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MLB Rumors: The Precautionary Tales for a Josh Hamilton Contract

There are MLB rumors, and then there are facts. The fact is that Josh Hamilton will be the best position player on the market at the end of the 2012 season. A winner of the 2010 A.L. MVP award, Hamilton could be in line to lock up that crown for the second time in three years with a strong second half of his season. He has also played in 79 of the Texas Rangers’ 86 games, which puts him on pace for 149 games played, well above his career average of 125 games played in a season. Hamilton’s health seems to be a ticking time bomb, but he is determined to play 150-155 games this season and prove he can stay healthy. If he can do that and produce in the second half the same way he has in the first half of the season, his value in the open market will be unmatched.

When asked where Hamilton expects to be playing in 2013, he responded by saying “Hopefully an American League team, and hopefully back with the Rangers, that’d be nice.” Hamilton has also been quoted as saying that he will give the Rangers the first shot at signing him, but he is not expected to offer any kind of hometown discount. Given the Rangers recent history of negotiating multi-year contracts, Hamilton should expect to able to fully test the market. The market for his services may be limited to the handful of teams that have the budgetary capacity for the MVP-caliber free agent-to-be, but he will certainly command and receive a multi-year, $20M+ average annual value contract.

Hamilton will turn 32 years old during his 2013 season. Many have suggested the market for signing Hamilton will start in the neighborhood of seven years and $150 million, and will go up from there. That seems like numbers too gaud for a starting point. I’d put the starting point at six years and $120 million. Either way, Hamilton’s contract is likely to be big years and big dollars that will carry him into his upper-30s.

We have seen this type of contract before, and especially recently. Here is a look at how some of those contracts have turned out:

Ryan Howard: Howard signed a 5-year extension at the very beginning of the 2010 season, coming off of four consecutive 45+ HR, 135+ RBI seasons. The extension, however, did not start until 2012. Howard is now 32 years old, and has played in just two games in 2012 due to an Achilles injury suffered on the very last play of the Philadelphia Phillies’ 2011 season. Even while healthy in 2011, Howard’s numbers were already regressing, as he hit 33 home runs with a .835 OPS. Now, Philadelphia owes Howard $115 million in 2013 through 2016. Howard has a chance to bounce back from his injury, but I wouldn’t put my money on a 6’4”, 240-lb 33-year old being a prime candidate to do so.

Alex Rodriguez: Rodriguez has signed the largest contract in baseball history twice. The latest one was a 10-year, $275 million deal that Rodriguez signed at the end of the 2007 season, when he was 32 years old. Now, Rodriguez turns 37 years old this month, is hitting .269/.357/.436, and is owed $114 million in 2013 through 2017. He is now a shadow of himself, making an average of $23 million per year.

Albert Pujols: Pujols just signed a 10-year, $240 million contract with the Los Angeles Angels. While his first season has not been a rousing success, it is still too early to declare this contract a boom or a bust. What we do know is that Pujols is reportedly 32 years old (there has been speculation he is actually older), and when he is in his age 35 – 41 seasons he will be making $189 million. Pujols may defy the laws of age and regression through the upper-30s, but the odds are not in his favor.

Carl Crawford: Though the youngest of the group we have looked at so far, Crawford is still going to turn 31 years old in August. He signed a 7-year, $142 million contract with the Boston Red Sox before his age 29 season, in which he disappointed Red Sox nation with a .694 OPS and 0.0 bWAR season. He is yet to play a game in 2012 due to elbow and groin issues, though is set to return to game action on July 16th. Crawford is slated to earn $82.5 million in his age 32 – 35 seasons. Considering he is younger and has a more athletic build than Howard, he is a better bet to return from his injury and produce, but there isn’t a baseball fan in Beantown that doesn’t squirm at the thought of owing Crawford $100 million in the next 5 years.

Jayson Werth: Werth capitalized on three straight above-average years in Philadelphia and pulled in a 7-year, $126 million contract from the Washington Nationals just before his age 32 season. In the year and a half since then, Werth has been no better than an average MLB outfielder, only adding 1.5 bWAR. Werth will make $83 million in his age 35 – 38 seasons, a big pill to swallow for a mid-size market club like Washington. While the Nationals are able to compete while still young and inexpensive now thanks to Stephen Strasburg and Bryce Harper, Werth’s deal is not a major hindrance. However, once that young talent begins to reach arbitration and free agency, the Werth deal will be an albatross that casts a pall shadow over the Nationals’ budget.

Alfonso Soriano: Soriano signed with the Chicago Cubs at the end of the 2006 season for a total of eight years and $136 million. At this point, the 36-year old Soriano is of little value to anyone, yet he is owed $18 million per season in 2012, 2013, and 2014. Upon Theo Epstein taking the reins as team president, and Jed Hoyer coming in as the new general manager, one must have wondered their thoughts on Soriano’s remaining $54 million contract being a roadblock to their desired rebuilding project on the north side of Chicago.

This may be clearer in tabular form:

 

It is no fault of these players that they are now overpaid former superstars that are a drag on their team’s payroll budget like an anchor on the sandy floor of the ocean. Some may point to bad deals being the spawn of evil agents (like Scott Boras), but those agents are just doing their job, not taking hostages. It was the teams that offered and agreed to the big years and the big dollars; no one would turn down these kinds of proposals. Each contract was given with the full knowledge that the back ends of the deal would be pretty ugly for the team. It was a sacrifice the ownership and front office were willing to make if the offsetting factor was the smooth, heavy feel of a World Series ring on the finger. So far, only one of these players (A-Rod with the Yankees in 2009) was a member of a World Series championship team during the term of their current contracts.

Will these cautionary tales prevent teams from giving Josh Hamilton a similar contract in terms of length and size? No, they probably will not. The pursuit of a World Series is a mirage too enticing for many owners to resist. The pain of the future is hidden by the hope of the present. The money is less of an issue in the minds of owners, for those are the dollars of the future, not the present. With the increasing media revenue that is flowing into the MLB, that trend will only get worse, not better. Prepare yourself for Hamilton to sign a contract that you will immediately assess to be too lengthy, and too large. He will make whatever team signs him better in 2013, and that will feel worth it, and in too many ways that is all that matters.

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