MLBTR Originals Rumors

Another Bite At The Apple: Opt-Out Clauses In MLB

An opt-out clause is the ultimate safety net for an MLB player.  Typically employed with deals of least five guaranteed years, an opt-out clause is inserted in the middle of the term and allows the player to abandon the rest of his contract and become a free agent.  

Alex Rodriguez started the opt-out trend with his monster free agent deal with the Rangers in December 2000, and in total, ten players have received opt-out clauses.  Six of those clauses have come due, and only one of those players, Vernon Wells, didn't secure additional money at the time.  C.C. Sabathia leveraged his ability to opt out to add one year and $30MM to an already record-setting deal.  The others — A-Rod, J.D. Drew, A.J. Burnett, and Rafael Soriano — got to take another lucrative bite at the apple of free agency.  

A Deal-Making Idea

On the night before the 2005 Winter Meetings in Las Vegas, agent Darek Braunecker had a client in A.J. Burnett who he felt was on an island in terms of being the best pitcher available.  It was at that point Braunecker conceived of the idea of asking for an opt-out clause in Burnett's deal.  "I wanted to create something that might add additional value to the deal as opposed to just the monetary component of it," explained Braunecker in a January conversation.  

Burnett's five-year, $55MM deal with the Blue Jays came together quickly once the team agreed to include an opt-out clause after the third year.  "Quite honestly, it was a deal-maker for us," said Braunecker.  "I presented the idea to [Blue Jays GM] J.P. [Ricciardi] and told him that we had another club that had already agreed to that provision, and that if he was willing to do it that he would have a deal. So, really, no pushback to speak of. He obviously had to get approval from [club president] Paul Godfrey, and Paul gave his blessing on it almost immediately and that's essentially what concluded those negotiations."  Braunecker added, "It really wasn't much of a challenge, to be honest with you." 

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Three years later, agent Greg Genske had the enjoyment of negotiating on behalf of the offseason's best available starting pitcher, C.C. Sabathia, and eventually landed a record-setting seven-year, $161MM deal with an opt-out clause after the third year.  There seems to be some disagreement about who proposed the clause.  Back in 2008, Matt Gagne of the New York Daily News quoted Yankees GM Brian Cashman saying, "I offered it. They never asked for it.  They never said they were afraid of New York, I never heard that….Just in case it was an issue, I went to their house and I said, 'I think you're going to love it here. But let me just throw this out there.'"  Genske disputed Cashman's account, telling me in January this year, "That's not true at all. That was a negotiated item that was difficult to get the Yankees to agree to. It was the last item agreed to."

The sheer rarity of opt-out clauses suggests they're not something teams are readily offering up.  Only ten opt-out clauses have been given out in total, though two of them came in January this year for Excel Sports Management clients Clayton Kershaw and Masahiro Tanaka.  According to Cot's Baseball Contracts, 52 MLB contracts have been worth $100MM or more.  Only seven of those included opt-out clauses.  Asked if he's surprised we've seen so many top of the market deals without opt-out clauses, Genske replied, "I don't think I'm surprised. It certainly is a big deal for a club. If a club's going to commit themselves to those kinds of dollars, then they don't get the benefit of the upside fully if the player has the right to opt out. I certainly understand clubs' resistance to do it."  

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How Much Would Kimbrel Have Earned In Arbitration?

Back in October, MLBTR contributor Matt Swartz explained that Braves closer Craig Kimbrel has been so good in his first three seasons, he broke our arbitration projection model.  We eventually decided to create a special rule because of Kimbrel, which limits a player's raise to $1MM beyond the previous record for his player type.  Since Jonathan Papelbon had set a $6.25MM first-time arbitration record for closers in 2009, we capped Kimbrel's 2014 projection at $7.25MM.

Without the rule, our system had assigned a $10.2MM projection to Kimbrel, so we lopped off about $3MM more for which he at least had a statistical argument, if not a precedent.  With such a wide spread of possibilities, it was no surprise when Kimbrel and the Braves ended up exchanging arbitration figures.  Kimbrel and his agent David Meter submitted a $9MM figure, a number reflective of the attitude, "We don't just deserve to beat Papelbon's record, we should crush it."  The Braves went with $6.55MM, which would have thrown Kimbrel just $300K beyond Papelbon's record despite this potential hearing coming five years later and Kimbrel's far superior statistical record.

