In case I haven't mentioned this, I consider it gauche to discuss a prospective free agent's future until that player's season has officially ended. But Pablo Sandoval's season has ended! Which means we can talk about his free agency without any pangs at all.
Monday, FanGraphs' Dave Cameron went through the math on his way toward explaining why it's perfectly rational for Sandoval to expect a six-year contract for north of $100 million ... even though he'll almost surely seem overpaid at the end of such a contract.
Backloaded contracts allow teams to give out larger total contracts -- which players like -- because they act as a kind of no-interest financing. Teams can essentially borrow from themselves by pushing the most expensive parts of a contract into the future, even though that means guaranteeing that the player is going to be drastically overpaid by the end of the deal. It's a trade-off teams are willing to make, however, as pushing the largest salaries to the end of the deal often means that another front office -- and sometimes, another owner -- will have to deal with the ramifications of that backloaded deal, giving the guy who gave out the contract the largest benefit without having to personally incur the cost when the deal becomes player friendly.
Further, as Dave points out, to properly evaluate a contract, you should look at the whole contract rather than individual years. Sure, a lot of players seem "overpaid" in the so-called "out years" of a contract ... but often they're "underpaid" in the earlier years, and so everything balances out nicely. Sandoval might be worth $25 million in the first year of his new contract, but only $9 million in the sixth year. But nobody's going to pay him $25 million in the first year or -- assuming a six-year contract -- $9 million in the sixth year. The money will be spread out, because that's how the teams (and probably the players) like it. So Panda might instead sign a contract that pays $18 million each year for six years. Which might look like a bargain in the first year and a millstone in the sixth year ... but works out well for everybody, and especially the club, because Sandoval gave them $108 million of value on the field and the club actually spent less than $108 million in 2015 dollars.
Cameron's math is unassailable. The only thing that's missing is the psychology, of both the player and the team. Actually, let's leave aside the psychology of the player, since it's largely unknowable and anyway Dave's making a general point here, which is that long-term, seemingly backloaded contracts make sense for financial reasons. Which I think he's right about.
What Dave doesn't address is the team's psychology in the out years. After predicting a six-year contract in the neighborhood of $120 million, Dave writes, "we shouldn't freak out that a team was too dumb to realize that the 2020 version of Pablo Sandoval is going to suck. They know that. Pablo Sandoval probably even knows that, which is why his agent is trying to get him a guaranteed contract for that year in advance ... Contracts that end badly aren't always mistakes. They're usually designed that way on purpose."
If by "usually" Dave means more than half the time, then I think he's right. Since more than half the teams know what they're doing (Ryan Howard's contract was not designed that way on purpose). But here's where the psychology comes into it. Dave's got Sandoval worth approximately 1 Win Above Replacement in 2020, the sixth and last season of this hypothetical contract. Let's assume for the moment that he's healthy enough to play, but does (to use Dave's word) suck. If the Giants are paying him $18 million, will they treat him like a player who sucks, or like a player who's earning $18 million (or even more, if the contract is literally backloaded)?
Well, it's hard to say. But I think most teams have an exceptionally difficult time ignoring the salaries of their players. Or what if the suckage begins earlier than expected? What if Sandoval struggles badly in Year 5, to the point where he's clearly hurting the team? Would the Giants just cut him during or after the season, and eat that $18 million (or more) in 2020?
Well, they might. But we've seen their patience with Tim Lincecum, and before him Barry Zito. We've seen the Braves' patience with Dan Uggla, and now B.J. Upton. I'm sure weâll see the Angels' patience with Josh Hamilton, and Albert Pujols. I'm sure we'll see the Rangers' patience with Prince Fielder, and of course there's the Strange & Ongoing Case of Alex Rodriguez.
None of which is to suggest that Sandoval shouldn't get his $110 million. He's a pretty good player and we know the clubs have money to burn. But when you figure these things, you have to figure more than the financial cost. There's another cost, an opportunity cost, that's paid when you're paying a player so much that you just can't bring yourself to replace him. We've seen it before, and we'll see it again.
