Evan Longoria leaves it on the table

J. Meric

Why did Longoria decide to sign another team-friendly contract? There are a host of reasons why.

It doesn't take a general manager's brain to see that the deal Evan Longoria signed on Monday, keeping him in a Rays uniform for at least the next 10 seasons, was a good one for the team. The contract adds six years at an average annual value of $16.7 million. According to Cot's Contracts, that's not in the top 47 in AAV terms, and it's tied for 34th in total value terms. It's plenty of money to you or me, but it's nowhere near what superstars who hit the open market are getting, and it's a lot less than you'd expect to have to pay for the age 31-36 seasons of a guy who, at age 26, is probably one of the five best position players in baseball.

The deal is even better for the Rays than it looks (and "worse" for Longoria, if you can say such a thing about a guy who just guaranteed himself a huge sum of money) because none of that money gets paid until at least four years from now. The Rays are set to benefit from something you've probably at least heard of called the time value of money: in the simplest possible terms, a dollar is worth more today than it will be tomorrow, both because of inflation and because if I had that dollar today, I could invest it and earn some fraction of a penny in interest on it. Equivalently, if I promise you a dollar a year from today, that future dollar is worth less than the dollar in my pocket is today.

Conservatively (and to toe the sabermetric line), we can assume a five percent annual discount rate, or we could be a bit more aggressive and assume a rate of seven percent, which is about the annual return the S&P 500 has been getting lately. Heck, let's do both! Here are two looks at what Longoria's contract might ultimately be worth in current dollars (note that I added his signing bonus into year one, and his 2023 buyout into the final year):

Year

Age

Nominal

5%

7%

2017

31

14

11.5

10.7

2018

32

13.5

10.6

9.6

2019

33

14.5

10.8

9.7

2020

34

15

10.7

9.3

2021

35

18.5

12.5

10.8

2022

36

24.5

15.8

13.3

Total

100

71.9

63.4

Well. That makes a pretty big difference, huh? In today's dollars, what the Rays essentially agreed to do was to pay Evan Longoria, for his age-35 season, less than the Phillies will pay Jonathan Papelbon for each one of the next three seasons. Anything can happen between now and 2017, but whatever the universe of possibilities looks like for Longoria, the median of his production over those six years has to be worth much, much more than that.

It's obvious why Longoria (and his agent, Paul Cohen) would agree to take that kind of theoretical pay cut. Unlikely as it seems right now, there are plenty of scenarios under which Longoria falls well short of earning that kind of contract four to ten years from now. There's the Andruw Jones plan: awesome at 29, bad at 30, bottom fell out at 31, and that was his last big payday. There's the Nomar Garciaparra diet: brilliant at 26, good at 28 and 29, averaged 84 games played and a 102 OPS+ over his final six years on one- and two-year deals. There's the most obvious comp (of the painful ones), Eric Chavez; we won't talk about that one (hits way too close to home here). If Longoria were to wait out those three option years and reach free agency and any of those scenarios were to take place, He'd stand to lose, what, $80 million? $90 million? In the worst case, certainly -- an injury ending his career before all options were picked up -- he could lose more than $100 million.

So, getting to free agency would be a gamble for Longoria. The odds seem heavily in his favor, with an expected payout much bigger than he ultimately settled for, but with a nonzero chance at going home (comparatively) empty-handed.

In that light, I think that many or most of us would do what Longoria did, taking a guaranteed $100 million rather than take a chance at much more that might end disastrously. The utility of money above $100 million has to be close to zero, or get there very quickly, so why try for more than that in the face of any chance to lose it all (or most of it)?

Yet, players don't think that way. There are other very-long-term extensions, but they've either paid the player very near the top-of-the-market rate at the time the deal was signed (Troy Tulowitzki), or involved a player with a lower established value and more troubling injury history (Ryan Zimmerman). No one, as far as I can tell, has taken a hit to his likely future worth like this in exchange for some (admittedly, a great deal of) security. Considered alongside his similarly risk-avoiding 2008 contract, I think it's clear that Longoria is the most risk-averse athlete in baseball, and maybe in all of professional sports.

