Walker, Paxton, Hultzen: the Right Price Points, 2


Q.  OK, let's say the M's tempt their youngsters with a quick $1M per year.  But you say $400K isn't a lavish lifestyle?  It would be for me.

A.  You'd be surprised.  You gross $400k, you take home $250K ... but you've got to secure your future with a good part of it.  The kids gotta go to college.  You're living on $100, $150 per year or something, and that doesn't put rolls of C-notes in your pocket at the 6-star hotel in Hong Kong.

$1M per year, all spendable, that's different.  Now the kid can trick out the Ferrari the way he wants it.  You're making $100,000 per month during the season, by the fourth month you don't know what to do with it.

The Moore-type deal is not only sensible fiscally, it also moves the kid into the rich man's lifestyle.


Q.  Is a 30% discount reasonable, for a kid trying to sell a future TOR year and get paid for it today?

A.  It's where I'd be.  

There is no way anybody can nail this 30% figure down, because there are 100's of variables to consider; it's an estimate on everybody's part.  

Previously we ran this study from Bill James Online.  Excerpted:

Suppose we focus only on pitchers whose ERAs are no more than 5% higher than the league ERA.   Then we have 428 first-year starting pitchers, of whom 288 make 25 or more starts the next season (two-thirds), 233 the second year following, 206 the third year following, 191 the fourth year following.    So a 30% discount for injury risk seems reasonable.

From 1970 to 2005, you did indeed have about 25% to 40% of the good young pitchers burn out or become ineffective within 5 years.  You had your Correias, Rozemas, Ankiels, Kazmirs, etc.  But around 70% of them stayed healthy and effective.

Does that seem high?  James calculated it out, based on all 1970ff pitchers with 25+ starts.  I'm pleased to see that the number is so high.


Q.  Where does the Lincecum scenario fit in?

A.  The kid is indeed giving up the $50M scenario.   But he's getting $15M guaranteed, and that will go to $30M -- as in "probably" will get $30M.  If he's a TOR, he's going to get $30M.  That cuts the tradeoff down quite a bit.

Also:  if you really turn out to be Tim Lincecum, and you sacrifice a couple of arb awards, your huge FA payday is on the agenda in that life variation, anyway.


Q.  These numbers still seem to have a lot of slop in them.  Are you sure?

A.  The Rays did the hard part.  They laid the groundwork by creating the Moore deal.  Now there's a precedent.  You go up or down a little bit.  The baseline is there.


Q.  Okay, from the Mariners' point of view... suppose they gave 8-year deals to three different rookies.  How could that be sensible?

A.  Bear in mind that the Rays guaranteed only $15M to Moore.  A top-of-the-rotation starter routinely earns $15-25M per season.  Doug Fister earned $25.1M last year.  Michael Pineda earned over $15M, and he was shut down in August.

You're not risking anything by guaranteeing James Paxton the equivalent of one partial season as an ace.  C'mon.  

It's a no-brainer for the club.  The anguish is on the player's part, who can't pass up a chance to lock in $15M even though it's costing him a ton to do it.


Q.  But to three different guys at the same time?  That increases your odds that one will fail, right?

A.  If you've got a tremendous bet available, that's great.  If you've got three different tremendous bets, you cannot lose.

The M's guarantee Walker, Paxton, and Hultzen $20M each -- there's a nice round number for Hultzen's daddy, eh - then at least one of those guys is certain to earn $60M on the field.  Felix Hernandez earned $127.7M in his first six years.

As good as these three kids are, as clean as their motions are, the M's would be derelict not to push Matt Moore contracts at them.  There's no downside for the club, mathematically speaking.  They're exploiting the fact that the kids' lives require the first $15M a lot more than the $$ following.  To fail to exploit that would be silly.

And it's not like it's unethical.  You're not being malicious to buy out a startup company at a price that makes the founders' dreams come true.


Q.  Could Jesus Montero get this kind of a deal?  Could Ackley?  Carp?

A.  Jesus Montero, maybe - hitters are not subject to injury the same way.  You'll notice that Evan Longoria agreed on* his deal before he ever played in the majors - there was at least a little uncertainty in Longoria's mind at that point.  If you want to do an 8-year deal with Montero, you'd better catch him before he's a nationwide star.  

I certainly would do it.


Ackley - forget it.  He's a Boras client.  He's going to play his 6.6 years and then look for $200M.  Carp - he's not good enough for this kind of offer.

But Montero, I've already seen enough.  I'd offer him the Longoria contract.


It's kinda weird that Longoria and Moore signed their deals, totally completed, just days after their callups.  Here y'go, kid, contract's ready and we wanna get you into Safeco.... you wonder if the M's are negotiating Moore-type deals as we speak.

They better be.


Dr D 



MarinersInMacau's picture

Great read.  Love the whole idea of taking away all risk for the kids, while buying back overall flexibility for the ballclub.
Something to consider when talking about creating young multi-millionaires - who's to say that a 19-year old or 22-year old won't fizzle out BECAUSE he's already taken care of for the rest of his life?  Safety nets tend to promote reckless behavior.  For the impassioned player, $15 million is simply achieving security while pursuing the real goal of being the best that you can be.  For the majority, however, $15 million means you can sit on your but, and get a free ride the rest of your days.  Yunieski Betancourt comes to mind.
On the whole, you'd better trust your physicians and advance scouts a ton to ensure these kids are:
1. Good health risks
2. Possess the right character
3. Possess enough non-financial motivation to keep them hungry
Great topic.


Though his contrast was Soviet-Cuban poverty, into American millions.  On the scoreboard it listed his favorite food as black beans and yellow rice...  :- )
Danny Hultzen, as y'know, grew up in a relative mansion, and his getting $50,000 per bi-weekly seasonal paycheck may still leave him pretty humbled when some guys around him in the locker room are making more like $1M every two weeks...
At $1M per year, I bet you that the kids still feel like they're on the outside looking in when they walk around All-Star locker rooms...

OBF's picture

I think this angle gets way to much play, especially from us 9 to 5 schlubs.  I go to work and do a job that I... tolerate, maybe enjoy on a really good day, hate on the bad ones, but I do it predominatly for the paycheck although I do get satisfaction from my coworkers and when customers report they are happy as well.  So it makes perfect sense to us then that if we became finacially secure we would quit our jobs and go find something we love to do.  However these guys ARE doing what they love to do.  Just like when I get done working I go to the Racquetball courts and play like my hair is on fire or go wail on my guitar like I am Van Halen because I LOVE it.  If I got paid to do either one that would just be a big time bonus :)
Of course you are right that there are exceptions, like Yuni, whos life experince is not applicable to 99.9% of baseball players (and certainly not applicable to Pax, Walk and Hultz).  But even with Yuni I dont know if you can say his baseball stagnation is 100% due to being lazy once he got paid, he had limitations regardless (like plate patience) and I mean he is STILL a starting SS in the mlb so...  it isnt like he just quit or something.


The guys who sign huge contracts and then drop off... I wonder if there isn't some factor other than that they've got a Maserati in the driveway.
Most of these guys are older, of course, and they're moving into really *decadent* lives.  Maybe their age factors in; generally, you're not as ambitious at 32 as you are at 22.


Conor Glassey says that the big three pitchers will start the year in AA together.  


He already pitched there last season. I guess it's a way to keep pressure off the org to have them in the majors the moment there is an opening or someone struggles. It will be the perfect chance to see exactly how Walker compares to the older, college-trained pitchers, which will be fun.

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