Constructing A Josh Hamilton Contract

Josh Hamilton is a free agent after the 2012 season, for the first time in his career. It seems as though Hamilton’s free agency has been a topic of discussion since the beginning of January, when it was reported that Hamilton’s agent and the Texas Rangers were beginning contract discussions. In that way, Hamilton’s free agency is the most anticipated of the upcoming offseason. In many more ways, his free agency is certainly the most intriguing.

The story of Josh Hamilton has been documented many times over, from being a #1 overall draft pick to an addict out of baseball and back to A.L. MVP. Since his return to baseball, he has fought through what has seemed to be a constant wave of injuries, limiting him to playing just 125 games per season for the last 4 years. On the other hand, when he is on the field he is one of the best players in the game. The entire life and career of Josh Hamilton is one giant paradox. He’s an addict, or he’s a saint. He’s injured, or he’s an MVP.

The future for Hamilton is just as unpredictable as his past has been. He turns 31 years old in just two weeks time, and there is not a strong track record of aging outfielders continuing to produce at their career high levels, and Hamilton’s struggles with staying healthy do not aid that concern. Almost certainly, Hamilton can only regress from here (of course, there is only one direction a player will move when he’s hitting .406 with 14 HRs and a 1.298 OPS). Hamilton himself admitted this spring that he expects that he will eventually move from the outfield, to first base, to DH over the next 6 years of his career. That is a big change in the defensive advantage he has today as a center fielder. The offensive expectation of a center fielder is relatively low, so Hamilton’s value is even higher because of his talent at the plate relative to other center fielders. However, as a first baseman, and especially as a DH, Hamilton’s value is diminished because offensive talents at those positions are more readily available.

The emotional desire to re-sign Josh Hamilton has never been stronger by the Texas Rangers fanbase than it is today. As Hamilton continued to launch home runs into the Baltimore sky Tuesday night, the reaction from many fans was that he needed to be re-signed that instant. This, of course, is not how the Rangers front office would approach contract negotiations. The Rangers know and understand the what, who, and how of Josh Hamilton more than anyone. I can assure you that after Hamilton has played 27 games in 2012, the needle in the Rangers front office hasn’t moved much, if at all. The same statement would be true if Hamilton were off to a terrible start to the season. The next contract that Josh Hamilton signs is going to have too large an impact on the signing team’s future for it to be viewed only through the lens of 27 baseball games.

As far as comparable contracts to what Hamilton could demand, there have been several signed in just the last 8 months. Matt Kemp (age 27) is also an all-world center fielder, and he signed an 8-year, $160 million contract. Albert Pujols (age 32, 10 years, $240 million), Prince Fielder (age 28, 9 years, $214 million), and Joey Votto (age 28, 10 years, $225 million) are all game-changing offensive threats like Hamilton in about the same age range. All four of those players are in their prime, with Kemp being in the early years of his prime, and Pujols being the closest to his prime’s sunset. Hamilton is likely nearer the Pujols end of the spectrum than the Kemp side.

So when you factor in the health risks, the on-field performance, the possibility of off-field distractions, and the market for a player of Hamilton’s caliber, what kind of contract would be appropriate for Hamilton?

Drumroll, please…

My best offer to Hamilton would be as follows: 4 years, $84 million, with two option years. The year 5 option vests for $18 million if Hamilton reaches 550 plate appearances in year 4. If it does not vest, the team holds a $12 million option, and the player holds a $6 million option. The year 6 option vests for $15 million if Hamilton reaches 525 plate appearances in year 5. If it does not vest, the team holds a $10 million option, and the player holds a $5 million option.

Given the above scenario, the guaranteed deal for Hamilton would be 6 years, $95 million ($21M-$21M-$21M-$21M-$6M-$5M). The maximum deal for Hamilton would be 6 years, $117 million ($21M-$21M-$21M-$21M-$18M-$15M). Hamilton would also have the option to test free agency again years 4 and 5 if he did not reach the plate appearance thresholds. The core of the contract I proposed is the first 4 years. Beyond that, the team is essentially only paying for what they get. If Hamilton is riddled with injuries, the team isn’t locked in to an extraordinarily back-end loaded deal.

Do I think that is a deal that Josh Hamilton would accept to keep him a Texas Ranger for the rest of his career? I am not sure. This is, after all, Hamilton’s one chance to ensure that he and his family can be taken care of for life. No one can begrudge him the right to use the opportunity however he chooses. I can say that due to the paradoxical nature of the player, this is conceptually the type of contract I expect Hamilton to sign – a creative one.

If the Rangers are serious about signing Hamilton, they will likely need to get it done before the free agent period opens this offseason. Given the opportunity, it would not be a shock to see one team swoop in and pay Hamilton solely for his upside, without discounting for the associated risks. It is going to be an interesting story to see unfold, no matter what the ending looks like.

 

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