February 22, 2018 – Underextended

The latest edition of Penning Bull went out to subscribers overnight, on a consequence of the CBA (and the increased penalties therein, for spending beyond the luxury tax threshold) that rarely gets discussed: the way it discourages early extensions for good players.

Say you’re the Red Sox, and you’re thinking about signing Mookie Betts to a long-term deal. It really doesn’t matter at which point, over the last three years, but let’s say it’s early 2016. The point is, you want Betts to be a Red Sox for a very long time. He’s interested. After all, he signed for just $750,000 back in 2011. He’s not represented by Boras. He knows there’s only so much money waiting for him on the professional bowling circuit, if his size catches up to him before he gets megarich. He’s willing to sign a deal comparable to the one Christian Yelich signed in 2015. Yelich got seven years and just under $50 million, guaranteed, with a $15-million club option for 2022. Betts wants seven years and $52.5 million, with a similar club option tacked on at the end.

From one perspective, that would be a huge win for you. Betts would be under team control for at least two years more than he’s slated to be, and it could be three. There’s cost certainty all the way through, and obviously, those certain costs are discounted pretty heavily.

You can’t do it. You just can’t. You want to get under the tax threshold in 2017, and this deal would blow a hole in those plans. As it is, you’re going to surpass the threshold for a second straight year in 2016, but if you sign Betts to this deal, his tax number immediately becomes $7.5 million, rather than the $1 million or less it will be if you leave things alone. Even if it saves you a few million on the same number three and four years down the road, it won’t offset the negative effect of having that AAV shoot up two years before it needed to do so.

If you like what you see, and would like to read the whole thing, or if you are looking for another source for good baseball discussion and thought exercise this spring, please click the button you see on this page and subscribe.

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