In Which the Yankees Didn’t Offer the Biggest Contract

MLB Trade Rumors, which always does an excellent job of rounding up all the tweets and missives from the real baseball reporters (and Jon Heyman), had this to say about all the various offers Cliff Lee fielded before surprising the world by choosing Philadelphia:

Crasnick hears the Yankees offered a deal that guaranteed Lee $132MM over six years, plus a $16MM player option for a seventh year (Twitter link).  At $148MM guaranteed, that was the highest bid.  The Rangers offered $138MM over six years, and their proposal included a vesting option that could have brought the value of the deal to $161MM, according to Yahoo's Tim Brown (Twitter links).  That offer included huge deferrals, tweets SI's Jon Heyman.

So let's dispel the Altruistic Lee Chooses Loyalty Over Money myth. Technically, Lee actually took the offer that will make him the most money over the next five years. The five-year, $120 million deal he accepted from Philadelphia is worth $24 million per year, more than either the Yankees or Rangers offered. Plus, he has a vesting option for a sixth year that brings the overall value to six years, $147.5 million, or $24.58 million per year.

But that paragraph indicates something else interesting, even though it states the opposite: The Yankees didn't offer the largest contract, not by AAV and not by total value:



Contract value (no options)

  • Philly: 5 years, $120M ($24M per year)
  • Texas: 6 years, $138M ($23M per year)
  • Yanks: 6 years, $132M ($22M per year)

Contract value (with options)

  • Philly: 6 years, $147.5M ($24.6M per year)
  • Texas: 7 years, $161M ($23M per year)
  • Yanks: 7 years, $148M ($21.1M per year)

Firstly, if Lee is even moderately effective as a starting pitcher after six years, he'll only need to make $13.5 million per year on his next contract to match what he would have received from Texas. Safe to say that by 2017, the cost of a win will be considerably more than the current $5 million — a price at which league-average starters are easily worth $10-$12M per year. And, of course, he would only need to make minimum wage in 2017 to equal the Yankees' offer. Which brings me to the actual point of this post:

Sure, the seventh year on the Yanks' offer was a player option, and Lee would almost certainly have taken it (but not necessarily; there are examples of pitchers — Keith Foulke comes to mind — suffering career-ending injuries and declining to show up for the next year's spring training, thus voiding their contract out of a sense of honor and fairness), but I think this serves as an instructive example that just because everyone thinks the Yankees can blow all other bidders out of the water doesn't mean they actually will — and it certainly doesn't mean the player will feel obligated to take it, even if they do.

15 comments… add one

  • Interesting, but I do have an issue with the idea that he didn’t turn money away. He did. In terms of guaranteed income, he didn’t take the biggest offer.
    On the other hand, do you think we will hear a lot from Yankee fans or the media about how their team doesn’t go the extra mile to acquire players they need (Bobby Abreu and the Red Sox, anyone?)?
    Seems like Cashman was fighting an uphill battle on two fronts here: Lee doesn’t appear to have wanted to play in NY, for one, and he (or Hal and Hank) may have had a set limit above which they wouldn’t go, for two. Good for them on #2, in my opinion.
    I wonder if this was Philly’s plan all along. I am so curious about how this signing really went down. My hunch is that if Lee always wanted Philly, then the Philly front office had to have an idea they should prepare to make an offer or got a call from Lee’s agent saying “you guys are actually still in this”, even late. The “mystery team” narrative makes it sound like they came back to the table at the end and blew Lee away, but the story leads me to believe that Lee reached out to the Phillies and did what he said he wouldn’t do with Texas: tell the team what he wanted. Lee’s agent said “that isn’t the way it is done”, but my gut tells me this is exactly how it got done with Philadelphia.

    SF December 14, 2010, 10:14 am
  • I do think it’s funny that whenever a team makes a signing no one expected, the sportswriters invariably use the phrase “swooped in.”
    The Sox “swooped in” to sign Carl Crawford, even though they scouted him extensively in 2010, had him at the top of their list and met him and his agent personally before the winter meetings.
    The Yankees “swooped in” to sign Mark Teixeira, even though they sent him a promotional video the minute he became a free agent and he himself said he’d chosen the Yankees near the beginning of the offseason.
    The Phillies “swooped in” to sign Cliff Lee, even though we have no idea how long he’d had the Phils’ offer in hand.
    Just because it doesn’t get leaked to the press doesn’t mean the signing was a surprise, or even a quickly moving process, to the parties involved.
    On the other hand, do you think we will hear a lot from Yankee fans or the media about how their team doesn’t go the extra mile to acquire players they need (Bobby Abreu and the Red Sox, anyone?)?
    No, because Yankee fans/media don’t have/feed a ridiculous inferiority complex that still obsesses over a team that has fewer world championships this century than they do.

