Baseball BeatNovember 15, 2006
The Art of a Bad Deal Revisited
By Rich Lederer

Score one for J.D. Drew and Aramis Ramirez. The players signed contracts two years ago allowing them to opt out after their second season. Guess what? They both did. The players won and their teams lost. No ifs, ands, ors, or buts about it.

Drew exercised his option last Thursday and is now a free agent. He left three years and $33 million on the table. Ramirez filed for free agency on October 30, turning his back on $11M in 2007 and $11.5M in 2008, before agreeing to a new five-year, $75 million deal with the Cubs.

Ramirez's windfall is highly transparent. His total salary increases by $7.5M over the next two seasons and he has gained an extra three years of security at $15M per. The 28-year-old third baseman has a full no-trade clause through 2010 and the right to void his contract after four years.

We won't know how much Drew stands to gain until he comes to terms with his new team. But one thing is certain: J.D. will sign a more lucrative deal than the one he just forfeited. You can take that to the bank.

First of all, it was not an accident that Scott Boras negotiated the escape clause to coincide with the arrival of the new Collective Bargaining Agreement. Secondly, Boras sized up the market, determined that Drew would be one of the most highly prized free agents this offseason, and realized his client would have no problem securing a better contract than what remained on the old arrangement.

Based on Ned Colletti's comments, the Dodgers are not going to bid on Drew. According to the Los Angeles Times, the general manager, who hadn't spoken to his star right fielder since October 6, was "surprised" and "disappointed" in Drew's decision to test the free agent waters. Colletti was also blunt in his assessment of the situation. "I'm done. He wants out. He can have out."

I recognize that it was Paul DePodesta--and not Colletti--who signed Drew to that one-sided deal in December 2004. But Ned inherited the contract and could have negotiated a new one if he wanted to keep Drew in Dodger Blue. It might be a painful lesson but the door swings both ways. The Dodgers exercised their right not to pick up Eric Gagne's $12M option for 2007 and J.D. Drew exercised his right not to return to the Dodgers. What's good for the goose is good for the gander.

Drew was a polarizing figure in L.A. He was generally supported by the sabermetric crowd but never embraced by the casual fan or the mainstream media. In fact, there are many who see Drew's exit and say good riddance, others who view his departure as a blessing, and those who seem relieved by it all. The more objective, even-handed take on the matter seems to be the exception rather than the rule.

Whether one likes or dislikes Drew is not the point here. Players who hit close to .300/.400/.500 don't grow on trees. Lost on the critics is the fact that Drew was the #1 right fielder in the NL last year and the sixth-best in the majors (behind Jermaine Dye, Vladimir Guerrero, Ichiro Suzuki, Mike Cuddyer, and Bobby Abreu).

The point is that the Dodgers are worse off without Drew than with him. His production cannot be easily replaced in today's market for $11 million per year. The Dodgers--and the Cubs in the case of Ramirez--made a costly mistake in agreeing to the escape clause. As I pointed out in The Art of a Bad Deal in January 2005, "you don't give the other side the right to put (the contract) back or call it away unless you get something in return."

A year later, I included the following comments on Drew in High Risk, High Reward:

The risk to the Dodgers is twofold: (1) if J.D. plays well, he has the ability to opt out of his contract; (2) on the other hand, if Drew gets hurt and/or plays poorly, he sticks around for the last three years of his contract and collects the remaining $33 million owed to him.

Heads Drew wins, tails the Dodgers lose. One way or the other, the outcome was not going to work out in L.A.'s favor. Mind you, between the two risks, losing a productive Drew earlier than expected beats the heck out of keeping an unproductive Drew for three additional years.

Nonetheless, the Dodgers now face the prospect of having to replace Drew in an environment in which comparable players will cost them more dollars and years. Welcome to the laws of supply and demand. Economics 101. When demand exceeds supply, prices rise. In the case of MLB, the supply of talent is more or less fixed while the amount of money chasing these goods has generally been on the rise.

Baseball teams are awash with cash and the bidding for top-tier talent will be fast and furious. The Dodgers will either be forced to pay up for Alfonso Soriano or Carlos Lee, or settle for someone like Moises Alou, Frank Catalanotto, Cliff Floyd, Luis Gonzalez, Aubrey Huff, or Trot Nixon. Besides Nixon, none of these players have the tools to play right field. Andre Ethier could be switched from one corner to the other, freeing up a spot in left for one of the above or perhaps even James Loney (should the Dodgers bring back Nomar Garciaparra).

