We Need to Change Our Perspective on the Relative Cost of a Big Free Agent Contract

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We Need to Change Our Perspective on the Relative Cost of a Big Free Agent Contract

Chicago Cubs

Back in 2016, the 5 highest total value contracts ever handed out belonged to Giancarlo Stanton ($325M), Alex Rodriguez ($275M/$252M), Miguel Cabrera ($252M), Albert Pujols ($240M), and Robinson Cano ($240M).

That wasn’t THAT long ago, but things can change rapidly.

Now? There are SEVEN contracts ahead of the former leader, Giancarlo Stanton and TWENTY-ONE total deals above the $240M threshold. Take a look, via Cots Contracts:

1. Mike Trout, $426,500,000 (2019-30)
2. Mookie Betts, $365,000,000 (2021-32)
3. Aaron Judge, $360,000,000 (2023-31)
4. Carlos Correa, $350,000,000 (2023-35)
5. Francisco Lindor, $341,000,000 (2022-31)
6. Fernando Tatis, $340,000,000 (2021-34)
7. Bryce Harper, $330,000,000 (2019-31)
8. Giancarlo Stanton, $325,000,000 (2015-27)
9. Corey Seager, $325,000,000 (2022-31)
10. Gerrit Cole, $324,000,000 (2020-28)
11. Manny Machado, $300,000,000 (2019-28)
… Trea Turner, $300,000,000 (2023-33)
13. Xander Bogaerts, $280,000,000 (2023-33)
14. Alex Rodriguez, $275,000,000 (2008-17)
15. Nolan Arenado, $260,000,000 (2019-26)
16. Alex Rodriguez, $252,000,000 (2001-10)
17. Miguel Cabrera, $248,000,000 (2016-23)
18. Stephen Strasburg, $245,000,000 (2020-26)
… Anthony Rendon, $245,000,000 (2020-26)
20. Albert Pujols, $240,000,000 (2012-21)
… Robinson Cano, $240,000,000 (2014-23)

Why did I reference 2016? What’s my point here? The game has changed since the last time the Cubs were going out there and spending big on guys like Jon Lester ($155M) and Jason Heyward ($184M). And that means our perspective of the relative cost of these sort of deals needs to change too — well, more importantly, we hope the CUBS’ perspective of the relative cost of a deal changes, but we can arrive there first.

As of today, Jon Lester’s $155M free agent deal is tied for the 51st largest total guarantee of all-time. But at the time of being signed, it was among the top-20 in MLB. As of today’s Jason Heyward’s $184M guarantee is tied for the 32nd largest of all-time. But at the time of his deal, it was among the top-15 in MLB (I’m including deals signed the same offseason, even if they came later in the winter, so really both of these could be moved up … but you get the point).

Another way to look at this is as average annual value as a percentage of the luxury tax. In 2015 and 2016, the MLB luxury tax was set at $189M …

Jon Lester: $25.8M (13.7%)
Jason Heyward: $23M (12.2%)

… So the deals signed by Heyward and Lester accounted for roughly 12-14% of the CBT threshold at the time of being signed. But after the new CBA, the lowest level of the luxury tax threshold has been moved all the way up to $230M ($233M for 2023). So those “top of market” contracts for Heyward and Lester would account for MUCH less of the luxury tax now than they did then. If we were to keep the percentages the same, Jon Lester would get an AAV of $31.5M over six years ($190M total) and Jason Heyward would get $28M over eight years ($224.48M). That’s about a 21.7% increase.

Why do I bring this all up? Mostly because of Dansby Swanson and how I was thinking about his projected deal with respect to the largest free agent contracts in Cubs history. And more specifically, what that would mean for what else the Cubs could do *after* signing him (if that’s where this does end up).

The general concern I’ve seen (and shared, myself!) is that IF the Cubs sign Dansby Swanson to a deal for $190M+ (which now seems pretty obtainable for him) that they’d be done in that tier. Like for years. That’s their big star and that’s where things would end. The Cubs would have their new largest contract in team history and we couldn’t possibly expect them to sign more.

Of course, that would be a fallacy even IF there weren’t these massive changes to the relative cost of players (the Cubs are a huge market team and should be spending like drunken sailors) and revenue, but I could almost hear the argument being made.

But it’s just not true. If the Cubs sign Swanson (or any free agent) to $150M-$200M deal today it just doesn’t mean what it used to mean. That is NOT the top of the market anymore. And just like we wouldn’t have assumed a deal in the $100M-$120M range would take them out of another big deal 6-7 years ago, we shouldn’t assume that a $160-$190M deal should today.

So I guess my point here is … Fine. I get it. The Giants went over-the-top to land Carlos Correa and the Cubs were not going to match it. They didn’t even make a formal offer. I hate it, because he just makes SO MUCH SENSE for the Cubs, but it happened. But in the case that they end up with Swanson for a new “franchise-record contract,” the Cubs better keep in mind that numbers are relative. Just as an example, $200M for Swanson over 8 years wouldn’t be “$16M more than their previously largest deal” (Heyward, $184M). It would actually be something like $24M LESS than his deal, when time-and-CBT-adjusted for inflation.

As a related aside on why the Cubs should be willing to spend big this offseason, even absent everything else above: There is guaranteed labor peace for the next five years and each team received new $30M BAMTech payments. Also, these two thoughts from Brett and I on (1) How the CBA *expects* the Cubs to spend and (2) how much money is STILL coming off the books after this season.

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Author: Michael Cerami

Michael Cerami covers the Chicago Cubs, Bears, and Bulls at Bleacher Nation. You can find him on Twitter @Michael_Cerami