Miguel Cabrera’s Contract Not Close to Biggest Ever

According to IMDB, Gone with the Wind pulled in nearly $200 million at the American box office. The Sound of Music pulled in just over $163 million. This makes them two of the highest-grossing films in US movie history. Those numbers are also utterly trounced by Fast & Furious 6′s $239 million. It can be said, technically accurately, that Fast & Furious 6 has been a higher-grossing film than the other two mentioned. But that sort of technical accuracy is deceptive accuracy, and, of course, we need to make adjustments. The raw numbers don’t tell us anything of value.

Listen to Twitter and you’ll find out in a hurry that the baseball industry was shocked by news of the new Miguel Cabrera contract. Cabrera’s now guaranteed $292 million through 2023, and beyond that there are another two options. It’s a massive deal for the Tigers, and a massive commitment, and seemingly a massive risk, that the Tigers didn’t need to take right away. Everyone’s floored by the magnitude of the thing. But then, we’ve seen this thing before. Cabrera’s contract isn’t the biggest contract ever, and in fact it’s hardly even in the conversation.

The factor to keep in mind is MLB’s ever-increasing revenue. It’s no secret that teams are spending more now than ever, and it appears that’s going to continue for the foreseeable future. So we don’t have to settle for raw, unadjusted contract terms. What if we expressed contracts as percentages of total MLB player spending? Then, in theory, we could actually compare contracts covering different years.

It isn’t hard to gather historical opening-day payroll data. It’s harder to gather future opening-day payroll data, on account of we aren’t in the future yet. But what we do have is information for 2014, and another thing we have is this article from Matt Swartz. Using his numbers, I’ve projected payroll numbers through 2023. The table below covers 1999 – 2023, because 1999 is when baseball’s first nine-figure contract began. It’s that pool of contracts we’ll compare later on.

Year OD Payroll (billions) %Change
1999 1.446 -
2000 1.670 15%
2001 1.934 16%
2002 2.023 4.6%
2003 2.131 5.3%
2004 2.056 -3.5%
2005 2.182 6.1%
2006 2.327 6.6%
2007 2.479 6.5%
2008 2.686 8.4%
2009 2.650 -1.3%
2010 2.731 3.1%
2011 2.790 2.2%
2012 2.941 5.4%
2013 3.099 5.4%
2014 3.327 7.4%
2015 3.570 7.3%
2016 3.831 7.3%
2017 4.111 7.3%
2018 4.374 6.4%
2019 4.654 6.4%
2020 4.952 6.4%
2021 5.269 6.4%
2022 5.606 6.4%
2023 5.965 6.4%

Miguel Cabrera’s new money is $248 million, beginning in 2016. Over the eight years, MLB is projected to spend about $38.8 billion in opening-day payroll. So Cabrera’s contract is projected to represent 0.64% of all opening-day player spending. There have, so far, been 53 nine-figure contracts handed out to players by teams. Where does Cabrera’s new deal rank among them?

