Poll: Circumventing The Luxury Tax
Rumors of a long-term contract extension between the Red Sox and Adrian Gonzalez were made a reality yesterday, when the first baseman agreed to a seven-year, $154MM deal. While Gonzalez’s surgically repaired shoulder was a legitimate concern, there’s some belief that Boston waiting until after Opening Day to announce the deal to avoid a competitive balance (a.k.a. luxury) tax penalty. The same was true of Josh Beckett‘s extension last year.
The Red Sox aren’t breaking the rules here, in fact they deserve credit for finding a creative way to save money. But as Jon Paul Morosi of FOX Sports mentioned yesterday, “the spirit of the [luxury tax] isn’t being honored here.” He wonders if the upcoming Collective Bargaining Agreement will push the deadline back to avoid such shenanigans. Between the Gonzalez and Clay Buchholz extension, the Sox have saved upwards of $10MM against the tax this year by announcing the deals after the season started.
Of course the luxury tax only impacts a handful of teams, so altering a rule that effects only a small number of clubs may be unfair. As Cork Gaines showed at Business Insider recently, the Yankees have been paying the tax every year since it’s been in place, with the Red Sox, Angels, and Tigers all contributing at some point as well. The luxury tax is based on the annual average value of the contract, and the 25% of the money goes to the “industry growth fund” while the remaining 75% is used to fund player benefits.
Should MLB change the luxury tax deadline to force teams to "honor the system?"
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Yes 74% (3,704)
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No 26% (1,304)
Total votes: 5,008
Baseball Blogs Weigh In: Rendon, Buchholz, Price
Six years ago today, baseball finally returned to Washington D.C. when the Nationals beat the Diamondbacks in their home opener at RFK Stadium. Livan Hernandez got the win, Chad Cordero the save, and Vinny Castilla went 3-for-3 with four runs driven in. It was the first MLB game played in the nation's capital since September of 1971.
Here is this week's batch of links…
- Pirates Prospects interviewed Anthony Rendon, a candidate to go first overall in this year's draft.
- Splashing Pumpkins asked Giants' prospect Mike Kickham ten questions.
- Phoul Ballz interviewed Phillies' prospect Aaron Altherr.
- Boston Sports Then & Now explains why the Red Sox signed Clay Buchholz long-term now and not later.
- The Process Report uses Buchholz's contract as a blueprint for a David Price extension.
- River Ave. Blues says the Pedro Feliciano signing was bad process by the Yankees and not just bad results.
- Deep Left Field analyzes the CC Sabathia trade nearly three years later.
- Beer Leaguer tries to figure out what's wrong with Matt Thornton.
- Rising Apple looks as some players who came back to the Mets for a second tour of duty in honor of Jason Isringhausen.
- The Nats Blog reacts to the news that Stephen Strasburg's rehab from Tommy John surgery might take a little longer than expected.
- Houston Hotbed says the Astros need to acquire a quality left-handed hitter.
- FanSpeak thinks the Nationals might be able to quick-fix their bullpen.
- Feeling Dodgers Blue explains why Clayton Kershaw is a Cy Young Award candidate this season.
- D'Backs Central wonders if it's time for the Diamondbacks to worry about their starting pitching.
- The Yankee Analysts wrote about the disconnect between teams and their fans.
- Beyond The Box Score offered up the definitive sabermetric guide to managing.
If you have a suggestion for this feature, Mike can be reached here. Only one email per week, please.
MLBTR Originals: 4/3/11 – 4/10/11
The offseason hot stove has cooled down as teams evaluate their needs early in the season, but we're still providing plenty of content here at MLBTR. Here's recap of our original posts from the last seven days…
- Tim Dierkes spoke to several executives and agents about what Vernon Wells would have gotten as a free agent this past offseason while Ben Nicholson-Smith spoke to Rockies' senior director of international scouting Rolando Fernandez about how the team has constructed its rotation.
- Tim also listed next offseason's best available starters, and Ben listed some players that may qualify as Super Twos after the season as well as some that could just miss the cutoff.
- Several players could be in line for major arbitration raises after the season, and the free agent second base market has changed dramatically over the last few months.
