Note: This post was edited at 1:45pm to reflect updated contract information about Lee's deal with the Phillies. We initially heard that the overall package for Lee was worth $147.5 million; however, the actual breakdown of the deal is $107.5 million for 5 years, with the $12.5 million buyout bringing it to $120 million guaranteed over six years. The $27.5 million vesting option for the sixth year brings the potential package to $135 million over six, for an AAV of $22.5M. The Yankees' highest offer was seven years and $148 million ($21.1M AAV).
The following is a guest post from sometime Yankeeist contributor David Meadvin.
This morning, my long-suffering Mets fan friend Tom suggested that Philadelphia’s surprise signing of Cliff Lee might represent the “steal of the century.” The conventional wisdom in the hours since this deal went down has been that Lee left a pile of money on the table to play for a team he felt most comfortable with.
That’s good spin by Team Lee, but it doesn't quite tell the entire story.
It’s taken as gospel these days that guaranteed years are the holy grail of free agency. The Yankees offered Lee a deal that, with a player option, included a seventh year. No other team was willing to go seven. So the Yanks’ offer must have been the strongest, right?
Wrong. Let’s look at the final reported offers for each of the three contenders:
| Team | Guaranteed Years | Option | Total Value | AAV |
| Phillies | 5 | 1 (vesting) | 6 years/$135 million | $22.5 million |
| Rangers | 6 | 1 (vesting) | 7 years/$161 million | $23 million |
| Yankees | 6 | 1 (player) | 7 years/$148 million | $21.1 million |
On total contract value, it appears that the Rangers offered the best deal at $161 million. But keep in mind, that’s over seven years, versus the Phillies’ six.
Cliff Lee will be 38 when his new deal expires, assuming the sixth year vests. While he won’t be a spring chicken, his epic control suggests he can be an effective pitcher much longer than a pure power pitcher who can’t hide behind a fastball that loses a few mph over the years. If he comes anywhere near retaining his form of the past three seasons over the life of this new contract, there’s no reason to think he can’t sign another multi-year deal at 38. Taking into account the possibility of further contract inflation six years from now, Lee could be setting himself up for another $50 million payday (3 years/$50 million doesn’t seem ridiculous in 2017).
Even if this is Lee’s last contract, if we round the Phillies' offer up, he took the highest average annual value, and that’s the best way to judge this deal.
Baseball fans and pundits have been suggesting that this contract negotiation represents a watershed moment where the Yanks’ huge financial advantage couldn’t win the bidding war. Yankeeist wrote earlier this morning:
“Lee is that rare athlete who clearly isn't all about the money.”
We now know that isn't true. Lee took the richest deal on the table. It’s easy to say in hindsight that he wouldn’t have signed with the Yankees for any amount of money. We’ll never know. But if the Yanks had upped their deal to exceed the Phillies' offer on average annual value and the Rangers' on total value, there’s no reason to think they wouldn’t have gotten their man.
The Lee saga isn’t a story about the Yankees getting rebuffed by a player who rejected their big money. After all these years, we’ve simply been trained to assume that’s what happened. But this is actually a story about the Yankees setting a value on a player they wanted and sticking to that number, even if it meant being outbid.
That’s a new way of doing business, and it bodes well for the future.
By day, David Meadvin is president of Inkwell Strategies, a professional speechwriting firm based in Washington, DC.
Your math is fine but your theory is questionable. Comparing a 6-year deal to a 7-year deal by simply calculating an average annual value based on the idea that a 38-year old pitcher will have no problem signing a 3-year deal is a leap of faith. You also aren't giving any mathematical accounting for the difference between a player option and a vesting option. Your viewpoint is certainly reasonable, but I'd hardly call it the "correct" way to judge this deal. A lot can happen over the course of six years, especially to a pitcher. That seventh year has a lot of value that I think you're not properly accounting for.
ReplyDelete--T
Does it really bode well for the future? The Yanks are guilty of over-paying many players in the last decade, but I'm not sure Lee would have been one of them. Knowing when it's worth it to spend the big bucks is just as important as knowing when not to.
ReplyDeleteGreat post Davey.
ReplyDeleteApparently the Phillies' deal becomes even more valuable than the Yankees' deal if the sixth year is included.
My hunch is that Lee was lukewarm on the Rangers and Yankees for whatever reason, and his agent told the Phillies what dollar amount it would take to get it done. If the Phillies offer were, say, 5 years $100 million I don't think Lee signs with them.
I'm perceiving this as a case of money and destination driving the deal.