Player Salary (millions) Years %MLB OD Payroll
Alex Rodriguez 252.0 2001-10 1.09%
Manny Ramirez 160.0 2001-08 0.90%
Alex Rodriguez 275.0 2008-17 0.87%
Derek Jeter 189.0 2001-10 0.81%
Johan Santana 137.5 2008-13 0.81%
Kevin Brown 105.0 1999-05 0.78%
Cliff Lee 120.0 2011-15 0.76%
CC Sabathia 161.0 2009-15 0.76%
Jason Giambi 120.0 2002-08 0.76%
Clayton Kershaw 215.0 2014-20 0.75%
Ryan Howard 125.0 2012-16 0.75%
CC Sabathia 122.0 2012-16 0.73%
Mark Teixeira 180.0 2009-16 0.72%
Josh Hamilton 125.0 2013-17 0.70%
Mike Hampton 121.0 2001-08 0.68%
Justin Verlander 180.0 2013-19 0.67%
Carlos Beltran 119.0 2005-11 0.67%
Zack Greinke 147.0 2013-18 0.66%
Joe Mauer 184.0 2011-18 0.66%
Barry Zito 126.0 2007-13 0.65%
Felix Hernandez 175.0 2013-19 0.65%
Cole Hamels 144.0 2013-18 0.65%
Todd Helton 141.5 2003-11 0.64%
Miguel Cabrera 152.3 2008-15 0.64%
Miguel Cabrera 248.0 2016-23 0.64%
Vernon Wells 126.0 2008-14 0.62%
Carlos Lee 100.0 2007-12 0.61%
Prince Fielder 214.0 2012-20 0.61%
Matt Cain 127.5 2012-17 0.61%
Adrian Gonzalez 154.0 2012-18 0.61%
Masahiro Tanaka 175.0 2014-20 0.61%
Carl Crawford 142.0 2011-17 0.60%
Alfonso Soriano 136.0 2007-14 0.60%
Albert Pujols 240.0 2012-21 0.60%
Ken Griffey Jr 116.5 2000-08 0.60%
Albert Pujols 100.0 2004-10 0.58%
Matt Holliday 120.0 2010-16 0.54%
Matt Kemp 160.0 2012-19 0.54%
Jayson Werth 126.0 2011-17 0.53%
Jacoby Ellsbury 153.0 2014-20 0.53%
Robinson Cano 240.0 2014-23 0.53%
Jose Reyes 106.0 2012-17 0.51%
Joey Votto 225.0 2014-23 0.49%
Ryan Braun 105.0 2016-20 0.48%
Shin-Shoo Choo 130.0 2014-20 0.45%
Buster Posey 167.0 2013-21 0.45%
David Wright 138.0 2013-20 0.43%
Troy Tulowitzki 157.8 2011-20 0.42%
Ryan Zimmerman 100.0 2014-19 0.42%
Freddie Freeman 135.0 2014-21 0.40%
Evan Longoria 100.0 2017-22 0.35%
Elvis Andrus 120.0 2015-22 0.33%
Dustin Pedroia 110.0 2014-21 0.32%

Wouldn’t you know it, but Miguel Cabrera’s new contract is exactly equal, here, to…Miguel Cabrera’s current contract. Of course, during the new contract, Cabrera will be older and presumably worse, but that’s one of the funnest of fun facts from the table of data. It’s also evident how much of a hometown discount Dustin Pedroia took, and it’s clear that the Rockies have Troy Tulowitzki under team-friendly terms. Also, the Evan Longoria bit. Longoria is rich, and he’s going to get richer, but he could be richer still if he drove a tougher bargain. He’ll survive.

Cabrera’s deal is right in the middle of the pack. It’s comparable to the deal that Todd Helton signed with Colorado, and it’s a bit bigger than the Prince Fielder deal with Detroit from a few years back. Joe Mauer’s deal is bigger, relatively speaking. But I shouldn’t waste any more of your time — let’s just all look at the top. Alex Rodriguez’s current contract is enormous. The first one he signed was enormous-er. It accounted for more than a full percent of all player spending. A-Rod doesn’t just compare to Cabrera, here — the former’s deal slaughters the latter’s.

What if the Tigers had given Cabrera the relative A-Rod terms for 2016-2023? What he’ll actually get is $248 million. However, 1.09% of projected spending would be $421 million, and 0.87% of projected spending would be $336 million. Obviously, the Tigers aren’t getting a bargain with this contract, and we don’t know how smoothly Cabrera is going to age, but there have been substantially bigger commitments in recent history. It’s just less obvious when you fail to account for baseball’s considerable rate of inflation.

It’s probably too big or too long of a commitment. It’s also probably time we stop expressing such shock at the dollar figures being thrown around. Baseball is doing incredibly well, and that’s going to carry well into the future. Teams and players are adjusting to the reality. If certain observers aren’t, that’s on them.

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Jeff made Lookout Landing a thing, but he does not still write there about the Mariners. He does write here, sometimes about the Mariners, but usually not.

39 Responses to “Miguel Cabrera’s Contract Not Close to Biggest Ever”

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  1. Mike Trout's Agent says:

    1.09%/0.64% x $248,000,000 = $422,375,000….divided by 8 =

    8 years at $52,796,875 per year.

    Thanks Jeff!!!!!!!!!!

    +38 Vote -1 Vote +1

  2. bookbook says:

    1.09% is $421 million? Ironic that folks have been talking about the “right” value for Mike Trout (as expressed on this site and elsewhere) has been in the $400 million range.

