Who are the Contenders in the Hunt for Vlad (Part 2-3)
When You Fail to Plan, You Plan to Fail
As shown in my premium article on the Giants budget situation - Giant's Post-Bonds Era Preparation: The Lowdown - the Giants are looking at salaries near full budget of $80M - assuming no revenue gains - for the next three years. As player contracts ends, the savings in salaries are more than offset by the salary gains that the remaining players will earn as raises. Adding a superstar player would require the Giants ownership and management to accept larger losses than that which they had planned for before. Looking at adding $10-20M per year would result in losses of $10-20M, or more if the Giants do not make the playoffs and get the additional profits. It's doubtful the ownership will go for such a large potential deficit at first glance and it appears unlikely that the Giants will sign Barry's successor soon.
However, the Giants ownership has another rather large incentive to obtain Barry Bonds successor: they still owe the $20M annual payments on their construction loan for another 16 years or so. Lack of a winning team will be death to attendance and associated revenues, which will affect their ability to pay the annual loan payment. The Giants need to keep the revenues generated at a high rate because team success on the field begets revenue success and team losses beget revenue losses. Team success on the field, therefore, is paramount to paying off the loan. So perhaps the owners should think about the controlled losses of this scenario or else they risk the uncontrolled spiraling losses that could occur if the Giants start losing again.
The Giants have been built to revolve around a superstar player and Barry's reign as that player is coming to an end within a few years. How better to transition from one player in the mold of Willie Mays with another player who has been putting up numbers comparable to Willie Mays, as Vlad has done so far, according to the similarity score provided on baseball-reference.com. The Giants, whether Vlad or another player is obtained to be the next star, needs to start planning for the end of Barry Bonds as a premier player.
How Low Can Vlad Go? How the Giants Can Afford Vlad
The only way the Giants can afford Vlad is if he is willing to backload his salary to after Bonds' huge contract is over or actually gives a discount to the Giants or both. I have no way of guessing how much of a discount he may be willing to give so I will have to assume that the Giants will have to hope to get him to accept back loading. However, since he is financially comfortable already with relatively simple wants or needs, he should have no problem with backloading, say, $5M per year at the beginning of the contract to the end when Bonds' contract has ended.
Another option that has been used before is deferring money from the contract to a later date, but I don't believe that works as well anymore. I do not know how the previous Collective Bargaining Agreement looked like before, but the current one signed just last year requires teams to put aside enough money to cover that deferred payment within one and a half years after the year of the deferment. For you financial types, the net present value of the deferred amount, minus a token $2M, must be set aside by the team to cover that liability by the second July 1st after the deferment season. Especially with interest rates at record lows, the amount actually deferred will be relatively small. Backloading is the way to go.
One reason he should not be adverse to backloading is that he has not made any efforts towards obtaining endorsements. If he was interested in getting the extra million of dollars available, he would have gone out and gotten them by now. However, numerous articles have noted that Vlad avoids endorsements because he is not interested in the fame that comes along with it. Other articles which highlight his life notes the simplicity he craves and the normality that he strives for, though he is not totally ascetic: he does own and drive a large SUV truck.
To get an idea of what he is passing up, we should examine deals made by baseball players as other sports have much higher deals, with LeBron James as exhibit A. Alex Rodriguez in 2001 got a $10M deal for three years with Radio Shack. Ichiro's agent has claimed to pass up a lot of deals but he is unique in that he can be marketed to great value in Japan. Sammy Sosa is the best comparison because he is a fellow Dominican with similar skills, though obviously more media friendly. He has been making somewhere in the range of $5-10M per year in his endorsement deals. So Vlad, being younger and/or not as famous as these other players, would probably be looking at $1-5M per year if he were to pursue them. And yet he passes on them.
How Much For That Superstar in the Window?
First off, what's a fair market value for Vlad? Obviously, Alex Rodriguez's contract looks to be an "only in a bubble economy" deal (or "only an dumb owner" deal). Ken Griffey, Jr. gave a steep home discount in order to sign with the Reds so maybe Vlad can do that as well. The best way to judge what Vlad is worth is to examine how much other star players in his skill and age range has received over the past few years and, in particular, last year since it appears that salaries took a hit last year.
To ease the analysis, I looked on Baseball-reference.com for Vladimir Guerrero's statistics webpage. On it, they use Bill James similarity methodology to find batters most similar to Vlad by current data and by current age. I compiled the names for players from today most similar to him (tellingly, he has only one player in the 900's whereas other players have a lot more in the 900's, showing the uniqueness of his performance so far; as noted before, Willie Mays stats is the most similar to Vlad's for ages 23 to 26) and examined their current contracts.
The players are Brian Giles, Todd Helton, Magglio Ordonez, Bobby Abreu, and Andruw Jones. Among the players most similar to him statistically, by age, Ken Griffey, Jr., was among the top 10 in similarity score. For these six players, the average contract size was $79M with an average annual salary of $12M. By year, the contract starts out at an average around $10.5M and goes up about $1M per year across the life of the contracts, from 2004 on.
