In recent years, the Tampa Bay Rays have been very successful, reaching the playoffs in three of the last four years and winning the American League Pennant in 2008. The San Francisco Giants have not been as consistent yet were able to win the World Series in 2010.
A huge part of the two teams’ success is undoubtedly a result of the performance of their superstars, most notably Tim Lincecum, Matt Cain, Evan Longoria and David Price. Among them, the three pitchers and stud third baseman have 11 All-Star appearances. Lincecum already has two Cy Young Awards under his belt. The difference among the four: The Giants paid Lincecum and Cain a combined $20 million in 2011, while Price and Longoria earned a total of $3.25 million.
The disparity will increase in 2012, as the former pair will earn $33 million and the latter duo will take in $6 million. Luckily for the Giants, the extra cash paid off with the world championship two seasons ago.
How could four equally and incredibly talented players be compensated so differently?
The answer is simple: The Rays’ front office management had the foresight and intelligence to secure long-term contracts for Longoria and Price at the start of their promising careers, while the Giants waited to pay their stars based on past performance and a hope for continued future performance. The Rays are in position to compete today and in the long term, while the Giants do not feel as secure.
If there is one thing that has never made sense to me in the game of baseball, it’s when teams sign players who are in the end of or past their primes to massive contracts, hoping they can continue to perform at an elite level. If performance drops off, like in the cases of Alfonso Soriano and Barry Zito, the contracts can be financially crippling for the organization. Just this past offseason, the Angels and Tigers entered into this type of marriage with Albert Pujols and Prince Fielder, respectively.
While I think Pujols is the best player of our generation, I also think that it is absurd to expect a consistent offensive output through the end of his contract in 2021 — when he will be approaching his 42nd birthday and earning $30 million annually.
The MLB Collective Bargaining Agreement, or CBA, lays out a system to determine a player’s compensation if a long-term contract cannot be agreed upon. During the first three years of a player’s MLB service, he is under club control and will be paid according to the rookie wage scale, which equates to somewhere around $500,000 every year. For the four subsequent seasons, the player is arbitration eligible, which means he can request a salary and have his case heard in front of a group of arbiters who will decide whether the player deserves his request pay or the pay the team is offering. Again, this will not occur if the player is under a long-term deal.
In the cases of Longoria and Price, the Rays recognized the superstar potential of their prospects, and inked them to multi-year contracts very early in their careers. Price signed a six-year, $8.5 million deal in 2007 before pitching at Tropicana Field. He just signed a one-year deal for the 2012 season for just over $4 million. Longoria agreed to a six-year, $17.5 million deal in 2008 at the very beginning of his big league career, and the Rays hold very team-friendly contract options for the 2014-16 seasons that would buy out all of his arbitration eligible years.
When taking a look at San Francisco, the situation is much different, and it is flirting dangerously with financial issues. Lincecum signed a two-year deal prior to the 2010 season that cost the Giants $21 million, and just signed another two-year, $40 million deal that will take him through his arbitration years.
Cain was under a contract similar to Price’s, but the Giants decided to renegotiate the deal to remove a club option year and guarantee another season of Cain in San Francisco. Instead of carrying out 2010 and 2011 under the initial deal, the Giants paid Cain another $750,000 and set the precedent for his recent deal with a $15 million figure in 2012. His latest extension, signed April 2, could reach over $20 million per year by the time it expires in 2018.
Because of the shorter, more lucrative deals in San Francisco, the long term also becomes much more expensive. At the culmination of the deals in Tampa Bay, the players might deserve significant raises, but they will also remember the loyalty shown to them by the organization.
Even if some scouts in 2007 might have recognized that Longoria and Price would have been worth tens of millions of dollars a few years into their careers, they were still young, developing players. The Rays showed a great deal of faith in both by offering them financial stability at a point in their lives when a major league career still seemed like a dream. Price returned the loyalty this year by negotiating a $4.35 million deal when he is probably worth millions more.
In December, the Rays continued this course of action with their signing of highly touted pitching prospect Matt Moore to a five-year, $14 million deal with an additional three club options that take away his club control and arbitration years. With the club options included, the Rays could either lock up Moore for more years at a cheap price, or part ways with him if he fails to live up to his expectations.
The Rays are in a low risk, high reward situation. If the Rays can negotiate a similar deal with reigning AL Rookie of the Year Jeremy Hellickson or talented outfielder Desmond Jennings, they could lock up an extremely promising young core of players at a significant bargain.
The Giants have a fantastic opportunity to do exactly the same thing. Even with the expensive contracts of Lincecum and Cain, they have talented, young players Buster Posey, Madison Bumgarner and Brandon Belt. They are all still under club control, and deals similar to that of Matt Moore could be highly beneficial down the road for San Francisco.
In an industry where money is the name of the game, the Rays are ahead of the curve. The market in Tampa is small and the team’s tiny payroll is a reflection of this situation. Thanks to some smart maneuvering in the front office, they are now able to compete with juggernauts like the Yankees and Red Sox season after season. And I expect them to be in the hunt for years to come.