    Vote -1 Vote +1

  3. Bip says:

    The problem with this form of measurement is that it only considers AAV. The numerator is total dollars, but the denominator is money spent over the length of the contract. In fact, a longer contract with a constant AAV will appear lower on this list than a contract with the same AAV and a shorter term, because as the contract payout remains the same per year, the opening day payroll will inflate each year.

    So this is a fine way to put Cabrera’s AAV in perspective, but it does nothing to help us grasp the total size of the contract, which is what is most extraordinary about it.

    +6 Vote -1 Vote +1

    • Nathaniel Dawson says:

      So put together a list of total guaranteed money on contracts, as a portion of Major League payroll for the year it was signed. Don’t worry about future years of Major League payroll.

      He’s got all the information up there for you to do that, so if you’d like it expressed in different terms, go for it.

      Vote -1 Vote +1

    • James says:

      I think you miss the point. The point is that the $31 MM (AAV) Cabrera will get in 2023 will be worth ~$15.5 MM in today’s spending power. So this analysis is correct. In fact, you could be even more accurate by going year by year through the contract and dividing the salary for a particular year by the total payroll for that year, coming up with a year-specific percentage for each of the eight years, and averaging those percentages to get the final result. For all I know, that’s what he did but just didn’t state it explicitly.

      Vote -1 Vote +1

      • Bip says:

        Even if it’s true, that 31 million in 2023 money is 16 million today, it’s still ten years of approximately 23 million of today’s value. That’s a very big commitment that this measurement doesn’t capture.

        This measure shows that average AAV of Cabrera’s deal may be less than Cliff Lee or Kevin Brown, but it’s certainly a bigger total commitment. That’s what people were focusing on more than the AAV, if my perception of the coverage of this deal is accurate.

        Vote -1 Vote +1

        • asdf says:

          What you want is for the contracts to be adjusted by normal inflation, not Magic-Johnson-Inflation.

          i.e. you’re looking to capture both cabrera’s place in baseball, as well as baseball’s place in the economy. “Cabrera makes wayyyy more than these guys did! Baseball is full of money!”

          Vote -1 Vote +1

  4. Pumpsie Green says:

    Excellent vantage point, Jeff! Thanks!

    I looked at it from a WAR/$ viewpoint – Dave Cameron expects Cabrera to reach 86 WAR in the next 10 years; at that point, his career earnings will be $408 million. You suspect this will seem like a swell deal in 10 years – for both sides. I concur!

    Jeff, is there a tool somewhere I can use to calculate dollars-per-WAR over a player’s career? Combine that with what you’ve done here (and more comparative financial data), and I think it would be very interesting to see how the all-time WAR leaders stack up with these massive contracts.

    Vote -1 Vote +1

  5. pft says:

    Good article.

    Since Pedroia is only 1/3 the hitter Cabrera is (and teams pay more for offense than defense) does that mean his contract is as good as Cabreras or that Cabrera took a home town discount?

    -11 Vote -1 Vote +1

    • Jackson says:

      stupidest comment I have ever seen on Fangraphs. Damn, I thought people here were smart

      Vote -1 Vote +1

    • jim says:

      in 2013, cabrera was approximately 4.8 times more valuable as a hitter than pedroia, but pedroia was better enough at everything else that cabrera ended as only approximately 1.4 more valuable overall. since cabrera’s new money is $248 million, pedroia should have gotten… $100 million?

      not the conclusion I expected to reach, and not the full story, but interesting nonetheless

      Vote -1 Vote +1

      • David says:

        not that I agree with any of the methodology that you use to get here, but 100Mx1.4=140M, not 248M…

        Vote -1 Vote +1

      • Joe says:

        Assuming you used the 63.5 and 13 offensive runs values, 63.5 is 4.8 times AS valuable, not 4.8 times MORE valuable. You wouldn’t say 50% more valuable when you meant 50% as valuable. I don’t think comparing their runs above average is the best way to do it either. By weighted runs created, Miggy is only 1.5 times as valuable as a hitter.

        Vote -1 Vote +1

  6. I'm Toivo says:

    Can you say what percent of the UP economy is Crebera’s contract?
    I’m guessing pretty big….