For the six players, how similar are they to Vlad?
Overall, Vlad is better than any of these players, except Griffey Jr., at almost all the totalled categories, except for walks. For the averages, his relative lack of walks hurt his OBP and, as a result, his OPS is about the same as most of them except Andruw Jones and and Bobby Abreu, who are much lower. Consequently, Vlad is better than the group as a whole and should be paid more than they have received. This would suggest a contract in the $13+M average per year contract.
I also compiled from the MLB contract website all the large contracts that have been signed and are still valid. Almost any way I cut it, the average is around $11-15M and $50-80M in total contract value. The youngsters who are in their late 20's and getting contracts are getting similar amounts as well. Mainly it is the elite, experienced players like Sosa, Bonds, Randy Johnson, and Greg Maddux who got contracts with annual salaries at about $15M and over per year. The younger players have a lower average because they start out with lower salaries which increase to be in the range of the elite players.
However, last off season was a downer for contract size. We may have to adjust the above numbers for any market shift downward in price. The big winner last year was Jim Thome, signing a six year $85M contract last off -season with the Phillies, averaging $14.2M per year. Scott Rolen re-signed with the Cardinal's for an average of $11.3M per year, to take second among the hitters. Greg Maddux got $14.8M from the Braves and Randy Johnson got $16.5M from the Diamondbacks to lead the pitchers. The top 3 in average annual amount fell from $17.7M to $15.1M, a drop of 15% after a drop of 17% the year before.
Scott Rolen, out this group, is the closest to Vlad in abilities and age range. He even counts Andruw Jones as one of players most similar to him. For comparison:
Scott Rolen has 164 HR, 603 RBI, 74 SB, 446 BB, .281/.372/.508/.880
Vlad, again, does better except for walks but is better in all the averages. Scott Rolen got a contract for 8 years and $90M for an average of $11.3M per year.
I'll Take One Vlad To Go, Please; What's the Final Cost?
So overall, it looks like Vlad should get a contract worth around $13M average on the open market. If the market conditions from the past two years continue, he may be looking at a drop of about 10% to $12M average. Plus any discount he may be willing to give for a situation that would be enjoyable and comfortable. For a contract length of 6 to 8 years, that could range anywhere from a $72M to $104M contract size.
I believe a contract like this would work for Vlad and the Giants and includes no discount: 2004 and 2005, $8M; 2006, $10M; 2007, $12M; 2008, $13M; 2009, $14M; 2010, $15M, 2011, $16M. That would amount to $96M over 8 years for $12M average. That is still more than Scott Rolen got but includes a slight drop in salary to reflect the down trend over the past two off-seasons.
If he wants to give a slight discount, take $1M off per year, and for a full home discount like Griffey Jr. gave of around 25 percent, $3M off per year. With that type of discount, the Giants may be able to afford to keep Aurilia or Santiago (or perhaps both if Aurilia is facing a Jose Hernandez-type market) in 2004. I would imagine he would be willing but who knows what would happen when push gets to shove.
In addition, the starting salary with this contract is only $2.5M less than what other comparable players got (the $10.5M noted above) over the past couple of years, not including any further salary erosion this year as it has the past two off-season and the economy not looking so good now. This is about what he is giving up in endorsements. So he is not backloading that much to the end of the contract in his first couple of years.
A contract backloaded like this would require the Giants to move out of their comfort zone however. Like the 49er's with their salary cap driven decisions, the Giants are going to be right around their $80M 2003 budget target for the next three seasons, barring any trades, and assuming that they fill their roster internally with MLB minimum players or cheap $500K veterans. Vlad would be added on top of that.
With the poor economy, especially for advertisement, and the twindling novelty of Pac Bell Park reducing attendance (down 4.3 percent this year on average), offsetting possible ticket price raises, revenues look to be static, at best, over the next few years. As a result, worse case scenario being no playoff profits, the Giants could be looking at potential losses of $15M in each of the next three seasons in order to get their hands on Vlad, assuming the contract proposed above, which is not much relative to what they were risking before ($10M losses). With the increase in value of the ballclub and low interest rates, they can get a loan each year to cover any losses so that additional money does not have to invest into the club by investors.
It Ain't My Money: Back Breaking News
Complicating the situation, recently, Vlad was placed on the 15 day disabled list with a herniated disc in his back. This may reduce demand for his services, as some teams may be afraid that this may be recurring. And so it would hurt his free agent value. Last year many teams shied away from Edgardo Alfonzo because of his back troubles, or didn't offer as much money or years.
At the moment, he is undergoing physical therapy and injections in hopes of alleviating the condition. There have been reports that he may have a condition that may require surgery. But it is all too early to speculate as the doctors don't really know what's happening with his disc. According to what I've read on herniated discs, most are cured with rest. We will just have to wait and see for now. But assuming everything is relatively OK - meaning no surgery now but potentially a bad back in the future - should the Giants do it?
