Changing the System for International Free Agents
Jan 23, 2014 12:30:12 GMT -5
Post by Ben (Rays GM) on Jan 23, 2014 12:30:12 GMT -5
Long post. Sorry. Skip to the end for a summary if you prefer.
We've seen some crazy big contracts for international free agents this year. Abreu signed for $48 million. Alexander Guerrero got $24.7 million and Tanaka is already up to $31 million. Next year, however, each of these guys will cost just $0.5 million. The following proposed rule change "fixes" this, but wouldn't apply until next offseason, so it wouldn't affect any of these free agents.
In the past, this was justified by calling the big cash up front a posting fee or a signing bonus. Pay big money up front, reap the rewards later. The problem is, this incentivizes tanking. A GM who recognizes that his team is unlikely to compete for a playoff spot might decide that there's a greater reward to be had in blowing all his money on an international free agent and having a cheap star for the following five years rather than spending that money to fill out a roster and make an effort to compete.
Furthermore, the posting system has changed. In the past, guys like Daisuke Matsuzaka commanded huge posting fees ($51 million) but were then signed to relatively reasonable contracts ($8.5 million per year for six year) because the team that won the posting had exclusive negotiating rights. That's not the way it works anymore, which is why a guy like Tanaka can benefit from having four teams bidding against each other to become one of the highest paid pitchers ever. Seeing as it's no longer a realistic analog to how posting works in real life, the time has come to reevaluate how it works in our league.
The new proposed system would eliminate the option of cheaply cost-controlling a player after his contract runs out. You'd still be able to keep the player through his sixth year, but now, instead of going to the usual cost-control schedule after the contract expired, he'd continue to earn the same free agent salary for the remaining cost-control years. In other words, if Tanaka signed for four years at $15 million per year, he'd be guaranteed the $15 million each of those years, after which he could be non-tendered or the team could choose to pay him $15 million for the fifth year and again for the sixth. Effectively, the fifth and the sixth year would become team options. If Tanaka signed for two years at $20 million per year, he'd have $20 million options for his third through sixth years. There'd still be a benefit in the form of flexibility to signing these guys - team options are a lovely thing to have - but we'd no longer see these $30-40 million one year contracts, because it's pretty clear nobody would want to pay the player $30-40 million in years two through six and the guy would just get non-tendered.
On the official rosters, Tanaka at four years, $15 million would look like:
Masahiro Tanaka 15.0 million (2014-2017)*
Then, in 2018, he could either be non-tendered or else he'd become:
Masahiro Tanaka 15.0 million (5th year)
Followed by:
Masahiro Tanaka 15.0 million (6th year)
The proposed system would apply to all free agents signed prior to their sixth years. If a non-tendered third year player signed to a one year, $3 million deal, he could be kept at $3 million for his remaining cost-controlled years. As an example, Marco Estrada was signed by the Pirates in 2012 for one year, $1.6 million in what would have been his second year. I know this because I acquired Estrada from the Pirates at the trade deadline along with some picks (for Mike Minor, ugh. Oh well, he was instrumental in my title this year) and then cost-controlled him for 0.6 million as a 3rd year player for 2013.
Under the new system, somebody like Estrada would still be controlled for his 3rd-6th years, but at a fixed $1.6 million instead of the usual scale. However, for his sixth year, I propose that he'd still cost $2.0 million, the usual sixth year cost, because it's more than the amount he'd have earned. For the option years, players would earn either the annual salary of their original contract or the usual cost-control scale amount for that year, whichever is more.
Along with this solution, we'd remove the provision that allows 24+ year old rookies to be signed for more than $12 million on a one year contract. The minimum salaries for contracts would be back in place for all free agents except those that are over 35. However, I have two other proposals for free agency that are completely separate from this one below, and one of them affects that rule as well.
*****
Thus ends the description of the proposed new rule, but what follows are two more rule changes that I've been considering and wanted to float by you all:
First: there's something unnatural to me about imposing a hard cap of $12 million on one-year contracts. There's a good reason for it, in that one-year contracts exceeding that amount are extremely rare except in the case of older players, but making it a hard and fast number is problematic because it creates what's effectively a game of chicken: two GMs bid on a player that they both want for one year, one offers $5 million, the other offers $6 million, the first offers $7 million, and then the second panics and jumps right to $12 million and the first wishes he'd done the same (examples this offseason: J.J. Hardy, Nelson Cruz). Why should that number be special? Why should it be that the first GM who offers $12 million wins the player automatically?
