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The Yankees know: don't sign players until you have to

Apr 26, 2010, 6:00 PM EDT

It’s safe to say I’ve given up on my hopes of becoming a major league GM. But if a reader hits the lottery, buys a team and decides to give me a shot, know that there’s a couple of rules I’d live by:
1. Never give multiyear deals to bench players
2. Don’t re-sign veterans until it’s absolutely necessary

The Yankees already seem to follow both. No. 1 may be an accident, but No. 2 is team policy: the Bombers don’t negotiate with their free-agents-to-be until they actually become free agents.
Now I’m certainly not against giving long-term deals to youngsters. That strategy has saved major league teams tens of millions of dollars over the last decade, not only in avoiding arbitration hearings and early free agent years with the players that sign them but by holding down the arbitration awards of those that don’t.
But giving veterans long-term extensions when they still have one or two years left under team control is a losing proposition more often than not. The potential gain — saving money over what it would cost to sign the player closer to free agency — just isn’t worth it. More information leads to better decisions, and there’s a lot of information to be gained by waiting that extra year until the player nears free agency.
For one thing, the players getting these extensions are already in their prime and likely at the peak of their value when they sign them. After all, the player isn’t going to want to sell low on himself by signing after a bad year or a rough first half. Teams, on the other hand, have no problem buying high by signing players immediately after a career year.
Look at the Yankees. Obviously, they have a huge advantage in these circumstances, since they don’t have to worry about being outbid in free agency. But they made no attempt to re-sign Derek Jeter and Mariano Rivera last winter. Their policy probably cost them some money when they had to re-sign Jorge Posada as a free agent after his career-year in 2007, but it’s worked out well overall and the team has fewer bad contracts now than probably at any point in the past 15 years.
It’s something the Phillies should have looked at very carefully before committing an additional $125 million to Ryan Howard on Monday. Howard was already signed through the end of next year, and it’s hard to imagine that the Phillies are saving any money over what it would have taken to sign him a year from now. Howard pretty clearly wanted to stay in Philadelphia. Was he really going to turn down $25 million per year next April? Or even next November for that matter?
Ponder that while looking at a few examples of bad deals signed by players under contract and still one to two years away from free agency. I won’t count arbitration-avoiding signings like Detroit’s Dontrelle Willis and Nate Robertson deals, since while I think they fit, they weren’t contract extensions.
Travis Hafner – Indians
Old deal – Four years, $11.5 million for 2005-08 (2008 was a club option)
New deal (Signed July 2007) – Four years, $57 million for (2009-12)

Hafner was maybe baseball’s biggest bargain for two years in 2005 and 2006. The Indians gave him his huge extension even though his play had fallen way off in the first half of 2007, and it’s proven to be a franchise killer since the moment it was signed.
Mark Kotsay – Athletics
Old deal – Three years, $16 million for 2004-06
New deal (signed July 2005) – Two years, $15 million for 2007-08

Hit .214/.279/.296 in 56 games during an injury-ruined 2007. The A’s paid $5 million to get the Braves to take him for 2008.
Eric Chavez – Athletics
Old deal – Five years, $17.65 million for 2001-05 (2005 was a club option)
New deal (signed March 2004) – Six years, $66 million (2005-10)

Seemed like a pretty good idea at the time, and Chavez went on to put up a career-best 898 OPS in 125 games in 2004, so he would have been at least as expensive to re-sign that winter. However, he lost 100 points of OPS in 2005.
Scot Shields – Angels
Old deal – One year, $3.4 million for 2007 (wouldn’t have been a free agent until after 2008)
New deal (Signed March 2007) – Three years, $14.6 million (2008-10)

Shields was worked about as hard as any reliever in baseball from 2004-06, so the Angels were either foolish or simply overly generous for committing to him when they still had him under control for two more years. He went on to have his worst season in 2007, and while he had a fine 2008, he’s contributed nothing since.

