In Defense of the Player Opt-Out

If, after year three of his nine-year, $205 million contract with the New York Yankees, CC Sabathia had cashed in his opt-out clause at the age of 30, having accumulated Top 5 Cy Young finishes in each of the previous six seasons, would the deal have worked out poorly for the Yankees? 

They would have paid him $63 million for 18.3 WAR, well below market rate, and enjoyed the fruits of the top-of-the-rotation workhorse they wanted when they inked the deal. Sabathia, riding a wave of great performance and still young enough to command wagon-loads of legal tender, would have been wise to latch on elsewhere for more than the $142 million owed to him.

And he would have saved New York a big sunk cost. In the four seasons since the imagined opt out, his ERA has ballooned to 4.01, 5.20, 6.07 and 4.95, earning just 3.6 wins over four years and showing the decrepitude that comes with turning 34 while your waistline turns 50. The pinstripes still owe him $50 million for his age-35 and 36 seasons, neither of which figures to be pretty.

Player Options In the News
The question of player opt-outs has come to the fore after several recent signings in which players have won early opt-outs as signing sweeteners. The Giants threw in an opt-out after just two seasons of Johnny Cueto's six-year, $130 million deal. That would seem to put the 29-year-old hurler in the primo position of seeking further riches after impressing while he's still young.

But what's good for one side isn't necessarily bad for the other. Unless the contract is heavily front-loaded, the team can prosper when the player finds another suitor. Should Cueto continue his NL mastery in 2016 and 2017, the Giants would have enjoyed those two seasons at market prices and let some greater fool pay for Cueto's age 37 season.

Don't Clubs Assume All the Risk With Player Options?
It's been pointed out that players accept the guaranteed money only when poor performance (or injuries) inhibit their ability to command more on the open market, leaving the original signing team holding the bloated contract. But that's the contract the team would have signed anyway, opt-out or not. Most of these deals figure to diminish in value each marginal year, meaning an opt-out might be a gift from heaven. (I'd like the Cueto opt-out significantly better for the Giants if it came a year later. He figures to still be plenty effective at 31.)

There's an opportunity cost when the player leaves -- i.e., the team has to replace the ace with someone else, and if he's similar quality to the guy leaving, he'll cost a bundle too. But players opting out of free agent contracts are almost by definition entering their dotage (Cueto will be unusually young when his option kicks in), while the replacement, even another free agent recruit, can be several key years younger.

The Contrary Case of Zack Greinke
The Dodgers can't be thrilled that Zack Greinke exercised his option to bolt after three awesome seasons of 51-15, 2.48 for the stacks of Benjamins offered by the division rival Diamondbacks. Greinke increased his annual haul by millions and L.A. is back down to one mound ace. But we'll see how it works out for Arizona at $34 million/year as Greinke ages. Past results do not guarantee future performance, especially in the fickle sport of 162 game seasons.

If player options mean that teams are in effect signing free agents to just a few good years and then watching them depart, well, that might not break many GM hearts. It's not the optimal scenario certainly, because the disaster signings will hang around to fester. But if it gets your team the big star in the first place, it might be a small price to pay, smaller even than paying mega-millions for former superstars in their sub-replacement age 37 seasons.