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All-Star Signs the "Worst Contract Ever" by a MLB Player
Atlanta Braves second baseman Ozzie Albies recently agreed to what ESPN's Jeff Passan said league "executives, players, analytics people, development side and scouts" are calling the "worst contract ever" signed by a MLB player – a 7 year, $35 million agreement with two additional club options at $7 million/season (includes a $4 million buyout on the 1st option year). The deal will take the power-hitting second baseman past his 30th birthday, limiting the potential value of his next contract; no position player, over the age of 30, signed a contract worth more than $60 million this past offseason. An all-star at the age of 21, Albies was scheduled to make just +/- $1.1 million over the next 2 seasons before becoming arbitration eligible following the 2020 season.
Howie Long-Short: Albies certainly appears to have signed a deal below his projected value. He's notably young to have agreed to a pact of that length and the few prospects his age that have inked contracts that take them through their 20s, have signed for far more money (see: teammate Ronald Acuña Jr.). Joel Maxcy, a sports economist at Drexel University's Center for Sport Management, suggested that Albies may have been "somewhat ignorant of the process – it almost seems as if this was the team's first offer it was so low" – and given some poor advice from his agent (SportsMeter) because he could have just "signed through the arbitration years and then tested free-agency."
Sure, Albies could have incurred a career threatening injury or end up washing out as a player (before cashing in), but those prospects seem far-fetched. Maxcy says, "one thing about baseball players is they are remarkably consistent over time – there's really no reason to expect a tremendous decline in performance. And he's not a pitcher. It's not likely that a 2nd baseman is going to experience a career threatening injury."
FanGraphs projections indicated that Albies could be leaving as much as $200 million on the table over the life of the deal, but a lot would have to go right for the player to realize all that money. More conservatively, the figure is somewhere between $35 million and $85 million. Maxcy said that the $35 million deal signed is likely "50% of what he could have gotten. It could have been much more than that. It could have been $100 million or $120 million for a deal of that length." You can be sure agents competing with SportsMeter for players will be using this deal against them for years to come.
$35 million (perhaps as much as $45 million) may not be market value, but for a player who has earned just +/- $1 million in his career to date (signed for $350K at 16, made +/- $550K last season) it likely seems like a fortune; "humans in general tend to be risk adverse. If offered a sure thing – when the potential to blow it remains – most people will take it." While that explains why Albies wanted the security of a long-term agreement, it doesn't answer why he failed to sign for a higher AAV considering the deal's length; Carlos Correa (another one of the players Baseball-Reference cited as a comp.) settled for $5 million in his 1st year of arbitration and will receive increases the next 2 seasons, while retaining his right to hit free agency. Had Albies simply played out his arbitration years, he would have received "$5 million in the first year, $7 million in the second and $10 million in the third – and likely more than that."
It's possible that Albies saw the writing on the wall with the "free agent market seemingly favoring teams more and more and took the money offered", but it seems highly unlikely this is "the new normal." You can make the case that Bryce Harper signing for a lower AAV than A-Rod circa 2007 "indicates that the market is not where it once was, but the discount Albies took is beyond the new economics of baseball." Of course, moving forward, every arbitration eligible prospect – particularly 2nd baseman – will be compared to Albies, so this deal may end up representing the beginning of a "newer normal." If that's the case, we'll see a strike following the '21 season.
The Braves (BATRA) have now locked-up their middle-infield through arbitration and their prime years for below market value; Albies close friend and teammate Ronald Acuña Jr. also signed a "team-friendly" deal (8 years, $100 million). That's good news for BATRA shareholders who are now guaranteed to have some star power and cost certainty for the better part of the next decade. Shares are up +4% (to $28.45) since Acuña's deal was announced on April 2nd.
Fan Marino: To give you an idea of the type of talent Albies has, the 22-year-old posted a 3.8 bWAR (Wins above Replacement) in his first full season in the majors. That won't mean much to many of you, but for some perspective, Joe Morgan (HOF '90), Ron Santo (HOF '12) and Bill Mazeroski (HOF '01) were among the players Baseball-Reference identified as being "most similar" to Albies through the age of 21.