Are These Mega Contracts Worth It?

Posted by Noah Wright on

By: Noah Wright

 

In just the past month alone, we’ve seen the contract record broken...twice. On March 20th, Mike Trout finalized a 12 year extension with the LA Angels that will pay him a grand total of $430 million. That break’s Bryce Harper’s mega deal that was worth $330 million over 13 seasons he signed with the Phillies on March 1st. That’s not even the last $300 million deal this year. Third baseman Manny Machado signed a $300 million deal over 10 years with the SD Padres at the end of February.

Needless to say, these contracts are absolutely insane. If you ask me, only Trout was paid what he is worth. Even then, $430 million is an extreme number. But many ask, are these contracts actually worth it? Well, this is how I see it. There are 2 sides of baseball. There’s a baseball side, and a business side of the game.

First, I want to start with the baseball side. Decisions that fall under the baseball side of things, for example, include if the team should trade a star player for a prospect boatload. From this side of things, these mega deals aren’t worth risking. A lot can happen in 10-12 years. Player decline, injuries happen, and that can lead to a lot of money being wasted. Even if they’re not a ‘bad’ player, they’re still clogging up payroll. A good example of this is Zack Greinke. Greinke can still be considered a top of the rotation starting pitcher, even at age 35. Last season, he posted a 3.21 ERA, 3.71 FIP, and 1.079 WHIP. He had kept walks to just 1.9 per 9 innings, while keeping a decent K/9 rate of 8.6. However even with the good performance, his salary is massive. Next season, he’ll be owed $34.5 million. For 2020 and 2021, Greinke will be paid $35 million. Whether or not he’ll keep up that performance is another question, but his salary has kept the D-Backs from spending big. His contract takes up 28.75% of the D-Backs payroll this season. We’ve also seen this work in the opposite way, many, many times, when a player declines to an abysmal level, but is still getting paid like they’re in their prime. This is the case for Albert Pujols, who’s getting paid $28 million in 2019 at the age of 39. He hasn’t had even an average year with the bat since 2016, and he hasn’t been above average since 2012. Jacoby Ellsbury is an example of injuries making a contract go sour. Ells, a former MVP candidate in 2011, was paid $21.1 million in 2019 to be injured the entire year. Since signing the 7 year, $148 million deal back during the 2013-2014 off season, Ellsbury has only played 140 games twice. He’s facing injury again this season, and will be paid over $20 million for 2019. This will even be a struggle for teams like the Yankees, who have Giancarlo Stanton’s massive contract on the payroll (plus Ellsbury’s). That will definitely come into play if they want to lock down Aaron Judge, Miguel Andujar, Gary Sanchez (if he bounces back), and Gleyber Torres long term.

Then there’s the business side of things. This is where things like ticket sales, jersey sales, and souvenir sales are taken into account. When it’s about the business side, things are different. Harper broke two records when he signed his deal with the Phillies. One, the contract record, and two, the jersey sale record. Within the 24 hour period Harper signed, he broke LeBron James’ 24 hour sale period. According to CBS, sales of Phillies’ merchandise was up 5000% compared to the same 24 hour period from the previous off-season. Ticket sales for the Phillies also skyrocketed when Harper signed. When Machado signed, the Padres saw a $3 million jump in ticket revenue. Then there’s the jersey sales that also probably made a large jump after Manny signed. If the Angels didn’t give 100% effort in trying to extend Trout, then there would probably be a large decrease in ticket sales overall, meaning less revenue. I personally saw this with the Pirates last year. The team had traded team favorites outfielder Andrew McCutchen and pitcher Gerrit Cole, and got hit with a drop in ticket sales. From a business perspective, these massive contracts to keep around good players is worth it. When you put a good product on the field, and show willingness to keep it there, more people will buy tickets and souvenirs.

Each side has it’s pros and cons. If you do things for a baseball reason, your team will be more successful in the long run. You won’t have a clogged payroll, and the players you do sign, you can trade. Even as good as Bryce Harper or Manny Machado are, those contracts will be extremely, extremely hard to move. The same goes for Trout, but on a greater scale. We’ve already seen how it affected the Giancarlo Stanton trade. However, if you do things from the business side, you’ll be able to regain the revenue you lost in the contracts fairly quickly. Trout’s contract, Harper’s contract, and Machado’s contract will pay off in terms of money. The owners will eventually make back their $300-$400 million on the jersey/souvenir, and ticket sales alone that each player will bring in. In the end, there is no clear way to tell if the contracts are actually worth it, as you could make a very good argument to be made for each side.  


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