Given Colletti's reluctance to hand the center field job to Matt Kemp, the Dodgers will also need to re-sign Kenny Lofton, pursue Juan Pierre or Gary Matthews Jr., or make a trade for someone like Chone Figgins.

No matter what, the Dodgers are going to spend more money or wind up with lesser players than Drew at all three outfield spots. There's just no opting out of that.


Can the Dodgers offer Drew arbitration and get draft picks for him?

In Drew's case, I don't think the opt-out clause was a bad thing. In fact, I think any team signing him should probably give him a frontloaded contract with another opt-out clause to encourage him to take it.

Without an opt-out clause and the promise of more money than he's currently making, there is absolutely nothing to keep this guy motivated. This won't be popular, but I'll say without his opt-out clause this year you'd have seen a different Drew. This guy needs Tony Robbins, bad. He doesn't show up unless there's something in it for him he doesn't already have.

I would offer him a deal that puts a ton of money upfront for the first two years of the deal, an opt-out clause, and then a much reduced salary for the remainder of the contract, because I'd be scared to be stuck with him when he's got no incentives to play for. I think anyone who signs him to more than a 4 year, $56 million contract with no opt-out clause or incentive to continue playing well will be making a colossal mistake. Drew is one of the few players whose achievements will always be more valuable on paper than on the field I believe. He's underrated, but not by a whole lot.

The Cubs shafted themselves on Ramirez. Like the Dodgers, I say good riddance to Drew. He played a full season in 2006, but this guy's injury-prone history would scare me away from a long-term deal.

As much as I disliked Buzz Bissinger's book, buried in the mass of nonsense were some legitimate observations. And one of them may be the characterization of Drew as someone who simply does not play hard much of the time or work hard to hone his considerable skills. That does not mean he has no value, but I think APing's points are correct. Any team that signs him needs to build in incentives and protections for itself.

Great analysis (do you get tired of hiring that?), Rich.

I honestly don't understand what was the incentive for both clubs to make those damned-if-you-do, damned-if-you-don't deals.

I really hope Dodger fans get a right fielder who hits about .220 with a .250 on base percentage and .300 slugging percentage. I'm a bit ashamed of how my fellow Red Sox fans behaved toward Keith Foulke and Mark Bellhorn but that's kind of passion gone awry. How do you leave games early and work yourself into a hate for J.D. Drew and Paul DePodesta? It's like some impossible combination of apathy and antipathy.

"you don't give the other side the right to put (the contract) back or call it away unless you get something in return."

This is probably the most important observation of the piece (even though it was from an earlier one!). This type of contract isn't necessarily bad; it just increases the risk for the teams making the deal. In order to justify such a clause, teams need to make sure that they're signing guys for less than they're worth or that the contracts are backloaded. This amounts to a player "paying" (by taking less money now/in the beginning of the contract) to put them in a more favorable position down the road. It's almost as if the player is insuring themself against injury or poor play down the road, and the premium is the early years in the contract.

In the case of the two contracts above, I don't recall many observers claiming that Drew and Ramirez were signing for "less than market value". The players got their insurance and the teams paid the premium.

Can the Dodgers offer Drew arbitration and get draft picks for him?

Yes, I believe Drew is a Type A Free Agent and treated like all the others.

It sure won't Ned long to wreck the Dodgers. Amazing with that crop of minor leaguers that they will just slip further and further away from the playoffs.

As pointed out by James T, the key observation in he article is "you don't give the other side the right to put (the contract) back or call it away unless you get something in return." But then how can we assume that the Dodgers did not get something back? We would have to know what the Dodgers would have had to pay Drew, and for how many years, absent the option, to know what concessions they actually received in return for the option, and we don't know that. James T assumes, or relies on very limited evidence to conclude, that Drew received a contract that was equal to market rate even without the option and that therefore the Dodgers just gave away the option for nothing. That would indeed be bad business. But it's not easy to estimate what the market value for a particular player is or was, and it is thus difficult to look back in hindsight and conclude whether the Dodgers were or were not adequately compensated for the value of one aspect of the entire Drew contract,the opt-out clause. I do agree that the Dodgers' front office whining about Drew's exercise of his contractual right is completely inappropriate. You have to assume that players will exercise their contract rights to their best advantage, just as players have to assume teams will do the same.

Rich, nice article, and not to pick on you, but I think you owe an apology to Mr. Garciaparra for your comments in the "High Risk, High Reward" article you linked. I think we can safetly say he delivered a "high reward" to the Dodgers last year, especially when he shouldered the franchise player load that was supposed to be Drew's.

