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Vlad’s deal: $5 million now, $3 million deferred

Feb 7, 2011, 3:00 PM EDT

Vladimir Guerrero AP

I was rather surprised when Vladimir Guerrero got $8 million.  We have some more details on it now and I suppose it’s slightly better for the O’s: it will be $5 million in 2011, with the other $3 million deferred over several years.

Still seems like a lot for a guy who didn’t appear to have anyone else bidding for him.  And it’s the second one-year deal I can think of off the top of my head that has deferred money this winter. The other is Carlos Pena‘s deal with the Cubs.  I guess it makes some modicum of financial sense for the club, but it does seem odd that they’re agreeing to pay a guy who is almost 100% certain to not be on the team again after this one year.

  1. martywinn - Feb 7, 2011 at 3:12 PM

    The team saves money this way. They can earn the interest on the money in the mean time before they have to pay it out. Plus inflation will lower the value of money. I would guess that pretty much any team would be happy to defer any amount of a contract. The player (if smart, or at least reasonably represented) would demand a higher total amount of money if it gets deferred. I never got why it was such a big deal to pay Bruce Sutter or Bobby Bonilla over a bunch of years. The team just puts some amount of money in a pot (investment-hopefully not Ponzi) and never think about it again, some 3rd party could take care of making the payments. It’s just like winning the lottery and taking the (less) money all now or getting it spread over 20 years.

    • okobojicat - Feb 7, 2011 at 3:29 PM

      Most teams actually don’t put money into some sort of investment. They simply take it out of the budget of the year that it is due to be paid from the General Revenues of that particular year. Holding back cash in 2011 for payments in 2015 or 2020 is a really dumb way to do business. If that money in 2011 can’t be used more efficiently than simply sitting in a bank account for five or ten years then they are not running a business very well.

      Ok, maybe some teams are doing this.

      The reason the teams delay money is that they are given a budget and they can’t go over it. So they delay it until either their budget is higher or they have less expenses on their books. That said, the only team that I think is really excited about their delayed payments and not actually hating them is the Reds and Griffey JR. because they were so large and not tacked to inflation, its a great move by them.

      The reason the players accept it is that its not $8m now vs. $5m & $3m. Its $6m now vs. $5m & $3m in five years (or something like that). They don’t need all the money now (if they themselves aren’t financially incapable) so having some income probably when they are retired will be nice.

  2. BC - Feb 7, 2011 at 3:49 PM

    That’s a lot of coin for a guy who had NOTHING left in the tank after July last year.

  3. ThatGuy - Feb 7, 2011 at 3:51 PM

    Deferred money in contracts always gets me thinking about Steve Youngs USFL contract and how amazing he made out on that contract. For those that don’t know in lieu of a traditional contract, Steve Young had the team purchase a 40 Million dollar Annuity that paid out between 1990 and 2027. Two years later, the league folds but the Annuity is already bought. So Steve is still getting paid 25 years later for the 2 years he spent in the USFL, and will continue to get paid over the next 15 years. Now thats what I call a contract.

  4. revolution311 - Feb 7, 2011 at 6:01 PM

    Sportswriters and honestly, any one with common sense, know that the Orioles and other bad teams will have to overspend to get better players until they become competitive again.

    So it’s funny that when the teams actually do go ahead and overspend for players they then get flack for it from the very sportswriters that previously wrote explaining why they would have to or at least in support of them having to do so.

    Not saying Craig Calcaterra has done that but I would have hoped he’d understand why the O’s did what they did rather then chime in with what he would or wouldn’t have done.

    • Craig Calcaterra - Feb 7, 2011 at 6:33 PM

      I understand the notion of a team like the O’s having to overpay generally speaking. But in this case we had a situation in which Vlad demanded $8 million, very publicly. The O’s countered with $3-5 million. Then a couple of weeks pass with various reports of Vlad continuing to demand $8 million, with absolutely no teams whatsoever showing any interest. With no bidding competition the O’s … cave.

      If there was (or is sometime soon) a single credible report that another team was interested, fine, I get overpaying Vlad to get him to come to Baltimore. But as it was, it was Baltimore or … no one. And Baltimore raised its bid.

      All of that said, I still think it’s a good signing. Baltimore can afford it. It makes them better. I think Vlad will hit there. My criticism of the price is a rather beside the point, esoteric one about negotiation tactics. Not whether it’s a good signing in an absolute sense.

      • revolution311 - Feb 7, 2011 at 6:41 PM

        Your own reports state that Michael Young wants out of Texas and Texas is trying to trade him.

        There’s the competition. According to the article today at The Baltimore Sun, there was more talk of that on Friday prompting people the O’s organization to be more leery of a bidding war. Here’s a quote:

        However, while no suitors had emerged publicly, there was always the fear from team officials that some teams would jump into the bidding the longer Guerrero stayed unemployed. And that fear was only heightened when reports started surfacing Friday that the Texas Rangers, the team Guerrero drove in 115 runs for in 2010, were in talks to trade designated hitter Michael Young. This is my opinion more than anything, but it doesn’t seem coincidental to me that the Guerrero deal with the Orioles was compromised on the same day reports became public that a Young trade could be imminent.

        A few million is a few million. Relatively speaking, for baseball, that’s not much. O’s supporters probably would have still been OK with the signing even if the O’s paid $10+ million for him.

        Ever since the signing I purchased opening day tickets, friends have purchased season tickets, and generally speaking, we’re all that much more excited about the season.

        A few million is well worth that kind of attitude change in your fan base. Good move.

  5. revolution311 - Feb 7, 2011 at 6:42 PM

    I wish there were an edit button. I made a few typos. :\

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