- Ben looked at when sellers start selling and revisited both the Brandon Phillips trade and the Jason Hammel trade. Josh Beckett's extension also came up, as did some sophomore pitchers that are candidates for long-term deals.
- I listed the $100MM+ contracts that have already been completed, and also listed how each team acquired their current closer.
- We looked at a number of young players that are candidates for long-term contract extensions, including Gio Gonzalez of the Athletics, Starlin Castro of the Cubs, Tim Lincecum of the Giants, and David Price of the Rays.
- Russell Branyan of the Diamondbacks, Erik Bedard of the Mariners, and Jeremy Guthrie of the Orioles were looked at as trade candidates.
- The offseason in review series continued with the Rangers, Nationals, Royals, Dodgers, Blue Jays, and Cardinals.
- This week's poll question asked if you think Manny Ramirez deserves to be inducted into the Hall of Fame.
- I rounded up the best the blogosphere had to offer in this week's Baseball Blogs Weigh In.
- Howard Megdal reviewed some early-season managerial changes.
- This week's chat transcript can be found here.
- Don't forget about our team Facebook, Twitter, and RSS feeds.
Week In Review: 4/3/11 – 4/10/11
Time to take a look back at what happened off-the-field during the first full week of the 2011 season…
- The biggest story of the week was the sudden retirement of Manny Ramirez. The Rays' DH called it quits after being informed that he tested positive for a banned substance for the second time in his career, choosing to walk away from the game rather than face a potential 100-game suspension. The overwhelming belief is that the second positive test will keep Manny out of the Hall of Fame.
- Two young right-handers agreed to long-term contracts this weekend. The Red Sox signed Clay Buchholz to a four-year deal worth $30MM with two club options while the Athletics agreed to terms on an extension with Trevor Cahill. It's unknown how many years and how much money Cahill will receive at this time. David Price said he'd be open to a long-term deal with the Rays.
- Pedro Martinez didn't pitch at all last year, but he recently said he's looking to return to help a team get to the World Series. The Red Sox have a leg up on other teams if they choose to pursue their former ace. Ian Snell may return as well.
- The Orioles are among the teams looking to add rotation depth. They're without Brian Matusz and Justin Duchscherer due to injury, and currently have prospect Zach Britton pitching well every fifth day.
- Dennys Reyes' tenure with the Red Sox lasted barely a week; he was designated for assignment on Friday. The White Sox designated Lastings Milledge for assignment after just two games played, and the Brewers DFA'd Dan Merklinger.
- The Yankees added some pitching depth by signing Carlos Silva to a minor league contract. The Cubs brought Ramon Ortiz aboard, and the Rangers did the same with Manny Corpas, who is rehabbing from Tommy John surgery.
- The other minor league contracts signed this week: Ron Mahay to the Diamondbacks, Doug Mathis to the Giants, Dan Meyer to the Pirates, and Jeff Suppan to the Royals. The Dodgers may guarantee Tim Redding's contract.
- The Rangers are close to adding 23-year-old Cuban outfielder Loen'ys Martin on a contract that could exceed $12MM. The Angels added 20-year-old pitching prospect Nataneal Rodriguez for $180K.
- The Pirates released Craig Hansen, a former first round pick that was part of the Manny trade in 2008. The Rockies cut ties with Greg Smith, who was part of the first Matt Holliday trade.
- Among the players that cleared waivers and were outrighted to Triple-A last week: Manny Acosta (Mets), Mike Ekstrom (Rays), Mark Wagner (Red Sox), Jon Link (Dodgers), John Lindsey (Dodgers), Travis Ishikawa (Giants), Lucas May (Royals), Ryan Rowland-Smith (Astros), and Merklinger. Texas claimed Ramon Aguero off waivers from the Pirates.
Trade Candidate: Jeremy Guthrie
Buck Showalter's Orioles are off to a roaring start this year, winning six of their first nine games and sitting atop the AL East for the first week-and-a-half of the season. The start has been fueled by pitching, as the O's boast a 3.33 ERA and have held their opponents to one run or less in five of nine games.
The leader of the pitching staff is veteran Jeremy Guthrie, who started on Opening Day for the third time in four years. He shut out the Rays over eight innings in that game, then returned from a brief bout with pneumonia to hold the high-octane Rangers' offense to one run over six innings this afternoon. Since Showalter came aboard last year, Guthrie owns a 2.76 ERA in 13 starts (91 1/3 innings).
At 32 years old however, Guthrie might not be in Baltimore's long-term plans. Back in February we heard that they may have already "ruled out an extension" for the right-hander, who is under team control in 2012 as an arbitration-eligible player before being hitting the open market after the season. He'll earn $5.75MM this season, a bargain even if he pitches to his 4.11 career ERA the rest of the season.
If made available, there would certainly be plenty of teams looking to acquire an AL East battle-tested right-hander they could control for another season. Guthrie has also proven to be durable, throwing 200 innings in each of the last two years and at least 170 in each of the last four. The Yankees would surely be in the mix, and we know the Rangers have scouted Guthrie in the past. The Tigers, Red Sox, Rockies, Cardinals … it wouldn't be a surprise to see any or all of those clubs having interest as well.
The Orioles have already received a tremendous return on their investment, acquiring Guthrie off waivers from the Indians back in January 2007 and paying him less than $5MM since. We know they're looking to add rotation depth right now, not subtract it, but if they slide back in the race as the season progresses, it could be time to cash in further and turn the righty into several young players via trade.
Photo courtesy of Icon SMI.
Red Sox Extend Clay Buchholz
5:08pm: Sean McAdam of CSNNE.com has the breakdown (on Twitter). Buchholz will earn $3.5MM in 2012, $5.5MM in 2013, $7.7MM in 2014, and $12MM in 2015. The two club options are worth $13MM and $13.5MM respectively.
3:45pm: The Red Sox announced that they have signed Clay Buchholz to a four-year contract extension in a press release. The deal is worth $29.945MM with a pair of club options, making it comparable to the contract signed by teammate Jon Lester a few years ago. Ben Nicholson-Smith looked at Buchholz as an extension candidate back in September.
Boston bought out all three of Buchholz's arbitration-eligible years plus one year of free agency with the contract. The club options cover two more free agent years, and the Red Sox saved approximately $1.6MM against the luxury tax by announcing the deal after the season started. Yovani Gallardo and Ricky Romero are two other young pitchers that have signed similar contracts in recent years.
Buchholz, 26, broke out in a big way last season, pitching to a 2.33 ERA with 6.2 K/9 and 3.5 BB/9 in 173 2/3 innings (28 starts). He earned his first All-Star Game nod and finished sixth in the Cy Young Award voting thanks to the second lowest ERA in the AL. Fielding independent pitching metrics say he wasn't quite that good as that ERA indicates, but a 3.61 FIP is certainly impressive on its own.
Lester's deal has proven to be a tremendous bargain for Boston so far, which is the level of success the Sox hope to achieve with Buchholz's deal. Boston now has five starting pitchers under contract through 2012 and four under contract through 2013.
Jon Paul Morosi of FOX Sports originally reported the agreement (Twitter links) while Gordon Edes of ESPN Boston (on Twitter) and WEEI.com's Rob Bradford and Alex Speier added details.
Mets Designate Blaine Boyer For Assignment
The Mets have designated Blaine Boyer for assignment according to Peter Botte of The New York Daily News (on Twitter). The team also sent down outfielder Lucas Duda and recalled right-handers Ryota Igarashi and Jason Isringhausen.
Boyer, 29, beat out Izzy for the final spot in the Mets' bullpen in camp but failed to impress. He pitched to a 7.71 ERA and a 2.14 WHIP in 4 2/3 innings, and that was before his four run, two inning outing this afternoon. Isringhausen agreed to remain with the team in Extended Spring Training before the season started.
Cubs Sign Ramon Ortiz
The Cubs have signed Ramon Ortiz to a minor league contract according to MLB.com's Carrie Muskat. The right-hander will report to the team's Triple-A affiliate and make his first start Monday night.
Ortiz, 38, threw 30 innings for the Dodgers last year (6.30 ERA), his first big league action since 2007. He was designated for assignment in late-May, then moved on to the minor league systems of the Mets and Rays. Ortiz owns a 4.93 ERA in a big league career that has spanned parts of ten seasons, though it's been almost seven years since he was last a viable MLB starter.
The Cubs are a little thin on pitching at the moment with Andrew Cashner and Randy Wells on the disabled list.
Quick Hits: Pedro, Martin, Archer, Davis, D’Backs
Links for Saturday, after Matt Harrison threw his second gem in as many starts…
- A team official told Joel Sherman of The New York Post that the Yankees have no interest in Pedro Martinez even though he's looking to return (Twitter links). The Yankees changed their mind about Carlos Silva after the right-hander agreed to get in shape and pitch in the minors.
- Mike Petraglia of WEEI.com spoke to Russell Martin, who said the Red Sox expressed interest in signing him this offseason but were concerned about his injured hip.
- Rays prospect Chris Archer holds no ill-will towards the Cubs for dealing him, writes Brad Biggs of the Chicago Tribune. The right-hander was a part of the deal that brought Matt Garza to Chicago.
- The Yankees did not send a scout to watch Doug Davis' workout yesterday, reports George A. King III of The New York Post.
- In his Insider-only blog post, ESPN's Buster Olney spoke to some executives that said Manny Ramirez's reported PED use may have altered the future of former Diamondbacks GM Josh Byrnes and manager Bob Melvin. Arizona led the NL West for most of the 2008 season, but were knocked out of postseason race when the Dodgers made a late charge after acquiring Manny at the deadline.
- ESPN's Jerry Crasnick profiled Brett Wallace of the Astros, who was traded three times in the span of 371 days. "The way I choose to look at it, the teams that traded for me all had a plan for me and believed in me," said the first baseman. "But it definitely makes you step back and see the business side of baseball. When you get traded one year out of the draft, it's an eye opener. It doesn't matter how much a team likes you or doesn't like you. Things can change. Things are going to happen, and anyone is touchable."
Extension Candidate: Starlin Castro
While pitching will always be baseball's most precious commodity, young shortstops aren't far behind. The Cubs have one of the very best in Starlin Castro, who didn't turn 21 until two weeks ago. Since being called up last May, he's hit .304/.350/.418 in 538 plate appearances, including .367/.406/.567 in the early goings of 2011.
When it comes to long-term contracts for young shortstops, three names jump to mind (in recent years): Jose Reyes, Troy Tulowitzki, and Hanley Ramirez. Let's compare their stats through the first 132 or so games of their careers, the number Castro has played to date…
Castro: .304/.350/.418, 33 2B, 7 3B, 3 HR, 10 SB
Reyes: .283/.307/.407, 28 2B, 6 3B, 7 HR, 32 SB
Tulowitzki: .271/.349/.410, 19 2B, 3 3B, 15 HR, 8 SB
Ramirez: .279/.345/.447, 32 2B, 9 3B, 12 HR, 43 SB
Castro's early career peformance ranks right up there with the other three, though Reyes was the only other guy playing full-time in the show at age 20. The Mets' shortstop gave up his three arbitration years for $12.25MM (total) plus one free agent year at $9MM. Tulo's first extension bought out his three arb years for $17.25MM plus one free agent year for $10MM. Ramirez's contract was the biggest of them all, buying out his three arb years for $23.5MM plus three free agent years for an average of $15.5MM per season. Both Reyes and Tulo had options for a second free agent year at similar money to the first.
Castro could qualify as a Super Two after the 2012 season since he spent 150 days in the Major Leagues last season, meaning he'd be arbitration-eligible four times instead of three. The three above contracts aren't a perfect comparison in that case, but it's clear that if the Cubs want to lock-up their franchise cornerstone, they'll need to spend $20MM or so for his arbitration years plus something like $12-15MM per free agent year.
The Cubs have a ton of money coming off the books after the season in the form of Aramis Ramirez ($14.6MM), Kosuke Fukudome ($14.5MM), Carlos Silva ($11.5MM), Carlos Pena ($10MM), and John Grabow ($4.8MM), but they also have to prepare for sizable arbitration raises to Matt Garza, Geovany Soto, and Randy Wells. Locking up Castro will give them not only some cost certaintly going forward, but also peace of mind that one of the game's top young talents will be in Chicago's north side well into the future.