Opt-out clauses aren’t ‘problematic’

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Former MLB general manager and professional interference runner for the league’s owners Jim Bowden had an article published at The Athletic on Thursday, decrying the rise of player opt-outs in extensions and free agent contracts. It’s a lengthy one, and while it does take opposing viewpoints into account to a degree — for example, there’s an executive in there saying if an opt-out is what it takes to sign a player, then the player will get an opt-out as the cost of doing business — it can essentially be boiled down to “players having options is bad.”

From Bowden:

The opt outs haven’t received as much attention as the recent run of record long-term contracts that take players into their age-40 seasons despite ample evidence these pacts won’t end well for the teams, but both are major short- and long-term issues teams must confront.

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So if the player plays well, it’s a four-year commitment for him, but he also has the insurance of the other four years that the team has guaranteed. Even in a case such as this one where the money would make it a team-friendly deal, the opt-out clause tips the scales in the player’s favor.

Every time a team gives on the opt-out-clause issue, it sets a precedent for future contracts. More and more agents and players will say, “You gave the opt out to this player or that player,” and insist on one. But make no mistake, these clauses undermine the main reason teams do longer-term contracts — to control the player for the length of the deal without having to worry about free agency or salary arbitration.

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“We are not going to give opt-out clauses to any player because we don’t like the precedent it sets,” an American League GM team told me. “We want players that want to be here and don’t sign players that already have one foot out the door, thinking about their next contract or team.”

First, the long-term contracts to players hitting 40 and beyond. That’s already been covered in this space, so let’s revisit for a moment. In a December 2022 piece titled “Super long free agent contracts are fine, actually,” I discussed how these deals adding more years instead of more money allowed players to rake in huge sums of cash that made them willing to sign, and gave space to teams to continue spending, as well. Which, in theory, should help make for some better teams that aren’t so quick to close up their wallet. As I said then:

The value of a particular dollar changes over time. Bogaerts’ $25.5 million per year is not going to look like $25.5 million today does 11 years from now — with inflation, a rising luxury tax threshold, and what will likely be even more money coming into the game for a league whose nearly two-decade long streak of record revenues was only interrupted by a season-shortening pandemic, $25.5 million for a 41-year-old Bogaerts might not seem like much of an issue, really. Rewind to 11 years ago, and today’s $25.5 million was valued at $19.3 million in 2011 dollars.

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Another way to think of it is that the problem with Albert Pujols’ megacontract (10 years, $240 million) wasn’t the money or the years. It was that the Angels signed a player to a deal of that size and then made a series of terrible personnel decisions in both free agency and in player development that combined with a refusal to go beyond the luxury tax and turned the franchise into something of a running gag. If the Angels had simply made better decisions, they could have weathered the downturn of Pujols’ career with ease, but they spent the money they were willing to spend on the wrong supporting cast, and then threw in the towel on pushing even harder to make up for it.

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…you probably want to keep an eye out for anyone saying the future of these organizations and the league is now in peril because Xander Bogaerts is going to make $25 million per year a decade from now. We’ll be lucky if any of these coastal teams are still above water at that point, and I don’t mean financially. These deals will help in the present, in the peak these players have left: the rest of the years are just the cost of doing business — and those years are cheaper than money.

The Padres, by the way, used the flexibility Bogaerts’ comparatively low average annual value gave them against the luxury tax threshold, and then extended Manny Machado, who — in a move that really ties things together here — said he was going to opt out at year’s end without an extension in place beforehand. Bowden’s take on these situations is basically that the team doesn’t gain anything from this: he can hypothesize that Machado would have signed for the Padres at $300 million eventually, but why would he have done that? The Padres weren’t proven spenders at that point. There was no evidence they were actually going to try beyond signing Machado and then saying hey, that’s enough effort for the next decade. The opt-out didn’t just give Machado a chance to sign a more significant deal later or insure against an injury that would have otherwise cost him money if he had just signed a shorter deal without an opt out in place. It gave Machado an out in case the Padres weren’t true to their sales pitch of using him as step one of a plan to revitalize the roster by making San Diego an attractive place for free agents and long-term extensions, and give trying to win a real shot.

The Padres showed themselves to be honest in their dealings with Machado; his threat to opt out was just business, because the total value of free agent deals (and the length at which players were being paid on their massive free agent contracts) had continued to rise from the time Machado first signed with San Diego. The Padres could have let him walk at year’s end: they could have used all that attention and cash on Juan Soto instead, or gone, “hey, maybe we can bring in Shohei Ohtani,” but they wanted to retain Machado, so they did. No one made them do that! Both sides had agency here, and they used it in a way that satisfied them. Yes, Machado is unlikely to be a star in his late-30s and early 40s, sure, but the Padres aren’t paying him to be one then. They’ll be paying him then for what he did for them before that point, and the reason they’ll even still have him when he’s elderly by baseball standards is because they agreed to pay him when he was still spry: just like with the Bogaerts’ deal and the opt out, the length is the cost of doing business.

Complaining about players having opt outs or signing deals that pay them for more years but at lower dollars per year looks pretty goofy and one-sided if you aren’t also going to complain about how, say, a player who doesn’t negotiate a no-trade clause can end up traded at any time, for any reason, regardless of their production or how nice the home they bought in the city they had committed to for seven, eight, 10, 12 years, whatever is. Players are a commodity to be bought and sold as teams see fit, and the second they get any kind of agency or control, analysys like Bowden think something is wrong.

Anyway, it shows a real maturity that I got through this whole thing without mentioning that Bowden resigned in disgrace from his job with the Nationals because he was under federal investigation for skimming bonuses from international players. You could even say I opted out of doing so, ha ha, just a little joke, enjoy your weekend.