  1. MJ - Apr 26, 2010 at 6:22 PM

    Of course the Yankees follow that rule because it doesn’t matter to them. The point of this article is understandable and makes some sense with the particular players you discussed, but it becomes pretty pointless when you bring the Yanks into the picture.
    As you said yourself, the Yankees could wait until the day their players become free agents every time because they have the luxury of knowing that they will be able to spend the most money in an extension offer 10 times out of 10. they don’t have to deal with weighing the pros and cons of locking up a player now and saving money vs. potentially losing them and getting nothing in return. Now the Phillies are high market team nowadays, so you can say they made a mistake , but if a team like the Brewers could do this deal with Fielder then they would do it every time, because locking up the talent is more of an advantage to the smaller market teams.
    It’s one thing to knock the Phillies for this, but to laud the Yankees seems laughable since they have an advantage over every other team in the league. Time will tell if this was a business savvy decision or not, but I think to dismiss the policy of re-signing players early all together is silly.

  2. Baz - Apr 26, 2010 at 7:19 PM

    The classic ‘Old Players Skills’ cries are all coming out now, and I agree. Hafner, Magglio, and going back to guys like Mo Vaughn..do clubs ever learn not to waste so much?

  3. Tom - Apr 26, 2010 at 11:40 PM

    This is just another example of the huge advantage the Yankees have over every other team. Because of their huge financial edge they can easily wait out their own free-agents. However, nearly every other team has to worry about losing their best players to the Yankees so they can’t afford to wait. If they make a mistake, it’s potentially crippling. If they wait too long they have to worry about their star going to the Yankees. Great situation the other teams are in!

  4. Moses Green - Apr 27, 2010 at 5:55 AM

    Preach.

  5. Joey B - Apr 27, 2010 at 9:14 AM

    “Of course the Yankees follow that rule because it doesn’t matter to them. The point of this article is understandable and makes some sense with the particular players you discussed, but it becomes pretty pointless when you bring the Yanks into the picture.”
    Yup, that’s the first thing that came to my mind. If you already pay more than anyone else, what’s the point of making the decision early.
    And the sample is way small, and one-sided. By not negotiating early, the RS paid more for Lowell and Tek (the first FA contract), and lost Damon (assuming they actually wanted to keep him). You can extend anyone, but their is always a risk premium. By signing market-value contracts early, that risk premium has been transferred from the player to the club.

  6. Perry - Apr 27, 2010 at 10:42 AM

    The main reason I think the Phillies made a mistake by signing Howard now versus 2011 is that how many teams would have actually been able to outbid Philadelphia for his services. He obviously would have had to go to a big market team. Lets look at the big market teams: Yankees – not interested they have Tex.; Boston – potentially but they seam to be more interested in San Diego’s first baseman; Angels – possibly but they have a very good young 1st baseman in Morales and certainly a lot cheaper. St. Louis – No way; That only leaves the Dodgers & the Giants – The Dodgers seam to be in a state of flux they seam unlikely to through that kind of money at anyone at least in the immediate future. That leaves only the Giants as a viable option. They could afford it, they certainly could use a power hitter and run producer but are they going to want to throw $100M plus at what would be a 32 year old for 4 or 5 years in 2011 – maybe. It would seam to me that when Howard’s free agency was a little closer Philadelphia would have only had to worry about the Giants. Considering that Howard seamed to want to stay in Philly they would have had the advantage in signing him even then.

  7. JudyJ - Apr 27, 2010 at 11:16 AM

    Ugh, Mo Vaughn – almost lost my morning coffee at the mention of his name.

  8. Perry - Apr 27, 2010 at 12:00 PM

    Obviously the Yankees have an advantage but to read some of the comments like “nearly every other team has to worry about losing their best players to the Yankees so they can’t afford to wait” seams to stretch it a bit. I doubt anyone can name even one team that doesn’t have several FA on their roster that they outbid the players home team for. Also, the Yankees are not the only team with the financial resources to acquire FA. Anyone check Bostons roster, Mets, Cubs, Angels, Dodgers rosters and yes even the Philadelphia Phillies they all have multiple players from “other” teams. The Yankees are the most recognizable because they are the most successful, and their owners are willing to do what most of the other teams owners are not and that’s invest in the teams success. But they are not the only team that bids for other teams player. I doubt there is even one team that’s entire 25 man ML roaster or 40 man team roster is made up entirely of “home grown players”.

