While we continue to celebrate the Chicago Cubs landing a significant free agent target, let’s take a quick look at some of the procedural elements of the signing:
- As reported, the deal is six years and $155 million guaranteed, with a vesting option for a seventh year, worth $15 million. The specific breakdown has not yet been reported, nor has the precise nature of that vesting option. It’s possible that it’s a combo vesting-team option (i.e., if it vests, it becomes a player option, if it doesn’t, it’s a team option), and the deal is for $25 million per year with a $5 million buyout on the option (which, perhaps, is actually worth $20 million – thus, because Lester would lose the buyout if he gets the option, it’s effectively a $15 million option).
- As for the annual salaries, I wonder if we’ll see a signing bonus up front – to be on the 2014 books for internal accounting purposes – and then some backloading (because, despite what you may think, backloading always makes financial sense if you’re responsible about it). For luxury tax cap purposes (something that might actually matter to the Cubs during the course of this deal), the AAV right now looks to be $25.83 million. In other words, that’s the amount that the Cubs will have to count toward the luxury tax cap each year of the deal, regardless of how much Lester is actually being paid that year.
- UPDATE, and, yup, significant bonus involved:
Jon Lester's deal with the Cubs includes a signing bonus of at least $20 million.
— Buster Olney (@Buster_ESPN) December 10, 2014
Lester's signing bonus is $30 million, paid over the life of the contract, according to a source familiar with the terms.
— Jayson Stark (@jaysonst) December 10, 2014
Jon Lester's option vests with 200 IP in sixth year or 400 total in the fifth and sixth. Signing bonus $20M upfront, $10M more spread out.
— Jeff Passan (@JeffPassan) December 10, 2014
- (CONTINUING UPDATE): That’s probably going to come in handy for baseball ops down the road in terms of internal accounting. They had extra money to spend in year 2014, and they spent it in year 2014. This matters for somewhat complicated reasons tied to the Cubs’ debt situation, more fully explained here. The TL;DR version is that, right now, the Cubs have some limitations with respect to how much they can spend in a given year relative to revenue. So, by putting that $30 million in the 2014 bucket, they add a little extra flexibility for the coming years. Lester’s probably pretty happy about it, too. (If you’re wondering how a “bonus” can count in 2014, but have portions of it paid out over the life of the contract, as far as I know, it’s just a matter of accounting. Or maybe only $20 million goes in the 2014 bucket. In either case, the point stands.) OK, back to the original post …
- (JUST KIDDING, ANOTHER UPDATE): More contractual terms slipped out here. Full no-trade clause is the big one. NOW, back to the original post …
- The Red Sox offer, as reported by a variety of sources, topped out at six years and $135 million, and they were the runners up. That means, as we suspected, they did have the inside track all along (otherwise the Cubs wouldn’t have had to top them by $20 million), but the Cubs overcame that with a little extra money and probably some excellent pitching (not the throwing kind, the ‘Mad Men’ kind). It also means that the Red Sox were comfortable losing out on Lester if they couldn’t get him on a relative bargain deal. They will rightly be excoriated by the local press and fans for failing to offer this kind of deal back in the Spring, when it almost certainly would have locked up Lester. Instead, they offered barely half that amount, and now Lester is a Cub.
- The Giants, on the other hand, were right there with the Cubs, in terms of the financial offer, and they were the team – not the Dodgers – who were willing to add a seventh guaranteed year, according to Jeff Passan. The guarantee, however, would be about $168 million. So, yes, that’s a larger guarantee than the Cubs were offering, but I wouldn’t quite go so far as to say that Lester took a lesser deal to come to the Cubs. It’s close. Would he think he could make more than $13 million after his age 36 season? And the Cubs did put that vesting option in there for more than $13 million. So, that is all to say, the offers were pretty close, with the Giants offer probably being a touch better financially. Then again, the Giants were apparently told they were out before they had a chance to sweeten any further, so it’s clear that, regardless of the money difference, Lester wanted to come to the Cubs (or Red Sox).
- The Cubs’ 40-man roster stands at 38 after the addition of Miguel Montero. That leaves two spots for Lester and Jason Hammel, when their deals are finalized, though the Cubs may wait to do so until after the Rule 5 Draft tomorrow so they’ll have a spot to make a pick if they decide to do so. In any case, there remain a few players who could probably be de-rostered, and it’s not like the Cubs are done making moves this offseason.
- That is a reminder, by the way, that the deal is technically not final, and could still be pending a physical. That rarely impacts a deal, but, it’s one more step to take before this is totally complete.