Are $20 Million Per Season Contracts Ever Worth It?

When I saw that Clayton Kershaw signed a seven-year contract with an average salary of over $30 million per season, my first thought was: that’s definitely going to be an albatross contract. In my mind, anything over $20 million per season has always seemed to be that threshold where a player no longer has a realistic chance of performing to the value of the contract. But, I am smart enough to know that what is in my mind is not always the same as what is in reality, so this brief post will look at every player during the 2013 MLB season that collected a salary of $20 million or more. My goal was to get a rough idea of exactly how many players either outperformed, adequately performed, or underperformed their salary.

I collected data from the website baseballplayersalaries.com. In the table below, I’ve reported the names, teams, and estimated salaries of each $20 million plus player in the 2013 MLB season. I’ve also reported the percent of their team’s payroll each player received and the percent contribution that player made to the team’s on-field performance.

Table 1: Players with $20 million or greater salaries for the 2013 MLB Season

Player Name Team Salary % Team’s Payroll % Team’s On-field Performance
Alex Rodriguez New York Yankees

$28,000,000

11.76%

0.97%

Johan Santana New York Mets

$25,500,000

32.93%

0.00%

Cliff Lee Philadelphia Phillies

$25,000,000

14.80%

40.56%

CC Sabathia New York Yankees

$23,000,000

9.66%

0.97%

Joe Mauer Minnesota Twins

$23,000,000

32.15%

27.00%

Prince Fielder Detroit Tigers

$23,000,000

14.84%

3.27%

Mark Teixeira New York Yankees

$22,500,000

9.45%

-0.65%

Tim Lincecum San Francisco Giants

$22,000,000

15.19%

-2.14%

Vernon Wells New York Yankees

$21,000,000

8.82%

-0.65%

Miguel Cabrera Detroit Tigers

$21,000,000

13.55%

13.85%

Adrian Gonzalez Los Angeles Dodgers

$21,000,000

9.19%

9.09%

Carl Crawford Los Angeles Dodgers

$20,000,000

8.75%

3.86%

Barry Zito San Francisco Giants

$20,000,000

13.81%

-9.29%

Matt Kemp Los Angeles Dodgers

$20,000,000

8.75%

1.14%

Roy Halladay Philadelphia Phillies

$20,000,000

11.84%

-5.00%

Ryan Howard Philadelphia Phillies

$20,000,000

11.84%

3.33%

Matt Cain San Francisco Giants

$20,000,000

13.81%

1.79%

Justin Verlander Detroit Tigers

$20,000,000

12.90%

8.85%

 

The first thing I noticed was the number of players that underperformed their salary — 13 of 18. That’s just over 72%!

When it comes to players that I consider underperformed, there are too many to list. So, instead I’ll list the players who I consider adequately performed to their salary for the team they were on: Joe Mauer, Miguel Cabrera, Adrian Gonzalez, and Justin Verlander. That’s only 4 of 18, or about 22%. I did not include Cliff Lee in the list because he clearly outperformed his salary based on this measure. He was the only one of 18 players to do so. That translates to only 6% of players with $20 million plus salaries outperforming.

Even more staggering was when I calculated the average percent of team payroll an individual player on my list made, and compared it to the average percent of team on-field performance. The average player on the list made 14% of their team’s payroll, but only contributed to 5% of their team’s performance.

I realize that the criteria I have used is limited in many ways. For example, players on a poor-performing team (ex. Cliff Lee) will have a higher percent of on-field team performance, and vice versa. Or players on a team with a low total payroll will have a higher percentage of team payroll. However, I feel these numbers are so overwhelmingly lopsided that I’m not sure if you would be able to find any objective criteria that would show an opposite trend.

Given that these high-paid players consistently underperform their salary, an entire new set of questions arise. Why are teams still so willing to hand out these contracts? Do underperforming ‘star’ players really generate enough additional team revenue to justify their cost? What would happen if a large-market team properly valued their players?

With the precedent set by the Kershaw contract, maybe in the not-so-distant future $30 million will be the new $20 million, but as of the 2013 season a $20-million salary almost guarantees the player will not be getting the short end of the stick on that deal (in terms of performance at least).



Print This Post



Sort by:   newest | oldest | most voted
Michael
Guest
Michael

While I think there are some flaws (you expect high priced stars to give less bang for the buck as long as they give a lot of bang, and be compensated by cost controlled younger players) it is interesting how many whiff completely on this list and how few are in the middle space. I would like to see alongside this WAR and $/WAR to be clearer.

As to your Kershaw feelings… Look at the two main lefties on here.. those are the two paths, and I think if Kershaw stays healthy like Lee this contract is short enough, he is young enough, and he is good enough that he earns it or exceeds it.

