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Saturday, April 01, 2006
 
David Ortiz: Overpaid or Rewarded?

I'll admit it: David Ortiz is my favorite Red Sox player since I started following the team in the early 80s. He's the most clutch hitter I've ever seen and sitting in Fenway Park and watching his swing is alone worth the steep price of admission. He's one of those players who today's Red Sox fans will tell their grandkids about, and they'll describe him as a majestic, almost super-human presence. Perhaps not surprisingly, he's also incredibly likeable, adroitly handles media and fan requests, and does a lot of charity work. In fact, I don't think you could find a single person who would say something bad about David Ortiz, the runner up for the 2005 AL MVP award. He only further endeared himself to Red Sox fans by taking a steep hometown discount in 2004 when signing a 2-year contract worth $12.5 million, with a team option for the 2007 season at $7.7 million.

So I was naturally pleased to read that the Red Sox are about to sign him to a four-year contract extension worth $50 million. He could have become a free agent at the end of the 2007 season, but now "Big Papi" will likely remain with the Sox for the rest of the decade.

Not all Red Sox fans are happy, though. Some of the baseball guys on the Sons of Sam Horn message board (whose membership includes Sox owner John Henry and pitcher Curt Schilling) believe that the contract will prove to be a financial albatross for the team, and they employ myriad statistical devices to evidence that assertion. The idea is that Ortiz, who is 30 years old, will decline in production over the course of the contract, and that the 2007-2010 version of David Ortiz will be vastly inferior to the outstanding 2003-2005 version. For instance, a poster named "Fratboy" studied Ortiz's "Marginal Value Over Replacement Player" and concluded, "he'll be wildly overpaid in 2008, 2009, and 2010, and these are the weighted mean projections! Any regression that occurs would be detrimental. You shouldn't be paying $13 million for a $4 million player."

Let's say these gloomy projections are correct and that the great Ortiz indeed devolves into a pedestrian hitter towards the end of his contract. Here's my reaction: Who cares? Ortiz has been profoundly underpaid over the last three seasons, so overpaying him now can be seen as a contractual balancing to a most deserving franchise player and one who exudes all of the spirit and passion expected of a future legend. And plus, think of the message it sends to younger Sox players, who might later approach the bridge that could lead them out-of-town for more money: if you're good to us now by taking a hometown discount, we'll be good to you later by overpaying you then. Granted, that's a "risk" that some players may later regret taking, as they may perform worse than expected after taking a hometown discount, but the point is that by overpaying Ortiz, the Sox can more credibly make that promise.

Plus, now the Sox and Ortiz avoid the inevitable distraction that arises when a franchise player starts to publicly discuss free agency, as well as the acrimony that often emerges when that player becomes a free agent. And although no number or statistical equation will confirm this, distraction and acrimony are real costs inflicted upon a franchise, its players, and its fan base. Red Sox fans know that all too well from the team's prolonged, embittered, and ultimately failed efforts to re-sign Nomar Garciaparra, who was eventually traded to the Cubs, or Pedro Martinez, who signed with the Mets (subjects that I address in a forthcoming article in the Brooklyn Law Review).

But more conceptually, should new contracts only reflect future performance, or should they also reflect past performance? In other words, what are we actually paying these guys for, the past or the future or both? And what is loyalty really worth, and what does the absence of loyalty really cost?





6 Comments:

It's kind of hard to see how this is a bad deal.

Proponents (myself included) of the deal will point out that he's been a bargain the past few years, that he's earned it with his clutch hitting, and that he's the face of the organization. That alone might be worth the contract, and then you have the main reason - his absolutely frightening ability to hit, especially in clutch situations - it's pretty amazing to listen to the respect and fear that Yankee fans have for him.

And the fact is that what he's earning (12.5 million a year until 2010) isn't really as much as we think it is. We pay #3 starters almost that kind of money nowadays. I'd much rather pay Ortiz 12.5 million a year than say, Matt Morris 9 million a year, or Jarrod Washburn 9.5 million a year.

