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Cliff Lee did not leave a ton of money on the table

Dec 14, 2010, 9:44 AM EDT

stack of money

UPDATE:  I somehow missed a Jerry Crasnick tweet on this that said that the Phillies offer had either a $27.5 million vesting option for 2016 or a $12.5 million buyout.  If so, that makes the Phillies deal that much better. In fact, it probably makes it better than the Yankees’ deal in absolute terms as well as average value, depending on what triggers the vesting option. The remainder of below the analysis stands as-is for dynamic, even if some of the specifics are screwy.

9: 44 AM: As LeePocalypse was going down last night, the conventional wisdom was that Lee was going to take substantially less money to go back to Philly than he would have received had he gone to New York.  While the details are still emerging this morning — and while some math is involved and we all hate math — it appears that the Phillies offer was superior in terms of average annual value to that which the Yankees were offering, even if it was a shorter guaranteed deal.

The best information we have right now is that the Phillies will pay Lee $120 million over five years. That breaks down to $24 million a year.  The Yankees guaranteed offer was for six years and $132 million, which is $22 million a year.  Of course there was a $16 million player option on there for 2017, which would make it a $148 million deal over seven years, at just over $21 million a year. For what it’s worth, the Rangers are reported to have offered two deals: a six-year, $120 million offer and a seven-year $138 million offer, though that would have been heavily back loaded.

The key here, obviously, is that under the Phillies deal, he could make a lot more money in year six if things go well for him than he would have if he took the Yankees’ deal, for he will be a free agent in year six rather than be “stuck” with a $22 million one-year deal. If he flames out by year six, sure, he’s out the $22 million he would have made that year plus the player option (and minus any salary he can snag elsewhere). But if he remains a front-of-the-rotation starter, he’s on a presumably inflated market come November 2015.

Ultimately, then, this was less an act of selflessness on Cliff Lee’s part — less an act of giving it up to go back to Philly — than it was a gamble on himself.  If Cliff Lee is worth his contract — and he certainly believes he will be, because that’s how human beings work — he’ll come out ahead for having taken the Philly deal.

If not? Well, then at least he’s the highest paid pitcher in baseball for a good long while, and that ain’t anything to sneeze at.

  1. BC - Dec 14, 2010 at 9:48 AM

    Achoo.

  2. dondbaseball - Dec 14, 2010 at 9:52 AM

    don’t you mean a one year $12 million deal in 2015-16 ($132-120)?

  3. lar @ wezen-ball - Dec 14, 2010 at 10:03 AM

    Did you see Jerry Crasnick’s tweets? He says the total possible value of the Yanks deal was $132 mil + $16 mil option ($148mil, like you have above), but the Phils deal is 5 yrs, $120 mil plus either $27.5 mil vesting or $12.5 mil buyout. If that’s true, then he left, what, half a million on the table. That Philly deal is much better.

  4. Jonny 5 - Dec 14, 2010 at 10:29 AM

    If Cliff Lee is worth his contract — and he certainly believes he will be, because that’s how human beings work — he’ll come out ahead for having taken the Philly deal.

    And I’m sure that was the line Amaro tossed at him too.

  5. revjbarth - Dec 14, 2010 at 12:04 PM

    CLIFF LEE LEFT NO MONEY ON THE TABLE!

    This is an incomplete article because it does not consider what Lee will get in take home pay: This is one aspect the article does not point out! Federal Income taxes would be the same if he played in both cities, but not state income taxes: Lee could make $22,000,000 less 8.97% NY income tax or $20,026,600 or go to Philly and make $24,000,000 less 3.07% PA income tax or $23,263,200 – a difference of $3,236,600 to play for the Phillies!

    $3,236,600 multiplied by five years = $16,183,000.00!!!

    • schlom - Dec 14, 2010 at 2:32 PM

      Texas doesn’t have state income tax, right? So that was really the best offer then?

      • Craig Calcaterra - Dec 14, 2010 at 2:34 PM

        I think a lot of the Texas offer was deferred money.

    • The Rabbit - Dec 14, 2010 at 2:36 PM

      Both NYC and Philly also have city wage taxes for non-residents.
      It’s been a while since I’ve worked in either city/State (and the rules may have changed) but I did not pay PA State income tax. My State income tax was paid to my “home” State of NJ.

      • revjbarth - Dec 14, 2010 at 3:04 PM

        Philly has a city income tax for non-residents but New York does not! Still, Cliff Lee would not be taxed as much as playing in NYC!
        The point I am trying to make is: Players and Agents must surely go through the whole process of figuring out salary after taxes and what kind of take-home pay these players will earn. Cliff Lee has a sweet deal, and as a Yankees fan I think the Philly starting rotation is awesome and will be an awesome force next year!

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