Proposed solution: instead of creating a hard cap at $12 million, impose a penalty or a tax of some sort for one year contracts beyond a certain number. My original proposal was a 100% penalty above $12 million, but Brian thought that was too high and countered with 50%. I'm willing to compromise at 50%, but in that case I want the penalty to start at $10 million instead of $12 million - a little harsher, and also mathematically simpler. If you like this rule but disagree with the proposed numbers, feel free to voice that in the comments.
So, using a random example:
Babe Ruth reaches one year, $10 million. Fine. But somebody wants him for four years, $14 million. Now if I'm the original bidder, I can go to one year, $15 million, but it's gonna cost me extra - 50% of $5 million is $2.5 million, so he'll cost me $17.5 million. But I can still be outbid by a four year, $15 million offer (which, keep in mind, ends up being $12.7 per year after discounts), and would have to go to $16 million, which ends up becoming $19 million, after that.
The maximum salary for a two year contract would also be removed and replaced with a similar system (I propose 25% of every dollar spent above $20 million).
Second: Somebody mentioned in the Chatango that it's kind of unrealistic that a guy like Marco Scutaro would take one-year, $7 million instead of three years, $6 million. Yes, the three-year offer would be discounted, but the point stands. I'm starting to question whether our discounts are enough. I propose a 10% discount for offering a second year, followed by 5% additional discount for offering the third year and 5% more for offering the fourth year. So a two year deal gets a 10% discount, a three year deal gets a 15% discount, and a four year deal gets a 20% discount.
I just think people are throwing around one-year offers in too carefree a way, and I think that these changes help address that.
*****
TL;DR. Three new rule proposals which would go into affect for all free agents signed in the 2014-15 offseason:
1) Instead of letting free agents who haven't yet reached their 6th years be cost-controlled at the usual low-cost salary schedule after the completion of their contracts, they could still be kept until the completion of their sixth year but now at the same price as their annual salary from the free agent contract. If Tanaka had signed for two years, $20 million, he'd effectively have $20 million options for years three through six.
2) Remove the $12 million maximum for one-year contracts, but instead impose a penalty for one-year contracts exceeding a certain amount. I propose a 50% penalty on every dollar spent above $10 million. For two year contracts, I propose a 25% penalty on every dollar spent above $20 million.
3) Instead of a 5% discount for each additional year offered on a multi-year contract, I propose a 10% discount for offering the second year and a 5% discount for each additional year offered after the second.
Please consider each rule separately and discuss.
We've seen some crazy big contracts for international free agents this year. Abreu signed for $48 million. Alexander Guerrero got $24.7 million and Tanaka is already up to $31 million. Next year, however, each of these guys will cost just $0.5 million. The following proposed rule change "fixes" this, but wouldn't apply until next offseason, so it wouldn't affect any of these free agents.
In the past, this was justified by calling the big cash up front a posting fee or a signing bonus. Pay big money up front, reap the rewards later. The problem is, this incentivizes tanking. A GM who recognizes that his team is unlikely to compete for a playoff spot might decide that there's a greater reward to be had in blowing all his money on an international free agent and having a cheap star for the following five years rather than spending that money to fill out a roster and make an effort to compete.
Furthermore, the posting system has changed. In the past, guys like Daisuke Matsuzaka commanded huge posting fees ($51 million) but were then signed to relatively reasonable contracts ($8.5 million per year for six year) because the team that won the posting had exclusive negotiating rights. That's not the way it works anymore, which is why a guy like Tanaka can benefit from having four teams bidding against each other to become one of the highest paid pitchers ever. Seeing as it's no longer a realistic analog to how posting works in real life, the time has come to reevaluate how it works in our league.
The new proposed system would eliminate the option of cheaply cost-controlling a player after his contract runs out. You'd still be able to keep the player through his sixth year, but now, instead of going to the usual cost-control schedule after the contract expired, he'd continue to earn the same free agent salary for the remaining cost-control years. In other words, if Tanaka signed for four years at $15 million per year, he'd be guaranteed the $15 million each of those years, after which he could be non-tendered or the team could choose to pay him $15 million for the fifth year and again for the sixth. Effectively, the fifth and the sixth year would become team options. If Tanaka signed for two years at $20 million per year, he'd have $20 million options for his third through sixth years. There'd still be a benefit in the form of flexibility to signing these guys - team options are a lovely thing to have - but we'd no longer see these $30-40 million one year contracts, because it's pretty clear nobody would want to pay the player $30-40 million in years two through six and the guy would just get non-tendered.
