The Los Angeles Dodgers have done it again. And by it, I mean they have signed a funkily-structured contract that is going to leave some folks annoyed.
The Dodgers are extending catcher Will Smith on a DECADE-long deal with a tiny average annual value:
Smith, who turns 29 tomorrow, is still two years away from free agency, so he is likely giving up a lot of potential future dollars in exchange for the security of his one big deal. Even if the shape of the deal is typical Dodgers.
Smith has been one of the true two-way studs behind the plate in his time in the big leagues, hitting .263/.358/.484/129 wRC+ behind the plate, and providing significant defensive value behind it.
Still, what the Dodgers are buying here are eight of his age-31+ seasons, which are extremely hit-or-miss for almost all catchers. The job is so physically taxing that the cliff can come much earlier than expected and can be much more pronounced than expected. Clearly, the Dodgers have good reason to believe that Smith will be one of the outliers, still worth of starts and huge dollars well into his 30s.
Even if you decide that this structure is primarily about lowering the AAV, they’re still paying more than $100 million for his, like, age-31 through 34 seasons. It’s a big bet on his longevity and durability, since they would have had his age-29 and age-30 seasons no matter what.
Buuuuuut, let us be very clear: this contract structure is about lowering the AAV.
No one anywhere in any universe would sign a 29-year-old catcher to a ten-year deal thinking they’re going to get meaningful value from the player when he is 37, 38 years old. It’s just that the Dodgers have made the annual value so low that they don’t care (and I’d bet they’re deferring some of this, too). Besides, on the same principle as deferred money, $14 million in 2034 is not even close to the same value as $14 million in 2024.
Moreover, the Dodgers have the ability to do this kind of thing without any fear of future cashflow issues because of their uniquely massive, and uniquely secure TV contract. They simply do not have to worry about significant financial commitments down the road, because they can very safely project that the cash will be there.
But also, the owners will probably sell for a huge gain long before these bills come due.