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Home Lance Gurewitz An MLB World without Opt-Out Clauses

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An MLB World without Opt-Out Clauses PDF Print E-mail
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Lance Gurewitz Article Archive
Written by Lance Gurewitz   
Monday, 28 March 2011 07:22
Alex Rodriguez
Alex Rodriguez 10-year deal with the
Texas Rangers set the table for the
opt-clause. It allowed him to exit the
contract after 2007, 2008 or 2009

When Alex Rodriguez signed his 10-year, $252 million contract with the Texas Rangers in 2000, he seemingly changed Major League Baseball forever. Certainly, the ripple effect from that contract has lasted longer than the contract itself, which A-Rod cut short following the 2007 season. If not for the title of this article, one might assume it was the dollar amount that created that ripple effect. In truth, though, it is Scott Boras’ original conception of the opt-out clause that continues to shape two of MLB’s biggest storylines even as the 2011 season approaches.

While opt-out clauses can do nothing but generate speculation during the season, their effects have shaped the current state of the Yankees-Red Sox rivalry. It all started with J.D. Drew, who opted out of his five-year, $55 million deal with the Dodgers after the 2006 season. Although Drew is frequently maligned due to his injuries and subpar traditional stats (e.g., no more than 68 RBI in any year with the Red Sox), consistent rate statistics on offense and defense have allowed him to average 3.3 WAR per season in Boston. Similarly, A.J. Burnett’s career year with the Toronto Blue Jays in 2008 (231 K, 5.5 WAR) propelled him to opt out and join the Yankees on a now infamous five-year, $82.5 million deal. Burnett was approximately worth the $16.5 million he was paid (3.4 WAR), but his disastrous 2010 season seems to have left most Yankee fans wishing Brian Cashman had invested elsewhere. If not for the opt-out clauses in their original contracts, Drew would have been a free agent after 2009, and Burnett would have just finished his contract with the Blue Jays. Even though it is entirely possible that the pair would have entered 2011 with the Yankees and Red Sox, they likely could have been had for much smaller price tags.

Along that same line of thought, one Yankee epitomizes how opt-out clauses can cost a team tens of millions of dollars without even changing a single name on the roster. That player is the aforementioned Alex Rodriguez. Consider that if Scott Boras and the Rangers had never agreed to include an opt-out clause for the 2007 season, A-Rod would not have been a free agent until this past offseason. The magnitude of the change in his perceived value from the winter of 2007-2008 to the present is profound. After 2007, his 54-home run, 9.2-WAR campaign, complete with walk-off home runs and 156 RBI, led to the perception that he had finally figured out New York and a new 10-year, $275 million deal. Since then, he has remained a fine player but has not topped 6.0 WAR in any one season, has dealt with an ongoing hip injury, and most importantly, admitted to using performance-enhancing drugs as a Texas Ranger. It seems safe to say that, coming off the worst season of his career in 2010, Rodriguez would have remained with the Yankees but not at a price of $184 million over the next seven years. Rather, though it is hard to know for sure, he may have been facing a 6- or 7-year deal more aligned with Jayson Werth’s $126 million from the Nationals. A deal like that would have done wonders for the Yankees’ long-term health and financial flexibility, but A-Rod’s original opt-out clause ensured that would not be the case.

On another note, two opt-out clauses may be exercised at the end of this season, potentially adding two prominent pitchers to the free agent market. These, too, involve the Yankees, as CC Sabathia and Rafael Soriano both have the incentive to test the market if they have strong 2011 seasons. Sabathia is entering the third year of a $161 million deal that he signed after a 7.6-WAR season as a 27-year-old. Meanwhile, the Yankees reportedly offered Cliff Lee an identical contract (seemingly without an opt-out clause, though) after a 7.1-WAR season as a 31-year-old. Sabathia, it seems clear, is not the same caliber pitcher as Cliff Lee, but his consistently high innings pitched and win totals will mask his declining peripheral stats in the public eye. Thus, barring injury, CC will almost definitely find at least one suitor willing to pay more than four years and $92 million for his services, even if that suitor is the Yankees, which means it is only logical for him to opt out. The same logic applies to Rafael Soriano, but the relief market is somewhat harder to read, so only an elite season should lead him to test the market or attempt to hold the Yankees hostage, as even Brian Cashman was not in favor of giving Soriano the deal the Yankees did.

Finally, opt-out clauses may make one final contribution to this year’s free agent market, though it is more implicit than those described above. It seems to be no secret at this point that Albert Pujols aspires to be the highest-paid player in baseball, and an opt-out clause might help him do just that. Of course, it is not an opt-out clause of his own that would help him, as, theoretically, teams should pay players less money when giving them an opt-out clause. Rather, the culprit is once again the opt-out clause in A-Rod’s contract with the Texas Rangers. As detailed above, without that opt-out clause, there is no way Rodriguez would have his current $275 million contract. Thus, the target for Pujols would be to break $252 million instead, and $300 million would simply be too stigmatizing to be in the discussion, even if it might be reasonable. This is largely speculation, but with the Yankees out of the bidding and both of A-Rod’s contracts still criticized by most of the national media, Pujols seems destined to fall somewhat short of A-Rod money. Simply by virtue of the fact that A-Rod’s second contract opened the door for Pujols’ initial asking price, however, it seems that Pujols may well end up having made $20 million or so off A-Rod’s opt-out clause.

In summary, even though attention on opt-out clauses seems to subside once the player using them signs a new deal, the large-scale effects they have on the game are not so quick to dissipate. Past opt-out clauses have affected current rosters in ways that are not always discussed, none of them more so than the one originally negotiated into perhaps the most infamous sports contract of all time. With a total of five players now having received opt-out clauses, the door is open for new contracts to include them and continue shaping the landscape of free agency unless teams quickly realize the extent of the risk these clauses force upon them. One has to wonder if even Scott Boras could have foreseen how many millions this innovation would earn for his clients.

The Labor Battle in the NFL. See for details

Lance Gurewitz is currently a freshman at the Wharton School of Business at the University of Pennsylvania. He also serves as the MLB Trade Rumors Florida Marlins Team Coordinator. You can read and discuss his baseball analysis and other sports musings in 140 characters or less by following @LanceWG42 on Twitter

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