Marlins have made 10-year offer to Pujols

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Ken_RosenthalKen Rosenthal

Confirmed: #Marlins have made 10-year offer to Pujols. Source says two sides trying to work through no-trade issue. MORE #MLB

[DJ's left nut]

Originally Posted by jd1020

You don't seriously believe teams back load contracts to invest the money saved, do you?

A) In fact, they do. If only via a shell game, they most assuredly do. When Bill DeWitt and crew only spend $100 million of their dollars on the Cardinals, instead of $110, they're leaving that extra $10 million somewhere else. Now some of that could be baseball investments (more money in latin scouting, more money in the draft pool; both of which are sources for low-cost talent). Even more of that is very likely in 'conventional' non-baseball investments.

But either way, the money doesn't vanish; it is otherwise used. When you're talking about money of that scale, it isn't difficult at all to make quite a bit more off of it, even in conservative investment vehicles. That money makes ol' Bill DeWitt an even wealthier man and all the more willing to eat a few $$ come payroll time.

B) Besides, now you're arguing about the intelligence of how the money saved is spent; which is a different story entirely. How the money is eventually spent or otherwise invested is completely different from how a contract should be structured from an economic standpoint. Even if DeWitt turns around and spends that $10 million on hookers and blow, the contract itself was still far more economically sound than front-loading it.

Oh, and getting beyond all that, you continue to ignore the inflationary nature of baseball salaries.

There are times when someone can cite a position as being 'an opinion' and thus capable of some gray area or reasonable disagreement. This, however, is not one of those time. From any logical economic perspective, it never EVER makes sense to front-load a contract absent a salary cap.

You are just flat wrong.

[jd1020]

I agree. It makes no sense to pay a player more for his best years and maybe throw some incentive deals on the back end when the money lessens.

[DJ's left nut]

Originally Posted by jd1020

I agree. It makes no sense to pay a player more for his best years and maybe throw some incentive deals on the back end when the money lessens.

Glad we're on the same page.

Though, for the record, the MLB CBA does not allow for performance based incentives. Besides, now you're not talking about front-loading a deal, you're talking about lowering the overall value of a deal by tying part of it to incentives.

I don't see why this is so difficult for you to comprehend - it's MLB; these contracts are all guaranteed. The money is going to be paid. So if the money is going to be paid, when you pay it is immaterial, more accurately, it's immaterial if you're trying to factor when you pay it in relation to when it is earned via commensurate performance. Who gives a shit if you're paying him when he's most productive? You're going to be paying him anyway. At that point the only question is "how can we reduce the hit in 'real' dollars paid over the life of the deal"? The answer is the same as its always been in finance - defer the costs.

It's not like the NFL where you can cut the guy loose at the end. Albert Pujols is going to get $220 million over 10 years. If you can convince him to take $1/year for the next 9 years and the remaining $219,999,991 in the final year, you are MILES ahead of the game because you keep that money and are able to invest it.

Or maybe you think banks charge interest on long-term payments because people enjoy paying it.

The time value of money is not a myth, nor are economies of scale when dealing with figures this large. If you truly don't understand this, you are a complete fool.

[jd1020]

Originally Posted by DJ's left nut

Glad we're on the same page.

Though, for the record, the MLB CBA does not allow for performance based incentives. Besides, now you're not talking about front-loading a deal, you're talking about lowering the overall value of a deal by tying part of it to incentives.

I don't see why this is so difficult for you to comprehend - it's MLB; these contracts are all guaranteed. The money is going to be paid. So if the money is going to be paid, when you pay it is immaterial, more accurately, it's immaterial if you're trying to factor when you pay it in relation to when it is earned via commensurate performance. Who gives a shit if you're paying him when he's most productive? You're going to be paying him anyway. At that point the only question is "how can we reduce the hit in 'real' dollars paid"? The answer is the same as its always been in finance - defer the costs.

It's not like the NFL where you can cut the guy lose at the end. Albert Pujols is going to get $220 million over 10 years. If you can convince him to take $1/year for the next 9 years and the remaining $219,999,991 in the final year, you are MILES ahead of the game because you keep that money and are able to invest it.

Or maybe you think banks charge interest on long-term payments because people enjoy paying it.

The time value of money is not a myth, nor are economies of scale when dealing with figures this large. If you truly don't understand this, you are a complete fool.

I'm not talking about lowering anything... I'm talking about incentive bonuses.

[Nightfyre]

Originally Posted by jd1020

I'm not talking about lowering anything... I'm talking about incentive bonuses.

It is my understanding that there is no such thing in the MLB because the CBA explicitly forbids it.

[jd1020]

Originally Posted by Nightfyre

It is my understanding that there is no such thing in the MLB because the CBA explicitly forbids it.

There are incentives in tons of contracts.