Bryce
Member
Bryce

Percentage of payroll seems like the wrong way to measure this, since so many players are under team control. When you calculate free agent $/WAR, int comes out to ~$6M these day, whereas total $/WAR for all players is ~$3M. It would be more informative to include $/WAR for these players, or if there’s a specific reason not to do that, then maybe percentage of a team’s free-agent salary and performance.

Spencer Jones
Member

Exactly what I was thinking, if you compare free agent contracts to the average MLB Player contract as a whole they’re almost always going to look bad.

Ian R.
Member

As the other commenters said, yeah, this analysis is flawed because of the variable effect of other players on the team. If, say, Pujols were on this list (he didn’t make 20 million last year, but the AAV of his contract is above that), he’d have no shot at measuring up to his contract largely because his teammate, Mike Trout, produced huge percentage of the team’s WAR for essentially no money. Conversely, Cliff Lee looks great in this analysis because the Phillies had Howard and Halladay eating up huge amounts of salary without producing much value.

It’s also a little bit iffy to just look at one year out of a long-term deal. Nobody, not even Brian Sabean, expected Barry Zito to be worth anywhere close to $20 million in the last year of his contract. The hope was that he’d produce enough surplus value in the early years of the deal to make up for it. (Obviously, that didn’t happen – that’s why the Zito contract was a historically bad one – but you’re getting the right answer with the wrong process.)

IrvRothman
Guest
IrvRothman

The risk of a high AAV/long term contract should not be evaluated on a snapshot of 1 Year. Case in point: Mark Teixeira. While I’m sure his total contract value v total contribution won’t look good, Teix was injured in 2013 and the Yanks didn’t pay.him his full contract $. While teams overpay up front for declining productivity and injury risk, Injuries can be insured, and in Teix case, the WBC paid his money. He was not paid $22mil in 2013 so why evaluate him as such? When you evaluate arod in 5 years will you count thecontract $ FOR 2014 he *would* have been paid or will you evualte what really happened? Any analysis of “bang for your buck” should evaluate actual money paid. The yanks got ‘lucky’ on arod and Teix (In terms of $) and that should be evaluated.

sambf
Member
sambf

FWIW, I re-ran the numbers for $/WAR; the numbers are below. The average cost/win was ~$11M–which is definitely an overpay–but as others have mentioned this sample seems to have an unusually large number of people in the back end of their contract, which is expected to be an overpay… Really you should look at $/WAR over the course of the contract (adjusting for inflation etc.)…

Player Name Team Salary % Team’s Payroll % Team’s On-field Performance Wins $/win
Alex Rodriguez New York Yankees $28,000,000 11.76% 0.97% 0.5 $56,000,000
Johan Santana New York Mets $25,500,000 32.93% 0.00% 0 #DIV/0!
Cliff Lee Philadelphia Phillies $25,000,000 14.80% 40.56% 5.1 $4,901,961
CC Sabathia New York Yankees $23,000,000 9.66% 0.97% 2.7 $8,518,519
Joe Mauer Minnesota Twins $23,000,000 32.15% 27.00% 5.2 $4,423,077
Prince Fielder Detroit Tigers $23,000,000 14.84% 3.27% 2.2 $10,454,545
Mark Teixeira New York Yankees $22,500,000 9.45% -0.65% -0.2 ($112,500,000)
Tim Lincecum San Francisco Giants $22,000,000 15.19% -2.14% 1.6 $13,750,000
Vernon Wells New York Yankees $21,000,000 8.82% -0.65% -0.8 ($26,250,000)
Miguel Cabrera Detroit Tigers $21,000,000 13.55% 13.85% 7.6 $2,763,158
Adrian Gonzalez Los Angeles Dodgers $21,000,000 9.19% 9.09% 2.8 $7,500,000
Carl Crawford Los Angeles Dodgers $20,000,000 8.75% 3.86% 2.9 $6,896,552
Barry Zito San Francisco Giants $20,000,000 13.81% -9.29% -0.6 ($33,333,333)
Matt Kemp Los Angeles Dodgers $20,000,000 8.75% 1.14% -0.4 ($50,000,000)
Roy Halladay Philadelphia Phillies $20,000,000 11.84% -5.00% -0.8 ($25,000,000)
Ryan Howard Philadelphia Phillies $20,000,000 11.84% 3.33% 0.4 $50,000,000
Matt Cain San Francisco Giants $20,000,000 13.81% 1.79% 1.3 $15,384,615
Justin Verlander Detroit Tigers $20,000,000 12.90% 8.85% 5.2 $3,846,154
$395,000,000 34.7 $11,383,285.30

wpDiscuz