T, thanks for your response. Keep in mind, though, that even if we throw out the likelihood of Lee signing another deal in 2017, he still only stood to earn an additional $13.5 million in that extra year from the Rangers.
ReplyDeleteAs for the Yankees, there doesn't appear to be any way of looking at the deal that makes their offer look best.
And it's not really fair to completely ignore his value post-contract. He's exactly the kind of pitcher that can be successful into his later years. If I'm Lee, I'd happily give up that $13.5 million final year from the Rangers in exchange for the option to test the market again at age 38.
Dave, your response illustrates my point- this valuation can only be subjective. It necessarily includes assumptions about future events which cannot be predicted with absolute certainty. All I am saying is that there is no single "correct" way to value this deal. There are only risky and risk-averse approaches, and yours is risky; you are assuming the risk of injury and general skill degradation over time. There is a good reason that "guaranteed" dollars are "the holy grail" of contracts, and it simply the "bird in the hand" principle. There is such a thing as a smart bet, but even smart bets don't always pay off.
ReplyDelete--T
I am not happy that Lee isn't a Ranger. I AM happy that he didn't go to New York when he spurned us.
ReplyDeleteAs I said this morning on a Rangers site: www.BBTIA.com
Lee has earned the right to play wherever the heck he wants to play. While I would liked that to have been Arlington, he has the right to go to Philly for less money.
I genuinely like the posters here at Yankeeist, but most Yankee fans I know personally (and even more who post) are so commonly entitled in their "of course we will sign Sabathia, Teixeira, Lee or whoever we want" attitude about free agency that I am happy that Lee didn't sign in NY.
Man, what a rotation that will be.
Hey Dean,
ReplyDeleteI was hoping you'd come by; I haven't been by any Rangers blogs yet and was wondering how Texas fans feel about this whole thing.
We work really hard at Yankeeist to cultivate a civil environment that fans of all teams should feel welcome in, and so I really appreciate your kind words and the fact that you've swing by from time to time to share your thoughts with us.
This was certainly a surprising turn of events. I figured that Lee would both go with the largest and lengthiest offer, and that said offer would be issued by the Yankees, and ended up being wrong on both counts.
Dean, as Yankee announcer John Sterling loves to say approximately 8,000 times per game, you just can't predict baseball.
FWIW, according to Chuck Greenberg, Lee offered to return to the Rangers if they were willing to guarantee him a seventh year, and the Rangers said no.
ReplyDeleteI'm not entirely sure I'm sold on this -- given that the Rangers were willing to include a vesting option as seventh year, it seems a bit tenuous that they'd flat-out turn Lee down for a guaranteed 7th, but at this point who even knows.
Thanks for the kind words. The admiration is mutual. Keep up the fine work.
ReplyDeleteThough it is hard to generalize accurately across such a large spectrum: Ranger fans are split. Some are moaning that we missed out on Lee. Some are happy we didn't give $23 per year for 6 (or 7) years to a pitcher who is most likely to regress well before the end of the contract. Almost all of them are happy that he didn't sign with the Yankees.
Is Yankeeland in shock, denial or do they want to tar and feather Lee?
Hey Dean,
ReplyDeleteThe Yankee blogs I read for the most part view the team similarly to the way I do, and so I would say that while there's disappointment in Yankee blogland, everyone's pretty much already picked up and moved on to focus on what else can be done to improve the team.
In Brian Cashman's conference call with the media this afternoon he said he had no animosity toward Lee whatsoever, and this is how Yankee fans need to view it -- ultimately Lee was able to find a deal he could live with with the team he really wanted to be on, and there's nothing wrong with that.
Yankee fans certainly share Rangers' fans feelings on their AL rival missing out, as now neither of us have to worry about facing him unless we reach the World Series, so at least that's something. Of course, in the event that one of our teams did come up against that Philly rotation in the WS I imagine we'd be whistling a different tune, but at least Lee won't have any impact on the regular season.
Not such a bad thing to lose Lee. Perhaps the Yankee payroll will dip under $200 finally. And with Posada gone after 2011, be near the luxury tax threshold for 2012. This, I feel, is an important point that is reinforced by the Lee signing. Why should the best franchsie in sports have to overpay for players? They should be willing to take less to play for the Yankees.
ReplyDeleteAs for 2011, the club will have to roll the dice with the young pitchers. Probably they have enough offense to make the wild card. Once in the playoffs anything can happen, as the Giants showed this year. A final Lee note, unless he can also hit, Philly may not have enough offense. Teams like the Dodgers of the 60's are rare, most will be undone by lack of hitting.