Overthinking It: Judgm... (08/09)
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August 9, 2010 Contractual MattersNo Guarantees
It’s easy now, seven years later, to forget how far the Tigers had fallen in 2003. Outscored by 337 runs, Detroit won just 43 games while losing 119, more than any other team in American League history. Only a 5-1 run in the season’s final week separated Detroit from passing the 1962 Mets for the most losses in modern major-league history. This year’s worst club, Baltimore, is suffering through a dismal 2010, but the Orioles are on pace to finish a dozen games better than the ’03 Tigers. Tigers general manager Dave Dombrowski engineered a turnaround which began in earnest with gambles on catcher Ivan Rodriguez and right fielder Magglio Ordonez, two veteran free agents with high risks of injury. Though Pudge has now moved on, Ordonez remained a productive force in the middle of Detroit’s lineup until late July, when a fractured ankle ended his season and left the Tigers looking to 2011. The injury also ensured that Ordonez will not be able to reach the playing time level required to guarantee the $15 million option in his contract for 2011. Detroit’s acquisition of Rodriguez served as a precursor of sorts for the Ordonez deal. After a memorable postseason in which he hit three home runs and led the Marlins to the 2003 World Series title, Pudge hit the free-agent market in the offseason at age 32. He proceeded to surprise just about everyone by signing with the last-place Tigers. Agent Scott Boras trumpeted the deal as a four-year, $40-million coup for his client. But Detroit’s exposure was limited by a clause giving the Tigers the right to void the contract after the first two years in the event Rodriguez spent 35 days on the disabled list because of a spine injury during 2004, 2005, or 2006. That reduced the guaranteed money in the deal to $20 million, or a present-day value of about $19 million when the contract’s deferred money was taken into account. The unique agreement paid off for both sides, as Pudge played in an average of more than 130 games a year and helped propel the Tigers to the 2006 American League pennant. Dombrowski and Boras worked out a similar deal the following offseason when the Tigers signed Ordonez to a five-year, $75 million deal which, with options, could reach $105 million over seven seasons. Ordonez, then 30, had undergone surgery to repair torn cartilage in his left knee the previous summer. He then developed bone marrow edema in the knee and traveled to Austria to visit a doctor for treatment. Limited to just 52 games in 2004, Ordonez was the riskiest free agent on the market. So again, Dombrowski limited Detroit’s exposure with a clause giving the Tigers the right to void the contract after the first year if Ordonez landed on the disabled list for 25 days or more with a recurrence of the knee injury. At the same time, the deal rewarded Ordonez for staying healthy, giving him the chance to guarantee the option years by reaching playing-time milestones. Under the agreement, Detroit held a $15 million option for 2010 with a $3 million buyout and a $15 million option for 2011 with no buyout. But Ordonez could guarantee the option-year salaries with 135 starts or 540 plate appearances in the previous season or 270 starts or 1,080 plate appearances in the previous two seasons. If the options vested, the 2010 salary became $18 million and the 2011 salary would be $15 million. As with Rodriguez, the deal worked for both parties. After a stint on the DL with a hernia in the first year of the contract, Ordonez has been relatively healthy and productive, posting a triple-slash line of .318/.381/.492 with Detroit. He tallied just enough playing time to guarantee the $18 million option for 2010, but his recent ankle injury ended all possibility that the 2011 option will vest. Though the Tigers retain a 2011 option for Ordonez, it’s unlikely they’ll devote $15 million to a 38-year-old who has not put up a WARP of more than 2.8 since 2007. Other clubs could face similar decisions, depending on whether players reach the thresholds to trigger vesting options in their contracts. Several million down the road from Ordonez is second baseman Alex Cora, who was released by the Mets this weekend after compiling an underwhelming .207/.265/.278 line in 62 games this season. The decision came with Cora just 18 games shy of reaching the 80 games needed to guarantee his $2 million option for 2011. The contract of Mets closer Francisco Rodriguez includes a $17.5 million option for 2012, which becomes guaranteed with 100 games finished in 2010-11, 55 games finished in 2011, and a clean bill of health after the 2011 season. After closing out his 44th game Saturday in Philadelphia, Rodriguez is well-positioned to make a run at guaranteeing the 2012 option next season. K-Rod’s replacement in Anaheim, Brian Fuentes, needs 55 games finished in order for his $9 million 2011 option to vest. But a stint on the disabled list has set him back, and with just 28 games finished with 50 games remaining, Fuentes is all but certain to miss the mark. For the Angels, it’s probably just as well for a closer with a fragile back who celebrates his 35th birthday today.
Another closer, Atlanta’s Billy Wagner, has proven he is fully recovered from his late 2008 Tommy John surgery. The left-hander leads the league in games finished with 46, and with just four more, his $6.5 million option for 2011 becomes guaranteed. However, the 38-year-old informed the Braves in May that he plans to retire after the season ends. But with 70 strikeouts in just 48
Jeff Euston is an author of Baseball Prospectus. Follow @JeffEuston
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How innovative can GMs be before the contracts are contested by the Union or even MLB itself? My opinion is that any contract freely entered into by both parties should stand, even if those two august bodies don't like it.