With a midpoint of $7.775MM, Meter would only have had to convince an arbitration panel his client deserved a dollar more than that, meaning that Kimbrel should get $1,525,001 more than Papelbon did.  You always hear that arbitration hearings are a crapshoot, but if I were a betting man, I would have bet on Kimbrel's side.  It's not just Meter putting together the argument; they would have had the knowledge of a motivated players' union behind them. 

Once the two sides reached the point of exchanging figures, a one-year deal went off the board because of the Braves' file-to-go stance.  But the two sides still discussed a multiyear deal and were able to get it done.  Kimbrel signed a four-year, $42MM deal with a club option for 2018.  The deal bought out all three of Kimbrel's arbitration years and one free agent year, with the option for a second free agent year.

For Meter and the Braves, one key question that had to be explored before agreeing to this deal was how much Kimbrel stood to earn in arbitration going year-to-year.  I asked Matt Swartz to show me a few scenarios.  Initially, Matt used what I considered to be fairly conservative stat projections for 2014 and 2015.  He used Steamer's 65 innings, 28 saves, and 1.88 ERA for Kimbrel's 2014 season, and then regressed to the mean a bit on 2015 with 55 innings, 22 saves, and a 2.20 ERA.

Using these stats and assuming Kimbrel lost this month's arbitration hearing, he'd have salaries of $6.55MM, $9.9MM, and $12.9MM for a total of $29.35MM over his three arbitration years.  In his actual multiyear deal, Kimbrel will earn $28MM over his three arbitration years.  In this scenario, Kimbrel left just $1.35MM in arbitration money on the table.  In his multiyear deal he still conceded up to two free agent years, and of course the younger a free agent is, the better he does.

Using the same stats and assuming Kimbrel won this month's arbitration hearing, he'd have salaries of $9MM, $12MM, and $14.7MM for a total of $35.7MM.  It's interesting to note that there was a lot more at stake in the 2014 hearing than the $2.45MM spread — losing this one hearing would have lost Kimbrel a projected $6.35MM in total arbitration earnings.  Comparing the $35.7MM projection to the $28MM his contract pays, Kimbrel gave a discount of more than 21% for his arbitration years.   

As I mentioned above, I felt that Matt's statistical projections for Kimbrel were pretty conservative.  The 50 saves Matt projected for 2014-15 is equal to his 2013 total.  In three years as a closer, he's averaged 46 saves per year.  Still, great closers fall short of the 40 save plateau all the time.  I asked Matt to plug in 35 saves for each of the 2014 and '15 seasons and run the numbers.  With the pair of 35-save seasons, Kimbrel projected to earn $33.65MM for 2014-16 if he lost his 2014 arbitration hearing and $40.1MM if he won it.

It's clear that the Braves feel Kimbrel has a good chance to reel off quality 35 save seasons in his next two years, with a reasonable chance of more than 70 overall.  Let's say, then, that the team might estimate his arbitration earnings in the $34-42MM range.  Compared to the actual contract, they might consider their arbitration savings anywhere from 18 to 33%.  In the scenario where Kimbrel wins his 2014 arbitration hearing and then reels off a pair of 35 save seasons, which I find quite plausible, the Braves essentially secured his first free agent year for free, plus an option on a second.

Keeping with the 35 save scenario, Kimbrel's 2016 salary projected at $16.1MM if he won lost his 2014 hearing and $17.9MM if he won it.  Since more than 35 saves a year is certainly possible, I'd widen that range and just say Kimbrel could have earned $16-20MM in 2016 alone.  Whatever the exact number, even the free agent market is not paying that much for elite relievers.  The Braves were likely picturing not being able to keep Kimbrel on the team in 2016, a point at which he'd have reduced trade value with an arbitration salary outstripping his potential free market salary.  Furthermore, if you take a more aggressive 40 save projection for Kimbrel for 2014 and assume he would have won the upcoming hearing, a $14MM salary for 2015 appeared possible.  Even that might have been untenable for Atlanta, reducing their Kimbrel window to one more year.