Yes, Yes, Yes!!!
The fact of the matter is that the Giants are salary tied for the next three years unless they trade someone but then they will be a weakened ballclub. That would just be moving your finger from one hole in the dike to another hole; there will still be a hole unfilled. Signing Vlad to a contract as outlined above would not stretch the budget much. Trading for or signing any other superstar player will put the risk for losses sky-high, in the $20-25M range. In addition, there are no other superstar outfielders out on the market next year.
If we don't get Vlad, what are the Giants options? Well, if we don't get Vlad, we'll have $8M to play with, assuming the team stretches the budget. However, the free agent market is very weak next season plus you can't expect to get a great player for $8M. So where are the Giant's holes?
Well, we probably lost Santiago, but Torrealba appears to be ready to play and, more importantly, hit at the major league level; he was a defensive whiz, no bat, in the minors. So only a small drop in performance there. We lost Aurilia and we just have to suck it up and accept that Neifi is the starting shortstop. We may have a Snow/Galarraga platoon, assuming Snow accepts a $500K contract like Galarraga's, but he's been such a professional that I feel that Snow deep down feels that he owes the Giants for his poor performance the past two years and would sign cheap to make good. He still kills righties and the Big Cat kills lefties; a match made in heaven.
True, we will probably be weak in relief because of the loss of Worrell. So maybe we can sign a reliever. However, as far as I could recall, Sabean has never (or perhaps rarely) signed any pitcher to a long term contract without first "kicking the tires" by obtaining him first, so that's doubtful. So Worrell would be the only option available and he will probably want closer money, $4-5M, now that he has shown that he can be a closer plus there should be some teams looking at him as well so he has options as well. So if we get him then all we would be able to afford is a journeyman outfielder to round out the starters.
The best outfielder will probably be Jose Cruz Jr. (Juan Gonzalez appears to be the best of the bunch right now but, ugh, NO!) and since he has cooled off, he might be willing to keep his $4M option instead of testing the market. However, with the weak supply of young skilled free agent outfielders, he would probably want to test the waters and get $4-5M instead. Or we could pick up a better first baseman - McGriff, Rafael Palmeiro top the list of free agents but Rafael is probably out of their range - and start a rookie outfielder instead.
Trading is another option but getting a good outfielder or first baseman would require trading Williams and a number of prospects, including Linden or Ellison, leaving our long relief pitcher to be Brower or Jensen and taking away one of our cheap options in the outfield. That would screw up our pitching and force another trade to get pitching. As noted above, trading just opens holes in other areas, if you are getting a real solution at another position. To get value, you must give value.
No matter how you look at it, the Giants don't have a lot of options available to them this offseason. Which would you rather have in 2004:
And this is all assuming that the Giants would be willing to stretch the budget in order to get an addition journeyman player with the other player above, which I doubt, whereas stretching to get Vlad is another thing.
I would vote for Vlad as that would give our team the best chance to win out of these options as he would add the most out of these choices. There are tough choices that need to be made but the Giant's strength in their farm system is their pitching. At some point, you will need to rely on them to mature and contribute - at low cost - because, frankly, the Giants cannot afford to pay for even a Mike Remlinger ($3M per year), even in trade.
The Giants will be scraping by, budget-wise, for the next three years and won't be able to afford to get a superstar in that timeframe without risking large losses. Getting a Vlad, however, will supercharge the offense. Signing Cruz or McGriff would not, as they would be same old, same old, offense-wise.
"What about his back?" some of you will say. If there is that much concern over his back, such that the Giants are concerned enough not to offer a long term contract, most teams will also balk at giving him a long term contract. Then the Giants can give him a more modest contract, laden with performance measures that would vest future options.
What have we got to lose because the other options won't add that much to our team, or as much as Vlad could? We need to take this risk because we have no other great choices for significantly improving the team. All the other options are basically reruns of what we already got.
Again, he is not a money-grubbing player. He would take such a contract if no one else is interested. That's where the Giants would have even a greater advantage and alure for him because, if he is having physical problems, he would especially want to be with someone he is comfortable with and the Giants have Alou and Pujols.
Staying in Montreal would not be an option because he wouldn't know where he would be playing in the future. He just wants to play ball where he can be comfortable and not be bothered by the trappings of fame. He can do all that here with the Giants.
Martin Lee writes 'A Biased Giant's Fan's View' for SFDugout.com when the mood and muse strikes him. He has been a Giants fanatic since 1971 when he got his first glove from his dad (a catchers mitt that his dad immediately had to return for an outfielders mitt). He will believe to his dying days that Bobby Bonds was robbed of being the first 40-40 player. He is GoGiants on the Giants discussion board. His e-mail is GoGiants_25@yahoo.com if you would like to reach him.