A blog dedicated to the New York Mets with some other baseball thrown in.

Thursday, November 11, 2004

Depreciable Life

Depreciable Life: An estimation of the useful, valuable life of certain assets.

Ok, follow me on this one.

Tom Glavine LHP NYM Signed Dec 2002 - 3 years/$35M
2003: $11.0M
2004: $10.5M
2005: $10.5M
2006: Mutual option $6.5M or $3.0M buyout

Tom Glavine signed a guaranteed three year contract for $35 million with a 2006 option. Now, Tom may not be back, but if he does, he'll be affordable. At 40 years old he is most certainly not worth much more than that considering the chances are he will regress rather then get better. Tom is a type of pitcher that I'd bet on being more effective longer than a power pitcher since it is harder to lose your feel for pitching than lose your fastball or bite on your curve. But his 2006 salary of $6.5 million dollars got me thinking.

1) With an option like that, he actually becomes more valuable trade bait this year for a team that wants him for 2006 for the price of #3 starter.

2) If the option does get picked up or is kicked in, he will not tie up payroll with a bloated contract when he is likely to contribute the least out of his time as a Met and leaves his team with more options available to better the team.

Now take this contract:

Mike Piazza C NYM Signed Nov 1998 - 7 years/$91M
1999: $6.0M (+$7.5M signing bonus, $4.0M paid initially)
2000: $11.0M
2001: $12.5M
2002: $9.5M (+remaining $3.5M of signing bonus Dec 15 2002)
2003: $14.5M
2004: $15.0M
2005: $15.0M

Unless you are the Yankees you really cannot go on the idea that you playing for today without regard for you financial future. However, 99% of every large contract goes up exponentially throughout the life of the contract. If you take a look at Piazza and look at that him as an $91 million dollar investment/asset he would certainly be of less value in 2005 then he is in 1999. Sure enough, his best years rank like this:

2000: .324/.398/.614 38 homers 113 RBIs
1999: .303/.361/.575 40 homers 124 RBIs
2001: .300/.384/.573 36 homers 94 RBIs
2002: .280/.359/.544 33 homers 98 RBIs
2003: .286/.377/.483 11 homers 34 RBIs
2004: .266/.362/.444 20 homers 54 RBIs

Now 2000 and 1999 are reversible and so are 2003 and 2004, but you get the idea. Teams always sign their huge contracts with more money in the back so they have more flexibility in the present. I do not have a problem with that if you signing Vlad at 28 through 33, but I have a problem with that when it is someone 30 through 35 during the contract or basically anytime the contract runs through a player being in their upper 30's. When you look at the value of what your product (baseball player in this case) will give you in each year, I think it should be priced accordingly. Right now Piazza looks like a virtually immovable contract that is getting grossly overpaid as does/did Sammy Sosa, Shawn Green, Jeff Bagwell, Mo Vaugh, Pedro Martinez, etc.

I understand the basic philosophy to the idea, which is buy now pay later. I understand the concept but I think for the long term viability and success of a team it has to be looked at to get what you pay for at the present time. Now, I'd love to see teams change the way the currently do business when it comes to these mega contracts. How would Piazza's contract look if it was more like this:

1999: $15.0M
2000: $15.0M
2001: $15.0M
2002: $14.5M
2003: $14.0M
2004: $10.5M
2005: $7.5M

You are paying for it in the beginning and all those figures include the signing bonus baked into it. The fist four years result in an extra $12.5 M in salary for Piazza which is a bit more than $3 M per year during those four years. However, if he is giving you monster numbers, it is easier to palate that and you will be looking to add less firepower to the lineup with a healthy and productive Piazza. In the final three years the Mets are saving $12.5 M over three years with the last year a very acceptable $7.5 million. At that price Piazza does not look like the load that he is now and does not make your head spin when you look at all the zeroes.

By no means am I suggesting doing this with 3 year Cameron-like deals, but only blockbusters that break the bank. Anytime players sign these colossal contracts the player is undoubtedly going to experience a downturn in numbers and value and has the team dying for them to get off the payroll. Sometimes a team will pay the players way out of town and absorb most of the contract and jettison them off to another team but for the most part the team finishes out the contract because they cannot move it. I'm sure I am not the first person to think this is a good idea and teams obviously have their reasons for making out contracts the way they do, but it will surely make having guys like Piazza on the team in the twilight of the career a bit easier.

I do not think it has to be buy now pay later with these superstars and I think the contracts should be structured to pay out the most money when you are receiving the most value back for your money. If the Mets had done that they would have an extra $7.5 million this year to play with and only had to absorb a bit more money in the first three years. In reality, when Mike is producing you are looking to add far less in terms of players than when he is not producing. If he was putting up 2000 numbers, the Mets may not be looking for a huge bat like Beltran. However, that is not the case and the Mets need a huge bat to supplant his loss of Piazza's production when is tying up the most money. The Cubs are rumored to be players for Beltran, but the Chicago media has surmised that they cannot make a move for him unless they move Sosa. Big stars with big contracts mean big problems at the end of their useful life. I think it makes sense for a team to try and reduce the hit at end of their career when they are least productive and they will be looking outside for some help by trying to absorb as much on the front end.