Since Kimbrel could have potentially earned all $42MM through arbitration and then gone to free agency as a 28-year-old, you might ask why he signed this multiyear deal.  As with most multiyear deals, Kimbrel chose to leave some potential earnings on the table for guaranteed money now.  Eric Gagne is a cautionary tale.  The former Dodgers closer was invincible from 2002-04 and then pitched 15 1/3 innings from 2005-06 due to elbow issues.  If something like that happens to Kimbrel, he's still got all $42MM coming to him, which is not the case if he had decided to go year-to-year through arbitration.

The arbitration pay scale for closers is just wacky, even more so in a time where teams are backing away from huge contracts for relievers.  With this deal, the Braves subverted the arbitration system and found a way to keep an elite reliever for more than one or two additional years.  If Kimbrel stays healthy and reasonably effective, they'll save significant money compared to arbitration, too.  Kimbrel can rest easy, having secured his family for generations three years prior to when he would have reached free agency.  


MLBTR Originals

A look back at the original reporting and analysis found on MLBTR this past week:

  • Tim Dierkes provided an extensive scouting report on Masahiro Tanaka (repertoire and approach, injury risk, and overall ability) by speaking with high-ranking officials with scouting-related positions for four MLB teams, who have seen the right-hander pitch in person (none work for the Yankees). The consensus is Tanaka will be one of the 25 best MLB starting pitchers in 2014 with one scout pegging the 25-year-old as being "toward the higher end of the spectrum" and contending for the Cy Young Award.
  • Zach Links participated in the conference call announcing the Rangers' signing of Tommy Hanson and reported the right-hander chose Texas because "that was going to be the best fit for me with being able to go in and make the rotation and be a part of the team."
  • During the same conference call, Rangers GM Jon Daniels told Zach, "We don't have any other offers out there and I think that there's no definite end to the offseason anymore. It's a 24/7/365 thing but we don't have anything else in the works right now at this point."
  • Charlie Wilmoth argues the Dodgers could have a bargain on their hands with Paul Maholm because the market has been overreacting to durable, pitch-to-contact, mid-to-back-of-the-rotation starting pitchers.
  • Tim learned three or four teams have serious interest in Ervin Santana (#6 on MLBTR's 2014 Top 50 Free Agents list).
  • Tim broke the news the deal right-hander James McDonald signed with the Cubs was a Major League contract.
  • Tim reported agents are not pleased with the Rockies' pre-arbitration salary scale: the league minimun of $500K plus $1K for each service year.
  • Steve hosted this week's live chat.
  • Zach assembled the best of the baseball blogosphere for you in Baseball Blogs Weigh In.

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Scouting Masahiro Tanaka

Though he's yet to throw a pitch in the Major Leagues, the Yankees committed a massive $175MM to sign 25-year-old righty Masahiro Tanaka in January.  $20MM of that went to his old team, the Rakuten Golden Eagles, with $155MM going to Tanaka.  Tanaka's contract is the third-largest ever for a pitcher in MLB history, topped only by Clayton Kershaw's new extension with the Dodgers and C.C. Sabathia's 2008 free agent deal with the Yankees.  Like those deals, Tanaka's includes an opt-out clause.

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Tanaka comes to MLB for the 2014 season after posting what many scouts refer to as "video game numbers" in Japan last year: a 24-0 record and a 1.27 ERA in 212 innings.  Last Friday, Yankees GM Brian Cashman did his best to temper expectations for Tanaka in a conversation with ESPN's Ian O'Connor.  Cashman said he expects the pitcher to have growing pains in the States, and asked his ultimate upside two or three years down the road, the GM said Tanaka "has the potential to be a really solid consistent number three starter."  Free agent salaries continue to rise, but I don't think the Yankees would spend that kind of money on a pitcher they thought might become a number three a year or two before his opt-out clause comes up. 

Unbiased opinions were needed.  To get a feel for Tanaka's repertoire and approach, injury risk, and overall ability, I spoke to high-ranking officials with scouting-related positions for four MLB teams (referred to simply as "scouts" later in this article).  Each has seen the pitcher in person extensively, and none work for the Yankees.

Before we begin, here is a refresher on the 20-80 (or 2-8) scouting scale from Kevin Goldstein, formerly of Baseball Prospectus: "A score of 50 is major-league average, 60 is above-average (also referred to as "plus"), and 70 is among the best ("plus-plus"). 80 is top of the charts, and not a score that gets thrown around liberally."  For more information on scouting pitchers from Goldstein, click here.