On the official rosters, Tanaka at four years, $15 million would look like:
Masahiro Tanaka 15.0 million (2014-2017)*
Then, in 2018, he could either be non-tendered or else he'd become:
Masahiro Tanaka 15.0 million (5th year)
Followed by:
Masahiro Tanaka 15.0 million (6th year)
The proposed system would apply to all free agents signed prior to their sixth years. If a non-tendered third year player signed to a one year, $3 million deal, he could be kept at $3 million for his remaining cost-controlled years. As an example, Marco Estrada was signed by the Pirates in 2012 for one year, $1.6 million in what would have been his second year. I know this because I acquired Estrada from the Pirates at the trade deadline along with some picks (for Mike Minor, ugh. Oh well, he was instrumental in my title this year) and then cost-controlled him for 0.6 million as a 3rd year player for 2013.
Under the new system, somebody like Estrada would still be controlled for his 3rd-6th years, but at a fixed $1.6 million instead of the usual scale. However, for his sixth year, I propose that he'd still cost $2.0 million, the usual sixth year cost, because it's more than the amount he'd have earned. For the option years, players would earn either the annual salary of their original contract or the usual cost-control scale amount for that year, whichever is more.
Along with this solution, we'd remove the provision that allows 24+ year old rookies to be signed for more than $12 million on a one year contract. The minimum salaries for contracts would be back in place for all free agents except those that are over 35. However, I have two other proposals for free agency that are completely separate from this one below, and one of them affects that rule as well.
*****
Thus ends the description of the proposed new rule, but what follows are two more rule changes that I've been considering and wanted to float by you all:
First: there's something unnatural to me about imposing a hard cap of $12 million on one-year contracts. There's a good reason for it, in that one-year contracts exceeding that amount are extremely rare except in the case of older players, but making it a hard and fast number is problematic because it creates what's effectively a game of chicken: two GMs bid on a player that they both want for one year, one offers $5 million, the other offers $6 million, the first offers $7 million, and then the second panics and jumps right to $12 million and the first wishes he'd done the same (examples this offseason: J.J. Hardy, Nelson Cruz). Why should that number be special? Why should it be that the first GM who offers $12 million wins the player automatically?
Proposed solution: instead of creating a hard cap at $12 million, impose a penalty or a tax of some sort for one year contracts beyond a certain number. My original proposal was a 100% penalty above $12 million, but Brian thought that was too high and countered with 50%. I'm willing to compromise at 50%, but in that case I want the penalty to start at $10 million instead of $12 million - a little harsher, and also mathematically simpler. If you like this rule but disagree with the proposed numbers, feel free to voice that in the comments.
So, using a random example:
Babe Ruth reaches one year, $10 million. Fine. But somebody wants him for four years, $14 million. Now if I'm the original bidder, I can go to one year, $15 million, but it's gonna cost me extra - 50% of $5 million is $2.5 million, so he'll cost me $17.5 million. But I can still be outbid by a four year, $15 million offer (which, keep in mind, ends up being $12.7 per year after discounts), and would have to go to $16 million, which ends up becoming $19 million, after that.
The maximum salary for a two year contract would also be removed and replaced with a similar system (I propose 25% of every dollar spent above $20 million).
Second: Somebody mentioned in the Chatango that it's kind of unrealistic that a guy like Marco Scutaro would take one-year, $7 million instead of three years, $6 million. Yes, the three-year offer would be discounted, but the point stands. I'm starting to question whether our discounts are enough. I propose a 10% discount for offering a second year, followed by 5% additional discount for offering the third year and 5% more for offering the fourth year. So a two year deal gets a 10% discount, a three year deal gets a 15% discount, and a four year deal gets a 20% discount.
I just think people are throwing around one-year offers in too carefree a way, and I think that these changes help address that.
*****
TL;DR. Three new rule proposals which would go into affect for all free agents signed in the 2014-15 offseason:
1) Instead of letting free agents who haven't yet reached their 6th years be cost-controlled at the usual low-cost salary schedule after the completion of their contracts, they could still be kept until the completion of their sixth year but now at the same price as their annual salary from the free agent contract. If Tanaka had signed for two years, $20 million, he'd effectively have $20 million options for years three through six.
2) Remove the $12 million maximum for one-year contracts, but instead impose a penalty for one-year contracts exceeding a certain amount. I propose a 50% penalty on every dollar spent above $10 million. For two year contracts, I propose a 25% penalty on every dollar spent above $20 million.
3) Instead of a 5% discount for each additional year offered on a multi-year contract, I propose a 10% discount for offering the second year and a 5% discount for each additional year offered after the second.
Please consider each rule separately and discuss.
