Get ready Diamondbacks fans, it’s MLB 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: opt-out clauses.
Market Dynamics Week spawned out of the Diamondbacks‘ decision to trade Paul Goldschmidt at the outset of the offseason – which in retrospect was a more complicated decision than it even seemed at the time. Since the trade, frigidity in baseball’s free agent market has brought certain trends in player contract to the forefront of the baseball conversation – and they’re worth exploring.
Frontloaded contracts are en vogue, and they’ve become popular fast, but other contracting trends catch on more slowly. Today’s topic is opt-out clauses. It was genuinely shocking that Bryce Harper‘s new contract with the Phillies didn’t include an opt-out clause, which goes to show just how boiler plate they’ve become.
On the one hand, players want to get as much money as possible before 2021, when a stoppage looms. There are enough issues between the owners and the players’ association that talk of a strike is already widespread – and we’re two years from the deadline. While there have been signs of positive dialogue lately, the long-term outlook is murky at best.
The celebrity of rockstar GMs like Theo Epstein and Billy Beane made owners more receptive to Ivy League thinking: namely, being wary of sacrificing future payroll freedom for present-day upgrades. Which happens to be one of the primary reasons to avoid frontloaded contracts – they hamper a team’s ability to add talent today.
Owners are growing accustomed the idea of giving more money up front, which means shorter, theoretically juicier deals. Interestingly, NBA owners and players have an inverse relationship.
Superstar players like Lebron James and Kevin Durant more-and-more often demand their sovereignty in the form of one-year contracts. A short deal for James or Durant guarantees their personal agency (yes, at the expense of team security) while making owners and front offices theoretically more accountable on a year-over-year basis.
And yet, the theory of juicier contracts doesn’t exactly capture the actual environment, nor has the theory of accountability for NBA front offices come to fruition. In fact, James’ Cavs-era teams were continually hampered by his unwillingness to commit, forcing the team into a very difficult team building situation – needing to do whatever it takes to win now. But trading your first round pick every season – even when it’s at the end of the first round – has a cumulative effect.
Baseball elites, meanwhile, continue to push for the most money over the longest amount of time. Of course, baseball’s top tier of superstars don’t have the same leverage as in the NBA because baseball players aren’t as impactful on an individual basis. Their year-to-year value, then, is more prone to cratering with a single subpar or injury-plagued season. Even the loss of Goldschmidt, the best player in franchise history, hasn’t dimmed GM Mike Hazen or manager Torey Lovullo’s dreams of contention.
One way MLB contracts and NBA contracts are trending similarly is the inclusion of opt-out clauses. Opt-outs let players have their cake and eat it too. Jason Heyward gets a monster deal fro the Cubs with an opt-out in case he actually ups his value in the ensuing years. He doesn’t, nor does he opt out, keeping the Cubs on the hook at superstar rates for a definitive non-superstar.
Teams are fighting back with shorter-term deals – or no deals at all. Opt-out clauses can hold teams accountable in baseball the same way they do in the NBA. Owners and front offices, then, don’t want to give them out.
Harper not asking for one in his 13-year contract was a twist in this narrative, for sure. But like most aspects of his free agency, it’s an anomaly. Harper’s desire for long-term security is unique to him: He was driven by the rumors that have swirled around him since before he even entered the league.
The presumption that Harper wanted to be a Yankee hung over everything he did in Washington, no matter how often he downplayed the idea. Locking in his long-term future in Philadelphia was more about shutting down a personal narrative than it was about league trends. Nobody else in the MLB (maybe Mike Trout) has to deal with that level of scrutiny.
NBA trends – like those driven by James and Durant – might have even played a part in the public’s refusal to give up the idea that Harper would eventually defect to the Yankees. So while Harper and the Phillies hit upon a rare bit of harmonious negotiating (on this particular point at least), most players would love opt-out clauses – while most owners and front offices would rather do without.
Scott Boras thinks he’s found a compromise. We’ll get to that tomorrow.
The Diamondbacks are but one club trying to recalibrate amid these shuffling MLB Market Dynamics. Frankly, it’s the story of the offseason.