Assessing George Springer’s Contract Situation

As many should know by now, George Springer is a highly touted and talented player, a huge part of the Houston Astros’ future. He has been on the brink of 40 home runs and 40 steals in both 2012 and 2013, shown that he could maintain his offensive output through each level of the minor leagues, and plays a premium position (center field) at an above average level; if he were to fix strike out issues, Springer would be seen as a top-10 outfielder in the American League coming into 2014.

Given the rules surrounding service time in the majors and the rapidly ascending price tags for premier talent, the Astros would have been perfect content with keeping Springer in Triple-A Oklahoma City to begin the season. Springer was with the major league team for Spring Training and in 31 at-bats was not terribly successful with only a .161 BA, but with much improved strikeout to walk ratio of 11 strikeouts to 8 walks; this should have firmly signaled a demotion to Oklahoma City. The Astros, though, tried to change it up a bit and offered Springer the richest contract for a player with his experience, a 7 year/$23 million contract.

Springer’s representatives countered that the 3 years of arbitration that the Astros were buying out were worth more than the $7.6 million per year that were essentially to be bought out, rebutting that he would be worth closer to $10 million in arbitration. Springer’s declining of the Astros offer sent him back to minor league camp and he will now come to Houston sometime this summer when he is able to move his arbitration clock forward. There are a few questions that arise from this valuation of Springer and also Springer’s decision to not accept the offer.

The most rudimentary, yet essential, aspect to look at in regards to Springer is what the Astros valued George Springer as for the last 3 years of his contract. For better or worse, the contract that the Astros offered was geared towards buying his arbitration so it is not fair to value this contract at $3.3 million a year because it is a ridiculous premise that the Astros assumed he was worth that money now. In fact, arguably the best player in baseball, Mike Trout, was only valued at $1 million a year pre-arbitration and it is a difficult argument to make that Springer is worth more than 3 times of Trout.

That being as it is, this contract should fairly be valued at $7.6 million for the 28-30 year old seasons for Springer. To assess what Springer’s price tag would buy the Astros on the open market, a thorough analysis of trends of free agent outfield salaries from 2006-2013 needed to be conducted. This analysis looked at all outfielders that were signed for $6-$10 million per season. A quick analysis of the data shows that a 34 year old outfielder with a 2.5 WAR would get roughly the same amount of money on the open market as Springer would have received in the proposed extension. Furthermore, out of the 24 player sample, only Cody Ross and Coco Crisp have been better since they signed for a similar amount as what was offered to Springer and each was over the past two seasons so there is very little of an inflation factor.

There are a lot of outside factors and reasons why these players received the amount of money that they did and there is also the fact that $23 million would represent the most money given to a player with minimal experience, Evan Longoria received $17.5 million in 2008; a lot of the liability of this deal was in the hands of the Astros, as Springer is more of an unknown than a proven commodity. The Astros are at a position with their franchise where they would take this liability; Houston is one of the strongest markets in the US, there is a new ownership group in place that has shown a willingness to spend, and by 2017 the team expects to contend. To take it a step further, the team is almost willing to take nearly a $10 million financial hit, assuming that the team is not successful on the field for the 2014-2016 seasons, just to be able to save that money for 2017 and 2018.

The final point may be where Springer’s agents had flawed logic; they are looking at the best wishes of their client as well they should, but in fact this may be a good deal for Springer. The Astros have shown that they are building for the future and are not going to spend money to be decent — there are many that see the Astros as tanking but really they are looking at their present day weaknesses and making them future strengths — so the team spending $10 million on a prospect while the team is still developing should be taken as a huge victory. Springer’s agents are right in assuming that he is going to lose money in arbitration and, if he did sign that contract, he would have been a free agent at 30 years old which is outside of his athletic prime of 27 years old.

This may be outside of his athletic prime, but definitely not outside of his financial prime. Since 2000, fourteen outfielders have earned in excess of $17 million over at least five years of a contract. ¬†Assuming that Springer produced about 4.5 WAR per year from 2014-2018, a common projection for Springer, he could earn $21 million per season in the open market according to the averages set by those player’s contracts. ¬†There are tremendous issues in that valuation of Springer, namely a shift in the market and a regression in Springer’s talents, but judging by recent trends, Springer would still be very well on his way to being one of the wealthiest outfielders in baseball history.

This contract is an outlier and was a fantastic idea for the Astros in attempting to fund their future and assure that Springer was a well paid player for his production. The Astros knew that Springer would outplay that contract and may very well have had provisions in the contract for enhanced performance, but at the onset, all of the liability was on Houston. There is very little reason why Springer needed to be on the 2014 Astros and the team’s financial shrewdness and outstanding player development are main reasons why pundits predict a bright future for the team; Springer was offered this contract as a statement towards the future and it may be short-sighted for Springer to have declined this fair offer. As seen with the case of Longoria, players that outgrow their contracts are usually paid handsomely by their parent teams. By signing this deal, Springer would have opened the pipelines for better negotiations between himself and the team. Declining the deal may be good for Springer in the short term but may be a major blow for negotiating a massive extension for the future.



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SS90
Member
Member
SS90

It is a 7 year deal though… The deal covers 3 pre-arb years, 3 arb years, and one year of free agency. So right off the bat this analysis is off.

Then it is not fair to value each of the years the same, neither on a 7 year look or 3 (should be 4) year look. They wont be paying $3.3 a year nor would they pay 7.6 a year, even hypothetically, in the last few years.

The deal would look something along the lines of:
Pre-Arb: $0.5
Pre-Arb: $0.5
Pre-Arb: $0.5
Arb 1: $3.0
Arb 2: $4.5
Arb 3: $6.0
FA: $8.0
Total: $23.0

These are just the number I chose that make the total work. The Astros would be getting a remarkable discount at these numbers. For perspective, Jon Jay got $3.1 as a first time eligible this season. Taking this offer would be a huge bet against himself and his future success.

maguro
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maguro

I think that Houston’s offer was a reasonable one, considering that you have to price in the very real risk that Springer is a complete bust.

I also understand why he rejected it – he’s confident in his own abilities and thinks he’ll do better going year to year. We will see whether that was a good decision on his part.

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