/2 months in the majors -- and the largest the Rays have ever committed to. It locks in a player whose very short track record marks him as not just a future star, but as one of the best players in baseball over the next decade.

Any time we get one of these deals it opens a debate as to what the player has given up on the back end for security on the front end. In this particular case, I don’t think you can criticize Franco at all. It’s $185 million guaranteed before his 21st birthday. I can tell you about expectations and projections and historical comps, but he’s the guy who has to keep playing well and avoid career-altering injuries every day.

The way the game is structured now, it would be 2025 before Franco was able to get even a fraction of his market value as a first-year arb player. That’s three productive seasons away from even being able to ask an arbitrator for $7 million or $8 million. It’s three more before he can go into the market and get paid what he’s worth, and even then there are brakes built into the system -- maybe even more of them by then. Franco wouldn’t become a free agent until after the 2027 season, which is one additional CBA down the road. Who knows what rules will be in place restricting his compensation at that point? I don’t think we have any sort of handle on what Franco is leaving on the table here.

These long-term, pre-arb contracts aren’t going to pay a player his full market value. The team assumes injury and performance risk in making this commitment. They’re not a charity, though, they’re trying to lock in a potential franchise player through his peak at a discount. Every now and then there’s an Ozzie Albies deal that is a failure of representation, but for the most part everyone is acting in their best interest and trying to reach a fair deal.

This deal, in fact, compares better to what Franco’s peers have made through age 31, the guaranteed part, than you might think. It guarantees him $185 million. Bryce Harper, through age 31, will have made about $230 million. Mookie Betts around $160 million. Mike Trout will be around $250 million by then. Francisco Lindor, $209 million.

(Note: These are all approximations that don’t adjust for 2020 reductions in pay or salary deferrals, and I’m assigning signing bonuses as paid out according to the essential Cot’s. Season to taste.)

Those players, of course, have money coming to them after the age of 31 owing to long-term deals signed as they approached free agency. That’s where the “he left X on the table” comes from. It’s a false comparison, though, because it compares years for which the above players are guaranteed money to years in which Franco’s compensation is as yet unknown. It is very likely that Franco will be paid and paid well from age 32 into future years, and in the case that he isn’t, it likely means that he was fortunate to guarantee himself $185 million at 20 years old, because his career has probably gone sideways.

The only way to see this as a bad deal for Franco is to project a career path in which he is so good in the years under contract that he is far underpaid for his performance, while also having something go so wrong in 2032 or 2033 to wreck his market value at that point. That’s what the comps to older players with guaranteed deals into their mid- and late-30s do -- compare known salaries to a zero for Franco, which is silly.

This elides any soft factors, of course. I don’t know what the value of never having to sweat your next contract is for a pre-arb or pre-free-agency player, but I’ll guess “not zero.” I don’t know what the value of guaranteeing yourself to be set for life is, but I’ll guess “not zero.” There’s the time value of money as well -- the money Franco makes in the next few years that he wouldn’t have made otherwise is money that can be invested to earn more.

This will be the biggest thing the Rays do this offseason, the thing that they supposedly never do, even though they did it with Evan Longoria twice and with Kevin Kiermaier and now with Franco. Maybe Franco won’t play out the contract as a Ray, being traded down the road, as Longoria was. The Rays, of course, invented the move of trading a player when his compensation began to catch up with the value of his performance, and it’s revolutionized baseball. You wonder what Branch Rickey or George Weiss or Charlie Finley could have done with that idea, if they’d only thought of it.