The simple answer to this question is that he does not have any trade value, but simple isn't good enough. That's especially true when you're talking about a player who is still owed $43.5 million through the end of 2014. The Cubs tried hard this offseason to find some team interested in taking him and didn't have much luck. We don't know what the Cubs were really willing to pay and we don't know what they would then have accepted so we don't really know anything other than the Cubs looked into trading Alfonso Soriano and were unable to find an offer they'd accept.
What we want to do is figure out how much Soriano is expected to be worth over the final 15.5 months of his contract. That's easy enough. We can use the rest of season ZiPS to get a good idea of what's expected from him this year and we can adjust accordingly for his age thereafter. ZiPS projects 323 plate appearances the rest of the way, a .329 wOBA and 1.2 WAR. Over 550 plate appearances that's basically 2.0 WAR.
Soriano still has value, but it's not worth the contract. Then again, who expected him to be worth what he was being paid in the final few years of the contract? If you did, you don't really understand how long-term contracts work. Here's an example: $100 million spread evenly over 5 years for John Smith and an average of $5 million per win. I'm making numbers up here to give you an example.
Based on the contract the team is paying for 20 wins over 5 years, but players get worse as they age.
The beginning of the contract teams are paying less than what the player is providing while at the end it's the opposite. This is expected. Soriano's contract was no different in terms of expectations. You take the good (early years) with the bad (later years).
The rest of this season we expect 1.2 WAR from Soriano and adjusting that to a full season we get 2.0. However, he'll be a year older so we'll go with 1.5 WAR next year and 1.0 in the final year of his contract. The win value is currently $5 million and to keep things simple we'll go with $5.5 million and $6.0 million the next two years. This means Soriano is worth $6 million the rest of the season, $8.25 million next year and $6 million in 2014 for a total value of $20.25 million between now and the end of his contract.
He's not being traded today so he'll have less value than that. Let's go with the end of July as that is when a lot of trades are completed. We'll go with .7 WAR the final two months and the next two years remain the same. His overall trade value at the end of July is now $17.75 million and he'll be paid $42 million. His surplus trade value is -$24.25 million.
That's the amoung the Cubs will have to send in any trade just to get absolutely nothing in return. Money shouldn't be a concern for the Cubs when it comes to Soriano's remaining contract. I see no reason they shouldn't send along all $42 million to get a better return. If they did that, the Cubs could get a very good prospect in return.
Realistically though, teams may view Soriano more as a DH, which hurts his value to the point where the Cubs may have to send all $42 million just to get nothing in return. My guess is it's somewhere between sending $42 million, getting nothing in return and getting a very good prospect. I'd guess the Cubs could send the entire amount of the contract and get a solid B prospect in return.
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Marilyn HagertyQuote Reply
I often heard Hendry was accused of handing out a lot of back-loaded contracts. Is this true? I guess it makes sense financially (pay them more at the end and it ends up being less due to inflation) but does it make baseball sense? If you are paying more at the end of a career for less production, then it makes it harder to unload the player.
What would be the ideal way to hand out a contract?
WaLiQuote Reply
@ WaLi:
Sorry this should have been an Ask OV.
WaLiQuote Reply
MB21,
I see a lot of Cubs fans complaining about backloading contracts. I’d be interested in your take opinion on Front loading, back loading, or doing even amounts throughout a contract life. (has there ever been a Front loaded contract in baseball? Does it ever make sense for a team to do a front loaded contract?)
EdwinQuote Reply
Are we sure it wasn’t the Tribune brass that was telling Hendry to backload, full well knowing they wouldn’t be paying the contracts?
Personally, I think backloading handicaps the future for the reasons Wali stated: More money for less performance.
srbutch5Quote Reply
Wali,
I took so long writing my Comment, you basically beat me to it. Damn indecisiveness!