Scouting Report: Three Plus Pitches

Tanaka's fastball typically sits between 91-93 miles per hour, with the ability to touch 96 mph.  Most of the scouts to whom I spoke graded his fastball as a 6, or plus, though one put a 70 on the heater.  One scout praised his fastball in saying he throws a "heavy ball," though two others noted the pitch can get flat or straight at times.  One of those two said Tanaka's fastball is "probably his most hittable pitch, in a way."

Scouts agreed Tanaka has a second or third gear for his fastball.  In Japan he'd often be in "cruise control" for the first half of the game, ramping his fastball up into the mid-90s later if he needed to.  Noted one scout who loves Tanaka, "When they're in Japan, they don't have to throw their best stuff because the league's not as good."  That figures to change for Tanaka in MLB, given the deeper lineups.

Tanaka clearly had plus-plus control in Japan, with walk rates below two per nine innings in each of the last four seasons.  Scouts feel that will translate to plus in the States.  Grading Tanaka's command, one scout said "60 or 70," another went with 55, and one gave a 5.  The most pessimistic scout elaborated, "I actually thought with the offspeed stuff, the splitter and the slider especially, I thought there was more command of those pitches. And I thought with the fastball he definitely threw strikes to an above average level but I thought the command, pinpointing it, was just average."  When Tanaka does get into trouble in MLB, there's a good chance it will be the result of throwing hittable fastballs.  

Next is Tanaka's splitter, by most accounts a nasty pitch.  One scout put an 8 on it, suggesting if you don't put an 8 on this particular pitch, then you might be the type who never gives out 8s.  He explained, "It's not a tumbling pitch. It's more of a disappearing fastball. It's not a Contreras splitter that comes out and kind of flutters."  Two others put 7s on the splitter, though one dissented with a 6.  That person admitted the split "could be plus-plus," but unlike his peers, he feels Tanaka's best pitch is his slider.

The lone scout who prefers the slider explained, "I think it's a true slider with a good tilt, he would get depth to it more than ones that are plus-plus." He feels the slider has a slight lead over the splitter, noting the slider has been Tanaka's pitch since his high school days.  With the other scouts, Tanaka's slider received a 6 across the board.

It is generally agreed that Tanaka's fastball, splitter, and slider are plus pitches, and he'll get strikeouts with each.  For a change of pace, he also throws a slow curveball, described by one scout as "useful."  This pitch grades in the 45-50 range.  Tanaka's ability to throw this pitch for strikes allows him to pitch backward if he chooses.  Typically, though, Tanaka's approach is aggressive, as one scout explained: "He pitches inside, he doesn't pitch away from contact a lot. Some guys in Japan, they're not as aggressive. He has more of a Western style that he's not afraid to go up and in, he's not afraid to pitch inside. He pitches kind of with a little chip on his shoulder."

Reduced Strikeout Rate: Red Flag?

Though he posted a 1.27 ERA, Tanaka struck out only 7.8 batters per nine innings last year in Japan.  That mark was his lowest since 2010.  While one scout admitted, "It's certainly not a positive," all agreed the reduced strikeout rate is not a cause for concern.  Explained another, "He's the type of guy that if he wants to, he can go out and strike out hitters. He's a brilliant, smart pitcher and he's not afraid to pitch to contact. I saw him doing that a lot that last couple years. That's one of the reasons he was able to stay efficient with his pitch counts."  Throw in MLB lineups that are much more prone to swinging and missing, and there's good reason to believe Tanaka will whiff more than 7.8 per nine in 2014.

Heavy Workload: Cause For Concern?

In December, multiple MLB executives expressed concern to Yahoo's Jeff Passan regarding Tanaka's high pitch counts.  The righty averaged about 110 pitches per regular season start in 2013, with seven outings in excess of 122 and a high of 136.  Most famously, Tanaka threw 160 pitches in a Japan Series game and another 15 the next day in relief.  In total, he threw 1,315 innings through his age-24 season, which hasn't happened in the Majors since the mid-70s, according to SI's Tom Verducci.  Perhaps the GMs and owners calling the shots were worried about Tanaka's high pitch counts, but most of the scouts we talked to brushed it off.