Soriano's contract comes with this - "award bonuses: $0.25M for top vote-getter in All-Star balloting, $0.35M for World Series MVP, $0.25M for LCS MVP, $0.3M for MVP, $75,000 for Gold Glove"

Dempster - award bonuses: $0.5M for Cy Young ($0.3M for 2nd, $0.25M for 3rd, $0.15M for 4th, $0.1M for 5th); $0.5M for MVP ($0.3M for 2nd, $0.25M for 3rd, $0.15M for 4th, $0.1M for 5th); $0.5M for WS MVP; $0.2M for LCS MVP; $75,000 each for Gold Glove, All Star

[DJ's left nut]

Originally Posted by jd1020

I'm not talking about lowering anything... I'm talking about incentive bonuses.

That's the extent of your response?

You're going to continue to ignore every bit of economic reality contained in there in order to once again harp about including incentive bonuses? Bonuses which, again, cannot be tied to performance?

Besides, that's exactly what you're arguing. Incentives have an economic value (amount of incentive multiplied by the likelihood of achieving them). If you're including incentives in the back of the contract in lieu of salary, then you're talking about reducing the value of the contract.

If you're talking about incentives in addition to the salary, you're talking about raising the value of the contract.

All you're doing there is dicking around with the overall value of the contract. None of that changes the fact that it still makes absolutely no sense at all to front-load the guaranteed portion of the salary.

Again - do people pay interest for charity?

If my firm offers to give me my next 7 years worth of salary tomorrow - done. I'll pay off every note I have to save the interest on those, I'll invest the rest in conservative crap the yields 7% and I'll end up better than twice as wealthy for my efforts (the math doesn't lie here; give it a shot).

You're not making any sense here. Money now is always more valuable than money later under any economic scale.

[DJ's left nut]

Originally Posted by Nightfyre

It is my understanding that there is no such thing in the MLB because the CBA explicitly forbids it.

They can be based on awards and appearances.

You can't have performance based incentives like "batting average above .300", but you can have them based on MVP finishes or total ABs. You can also vest option years based on same.

But again, they have nominal economic value and have nothing to do with when the guaranteed portion paid is most valuable.

[Nightfyre]

Originally Posted by jd1020

There are incentives in tons of contracts.

Soriano's contract comes with this - "award bonuses: $0.25M for top vote-getter in All-Star balloting, $0.35M for World Series MVP, $0.25M for LCS MVP, $0.3M for MVP, $75,000 for Gold Glove"

Dempster - award bonuses: $0.5M for Cy Young ($0.3M for 2nd, $0.25M for 3rd, $0.15M for 4th, $0.1M for 5th); $0.5M for MVP ($0.3M for 2nd, $0.25M for 3rd, $0.15M for 4th, $0.1M for 5th); $0.5M for WS MVP; $0.2M for LCS MVP; $75,000 each for Gold Glove, All Star

Major League Rule 3(b)(5) provides as follows:

"No Major League Uniform Player's Contract or Minor League Uniform Player Contract shall be approved if it contains a bonus for playing, pitching or batting skill or if it provides for the payment of a bonus contingent on the standing of the signing Club at the end of the championship season."

[jd1020]

Originally Posted by Nightfyre

Major League Rule 3(b)(5) provides as follows:

"No Major League Uniform Player's Contract or Minor League Uniform Player Contract shall be approved if it contains a bonus for playing, pitching or batting skill or if it provides for the payment of a bonus contingent on the standing of the signing Club at the end of the championship season."

ZZZZZZZZzzzzzzzzzzzzzzzzz

[Nightfyre]

Originally Posted by jd1020

ZZZZZZZZzzzzzzzzzzzzzzzzz

Is this code for, "I was wrong and refuse to admit it"? hehe.

[jd1020]

Originally Posted by Nightfyre

Is this code for, "I was wrong and refuse to admit it"? hehe.

I've provided proof of contracts having incentives. You're the idiot here.

Here's a brand spanking new contract for you...

Berkman - award bonuses: $0.5M for MVP ($0.35M for 2nd, $0.25M for 3rd); $50,000 for WS MVP, LCS MVP; $25,000 each for Silver Slugger, Gold Glove, All-Star

[Nightfyre]

Originally Posted by jd1020

I've provided proof of contracts having incentives. You're the idiot here.

I'm sure Albert is cringing over losing out on that quarter of a million for being a gold glover.

[jd1020]

Originally Posted by Nightfyre

I'm sure Albert is cringing over losing out on that quarter of a million for being a gold glover.

Is that code for "I was wrong?"

[DJ's left nut]

Originally Posted by Nightfyre

Is this code for, "I was wrong and refuse to admit it"? hehe.

No, his code for "I was wrong and refuse to admit it" appears to be some nonsense about how wealthy businessmen don't know how to invest deferred funds.