Princely Sum To Include Royal Tax

The relative quietness surrounding the pursuit of free agent first baseman Prince Fielder heading into the new year should not have been mistaken for an overall lack of interest from teams across the league. Or, at least that’s what his agent, Scott Boras, would have us believe when he informed members of the media that:

There’s a lot of passengers on the PF Flyer. I keep having discussions with teams, and they keep coming back after those discussions. We are having a very robust and constant communication with many teams. We’ve had an opportunity over the last 10 days to certainly get more definition, I would say. Normally in free agency, after a period of time you have teams that move to the background. When we think that’s happened, those teams have called back and they’ve changed their position.

The latest on Fielder not only suggests that the Washington Nationals have become the leading candidate to earn his services, but also that in doing so, they may have to include some sort of opt out clause for the 27 year old.

According to Ken Rosenthal:

Such a deal would provide the team with an immediate bang while giving Fielder the chance to hit the market again at 30 or 31, when teams such as the Yankees, Red Sox, Dodgers and Mets might be in better position to bid.

Several teams have already indicated that they’d be more interested in a short term contract for Fielder than one of length, while the first baseman himself would love the opportunity to hit the free agent market one more time during his peak, he’d likely only do so if he could maintain the same security extended to his contemporaries: Miguel Cabrera, Adrian Gonzalez and Mark Teixeira.

An opt out clause would provide the best deal for both sides, right?

According to one of Rosenthal’s MLB sources, it’s not such a slam dunk. A team offering a free agent an opt out clause takes on a ton of risk. If the player exceeds his value over the short-term, the team will either lose him to free agency or be forced to pay him a considerable amount more than the original contract to retain his services. If the player fails to live up to his expected value, then the team will still be forced to live up to its end of the contract despite the diminished returns. While a mutual opt out clause would insure against this, it’s exceedingly unlikely that Boras and Fielder would agree to such terms.

I’m not so convinced that a player opt out clause is such a doom and gloom scenario to a signing team, in fact we’ve seen before how it can become a blessing in disguise.

Previously, we’ve discussed how a signing team hopes the majority of value in a free agent contract will come in the front end of the deal. When an organization deals in long term contracts it’s anticipating that any deal will underpay at the beginning and overpay at the end. It’s the cost of doing business on the free agent market.

However, an opt out takes advantage of those early years and potentially allows for another team to get fooled into picking up the back end of the original deal. Let’s consider A.J. Burnett who signed a five year $55 million contract with the Toronto Blue Jays ahead of the 2006 season, with an opt out clause after the 2008 season. Through the first three years of the deal, Burnett earned $31 million in bonus and salary, while providing $47.3 million in value according to FanGraphs.

He opted out of his deal, and signed a new five year contract with the New York Yankees for $82.5 million. It obviously hasn’t worked out well for New York, but if we go back and time and pretend that Burnett didn’t opt out of his original deal with Toronto, it wouldn’t have worked out for the Blue Jays either. Burnett would’ve earned $24 million from the Blue Jays in 2009 and 2010 to provide $21.5 million worth of value. Overall, Toronto’s contract with Burnett could have been labelled a success, but it worked out even better thanks to the opt out clause.

This is obviously just one example, but it’s an important one. Yes, the Blue Jays lost a an above average season from Burnett in 2009, but his decline after that year  more than makes up for any of the value that they would have gained from him sticking around. This is the same attitude that any team extending Fielder an opt out clause must possess. It’s quite likely that they’ll miss out on a season or two of peak or near peak performance, depending on when the opt out clause occurs in the deal, but that’s an affordable cost to avoid an anticipated decline throughout the back end of a contract.

There’s another important element for a team considering an opt out offer that we haven’t touched on quite yet, and that’s what if the player chooses to stay and not take advantage of the clause. Frankly, no team should rest on the opt out clause as happening until it actually does. In other words, don’t make the deal anticipating that the opt out clause will be exercised.

Obviously, in signing a player of Fielder’s ilk, a team is most likely building something around him, or at the very least using him as a main player. From that perspective, I think you have to assume that he’ll be there for the length of the deal without the opt out clause, but simultaneously plan for the very real possibility that he leaves the team.

It’s understandable why baseball executives wouldn’t like such scenarios because it means planning for two different directions. However, if you think a player is worth a ten year deal to begin with, that evaluation should anticipate an eventual decline. The question then becomes one over a willingness to potentially give up on a couple years of good value in exchange for more years of bad.