  9. Perry - Apr 27, 2010 at 12:10 PM

    I think a more important reason the Yankees follow that rule is, let’s say the Yankees signed Jeter early just pick a number say for $20M and let’s say he had a career ending injury or at the very least an injury that prevented him from performing to his maximum level they would be out that money. Now multiply that times 2 or 3 high priced players and the effect would be devastating even for a team with the financial resources of the Yankees.

  10. JIM - Apr 28, 2010 at 8:59 AM

    Yes, the Yankess are a rich team and there are other rich teams as well. But what Yankees bashers don’t, or can’t, grasp is that the Steinbrenners aren’t the richest owners in baseball…. they just invest the most into their product. There are over a dozen owners with more personal wealth than the Steinbrenners. They pocket their money and only invest the minimum into their teams… blame them, not the Steinbrenners. The Boss figured it out: the better your team is, the more hats, jackets, programs and TICKETS you can sell. Then, repeat the cycle. Most of the Yankee dynasties were build from home grown talent or from trades. Bernine Williams, Jeter, Rivera, Pettite, Posada… all home grown. In the 90’s O’Neil, Tino, Stanton, Wells, Clemmons, Knoblauch, Brouis…. were through trades.
    If your team isn’t competing, instead of bashing the Yankees, maybe you should start taking a look at who own your team, how much they have and much are they WILLING to invest… and you should look atb the trades your GM is or isn’t making. If money was everything, the Orioles and Rangers of the 90’s would have won a few titles, the Braves would have won more than once, the Mets should have won in ’92…. as they all had higher payrolls than the Yanks did until around 2000.

  11. Mike O - Apr 28, 2010 at 1:07 PM

    Fun little tidbit here, the richest owner in baseball is that of the Washington Nationals.

  12. Mirrortwin - Apr 28, 2010 at 3:28 PM

    Mr. Perry, You are correct in stating “they (the Yankees) are not the only team that bids for other teams players.” However, the reason teams (other than the Yankees) have FA players from other teams is due to the fact that the Yankees did not want them nor need them. There might one or maybee two FA players the Yankees were ever outbid on (in modern times). So your theory is a little flawed. Your statement “The Yankees are the most recognizable because they are the most successful, and their owners are willing to do what most of the other teams owners are not and that’s invest in the teams success.” This is a flawed statement as well. You have to have money to spend money. If your revenue and/or projected revenue (from signing a high profile FA) is not in the range to swallow a huge contract then you can not sign the high profile FA. Its called being responsible. One high profile FA can not make up a majority of your teams payroll. The Yankee team is a perfect storm for success…Owner(s) with loads of money they can spend and they (the Yankees) play in a big revenue market(City). My hats off to them. However, you can not knock the owners and the teams from the smaller (revenue) markets. They are successful by a different measure of success. Hence, the Minnesota Twins. The Twins get more for their money than the Yankees…It just doesn’t show up in the win column in November…Why, because they do not play in New York. I am not a fan of the Yankees or the Twins. But I do respect both teams very highly.

  13. mirrortwin - Apr 28, 2010 at 3:31 PM

    Hey Jim, who would be the righest owners in baseball? Show me the info! Not saying your wrong but this would be very interesting information.

  14. August - Apr 28, 2010 at 4:13 PM

    I don’t entirely buy the statement that the Yanks have such a huge advantage over everyone else because they have soooo much money to play with. You have to admit that they are smart with what they do most of the time (remember what bombs Randy Johnson and Carl Pavano, to name a few, turned out to be?), and let us not forget that smaller market teams get paid A LOT of money by the royalties/penalties the Yanks pay out each year for their payroll. What are these teams doing with ALL THAT MONEY? Tampa Bay seems to be doing fine……..

  15. Joeyankeesbuybaseball - Apr 29, 2010 at 1:13 AM

    The Yankees? The best team MONEY can buy!! Always!

  16. baseball fan - Apr 29, 2010 at 11:14 AM

    money doesnt buy championships…ironically, the yankees proved that between 2000 and 2009…the spent the most money for years and didnt win the WS. Money and the yankees are always the scapegoat for the incompetent owners, players and management in the other teams in MLB.

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