"He's been trained for that his entire life," remarked one.  Another noted his durable, solid body and suggested he's someone who might be able to handle throwing a lot of pitches.  One scout noted that while it's obviously not a great idea to throw 160 pitches in a game, Japanese pitchers typically get six or seven days rest between starts, making the total mileage similar to MLB starters.  None of the four feel that Tanaka's injury risk exceeds that of a typical MLB starter.  Keep in mind, however, that the chance of going on the disabled list for the average MLB starter is around 39% for 2014, based on research from Jeff Zimmerman for FanGraphs.

Tanaka's Overall Projection

In a tweet last month, Joel Sherman of the New York Post said the comparables he's heard most often for Tanaka are Hiroki Kuroda and prime-age Dan Haren, plus reliever Bryan Harvey for his splitter.  One scout agreed with the Haren comp, noting that Tanaka has more arm strength.  Others cited Zack Greinke and Matt Cain.

In terms of placing an overall grade on Tanaka, opinions ranged, but all were quite positive.  One scout, who admitted being "toward the higher end of the spectrum," described Tanaka as a number one starter, without hesitation.  He expects Tanaka to contend for the Cy Young, and feels he'll be one of the ten best starting pitchers in MLB in 2014.

The other three scouts placed Tanaka in a slightly lower tier, ranking him in the #15-25 range among all MLB starters for 2014.  Two of them described him as a number two starter.

The mystery of how Tanaka will perform in Major League Baseball should be resolved in short order.  He'll face MLB hitters in Spring Training later this month, and could have a bit of a soft landing with the Yankees' first three regular season games coming in Houston in early April.

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MLBTR Originals

A look back at the original reporting and analysis found on MLBTR the last seven days:

  • Zach Links spoke with baseball executives and agents about the impact of the new NPB posting system and they believe the agreement is already creating a level playing field so more teams can bid on Japanese talent, but may not have a major impact on salaries given to regular free agents. 
  • Mike Dillon of Reynolds Sports Management, who represents right-handed reliever Joel Hanrahan, told MLBTR reports his client would hold a workout for clubs this past week were inaccurate. "We do not anticipate Joel throwing for multiple clubs in a 'showcase' type of workout until early March when he will be closer to 100%," Dillon said. "Having said that, we are excited and very encouraged with Joel's progress."
  • Jeff Todd explored how Freddie Freeman's eight-year, $135MM deal may be the new contract extension model for players on the cusp of being arbitration eligible.
  • Tim broke the news of the Marlins signing right-hander Chaz Roe to a minor league pact with an invitation to Spring Training.
  • Tim was the first to report the Dodgers reached agreement with infielder Justin Turner.
  • Tim learned left-hander Brian Burres will hold a showcase for interested teams Monday in Florida.
  • Steve Adams asked MLBTR readers which of our remaining 2014 Top 50 Free Agents would sign next. Nearly 11% of you correctly predicted Fernando Rodney (#32) would be the one to put pen to paper before the others. Three days after the poll was posted, the right-hander signed a two-year, $14MM deal to become the Mariners' new closer.
  • Zach gathered the best the baseball corner of the web had to offer for two installments of Baseball Blogs Weigh In
  • Steve hosted the weekly live chat.

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MLBTR Originals

A look back at the original reporting and analysis found on MLBTR this past week:

  • Jeff Todd examined the length and value of free agent contracts handed out over the last seven offseasons and found the length of free agent guarantees has risen quite substantially during this period.
  • Jeff analyzed the most common types of MLB contract options by their risks and benefits and how they have been utilized in recent years.
  • Joe Bick, the agent for Matt Guerriertold Steve Adams the right-handed reliever received interest from at least seven teams and, despite no assurances of making the Opening Day roster, agreed to a minor league pact with the Twins because of their mutual respect and the familiarity with Minnesota's coaching staff and front office.  
  • Charlie Wilmoth identified Indians second baseman Jason Kipnis as an extension candidate and suggested a five-year deal in the neighborhood of $30-35MM could work for both sides.
  • Steve presented a Free Agent Faceoff doubleheader this week. In the opener, MLBTR readers were split in deciding between right-handed starters Ervin Santana (#6 on MLBTR's 2014 Top 50 Free Agents list) and Ubaldo Jimenez (#11) with nearly 52% of you favoring Jimenez. In the nightcap, you gave a very slight nod to Nelson Cruz (#17) over Kendrys Morales (#28) with a mere four votes separating the pair. 
  • Tim Dierkes was the first to report the Pirates signed shortstop Blake Davis to a minor league contract.
  • Steve hosted the MLBTR live chat this week.

