Archer’s contract another sign of baseball’s economic health
All those worried that a work stoppage will shut down baseball after the 2016 season, fear not.
The owners will never let it happen. Not when they are making so much money. Not when so many talented young players are agreeing to below-market deals.
The monster extensions and free-agent contracts grab headlines, prompting the usual predictions of gloom and doom from the uninformed. But in reality, fewer and fewer stars are hitting the open market and over the past decade, the players’ share of overall revenues has decreased.
The game is trending younger in the drug-testing era — and many young players are accepting club-friendly, long-term contracts that delay their free agency, effectively giving teams multiple discounts.
Right-hander Chris Archer’s new six-year, $25.5 million contract with the Rays is the latest example of such a deal. The agreement includes two club options that could raise the total value to $43.75 million.
Archer, 25, can hardly be faulted for jumping at such a windfall — he is gaining financial security despite having less than one year of major league service, when all pitchers fear injury. Heck, if he were my son, I probably would have advised him to take the deal.
Still, the willingness of so many youngsters to sacrifice dollars for security — and in many cases accept multiple club options that further limit their earning power — is disturbing to many player representatives.
A player’s final year of arbitration and early years of free agency rank among his most valuable rights. The later a player hits free agency, the greater the chance he will sign at lesser salaries, and for fewer years.
I’m sure many fans don’t want to hear it, not when even largely unproven players such as Archer will make more in their first contracts than most people will earn in their lifetimes. But the players’ percentage of the revenues was 63 percent in 2003, according to the Sports Business Journal. It was about 50 percent last season, according to sources with both the players and owners.
In other words, if you want to scream about the players getting filthy rich, understand that the owners are grabbing increasingly larger slices of a bigger and bigger pie. The sport’s revenues topped $8 billion for the first time in 2013, and commissioner Bud Selig said last week that they could top $9 billion in ’14.
The dollars overall are so big, it’s understandable that many players find even below-market offers to be irresistible. Come 2016, the union might even prefer to avoid a work stoppage rather than fight for a bigger share.
Yet, if anything, the players should be making more money. And the union has to be concerned about losing its edge.
Remember how this union became so powerful: Through a methodical, step-by-step escalation in salaries in both salary arbitration and free agency. One contract built upon another, pushing the ceilings ever higher.
That is still happening at the high end. Clayton Kershaw signed for $30.7 million per season, and Miguel Cabrera $31 million; Mike Trout will average $33.5 million in his free-agent years. But when young players forfeit dollars in both arbitration and free agency, the union as a whole suffers.
Players, though, are not the only ones who fear losing their best chance for a big payday. Many agents, particularly those from smaller companies, also jump at such deals out of fear — the fear that they will lose their clients to bigger agencies before ever receiving a substantial commission.
That fear is quite valid; client-stealing is the scourge of the agent business, and many players are quick to change representatives, usually for the promise of greater riches.
The effect of that fear, meanwhile, is quite real.
Of the 31 pre-arbitration deals that have been done since 2000 with multiple club options, 26 were done by smaller or mid-level agencies, according to one player representative. SFX/Relativity, a larger group, did the other five contracts, including Archer’s.
A few examples:
* Royals catcher Salvador Perez, who agreed to a five-year, $7 million contract with three club options before he had a year of service. Perez might be the next Yadier Molina, but the three most valuable years in his deal – his final year of arbitration and first two of free agency – are club options valued at $3.75 million, $5 million and $6 million. Over time, inflation will make those numbers look even smaller. And if the Royals exercise his options, Perez will not be a free agent until after the 2019 season, when he is 30.
* White Sox left-hander Chris Sale, who signed a five-year, $32.5 million contract with two club options after two years of service. At the time the deal was announced, on March 7, 2013, Sale had been a starter for only one season. He was 23, married with one child and planning to have more. Still, Sale gave up three years of free agency, including club options of $12.5 million and $13.5 million in 2018 and ’19 – bargain rates for one of the game’s top left-handers. He will not be a free agent until he is 31.
* Rangers left-hander Martin Perez, who agreed to a four-year, $12.5 million contract with three club options before he had two years of service. Perez’s options also cover his final year of arbitration and first two years of free agency. Their values: $6 million, $7.5 million and $9 million. He will not be a free agent until he is 30.
Again, players cannot be criticized for accepting life-changing money. We rarely, if ever, know their family circumstances, their particular financial needs. But to some agents, even the risk of injury for pitchers is overstated.
Lefty Scott Kazmir threw only 1-2/3 innings in 2011 and ’12 before bouncing back in ’13. His reward: a two-year, $22 million free-agent contract with the Athletics.
Righty Bartolo Colon threw only 257 innings from 2006-09 and did not pitch at all in ’10 before gradually restoring his value over the past three seasons. His reward: a two-year, $20 million free-agent contract with the Mets entering his age 41 season.
Righty Kris Medlen underwent his first Tommy John elbow surgery in 2011 and recently underwent his second. Yet, he already has banked $8.4 million in his first two years of arbitration, and that number could rise to $14.2 million if the Braves tender him a contract next offseason at his 2014 salary.
Of course, all of these examples are easy for me to cite; I’m not the one taking the risk. A pitcher can blow out his shoulder on one pitch, and shoulder surgery is much more difficult to recover from than Tommy John surgery.
Thus, the problem for the union is that it cannot reasonably advise a pitcher such as Archer to reject a $25.5 million guarantee, no matter how much more he might project to earn year by year.
The owners are on the power play. And come 2016, when the labor deal ends, they are not going to let it expire.