EdwinQuote Reply
I think the “inflation” justification for backloading is a limited argument. The amount of money the contracts go up in the final years isn’t anywhere near the inflation rate. (recession notwithstanding)
srbutch5Quote Reply
@ srbutch5:
Yeah, inflation value is limited. The bigger thing to remember is how much value you’re getting in the front end of the deal. Of course backloaded deals are going to look bad at the end. But when you’re getting millions in surplus value earlier in the deal (and presumably when you’re gearing up for postseason contention) a good contract should more than offset it.
BerseliusQuote Reply
I would think back-loading a contract works like leverage. You get even more surplass value in the front years, but even worse value in the later years. This allows you to sign other players and accumulate even more talent in the present, at the cost of really screwing yourself later.
I thought one of the problems with the Cubs under Hendry wasn’t so much the bad deals, but the amount of bad deals, and the timing. The Cubs could have handled one deal like Soriano and still have had enough salary wiggle room to make some moves. But with all the other contracts all getting expensive at the same time, it hurt the Cub’s payroll flexability.
EdwinQuote Reply
@ srbutch5:
The only thing we have any “evidence” of was the Soriano contract, and that evidence is much more apocryphal than anything. The Tribune wanted a winner and wanted it now to inflate the value of the franchise, and signing free agents was the only way to try do it quickly. The budgetary constraints *may* have affected the degree of backloading, but that’s just the way all long term FA deals are stuctured.
BerseliusQuote Reply
Players would also be less interested in signing front-loaded deals. Previous year’s salary is how things like arbitration is calculated, and could also effect market value when they hit free agency again.
BerseliusQuote Reply
mb21 wrote:
likewise
BerseliusQuote Reply
@ Berselius:
Good point on most, if not all, long term deals being structured that way. With the exception being the Yankees, where money this year and money next year doesn’t matter.
srbutch5Quote Reply
For John Smith, I ran three different scenarios (including $.5 mil / war a year increase. Not sure that value goes up because of US $ inflation or not, so i didn’t include inflation). The first is no loading, the second is back loaded, the third is front loaded. In this scenario I’d probably want the standard no-loaded pay contract for a player on my team. You always have value. If you have a front loaded contract and you plan on trading the player, you aren’t getting the benefit of the player. If you plan on keeping him though it works well and if the player declines more you can cut him. Fans would probably like it better too.
WAR $WAR Salary Difference
2012 5 25 20 5
2013 4.5 24.75 20 4.75
2014 4 24 20 4
2015 3.5 22.75 20 2.75
2016 3 21 20 1
Total 20 117.5 100 17.5
WAR $WAR Salary Difference
2012 5 25 15 10
2013 4.5 24.75 17.5 7.25
2014 4 24 20 4
2015 3.5 22.75 22.5 0.25
2016 3 21 25 -4
Total 20 117.5 100 17.5
WAR $WAR Salary Difference
2012 5 25 25 0
2013 4.5 24.75 22.5 2.25
2014 4 24 20 4
2015 3.5 22.75 17.5 5.25
2016 3 21 15 6
Total 20 117.5 100 17.5
WaLiQuote Reply
@ WaLi:
@ Edwin:
I think it works best to use examples. Let’s say you pay an even amount each year. I showed the results in the table in the article. Now let’s say you backload it. Same 5/100 contract and all that stuff. We’ll backload it by paying $10 million in 2012.
Year WAR WV $WAR Salary Difference
2012 5 5 25 10 15
2013 4.5 5 22.5 15 7.5
2014 4.0 5 20 20 0
2015 3.5 5 17.5 25 -7.5
2016 3.0 5 15 30 -15
2012 WAR WV $WAR Salary Difference
2013 5 5 25 25 0
2014 4.5 5 22.5 22.5 0
2015 4.0 5 20 20 0
2016 3.5 5 17.5 17.5 0
3.0 5 15 15 0
2012 WAR WV $WAR Salary
2013 5 5 25 30 -5
2014 4.5 5 22.5 25 -2.5
2015 4.0 5 20 20 0
2016 3.5 5 17.5 15 2.5
3.0 5 15 10 5
That’s for backloading, paying exactly the amount you expect him to be worth and frontloading. Front-loading is out in my opinion. No way do you want to sign a player and in year one have less to spend elsewhere to put players around him. Not to mention the inflation issue. A dollar today is worth more than a dollar tomorrow so the wisest business decision is ALWAYS to pay as little now and as much later on.
