Rob Manfred is complaining about opt-out clauses:
“The logic of opt-out clauses for the club escapes me,” Manfred told FOX Sports on Thursday night. “You make an eight-year agreement with a player. He plays well, and he opts out after three. You either pay the player again or you lose him.
“Conversely, if the player performs poorly, he doesn’t opt out and gets the benefit of the eight-year agreement. That doesn’t strike me as a very good deal. Personally, I don’t see the logic of it. But clubs do what they do.”
Opt-outs should lower the value of the contract, so in a way it’s good for the team in the long run. I also suspect the real reason is that neither teams nor players are willing to offer or take very high salary, short term contracts. When thinking of signing a player around 30 years old, teams know they are going to pay for a long decline if they go more than four or five years. Most of the value of the player will be realized in the first three or four years. So why not offer a lot more money for a shorter period of time. In other words, why not pay Jason Heyward $120 million for four years? The team locks in his prime, and someone else pays for the decline?
Players like the long-term security, since they believe they’ll be great forever. MLB likes the long term contracts keeping the average yearly salary lower. It’s been 15 years since the Alex Rodriguez contract. We should be brimming with $40 million a year players. Instead, we’re just breaking $30 million a year. Since the A-Rod contract, owners and their GMs learned to game the free agent system to their advantage (as the players union had before that). Opt-outs, especially ones that are front loaded, are one way of dealing with that.
Consider this scenario.
A team and an athlete sign a contract where the team hands over to the athlete $120 million, all at once (or if its spread out, its for tax reasons). In return, the athlete is committed to play for that team each year, for the rest of his life, but provided his play falls within certain performance metrics.
If the athlete’s performance exceeds these metrics, he is no longer required to play for that team. He can go to another team and sign with them for more money. Otherwise, he has to be happy with the $120 million and continue to play for the same team. But the team can release the athlete from their obligation to play for them at any time, plus there is a clause that if the athlete doesn’t get a certain number of at bats/ innings in a season, he can go try his luck with a new contract with some other team.
That pretty much mirrors what is going on with the standard baseball contracts. It would be in the athlete’s interest to have the things that can release him to sign a new contract more likely to happen, and for the team the opposite. Athletes just like the stability of knowing they will get paid $20 million for six years, instead of $120 million all at once. But fans -and writers- get confused because the result is some athlete close to retirement, who spends most of the season on the bench, is being paid $20 million that season when it really was $120 million for his peak performance six seasons earlier.
Ed » Yes, that’s basically right, however, I suspect what would be best for everyone is to pay the athlete close to what he is delivering, so you don’t tie up $20 million in salary in a later year that could be spent on a good player.