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MLBTR Originals

A look back at the original reporting and analysis found on MLBTR the past seven days:

  • Yankees GM Brian Cashman told Zach Links the Masahiro Tanaka signing demonstrates the Steinbrenners "intend to put a team on the field that can compete on a yearly basis" and the goal to remain under the $189MM luxury tax threshold "wouldn't come at the expense of putting together a championship team." Cashman also told Zach "much of the heavy lifting" has now been completed in regards to their offseason upgrades.
  • Grady Sizemore told Zach he chose to sign with Boston because of his familiarity with some members of the coaching staff, their medical game plan for him, and "I thought the Red Sox gave me the best opportunity to succeed and that's why I went with these guys."
  • Steve Adams posits the Brewers' status as a team not desperate for starting pitching allowed them to sit on the periphery of the free agent market and act quickly on Matt Garza following the resolution of the Masahiro Tanaka saga.
  • Tim Dierkes was the first to report the financial details of Scott Kazmir's contract with the A's: $7MM in 2014, $11MM in 2015, a $4MM signing bonus, and a $500K bonus, if traded.
  • Zach learned Ben Revere's one-year pact with the Phillies contains bonuses for being named an All-Star, Gold Glove, MVP, and World Series MVP.
  • Zach also had the terms of Jose Mijares' minor league deal with the Red Sox: $1MM base, $1MM in incentives based on apperances, and a March opt-out.
  • Steve broke the story of the Hanwha Eagles of the Korea Baseball Organization acquiring the rights to Twins left-hander Andrew Albers.
  • Zach was the first to learn Jayson Nix's minor league deal with the Rays grants him a June 1 unconditional opt-out and allows him to seek a MLB job with another team, if he is not on Tampa Bay's 25-man roster.   
  • Zach was first with reliever Jon Rauch nearing a deal with a MLB club. The next day, the right-hander came to terms with the Royals on a minor league contract.
  • Steve asked MLBTR readers what the outcome will be in the Braves' arbitration cases with Craig Kimbrel, Freddie Freeman, and Jason Heyward. You see Kimbrel (63%) and Freeman (57%) winning their arbitration hearings and Heyward losing his (46%).
  • Zach spoke with right-hander Brett Tomko about trying a MLB comeback at age 40, his new perspective on the game, how long he envisions himself playing, and his post-career plans.  
  • Steve hosted this week's chat.
  • Zach compiled the latest edition of Baseball Blogs Weigh In.

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MLBTR Originals

A look back at the original reporting and analysis found on MLBTR this past week:

  • Tim Dierkes spoke to Orioles Executive Vice President of Baseball Operations Dan Duquette and agents Paul Kinzer and Dan Rosquete about the growing trend of signing six-year minor league free agents to Major League deals despite a lack of big league experience.
  • Tim also learned one of the players profiled, right-hander Erik Cordier signed by the Giants, had Major League offers from two other clubs.
  • Tim was the first to report right-hander Alfredo Aceves coming to terms with the Orioles on a minor league deal with an invitation to Spring Training.
  • Charlie Wilmoth spoke with Chase Lambin, the oldest active minor leaguer without any MLB experience.  They discussed the 34-year-old's career, the frustration of not yet receiving that big league promotion, and shifting his perspective to supporting his family while mentoring younger players with an eye toward coaching after his playing days are over.
  • Jeff Todd, using MLBTR's Arbitration Tracker, provided a two-part roundup (III) of Friday's exchange of salary arbitration figures. 
  • Steve Adams was first with the agreement between the Giants and right-hander Yusmeiro Petit to avoid an arbitration hearing.
  • Tim noted the Pirates, Jays, Braves, Marlins, Rays, and White Sox are among the teams believed to utilize the file and trial strategy in handling their arbitration cases.
  • The Dodgers paid Clayton Kershaw approximately $197MM to buy out six free agent seasons and became only the third franchise to give a player an opt-out in an extension, according to Tim.  
  • Zach Links was told interest in left-hander Scott Maine is picking up after positive reports from his stint in the Puerto Rican winter league, right-handed reliever Matt Guerrier is likely to throw for teams this week, and reliever Neal Cotts' new one-year, $2.2MM contract is fully guaranteed. 
  • Tim broke the news of agent Gustavo Vasquez, whose clients include Pablo SandovalSalvador Perez, and Luis Avilan, breaking away from the Morgan Advisory Group to form his own agency, SPS Sports Group.
  • Steve hosted this week's live chat.
  • Zach assembled the best of the baseball blogosphere for you in Baseball Blogs Weigh In.