    Paul SF December 14, 2010, 10:21 am
  • I dont think its necessarily correct to say that the Rangers offered more total money since a good chunk of the money appears to be deferred which greatly lowers the value in todays dollars. Secondly, the 7th year that pushes the apparently value over the yankees 7th year was a vesting option so not guaranteed. Its all kind of academic anyhow, but the Yankees did indeed offer the most guaranteed money in current dollars.

    sam-YF December 14, 2010, 10:52 am
  • Yeah, I can see that. Mostly, it was surprising to me that it was close enough to be parsed in all these different ways. I fully expected the Yankees to have the guaranteed seven years at the highest AAV. As it turns out, it was much more complicated than that.

    Paul SF December 14, 2010, 11:07 am
  • “Mostly, it was surprising to me that it was close enough to be parsed in all these different ways. ”
    I guess that throws out your previous thesis about how the Yankees FO operates. They obviously had a price they valued Lee at and stuck to it despite being given the last chance to raise it.

    sam-YF December 14, 2010, 11:20 am
  • I guess that throws out your previous thesis about how the Yankees FO operates.
    Indeed it does. Mea culpa.

    Paul SF December 14, 2010, 11:25 am
  • I guess that throws out your previous thesis about how the Yankees FO operates. They obviously had a price they valued Lee at and stuck to it despite being given the last chance to raise it.
    There is also the possibility that Cliff Lee never had any intention of going to the Yankees. That he wanted to go to Philadelphia as long as there was a reasonably lucrative offer on the table, and that the Yankees were his leverage. And Cashman, as of a couple of days ago, when he started asserting that the Yankees weren’t desperate and seemed to detach from the fray a bit, knew that they were being strung along.
    It could be a little of both, too – sticking to a price with some knowledge that it didn’t matter.

    SF December 14, 2010, 11:48 am
  • “a good chunk of money appears to be deferred which greatly lowers the value in today’s dollars”
    With interest rates as low as they are today, and appear to be for the foreseeable future, this is not as much the case anymore. The 10 year risk free rate sits under three percent. 23 million in ten years is worth more than 17 million today at those rates. I would imagine deferred money is much less of an issue this winter than it would have been 5 years ago

    Christopher Robert Matthews December 14, 2010, 11:50 am
  • Thats all good and true, Christopher, but its impossible to say what the rates will be 25 years out which is likely (judging from other deferments) is where the payments would have been made.

    sam-YF December 14, 2010, 11:56 am
  • Definitely, it would depend on the details. I haven’t looked very closely at the terms of deferred contracts in baseball, so if you’re correct about a 25 year horizon that would make a big difference.

    Christopher Robert Matthews December 14, 2010, 12:08 pm
  • Sometimes there are details we don’t know about, too – this from a SoSH thread on the Lee signing. Sources not fully attributable disclaimer:
    Maybe this has been discussed here already but I didn’t know this until today: Lee has a son who is in remission from childhood leukemia. The son, Jaxon, was initially given just a 30% chance for survival. While Lee was playing in Philly, his son was treated at Children’s Hospital of Philadelphia, a bone marrow match was found, and the leukemia went into remission. The son is now apparently doing well.
    While I can’t vouch for this myself, a doctor friend emails: “Children’s Hospital of Philadelphia has the most advanced, most well-funded, and most prestigious childhood leukemia program in the world.”

    SF December 14, 2010, 6:05 pm
  • As someone who works at Sloan Kettering, this is a touching story and could indeed explain part of his affinity to towards the city of brotherly love. That said, my institution has a world class program for childhood leukemia as well.

    sam-YF December 14, 2010, 6:09 pm
  • Not just his affinity, sam, but also a desire to be near that hospital should his son’s Leukemia come out of remission. We fans jump to such conclusions, it is easy to do, but sometimes there might be more to the story than we know. JD Drew’s son faced some terrible health issues during Drew’s first season in Boston that would have destroyed almost anyone’s focus, yet Drew never said a word, all while the Boston fans went after him not knowing that something extracurricular might have been at work.

    SF December 14, 2010, 6:13 pm
  • Yes indeed SF, I totally understand. Im saying that helps provide a positive association for that city for him.
    Regardless, Its not like Philly is that far away from New York and New York doesnt have a world class cancer center. Meanwhile, Texas has MD Anderson which is also world class. Regardless the reason, he feels most comfortable in Philly and Im grateful he didnt come to NY if he was gonna be uncomfortable here.

    sam-YF December 14, 2010, 6:20 pm
  • Actually, the $147.5 number is incorrect. The 5-yr/120 number includes a $12.5 million buyout of the option.
    Year 1: $11
    Year 2: $21.5 (32.5)
    Year 3: $25 (57.5)
    Year 4: $25 (82.5)
    Year 5: $25 (107.5)
    Year 6: $12.5 buyout (120) or $27.5 (135)

    Sycro December 15, 2010, 11:16 am

Leave a Comment

Next post:

Previous post: