For a non-baseball fan, it seems ridiculous that a bunch of men holding a wooden stick can make millions of dollars for hitting a piece of leather stuffed with yarn. For a baseball fan, on the other hand, it’s all relative. If Alex Rodriguez makes $32 million, that’s fine; but how does that affect, say, Derek Jeter’s next contract?
Baseball is a never-ending chasm of market analysis — what does this deal mean for the next? However, very seldom do we sit back and take a look at the results of these deals. Thanks to some data from Baseball-Reference.com and Cot’s Baseball Contracts, we can finally take a look.
Let’s first look at the two players with the two biggest contracts in baseball history. Those two players are, not surprisingly, Derek Jeter and Alex Rodirguez. They also happen to have had the two longest contracts in baseball history (although they are tied with others) at 10 years.
Here are two graphs, one showing A-Rod’s salary and his home runs per year, and one showing Jeter’s salary and his yearly batting average.
For those wondering, I chose home runs for Rodriguez and batting average for Jeter because those are the stats that make their careers such successes.
Evidently, both Jeter and A-Rod — and likely all players with long term deals — see a constant increase in salary. That, however, does not correlate with success. In other words, the salary is a sure-thing, but the success is not.
The consequences are obvious and are evident every season. Teams give players the monster contracts they demand, and the players don’t live up to it. When a player signs a contract, he is guaranteed money, but the team is guaranteed one thing — a chance.
A great deal for the player, a horrible deal for the team.
Now, let’s look at a player who did not have the luxury of enjoying a long-term contract. For arguments sake, let’s observe Matt Stairs, who has signed 10 contracts in his career: nine one-year deals and one two-year deal.
Here is a graph of Stairs’ salary and his yearly WAR (wins above replacement). The 1992, 2006, and half the 2008 season is missing due to an unknown or disputed salary.
As expected, his salary is all over the place. Unlike the players with the long term deals, there is new criteria for a deal each season, and the salary flucuates accordingly.
In this case, however, things are still a bit off. Graphically, as one line goes up, the other goes down, or visa versa. Theoretically, that means that success one year means a bigger contract the next year — makes sense.
But the team still loses out here. While the player deserves to make more money after a successful season, it does not mean he will succeed the next season. (Quite the opposite in Stairs’ case.)
So how do we make this fair? How do we get salary and success to correlate the way it should?
The only way either of those can happen would be if teams decided they were only going to hand out incentive-based, one-year deals. That is the only way to make it fair, and the only way to make these salaries make sense. But, thanks to the Players Union, you can kiss that dream goodbye.