I don't know if I owe Garciaparra an "apology," but I will admit that I underestimated his contributions this year. In a previous article, I actually gave the following prediction:

"If he's healthy, what's he going to hit? .280-.300/.320-.340/.460-.480? I'm sorry, but these numbers look like Shea Hillenbrand to me."

Using the mid-points of my ranges (.290/.330/.470), I was low but not that far off from his results (.303/.367/.505). He walked more than I anticipated and pounded out a few more doubles but was in the ballpark otherwise.

I'm not so sure that Nomar was a "high reward" though. I will admit that he earned his money ($8.5M, consisting of $6M in salary and $2.5M in incentives) but don't think he did much more than that. Yes, his rate stats were nice. However, he only played 122 games. By comparison, J.D. Drew played 146 games and put up a higher OBP than his teammate and virtually the same SLG.

I still don't completely buy the whole "J.D. Drew is lazy and unmotivated" line. In Bissinger's book, you get the feeling that LaRussa has some sort of personal grudge against Drew and Buzz is just acting as his mouthpiece. For all the praise he deserves for Prayer for a City and Friday Night Lights, his ode to Tony was truly awful.

Drew will always have that stigma and people have demonized him since day 1 for failing to sign with the Phillies in '97. The guy's injury prone--though no more so than Nomar--yet Nomar's a "gamer" and a "team leader" or what have you and Drew is just "soft". Whatever.

I'll still take a lineup of lazy .300/.400/.500 hitters any day of the week; the Bill Plaschke's and Ned Colletti's of the world can have all the David Ecksteins they want. Despite what the sentiment in LA may be, sprinting to first base on a pop out doesn't put any runs on the board.

Drew is alleged to have signed a 2 year/$30M deal with the Red Sox. He's getting more money per year, but fewer years, and less money overall. In this market, that's a pyhrric victory.

Fewer years is a good thing, not a bad thing. He is basically getting the same amount of money from the Red Sox over the next two years that he would have received from the Dodgers, especially if you take the discounted present value approach to analyzing the two deals.

Who knows what the market will be like in two years? Based on history, it will probably be better than it is today. Drew will be a couple of years older and perhaps slightly less marketable, but I would be surprised if he doesn't make out quite a bit better on a combined basis than had he stayed on board with the Dodgers for three more years.

In the last two years of his contract with the Dodgers Drew was paid about $104,000 per game. I'm just guessing, but that's got to be among the best paid players in the game. Though this wasn't his fault- he took a pitch off the wrist to lose much of the '05 season - it was something he and Boras could have considered when choosing to opt out. Again, he had the right to make the decision he made. And Boras probably has an ethical duty to recommend that Drew leave. But Drew wasn't obligated to hose the people who signed an injury-plagued, talented outfielder to $11 million per. Just as I would argue the Dodgers would be ethically (and financially) wise to re-sign Gagne at some medium rate, Drew would do well to experience the horror of an $11 million paycheck to fulfill the spirit of his initial contract.

Thanks, Andre. In a "feel good" sense, it would be nice if players such as Drew and Gagne (who made $18 million in 2004-05 for pitching 15.1 innings or more than a million dollars per IP) agreed to play for less than market value after shortchanging their employers in previous years.

But, in the real world, both sides always do what is best for them contractually at that moment in time. Sometimes the teams appear to get stiffed, and other times the players seem to be the ones who get shafted.

As fans, we all yearn for loyalty (both ways). It is unfortunate in this day and age of "merry-go-round" baseball that players will come and go and teams will almost never look or feel the same from one year to the next.

I don't disagree with what you just said. But my suggestion that Drew would do well to live up to the spirit of a contract isn't (entirely) about idealism.
I mean, aches and tweaks and fatigue seem to rule this guy's career as much as his considerable abilities. Drew - he of the 400 OBP and solid power and stellar defense and great base running - has managed to bum out Tony La Russa and Bobby Cox. They're a couple of hardasses, for sure, but they're also expedient men who don't seem to let emotion cloud their judgement of a player. As good as Drew is, two of the better managers of this era didn't want him. That's powerful. From my view, Drew treats the game as a long, apparently tedious ploy to snare an ever better contract.
Is that horrible? Not necessarily. I'm not anti-money. And I understand it's the elixer of the real world. But it's also a real world fact that Drew, as talented as he is, doesn't produce to within 80 percent of what he could produce. I can't help but wonder if sticking it out, contractually, might not help him stick it out on the field....

On another note, this is a great thread and a very cool site.