The Price of Price v. Lester

[lurker42]

That's false.

The pro-opt out side is simple.

1) It can mean the difference between signing the player and not.
2) The most likely outcome is that Price pitches well and opts out making this likely a 3/90 contract.
3) As long as the Sox aren't stupid enough to sign Price after he opts out, they're not going to be paying for his horrible decline phase.

No, the only pro to the opt-out is your #1, the possibility that the player might not sign without it. The other two are purely a product of how painful it is to sell high. It's very easy for most people to look at a guy who should be good but hasn't been playing well and identify him as a "buy low" candidate, but it is extraordinarily hard to look at a guy who's kicking ass and say: "time to trade him!"

Case 1: After 3 years, Price has declined or gotten hurt and is not worth 4/127: then he'll stay regardless of whether he has an opt-out or not, which is a loss for the Sox.

Case 2: After 3 years, Price is worth more than 4/127 to another team and he has an opt-out: he leaves, which we'll call a break-even for the Sox

Case 3: After 3 years, Price is worth more than 4/127 to another team and he doesn't have an opt-out: he's under contract, and the Sox come out ahead - either by keeping him, or trading him to a team that believes he has positive value over his remaining contract.

The difficulty is that most of these big contracts appear to fall into Case 3 at the end of 3 years, but in reality that player is going to decline and not actually earn the remainder of his contract. So the smart move is to trade the player while they're still good enough to appear valuable on the open market - i.e., to sell high. Most GM's don't have the nerve to do so, and wait until the player is obviously declining to make a move.

The whole argument surrounding opt-outs on this board is a result of the Yankees failing to properly value A-Rod and Sabathia. At the time of each of their opt-outs they appeared to have positive value over their remaining contracts, which is why they opted out. That's also why they were each able to secure even larger contracts, which have both proven to be mistakes. We all acknowledge that letting them walk would've been better for the Yanks than re-signing them; we're all in agreement there. But the discrepancy comes from the fact that if neither player had an opt-out clause, AND THE YANKEES HAD HAD THE BALLS TO TRADE THEM, the team would be even *better* off than letting them walk via opt-outs. And yes, there was definitely a trade market for both players, as the Yankees had to outbid other teams to re-sign each of them.

TL/DR: Escaping a big pitching contract after 3 years is usually a good thing, but it's even better if you have the balls to trade the player for value halfway through than to let them opt-out and get nothing in return.

 

[snowmanny]

The question isn't whether the play should execute the option. The question is:

Contract A: 2 years/$20 million, plus a player option for 2 years/$20 million
Contract B: 4 years/$40 million

The player's injury risk is 5% in year one, 10% in year two, 15% in year three, 20% year four.

Which contract exposes the team to more risk?

?

It's a ridiculous question. They have equal risk. The maximum risk is that David Price plays every year and is terrible, so whichever contract has the most guaranteed money is always the riskiest.

And the point of any contract for the team is to have an upside while mitigating risk. The potential upside is from the player outperforming his contract for a lot of years. If a player is good and healthy then more years is better.

 

[dcmissle]

So much here is counter-factual and contrary to experience.

We DO get it: Any team in MLB would sign Price at 3 for 90, and the option was important in getting that done as Price requested it.

But unless one assumes the end of history when Price opts out, it is far from clear the RS would have won the deal. Because Price needs to be replaced, unless one will be content with seasons that more closely resemble last year than the seasons we hope to have with Price. In that connection:

1. The RS have developed one Price level pitcher (more or less) during the 13 years of this ownership -- Lester -- and he was drafted in 2002, the year before Henry took the reins. If the RS enjoy the kind of success we hope and expect, the RS will be drafting nowhere near the top, which is where such prospects will be found.

2. In recent years especially, DD's MO is to solve problems by throwing money at them, big money. In this regard, the RS swiped Price from the Cardinals by blowing out their offer by $37 million. I'm fine with that given the complete absence of elite pitching in the system and where the rest of the roster is, but if it gives people people pause, that is reasonable. The great likelihood is that Price would be replaced by somebody like Price, and that performance/injury risk eventually blows up under your XMass tree.

3. If reports are to be believed, the RS do not view this as short term deal. They had identified Price as potentially "age defying", and acquiesced to his demand for the option. See Price thread and above.

4. Trading him after year 2 is a fantasy. You're not going to get a younger cost controlled version of Price for one year of Price at $30 MM.

 

[smastroyin]

I think matter is largely rhetorical at this point. If people don't understand that they are arguing nonsense then I don't think the discussion is worth having.

In my mind,the pro Opt-out position is based on the underlying assumption that you needed to give David Price something of value in addition to a 7 year $217 million contract to get him to sign. For the sake of argument, let's say that there are then three ways to add this value.

Option 1: Add in the opt-out after three years clause. Let's say this has a a day zero value of $15 million just for argument sake.
Option 2: Give David Price a $15 million signing bonus
Option 3: Give David Price an additional $4, $5, $5, $6 million in the final four years of the contract

You could also add an eighth year or something but for the sake of simplicity and not getting lost in the weeds I don't want to have an argument about how to price that eighth year nevermind if it is a vesting option/buyout situation.

The "pro" opt-out side is making the case that Option 1 is best for the Red Sox. There is also the idea that players overvalue their freedom of choice and price the opt-out irrationally high (therefore meaning you would need to bump Options 2 and 3 to give equivalent perceived value). I'm not sure that is the case but I think you could make the argument.

Beyond that, it is clear to literally anyone who can think through basic math or negotiating that the opt-out gives value to the player, not the team. If someone is arguing that a 7/217 with opt-out is a better contract for the Boston Red Sox than a 7/217 without one, then I don't know what to say, because it is obviously wrong.

 

[absintheofmalaise]

When I first started writing the article on the Price signing I included Sabathia in with A-Rod in the "they opted out" group. Upon doing more research I discovered that he did not opt out back in 2011. Hours before the deadline, he and the Yankees agreed on an extension for one year that paid him $25m through 2016, with a team option for 2017 for $30m. It includes a $5m buy-out if the Yankees don't pick up the option year based on the condition of his shoulder. I don't know how that play into the various arguments in here, but thought y'all ought to know.

More links:
ESPN
SI

 

[dhappy42]

That's false.

The pro-opt out side is simple.

1) It can mean the difference between signing the player and not.
2) The most likely outcome is that Price pitches well and opts out making this likely a 3/90 contract.
3) As long as the Sox aren't stupid enough to sign Price after he opts out, they're not going to be paying for his horrible decline phase.

Very clearly articulated. ;^)

The Red Sox signed Price to a 3/90 contract, with a relatively small probability that it will turn into a 7/217 contract.

 

[Apisith]

If there's a small likelihood that Price will exercise the opt-out, what would we have had to offer to remove the option? What is the option worth?

 

[dhappy42]

People really can't get their head around the fact that the player option can provide value to both the plater and the team.

 

[smastroyin]

People can't their head around it in the same way that they can't their head around the fact that 2+2=22.

But at this point I am locking this thread which went from interesting to moronic repetitive suckfest rather quickly.