In my opinion, paying exactly what you think he’ll be worth is out too. At no point in the contract do you have flexibility beyond what his value is.
For my money, I’m backloading a contract. As a player, I’d want it front-loaded. Backloading is worth more money to ownership and worth less to the player. Backloading allows you to add other players early in that contract that you otherwise wouldn’t be able to do if you were paying a higher amount. I’d not want to set it up so that I could do the same in the latter years of the contract because those are the least reliable.
I don’t know that the Cubs backloaded contracts more than any other team did, but I liked it. I’d like them to do it now.
What these tables here don’t show is this: all the contracts paid the player $100 million over 5 years. How you get there is irrelevant to me. I don’t much care how the Cubs choose to do it though I’d hope they’d be business smart and that’s paying more down the road. At the end of the day you’re paying the same amount over the same number of years.
It doesn’t matter so go with the best business decision.
mb21Quote Reply
Looks like WaLi beat me to it.
mb21Quote Reply
@ Berselius:
Looks like the Dodgers are out…down to the Yankees and Cubs and maybe Blue Jays, according to “sources” per MLBTR.
Rice CubeQuote Reply
WaLi wrote:
The value it increases IS inflation. For about 20 years inflation in baseball was 10% and then in 2007 it went down to almost nothing and has been back up the last couple years. The best estimate I’ve seen it for at this point is somewhere between 5 and 7.5%. I used +.5 million to make it simple, but 5%, 7%, 7.5% or .5 million inflation works. As long as it’s the same for all the players it doesn’t much matter.
I know I looked into it before but by backloading the Soriano contract at the time it was signed (inflation 10% and no sign of decline) the Cubs were essentially paying $110 million in present day dollars. May have been a bit less than that, but I’m not sure. Had they front-loaded it would have been more than the $136 million they paid him. The Cubs basically saved, if inflation didn’t stop in baseball for several years, at least $25 million. That’s money they used to sign other players and the freedom they gained in the early years by backloading helped bring two division championships to Chicago.
mb21Quote Reply
The present value of Soriano’s contract at the time it was signed was only $12.5 million per year (a little under 100 million total): http://www.hardballtimes.com/main/article/present-value/
mb21Quote Reply
@ Berselius:
I think that’s true, but I think players are dumb. Because they’re dumb they do want more at the end, but a smart player would walk up to the team and ask them to pay the entire contract on day one.
mb21Quote Reply
Here is a cake I would have recently enjoyed, if I’d been invited to the wedding.
On Soriano, my guess is that the Cubs try to trade him by the deadline if his knee holds out. If they can’t trade him (which I think is the likely scenario), then on Aug 1 I bet he goes on the DL to get knee surgery, then we start this discussion all over again next year.
SVBQuote Reply
@ mb21:
But isn’t baseball inflation different that US$ inflation? I don’t know. But US$ inflation since 2007 to 2012 has been 12%. I would think that plays in there somewhere. I guess the value of the $ in baseball is what matters.
In the current Cubs situation where we won’t be a contender for a few more years, maybe a front-loaded contract would make sense. I guess it depends on the situation you are in and plan to be in.
WaLiQuote Reply
@ SVB:
I was thinking they’d go until 8/31 and put him on waivers just to see if they could pull a Rios on somebody. Then yeah, DL + surgery.
Rice CubeQuote Reply
@ WaLi:
It’s different than US inflation. For about 20 years it was more than twice was the US inflation was, which obviously wouldn’t sustain itself and when the economy collapsed so did inflation in baseball. It’s back now though the new CBA may have an impact on it. I don’t know, but you can use any reasonable inflation you want and as long as it’s consistent it won’t matter. I think your rate is way too high for the US though. Here’s a historical chart: http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
mb21Quote Reply
I take back what I said earlier. It does matter, but as long as the present value of the contracts offered are the same it does not. Whether you pay him more now and less later it doesn’t matter. Say the present value is $10 million per year. I don’t care how they get there. They could pay all of it up front or all of it at the end. It’s all being paid anyway.
