Financial Caution

Winston-Salem, NC -- As is the new trend in baseball front offices, more teams are locking up their younger players to long term contracts. The benefit to the player is that they achieve financial security without risking an injury. The gain that the club experiences is that the contract buys out the arbitration process (which could get expensive if the player produces in his first three seasons) and usually one or two years of free agency. Mark Shapiro initiated this trend by signing Grady Sizemore to a 6 year-$23.45M in early 2006. Sizemore is set for life with his $23M, and the club is able to save the potential tens of millions of dollars that Sizemore could have earned (by waiting for free agency and re-signing with the Tribe) when he hit the free agent market.

Before this new trend occurred, teams would salivate when eligible free agents hit the market. In the early part of this decade, we saw contracts spiral out of control. Now, teams are using extreme financial caution with free agents. Can you blame them? Let's look at the top 15 largest contracts in the history of baseball (courtesy of Cot's Baseball Contracts):

• Alex Rodriguez, New York Yankees, $275,000,000 (2008-17)
• Alex Rodriguez, Texas, $252,000,000 (2001-10)
• Derek Jeter, New York Yankees, $189,000,000 (2001-10)
• Manny Ramirez, Boston, $160,000,000 (2001-08)
• Miguel Cabrera, Detroit, $152,300,000 (2008-15)
• Todd Helton, Colorado, $141,500,000 (2003-11)
• Johan Santana, New York Mets, $137,500,000 (2008-13)
• Alfonso Soriano, Chicago Cubs, $136,000,000 (2007-14)
• Vernon Wells, Toronto, $126,000,000 (2008-14)
• Barry Zito, San Francisco, $126,000,000 (2007-13)
• Mike Hampton, Colorado, $121,000,000 (2001-08)
• Jason Giambi, New York Yankees, $120,000,000 (2002-08)
• Carlos Beltran, New York Mets, $119,000,000 (2005-11)
• Ken Griffey Jr., Cincinnati Reds, $116,500,000 (2000-08)
• Kevin Brown, Los Angeles Dodgers, $105,000,000 (1999-2005)

Out of the 15 contracts above, I can label four of them as "deals." I am going to throw out the new A-Rod deal because it's too early to judge that one. However, do you get the feeling that the new contracts awarded this year to Miguel Cabrera, Vernon Wells, and Johan Santana are already going to be busts? The Tigers have already moved Cabrera to first base. He'll be an expensive DH in a year or two. Vernon Wells stopped hitting after 2006, and now he's injured. I wrote in last week's blog about the declining numbers of Johan Santana. So, which of these contracts have turned out well for the team?

• A-Rod's first whopper netted him 2 MVP's. He'll be the home run king before his new deal expires.
• Manny's deal looked terrible in 2003 when he was placed on waivers. Since then, he's won 2 World Series with the Sox.
• Jeter is the cornerstone of the Yankee franchise. He hasn't let the Steinbrenner's down with that mammoth deal.
• This one is kind of borderline, but Beltran has played well in New York following his first year there in 2005.

Here are the gophers:

Helton, Zito, Hampton, Giambi, Griffey, and Brown.

Soriano's contract grade can be given an "incomplete." When he's healthy, Sori has put up big numbers for the Cubs. I'd say this contract is still too early to judge.

Still, throwing out A-Rod's new deal and Soriano's contract, four out of 13 (31%) of these whopper contracts panned out well. However, when the player is ineffective, it can set a team back for years -- Rockies (Helton, Hampton), Rangers (A-Rod), Giants (Zito), Orioles (Belle), D-Backs (Glaus, Russ Ortiz), Mariners (Sexson, Beltre).

Frugal teams such as the D-Backs, Marlins, and Rays are proving that spending your money in scouting and developing your players can produce better results than a high priced free agent. Mark Teixeira is going to earn big bucks this offseason, but it'll be a few tens of millions of dollars less than he would have received had it been before Sizemore's landmark deal with Cleveland in March 2006.