    Vote -1 Vote +1

  7. Assumption says:

    Great article! We can’t assume that the overall payroll will just keep climbing at this rate though. Not only does that ignore the law of diminishing returns, but it ignores the fact that the rate of increase fluctuates year-to-year, in fact it DECLINED two of those years.

    The gist is correct but the details are inaccurate.

    Still, the article was enjoyable!

    Vote -1 Vote +1

    • bobaloo says:

      diminishing returns is not in a dynamic-inflation adjusted context. It is fixed for all those things. In fact, it is explicitly, “all else equal”

      Vote -1 Vote +1

      • Assumption says:

        Ah. Good point, I digress. Sometimes it just takes someone smarter than you to point it out!

        Inflation is dynamic, not fixed. That’s the problem with the table.

        Vote -1 Vote +1

    • pft says:

      Salaries have been increasing at 1/2 the rate of revenue for 10 years and players are only getting about 25% of additional revenue. If anything that should regress and salaries should revert back to closer to 50% of revenue growth

      Vote -1 Vote +1

  8. Tom B says:

    I’m sort of surprised that the Yankees are only responsible for 8 of these contracts.

    Vote -1 Vote +1

  9. pft says:

    One interesting things, since 2003, the last year where there was no testing, MLB revenues have increased 4.1 billion, while players OD salaries have increased 968 million. In other words, players are getting less than 25% of the increased revenues, or about 1/2 what they got 10 years ago

    Vote -1 Vote +1

  10. Mark Zuckerberg. says:

    I would have paid $42 billion for Miguel Cabrera. Whoever the fuck he is.

    +7 Vote -1 Vote +1

  11. Jake says:

    Not that it’s an oversight really, but how sure can we be that this current level of inflation is actually sustainable over the duration of the next decade. I realize that it is highly speculative but nearly all economic models show that rates of change never stay constant. Obviously, salaries will most likely not decrease but, as they have been escalating over a rapid clip as of late, may not continue the rate of expansion seen currently.

    Vote -1 Vote +1

    • noseeum says:

      We can’t be sure, but you have to make a guess when you sign a guaranteed contract. If you were expecting an economic collapse within baseball, as an owner you would not sign any long term contracts.

      My guess is this party is over within 10 years. Right now all of this money is coming from the RSNs and the explosion in local broadcast revenue in general. But there are already chinks in the armor with the Astros unable to get a deal done with Comcatd, with cable companies constantly balking at fees and cord cutting becoming a more viable option each year. The writing seems to be already on the wall that sooner or later a tipping point will be reached and cable companies will refuse to bundle the RSNs in he basic package. They can’t keep accepting these ever growing fees. Once RSNs are broken from the basic bundle, look out below!!!!!

      Vote -1 Vote +1

  12. gc says:

    If there are a few Evil Empires in operation, then a giga-contract does not take up as big a share, whereas A-Rod signed when there was only the Yankees in the luxury tax bracket.
    A different stat would be %median team payroll; e.g. if median payroll is $80M (too lazy to look it up) in 2014 and Cabrera gets paid $40M, that is the same as if A-Rod got $25M and the median was $50M/team. But the king of that stat is likely Babe Ruth, who might have been making 200% median.

    Vote -1 Vote +1

  13. Dave P says:

    What about Ruth making over $100,000 back in the 20s?

    Vote -1 Vote +1

  14. Jason says:

    As far as the inflation rates… this is just to put the contract in perspective. You have to make some assumptions, even if they are slightly incorrect, to make a projection. Why make it more complicated than it needs to be. Sure, you could make a better estimate using some dynamic inflation rates as apposed to the fixed ones, but is the result going to be that much different? No. The added the added precision isn’t necessary to get the point across. I think I’ve had too much coffee.

    Vote -1 Vote +1

  15. Jason says:

    And for anyone interest… Mike Trout’s new deal is 0.58% of OD payroll

    Vote -1 Vote +1

  16. bvillebaron says:

    Just goes to prove you can try to make any argument with statistics, huh? Giving a guaranteeed $292 million contract to a 31 year old player is asinine under any statistical analyis.

    Vote -1 Vote +1

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