I think the backloading talks have been way overblown.
mb21Quote Reply
Let’s say we establish the present value of a contract for player A to be $50 million over 5 years. You can pay that any way you want and it doesn’t matter.
They could pay 10, 10, 10, 10, 10 or 25, 25, 0, 0, 0 or 0, 0, 0, 0, 50 and it’s the same.
mb21Quote Reply
@ mb21:
Sorry, my rate was the total inflation from 2007 to 2012, not an annual inflation.
WaLiQuote Reply
@ WaLi:
I agree. Let’s think about this in terms of Josh Hamilton.
Next year we should have a young team with a low base salary, but over the course of a long term contract with Hamilton (let’s say 6 years), we should have some players we’d like to keep and will have to pay. Castro, Rizzo, maybe a catcher, some other free agents, etc. (Actually, it’s hard for me to make this list, we are so short of mid-career talent, but you get the idea.)
Say Hamilton wants $25mil a year. If you front load him and pay $32 mil now, you can pay “only” $18 mil later and have some money left over for free agents and home grown stars to sustain a run of playoff teams, rather than follow the “Marlins way” where you win once and then dump everyone. For the Cubs, I think front-loaded contracts for free agents that you have some long term confidence in make a lot of sense right now.
Sports Illustrated had a long article on Hamilton in this week’s issue. He wants big money to fund the community work he and his wife want to do. I think that gives a team an interesting opening, if that’s legit. Say Hamilton wants an 8 year contract at $25 mil/yr = $200 mil. To me, that’s too many years for him. I’d offer $200 million for 6 years but I’d find a way to split it so that, say, $100 mil went to Hamilton and the rest went to his charity of choice, then I’d front load it.
Year 1: 25 to Josh, 15 to charity
Year 2: 20/20
Year 3: 18/15
Year 4: 14/18
Year 5: 13/17
Year 6: 10/20
You can play with the numbers some if you want. The contract provides >$30 mil/yr for Josh and his charity.
Not sure how the tax laws work, but wouldn’t this also give the Cubs a corporate income tax break by donating to the charity foundation that Josh has set up? That would free up a little more money to invest in players. This all hinges on Hamilton being sincere in his statement that he wants the money for community works. At the end of the contract, if the Cubs still suck, then it also makes Hamilton a tradeable commodity if he is still productive. He can go to a better team. I’d probably provide a limited no-trade clause for him. Let him name 6 teams each year he can’t be traded to, and possibly that he’d only be traded to a team within 8 games of the playoffs. (Not sure if the latter is possible in the CBA.)
SVBQuote Reply
@ SVB:
By the way, I realize there is a lot of fantasy above, in terms of what the Cubs, the players’ union, and Hamilton would actually accept.
SVBQuote Reply
@ SVB:
I’m thinking the charity money would be more on a line of about 10% of the contract.
joshQuote Reply
@ josh:
And that seems like a bargaining chip. In other words, he doesn’t want $200 million with some of that going to charity, he wants $220 million, with the $20 going to charity, and the $200 M going to the Hamiltons.
joshQuote Reply
@ josh:
I read somewhere that certain contracts have a clause that mandates that the player gives a specific amount to charity each year of the contract; not sure if the club matches that contribution but I’m guessing they do it as a show of good faith.
Rice CubeQuote Reply
I don’t think the charity angle would amount to much, there’s a lot of precedent there. IIRC the dispute between Steinbrenner and Reggie Jackson had a lot to do with the shady charity that his agent was running.
BerseliusQuote Reply
@ josh:
Very well could be, but that’s not how I read the comments by Mrs. Hamilton in SI.
SVBQuote Reply
@ Berselius:
If I were a team in a deal like this, I’d ask to have someone on the board of directors, like the Ricketts sister.
