There’s No Crying in Baseball Contracting

Portfolio.com reports here on the death of mega-contracts in baseball.  Yes, we’re thinking of you, Troy Tulowitzki (pictured), and also of Evan Longoria.  These are two young baseball players who signed rich but not jaw-dropping contracts with their teams either as rookies or after one year. 

This blog has suggested elsewhere that agreeing to pay any 42-year-old player nearly $30 million a year might be irrational.  Portfolio.com suggests the same, as the average player peaks at age 26.  Rational ball clubs thus offer reasonable multi-year contracts to very young players with huge potential, hoping to avoid having to pay them eye-popping contracts for post-prime years.

But nobody will walk away from the negotiating table crying.  Mr. Longoria negotiated a deal that will pay him $17.5 million over the next six years.  At the time he signed, he had played six games in the major leagues.  Tulowitzki will get over $5 million a year over a six-year period, but he had already proved himself last year as a rookie.  These contracts may seem rich, but with what you pay Tulowitzki to play every day for a full season you can barely get Roger Clemens to sit on the bench four games out of five for a month.

[Jeremy Telman]