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Minor League Free Agents Finding Major League Deals

40-man roster spots are a precious commodity in Major League Baseball.  Many of the transactions on MLB Trade Rumors stem from this fact, as teams decide which players will occupy those last few spots.  The roster squeeze prevents many recognizable free agents from securing a Major League contract each offseason, from useful veterans like Jason Kubel, Shaun Marcum, and Jamey Carroll to former top prospects like Trevor Crowe and Taylor Teagarden.  Those players, despite a decent amount of name value, signed minor league deals.  However, a new trend emerged this offseason, as eight players with scant Major League experience signed Major League deals: Francisco Pena (Royals), Kelvin De La Cruz (Orioles), Edgmer Escalona (Orioles), Erik Cordier (Giants), Francisco Peguero (Orioles), David Cooper (Indians), Angel Castro (Cardinals), and David Adams (Indians).  Four of the players have no Major League experience at all, while none of the eight have more than 100 innings or 226 plate appearances in the bigs.

Upside As A Separator

The average age of these eight players is about 27 years old, significantly younger than a standard free agent who signs a Major League deal.  Many of these seven come with top prospect pedigrees.  Peguero, an outfielder signed by the Giants out of the Dominican Republic in 2005, was ranked as the team's fourth-best prospect prior to the 2011 season by Baseball America.  As recently as last year, Peguero was ranked eighth by BA, who said he "still has the most exciting combination of speed and power in the system, along with perhaps the best bat speed."  He went on to hit .316/.354/.408 in 70 Triple-A games to earn his second big league call-up with the Giants, though he received only six starts in September.

The Giants were faced with a difficult situation.  With Peguero having used his four minor league options, they risked losing him to a waiver claim if they weren't willing to put him on the 25-man roster out of spring training in 2014.  The Giants decided to remove Peguero from the 40-man roster by designating him for assignment in late November, cutting ties by non-tendering him five days later.  As agent Dan Rosquete tells it, "The minute the Giants said 'Hey, we're taking him off the roster,' they backed it up with, 'Well, we want him back, what's it going to take?'"  After Peguero's frustration from the lack of opportunity at the end of the season with the Giants, Rosquete's primary goal was to secure playing time for his client in 2014.  Interestingly, the Giants designated Peguero for assignment in part to make room for Cordier, a big arm who had become a six-year minor league free agent after pitching in relief for the Pirates' Triple-A team.  Cordier is one of four six-year minor league free agents this offseason to sign a Major League deal with no Major League experience.

The Orioles swooped in with an appreciation for Peguero's tools, an opportunity for playing time, and a Major League offer.  Orioles executive vice president of baseball operations Dan Duquette "could tell me more about my client than I knew about him," jokes Rosquete.  "Dan Duquette called me and said 'Listen, I'm looking at everything and I can see this guy as an everyday outfielder.'"  In an email, Duquette tells MLBTR Peguero "has good talent as he is a lifetime .300 plus hitter in the minors and [is a] very good defensive player."  As a group, these eight Major League signings possess upside rarely found affordably in free agency. For example, the Indians landed a former first round draft pick in first baseman Cooper, the Orioles added a strikeout lefty who has touched 94 miles per hour in De La Cruz, and the Giants picked up a power reliever who can touch 97 in Cordier.  Plus, all of them are considered to be near big league ready.  

Contracts Dictated By Strong Markets

The majority of the eight players were six-year minor league free agents, with a handful of non-tenders mixed in.  Ultimately, teams wouldn't give Major League deals and the accompanying 40-man roster spot to this level of player unless it was necessary to get the deal done.  Duquette, who authored three of these eight big league deals with Peguero, De La Cruz, and Escalona, notes, "In each case other clubs were offering Major League contracts, so you could say that the Major League contract was required by the market."  