* * *

Talk about an unflattering picture. It looks like pudgy gained about 20 pounds eating sushi and drinking Sapporo in Japan.

  • The Devil Rays may be looking to add a veteran starter. Hey maybe the Mets can return Victor Zambrano since he is damaged goods and exchange him for Aubrey Huff. Really though, if the D-Rays are unable to attract someone via free agency then maybe a deal surrounding Steve Trachsel + cash and obviously something else for Huff is not out of the realm of possibilities. They fleeced us so they way I look at it, we owe them a fleecing.

  • Despite his declining production and plummeting public image, Sammy Sosa still has fans in Flushing.

    Why won't this go away? WHY? The last time I said why won't this go away it was about the Zambrano for Kazmir rumors. Trading Piazza for Sosa is a huge mistake. Sosa plays in a hitters park and had declining numbers. He's older than Piazza and more a clubhouse nuisance. He is smiling Sammy no more and his attitude has changed for the worse. He corked his bat and very well could be 38 instead of 36. On top of that, he takes up an outfield spot that could be better used on someone younger and better. I shudder to think of the numbers that Sosa would put up at Shea in the declining part of his career. Piazza's contract is off the books after this year, why would you invite another huge contract and an aging star? Let us not forget Dusty thought so highly of him he was batting sixth in their lineup!!! Sixth!!! The Mets do not need a guy making close to $20 M batting in the bottom of the order. Luckily the Mets will not be able to make this happen. They would need to move Piazza's salary and have someone assume just about the entire contract. They would also need to move Floyd and have the Cubs absorb his entire contract and throw cash back at the Mets for Sosa. I cannot see that happening and thankfully for us Met fans the Mets are going to have a try really really hard to screw up and get Sosa.

  • Oh let's see what other rumor is out there that is dumb. How about Reyes for Soriano? Let's see, Reyes is seven years younger and is under Met control for four more years and Soriano is only under control for another two years. One is making peanuts while one is due to make almost $9 M in arbitration this winter. I could go on but my blood pressure would go through the roof. Just look at Soriano's road #'s last year and picture a .250 hitter with 22 homers at Shea in a good year.

    I like Omar's nobody one is off limits approach, but let us have some common sense and limit it to aging veterans. Moving Reyes for Soriano to make room for 31 year old Cabrera is about as sensible as trading Scott Kazmir for Victor Zambrano while Zambrano is injured. I do realize all this is talk and speculation by the media, but to even hear it is silly.

  • "Without question he could pitch in the major leagues," said MLB manager Bruce Bochy. "He has four major league pitches, he has a good idea of what he's doing on the mound. It's hard to compare him to anybody because of his unique delivery."

    Daisuke Matsuzaka was supposed to pitch game two of the series between the Japanese All-Stars and the MLB team, but he was put off until game six. Matsuzaka gave up one run on five hits while striking out six while going the distance for the win and may still come to the states this year. However, I would assume he would have to make that decision soon before teams commit money to free agents if the Seibu Lions want to start a bidding war. Why would they sell his rights to a MLB team? Japanese teams are in serious financial straits and five million dollars for negotiating rights is nothing to sneeze at for teams on the verge of bankruptcy.

  • Game on! Kendry Morales and the Indians have seemingly been unable to find common ground due to his contract demands. His demands are a bit rich for a guy who really is still a questions mark outside of some solid workouts, but worth the chance for a Mets.

    The Indians have slowed their pursuit of Cuban defector Kendry Morales. Agent David Valdez wants a major-league contract similar to the four-year, $9.5 million deal Texas gave Mark Teixeira in 2001.

    "We couldn't find any common ground," said John Mirabelli, director of scouting. "We could revisit this, but right now we have to refocus on the Pacific Rim." Some Japanese players have already declared free agency. Others should become available at the end of November through Japan's posting system.

  • Here is how much weight you have to put in all these rumors.

    According to a National League source, the Mets have only "limited interest'' in Cabrera, although new general manager Omar Minaya is familiar with him from their days in Montreal. The Mets are interested in acquiring one of Oakland's Big Three starters - Barry Zito, Mark Mulder and Tim Hudson - but not at the price of infield prospect Jose Reyes.

    So Reyes is NOT available for a young stud pitcher, but he is available for Soriano when the free agent market can produce a better right field option. I guess you have to pick and choose what to believe.

  • Clement going, going ...

    The Cubs have had exclusive negotiating rights with pitcher Matt Clement since the right-hander filed for free agency, but that period will come to an end Friday, and it seems Clement's stay in Chicago will as well.

    "They've had two weeks, and we haven't heard from them," said Clement's agent, Barry Axelrod. "There's actually more (outside) interest than I thought there would be. We've heard from eight to 10 teams ... and three or four sound serious."

    He costs you no draft picks and has an upside. Sign him, sign him now! Move Trachsel for a prospect or two if you need to open a spot and some cash to do it. Hey, I hear Texas is looking for some veteran pitching that is cost effective.


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