23 November 2014

What's the Big Deal About $325 Million?

If you're old enough to recall when the baseball free agent floodgates opened and Catfish Hunter snagged a mammoth five-year. $4.25 million deal from the Yankees, your mind is likely long beyond boggled by the contracts today that sound like they are paid in Lira. 

Regardless, a third of a billion dollars seems like a windfall, even for a talent as immense as Giancarlo Stanton. The Marlin rightfielder has, by age 24, already slugged 154 homers and accounted for 18 wins against replacement. But Giancarlo Stanton's talent is a windfall for Miami, as are his electric smile and dedication to the craft.

The fact is, $325 million makes perfect sense for this unique player; indeed, it might prove to be too little. Unlike other recent examples of overpayment, this one does not reward the athlete primarily for his past accomplishments or saddle the team with his salary well into his dotage. 

Moreover, while the deal is back-loaded the way others are, it is so for a reason: Stanton isn't afforded free agency for three more years, so his contract value is significantly reduced until after the 2017 season.

In year four of the new deal, Stanton will make $25 million. That's an enormous sum, and an enormous sum less than what he is probably going to be worth to the Marlins. Seriously.

Today, a win above replacement is worth, on average, about $6 million to a team. Even if salaries don't continue to increase at the past decade's rate, a 10% annual hike will catapult a win's annual value to $8 million. Let's suppose Stanton delivers just five wins above replacement that season -- significantly less than 2014's production -- he will cover his salary plus another $15 million for the franchise. If instead he improves, he's a gold mine to the team.

But wait, there's more. Giancarlo Stanton has value beyond the field of play. Inking him to a long-term deal was management's clarion call to the fans and other free agents that it has entered another of its periodic win-now spasms. Buy tickets, consider us in free agency; Miami is relevant again.

Come 2015 and beyond, Stanton will anchor a squad awash in nascent talent. Phenom starter Jose Fernandez will be back from TJ surgery at the ripe age of 23, along with promising 25-year-olds Henderson Alvarez and Jarred Cosart.  Talented outfielders Christian Yelich and Marcel Ozuna will be 23 and 24 respectively. Jarrod Saltamalachia will turn 30 -- and so shouldn't be trusted -- but is signed for two years to anchor the backstop position. If the farm continues to produce as expected and Miami can lure a player or two to South Beach -- how hard can that be, especially in an industry loaded with Latinos? -- fat crowds and TV contracts will dwarf Stanton's contract.

The formula is the same into his 30s, when the salaries escalate to $32 million. By then, the Trouts, Harpers, Kershaws and their ilk will make such sums look quaint. And then as Stanton's skills erode, so does his salary, down to $25 million at age 38.

The fact is, rich as this arrangement is for Giancarlo, it is even better for Miami -- the franchise, the people and the city. Even the 2020 player opt-out, seen by many as a fly in the ointment, keeps this mega-talent in the city for six more years at below-market prices. If he leaves then for yet fatter paychecks it will demonstrate that the numbers, now considered by some a vast overpay, weren't big enough.


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