Get ready Diamondbacks fans, it’s Market Dynamics Week here at Venom Strikes, where we explore financial elements shaping the current baseball conversation. Frontloading, opt-out clauses, performance-based incentives, swellopts – understanding the function of these contract elements is essential to tracking the ever-changing financial relationship between players and owners , and they’ve becomes bedrock talking points around baseball. Time to see what the hubbub is about with today’s topic: frontloading.
Market Dynamics Week isn’t being launched here at Venom Strikes because of a Diamondbacks problem, it’s because Major League Baseball has a Free Agency problem. It’s the second week of Spring Training and the Free Agent Market is flush with employable professional baseball players – even if the big fish are finally off the table.
Before Manny Machado, Nolan Arenado and Bryce Harper stole the attention of the baseballsphere with their new deals, there was a flurry of contract extensions for a talented quartet of pre-arbitration players.
The Twins signed Jorge Polanco, 25, for five years, $27.25MM and Max Kepler, 26, for 5 years, $35MM. The Yanks locked up Luis Severino, 25 on Feb. 20, for 4 years, $40MM. The Phillies, meanwhile, locked up their ace, Aaron Nola, a year after a third-place Cy Young finish for four years, $45MM.
These deals follow in a new trend that’s emerged: frontloading. This is just one of the many interesting contract trends that have emerged – and we’ll get to those later in the week – but for now let’s break these extensions into their elemental parts.
The first interesting data point here is the time at which each player signed their extensions. For that we’ll look at service time:
- Severino: 2 years, 170 days
- Nola: 3 years, 76 days
- Polanco: 2 yrs, 24 days
- Kepler: 2 years, 152 days
Now let’s look at the breakdown of each contract side-by-side:
Severino: $4MM (+$2MM signing bonus) in 2019, $10MM in 2020, $10.25MM in 2021, $11MM in 2022, $15MM option in 2023 ($2.75MM buyout)
Nola: $4MM (+$2MM signing bonus) in 2019, $8MM in 2020, $11.75MM in 2021, $15MM in 2022, $16MM option for 2023 ($4.25MM buyout)
Polanco: $3.583MM in 2019, $3.833MM in 2020, $4.333MM in 2021, $5.5MM in 2022, $7.5MM in 2023, $10.5MM option in 2024 ($1MM buyout), $12.5MM option in 2025 ($750K buyout)
Kepler: $6MM in 2019, $6.25MM in 2020, $6.5MM in 2021, $6.75MM in 2022, $8.5MM in 2023, $10MM option in 2024 ($1MM buyout),
More than service time separates these four players, of course, not the least of which is player performance – though we’ll table that component for this article. The players themselves aren’t the issue here at all – the contracts are – which means zooming out beyond the performance of any particular player and identifying some market factors. Like…
Representation. Each player here is represented by a different agency, none of them by the much-vaunted Boras Corporation. Also, age. Again, not much to go off of here as all four of these players are around the same age. Just over a year separates Kepler (oldest) and Severino (youngest).
Of note, Kepler, Nola and Severino all had four arbitration years ahead as super two players, while Polanco was a year from arbitration, though also four years from free agency.
It may not seem like it if you don’t spend a lot of time staring at year-by-year contract breakdowns, but all four of these contract tilt forwards more than extensions past, which have tendered towards heavily backloaded, or even deferred payment deals. Frontloaded contracts, apparently, are in fashion.
Now that frontloaded deals are en vogue, expect to see more – and soon. After all, Market Dynamics Week isn’t just about the Diamondbacks future, or the future of player contracts – it’s about the present. And right now, frontloading is in.