Why don't we see more players follow the same sort of plan? I can think of a few potential reasons:

  1. Longoria just loves Tampa Bay that much. We can always take Longoria at his word. He told reporters on Monday that the opportunity to stay with the Rays was "the perfect situation" for him, and that "[t]his is the place that I want to be." And why not? Many of us could probably make a bit more money if we packed up our families and livelihoods and moved to some other town/state/province; the fact that it's on a different scale from the one where most of us reside doesn't mean it's not a similar balance. We know from experience that most athletes aren't motivated to stay put through anything but money (and the MLBPA hopes like hell they never will be), but that doesn't mean Longoria can't be one of the few.
  1. He's in a pretty sweet, and unique, spot. Not totally unrelated to point one: Longoria just turned 27, and is already arguably the franchise's greatest player. He's a bit less than five wins behind Carl Crawford in Baseball-Reference's version of Wins Above Replacement, but in just over half as many plate appearances. He won the Rays' first major award and led them to their first three playoff appearances. Even if he never leads them to a championship, even if he's merely pretty good for most of the next ten years, that puts him on a king-of-central-Florida kind of track. We'd all love to be remembered, but that has real benefits, too, in post-career business opportunities and the like. Even most superstars don't have that kind of opportunity. Alex Rodriguez wouldn't have had it in Seattle, with memories of Griffey, Edgar and The Unit so fresh. David Price won't have it, with Longoria around. Many players get traded before they get the chance to decide whether they want it. Albert Pujols certainly could've had it, but hey, the big-fish-in-not-quite-the-biggest-pond thing isn't for everybody. It might just be for Longoria.
  1. He might be more of a risk than we'd all like to think. After two exceptionally durable full seasons in the big leagues, Longoria missed nearly 30 games in 2011 and more than half of 2012. He's playing a position that sometimes seems to wear players down rather quickly. There's that Eric Chavez comp I told you I wasn't going to get into. Longoria was as brilliant as ever last September, and while he had a minor surgical procedure last week, there's plenty of reason to think he'll go on being one of the best in baseball for years to come. But sitting out for more than three months has to worry a 26-year-old a bit, and maybe he sees a reason to want to take what he can now.
  1. Other teams may not be willing to do these deals. The Rays, as you no doubt know, are kind of pioneers in the field of signing long, cheap contracts at unexpected times. It's worked brilliantly for them so far, but other teams haven't been quick to follow their lead. Those teams, as a general rule, can afford expensive contracts better than the Rays can, so they may not have the same incentive to avoid getting to that point. The Rays are taking on a good deal of risk, after all -- in that worst-case scenario, they're out more than $100 million to no purpose. As unlikely as that sort of total failure is, it does represent a real risk, and one other teams may find no cause to take if they'll be willing to shell out whatever it takes to keep (or replace) him later, when it proves warranted. It seems unlikely to us, what with the near-unanimous praise for the Rays in this deal and everything, but it's possible that many more superstars would exchange likely earnings for security in this way, but their teams have no interest in letting them.
  1. He may really just be that afraid of risk. Two is enough to form a pattern, right? Because Longoria has leapt at the guarantee over the more attractive strong-likelihood twice now. I like to play a little blackjack now and then, but my wife can't stand it herself; whether we can afford it or not, even if she knows she's likely to win, just the fact of having any money out there at risk is unpalatable. Maybe Longoria's like that. Some people are, so some athletes probably are, right?
  1. Other athletes may not be wired that way. You don't have to look hard to find examples of professional athletes not quite knowing how to manage their money. (Google something like "Torii Hunter inflatable furniture" without the quotes for one funny/sad example.) I don't mean it as a slight against any one athlete or a group of them, and I think it's a problem of the environment they're put in and the kind of cash that is suddenly thrown at them...but still, it's a thing. Taking the sure thing appeals to me, I think, because I've had a job and kids to take care of and such; it's not something I'd think would even occur to me if I'd been given seven figures out of high school or college.

Whatever the reason, Longoria's more or less one of a kind, for now ... or maybe the Rays are. Whichever it is, Rays fans ought to be (somewhat cautiously) elated to be the beneficiaries.

Thanks to Tommy Bennett for his help on the present-value portion of this piece.

Bill Parker is one of SBN's Designated Columnists and one of the creators of The Platoon Advantage. Follow him at @Bill_TPA.

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