Detractors of the move will say that you shouldn't pay a DH that much, when you can find a masher that's 25 and have them cost controlled for six years.

Which to a certain extent is true. Young players, and the cost that accompanies them, are usually worth more per dollar than your 12 million dollar free agents.

If you have a Travis Hafner, you don't have to pay a free agent like Ortiz. I'm not saying Hafner is better overall, but he is for the dollar value. But not all teams have Travis Hafners just lying around.

The Sox can afford to spend the money. With the market they are in, and the farm system that they have, they have the resources to pay Ortiz, and several other top free agents. They'll be able to field a team with veterans like Ortiz and Varitek and young talent like Papelbon, Hansen, and perhaps eventually guys like Pedroia and Ellsbury.

Really, as long as they don't pull any long-term Helton-type deals, which are the ones that can really cripple an organization, I think they'll be fine. Even if Ortiz declines, the Sox aren't exactly placing themselves in the poorhouse with this deal.

Blogger Satchmo -- 4/01/2006 1:02 AM  


Edit - I know Ortiz won't be a free agent at the end of 2006 - the Red Sox basically gave him an extra 5 million on his 2007 option, I believe.

Even so, I still like the deal.

Blogger Satchmo -- 4/01/2006 1:07 AM  


I think this is something that the Sox had to do in the wake of their handling of Bronson Arroyo. Arroyo took the hometown discount and was immediately traded. In the wake of that, why would any player give the Sox a discount? They needed to reward Ortiz to shore up their credibility for future negotiations.

Anonymous Anonymous -- 4/01/2006 11:44 AM  


Excellent post.
I do not believe that you should reward players for previous years. That is why GMs are hired, to find players who will over perform their contract. They are hired to spot talent and players for their system.
I am not a Red Sox fan, however, I am sure there are several other teams that would have gave Ortiz this same contract. They are paying for more than his stats. They are paying for his leadership, character, charisma and everything else that be brings to the table. He makes everyone around him better. He is also a winner.
Compared to what other players make, this is not a bad deal. Just take a look at the comparable salaries throughout the league. Granted he does not play defense, he still deserves what he got. My initial reaction when I saw the article on ESPN was that Ortiz could have gotten more money. And if he went into free agency with having the same year as last year, he would have. Look at the money Adrian Beltre got, even though he is younger his impact cannot compare to Ortiz's. Teams like the Cubs, Mets and Yankees would have offered him 15 million a year.
Also when signing players to contracts, sometimes you have to add an extra year to secure the player. You realize the player wil have maybe two more MVP type seasons but you will not be able to secure him with a two year contract. I am not saying this will happen to Ortiz, he is only 30. Damon would have been better suited to a two or three year deal, look at what Bagwell is going through the last two years of a deal. These players may over perform during the first half of their contract and then it balances off towards the end.

Blogger tommie -- 4/01/2006 2:41 PM  


Tommie--forgive my confusion, but in your post you first say:

"I do not believe that you should reward players for previous years."

Then, a few lines later, you say this:

"They [Red Sox] are paying for more than his stats. They are paying for his leadership, character, charisma and everything else that be brings to the table. He makes everyone around him better. He is also a winner."

Seems to me that the Red Sox ARE rewarding David Ortiz for his "previous years"! How did he get a new contract with a larger salary? By his performance in previous years! (not solely, but largely).

Anonymous Anonymous -- 4/03/2006 9:38 AM  


Anonymous,
When I speak about paying people for past accomplishments, that means they were underpaid during the previous contract, the team makes up for it by overpaying them in the new contract. In many cases this happens with older players who many do not think can duplicate that previous success.
When talking about leadership and the ability to win, I meant that just because you pay someone 10 million dollars, does not mean it is just for the numbers he puts up, but for everything he WILL bring to the table. Ortiz will continue to be leader and have a positive influence in the clubhouse, same way Jeter gets paid as much as he does, when his stats alone could not justify the salary. He has proved his leadership in the past, however he will CONTINUE to be a leader, it is not like he will not in the future.

Blogger tommie -- 4/03/2006 10:20 AM  


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