The only way for an agent to really know what it will take is to let the market play out.  Paul Kinzer represents the 24-year-old Pena, who became a six-year minor league free agent after 2013 when the Mets decided not to add him to their 40-man roster.  "I don't know if anybody expected the kind of response we got on him," says Kinzer of Pena.  Kinzer says the strong demand for catchers worked in Pena's favor.  Three teams were close on the player, and the Royals had to offer a Major League deal to separate themselves.  Cooper signed a minor league deal with the Indians in August after recovering from career-threatening herniated disk in his chest cavity.  He opted for free agency at the end of the month, and demand was strong enough that the Indians re-signed him to a Major League deal.  The Rays put pressure on the Tribe by also reportedly making a Major League offer.

A Possible Trend

Though we don't have complete data on the number of inexperienced players signing Major League deals each offseason, the eight such contracts from 2013-14 is definitely the highest number in recent years.  Kinzer, who by his recollection has done three or four of these types of deals in his career, "absolutely" sees a trend toward more of them.  He explains, "Teams can go out and spend a little more on these guys and sometimes get a better return on their money than going with an older, veteran guy."  By "spend a little more," Kinzer is referring to the cost of a roster spot, since none of these contracts were for more than $75K above the $500K league minimum.  The going rate for a veteran backup catcher this winter has been in the $1-3MM range.

Teams are continually trying to find outside-the-box means of acquiring younger talent.  Showing a greater willingness to barter with a 40-man roster spot in November and early December, when most clubs are not near capacity, seems savvy.  The trend could truly explode if more success stories emerge.

The biggest recent success story is the signing of lefty Jose Quintana by the White Sox after the 2011 season.  Quintana was signed by the Mets out of Colombia for $40K in 2006, and signed with the Yankees about a year later after the Mets released him due to a violation of the Minor League Baseball drug policy.  Baseball America never ranked Quintana among the Yankees' top 30 prospects, and he became a six-year minor league free agent after '11.  GM Brian Cashman told Joel Sherman of the New York Post in June 2012, "We looked at him as a fringy prospect. We offered him a minor league contract to stay, but not a 40-man roster position. We didn’t feel he was ahead of other guys we gave spots to. It was a numbers game, but right now it does not look like a good decision."  White Sox scouts Joe Siers and Daraka Shaheed "made him stand out on the six-year free-agent list," then-assistant GM Rick Hahn told Sherman, and the Sox and GM Kenny Williams separated themselves from the pack by offering Quintana a Major League deal.  Fresh off 200 innings of 3.51 ball in 2013, Quintana is a scouting success for Chicago and the best recent example of a Major League deal paying off big for a player with no experience at the game's highest level.  

Quintana, who would go a long way toward stabilizing the Yankees' current rotation, is one that got away.  The team had a firsthand look at the southpaw for five years, but preferred to keep the roster spot open when he reached minor league free agency.  Of the eight who signed this offseason, seven landed with new clubs.  Time will tell whether the Mets, Dodgers, Pirates, Rockies, Giants, and Yankees will regret letting these players go, but if more credible big leaguers emerge from the group, it's likely we'll continue to see an increase in Major League deals for minor league free agents.


Pablo Sandoval’s Agent Forms New Agency

Gustavo Vasquez, agent for Pablo Sandoval, Salvador Perez, Luis Avilan, and others, left Morgan Advisory Group last year to form his own agency, MLBTR has learned.  Vasquez's new agency, SPS Sports Group, also represents Jeanmar Gomez, Miguel Socolovich, Edwin Escobar, Armando Galarraga, Victor Garate, Mauricio Robles, Adys Portillo, and Gorkys Hernandez.

Sandoval, 27, spent some time on the DL in June for a foot strain, but still managed his highest games played total since 2010 by appearing in 141 contests.  Sandoval hit .278/.341/.417 with 14 home runs in 584 plate appearances on the season, with the lowest isolated power mark of his career.  Having signed an extension in January 2012 covering only his arbitration years, Sandoval is in position to reach free agency after 2014 as a 28-year-old.  With a healthy campaign and offensive production closer to his career marks, Kung Fu Panda would be well positioned on the open market, though it's certainly possible the Giants will retain him.

For the latest on player representation, be sure to check MLBTR's agency database.