SVBQuote Reply
@ Berselius:
Charities in these cases all seem kind of shady to me. Maybe I’m cynical.
joshQuote Reply
@ SVB:
I’m too cynical to believe it’s more than a play, but we’ll see if they prove me wrong.
joshQuote Reply
Berselius wrote:
It was reported (well after the fact) by a “serious” “journalist” with “sources”. Damned if I can remember which one. Not a usual beat writer, of course.
By “it” I mean McDonough told Hendry to overpay.
Suburban kidQuote Reply
@ SVB:
While flexibility at the end of the contract would be nice (so would flexibility at the beginning of the contract of course), I just don’t think front-loading a contract is reasonable. I don’t think a GM could convince an owner to spend more now and less later. Nobody could convince me that and I have never owned a business anywhere as profitable or as valuable as the Cubs. I just wouldn’t do it.
The player probably wouldn’t either. Say you have a 27 year old free agent and you want to pay him something like 30, 25, 20, 15, 10 at which point he’s a free agent. The team will more than likely offer arbitration at which point the player can’t get much of a raise. So even if he’s still as good as he was when he signed the contract, if he accepted arbitration he’d be paid a fraction of what he’s worth. The player wouldn’t accept arbitration, but you get the point. There would be situations in which the player might actually accept (coming off injury or something). The player would much rather be in the position in which the team has to pay him a lot of money to keep him rather than paying him pennies on the dollar.
The player would probably be better off taking the front-loaded contract, but I don’t think you can convince a player to do it. I also don’t think you could convince an owner either. I think front-loading long term contracts is a fantasy. While it may be beneficial to the player in some ways, it’s also not and it’s definitely not to the owner.
I think the argument is really about whether to pay more later on or pay the same amount each year. As I said, as long as you’re paying the same present value it doesn’t matter to me, but if the Cubs are paying more in present value by paying the same each year then I think it’s a mistake.
mb21Quote Reply
Have the Cubs not signed any of their draft picks yet?
NateQuote Reply
@ Nate:
No. Not sure if this is for subscribers, but here: http://www.baseballamerica.com/draftdb/2012xteam.php?team=1004
mb21Quote Reply
Suburban kid wrote:
Just to be clear, IIRC, the report said that Hendry wanted to go only 6 years. Soriano’s agent pushed for the extra two years and McDonough/Zell gave the order to give in and sign him to increase the value of the Cubs before Zell sold them off.
jtsunamiQuote Reply
@ jtsunami:
I think Hendry wanted 7 and McDonough threw in year 8 (presumably because Soriano wanted it). It was still going to be a bad contract.
mb21Quote Reply
Sorry, mb.
jtsunamiQuote Reply
$4Billion. That’s the rumor I’m starting.
joshQuote Reply
Excited. Farm system has some hitters..
Rizzo, B Jax, Baez, Soler, Almora… Sign me up
bubblesdachimpQuote Reply
yay!
dylanjQuote Reply
http://www.chicagonow.com/cubs-den/2012/06/update-on-cubs-draft-signings/
Another update I found on Cubs draft signings.
NateQuote Reply
I think Demp will land us a pretty good prospect as well.
dylanjQuote Reply
Rosenthal confirms. Soler is a Cub. Add another top 50 guy to the system.
dylanjQuote Reply
Bruce Miles and Ken Rosenthal confirm.
jtsunamiQuote Reply
Time for some new shit
jtsunamiQuote Reply
new shit: http://obstructedview.net/projections/no-love-for-jeff-samardzija.html
mb21Quote Reply
Bubbles is excited. No way around it
bubblesdachimpQuote Reply
The way I’ve always understood it…Hendry didn’t want Soriano for the type of contract being bandied about. Zell and others pushed him in that direction as they attempted to pump up the value of the club, and then he had to beat Arte Moreno’s offer of 7 years.
If nothing else here is evidence of Moreno’s offer:
http://articles.latimes.com/2011/dec/13/sports/la-sp-1214-big-baseball-contracts-20111214
Smokestack LightningQuote Reply