Extensions on Prospects with Standard Contracts

[rcankosy]

Guys,

I would like to formalize the ruling on extending prospects whose bonuses were spread out over future years as part of a standard contract.  We have discussed this topic before, but it has never been fully resolved.  As an example, I would like to use my own Max Stassi.  His contract is $0.5 million (2011).  In all likelihood, he will not have even played a game in the majors, let alone exhausted rookie eligibility, by the end of the 2011 season considering he is currently in A Ball.  My understanding at the time we started free agency was that we would NOT forgo future prospect status if we chose to sign a prospect to a standard contract.  I was told that Stassi would return to a prospect contract once his signing bonus was paid out if he was still prospect eligible (less than 50 games played or 40 IP).  I don't see how such contracts could otherwise work, because there would be NO other logical means of extending them if they have little to no MLB stats by the end of their current deals.  Extending them as prospects makes perfect sense to me, because they are years away from being eligible for arbitration.  I have several of these contracts, and I know I'm not the only one.  I propose that we allow players like Stassi to be extended with prospect contracts when their contract contracts are over.

Roy

[Colby]

Seems fair enough to me... it would fall as a special caveat of extensions where the player is given a prospect contract in the extension.  I believe this should only apply to players whose prospect clock has not started (under 40 GP / 50 IP).

[lp815]

Seems fair enough to me... it would fall as a special caveat of extensions where the player is given a prospect contract in the extension.  I believe this should only apply to players whose prospect clock has not started (under 40 GP / 50 IP).

Hmm...I'm not sure on this...when the GM signs a prospect, he has the option to sign him to a prospect contract right then and there.  The only reason the GM would sign said prospect to a non-prospect contract would be that he doesn't have enough money to give him a bonus to the signing.  In my opinion, that is the GM's decision and risk, and his alone, since he controls all financial aspects of his team, and if he wants to forego a prospect contract, that is his risk. 

This seems like a backdoor way to get a prospect back onto a prospect contract, since the GM didn't have the money before.

So, in theory, a team can land all the prospects he wants, sign them to 2-3 year contracts, then actually GAIN cap back when these contracts are up, simply because they haven't played in the MLB yet.  It just doesn't seem normal that a young player would take a large salary at the start of his career, then be ok with playing for 500k until he starts to play in the majors.

The idea has its positives for all teams, and it would benefit my team surely, but I'm not sure if it's inside the rationale of the league.

[rcankosy]

Jake,

A few points I would like to add:

1.  This is not the first time this has come up.  We were ALL told that we could spread out the bonuses without losing their prospect status at the end of the standard contract prior to FA.  I asked the question on the main page, becasue I knew it would come up later, and the response was that such players revert back to prospect status if they have not exhausted their eligibility.  I'm formalizing the rule now, because apparently this caveat as Colby put it was not noticed by all of the owners.  I'm sure some owners were aware of this and chose to take the one year hit as part of their overall strategy for the future.

2.  The NFL has a hard salary cap, and it allows its teams to spread out rookie bonuses over the life of their contracts.

3.  For those of who do not agree with the above, what do YOU propose as an alternative?  These players will have little to no stats on which to base extensions.  You can't just force owners to throw them back into the FA pool without the option to re-sign them.  Players like Andrew Brackman signed major league deals, and it is no longer unusual for drafted players to sign such deals.  Since the 1990s, there have been multitudes of million dollar bonus babies who have not become stars in the majors.  A lot of them play for minimum salaries for a few years until they are out of the league entirely. 

4.  The rookie draft is coming up, and in my humble opinion it is not fair to force a team that already has finished last in the league to bear the hit of a $7 million bonus.  The league is already stacked against its small market teams, and this caveat would provide them a fighting chance against big market teams with $100-150 million plus payrolls.  I disagree that this caveat is not in the spirit of the league.  I would argue that it is quite the opposite.

Roy

[lp815]

Jake,

A few points I would like to add:

1.  This is not the first time this has come up.  We were ALL told that we could spread out the bonuses without losing their prospect status at the end of the standard contract prior to FA.  I asked the question on the main page, becasue I knew it would come up later, and the response was that such players revert back to prospect status if they have not exhausted their eligibility.  I'm formalizing the rule now, because apparently this caveat as Colby put it was not noticed by all of the owners.  I'm sure some owners were aware of this and chose to take the one year hit as part of their overall strategy for the future.

2.  The NFL has a hard salary cap, and it allows its teams to spread out rookie bonuses over the life of their contracts.

3.  For those of who do not agree with the above, what do YOU propose as an alternative?  These players will have little to no stats on which to base extensions.  You can't just force owners to throw them back into the FA pool without the option to re-sign them.  Players like Andrew Brackman signed major league deals, and it is no longer unusual for drafted players to sign such deals.  Since the 1990s, there have been multitudes of million dollar bonus babies who have not become stars in the majors.  A lot of them play for minimum salaries for a few years until they are out of the league entirely. 

4.  The rookie draft is coming up, and in my humble opinion it is not fair to force a team that already has finished last in the league to bear the hit of a $7 million bonus.  The league is already stacked against its small market teams, and this caveat would provide them a fighting chance against big market teams with $100-150 million plus payrolls.  I disagree that this caveat is not in the spirit of the league.  I would argue that it is quite the opposite.

Roy

1.  I must have oversighted this discussion, or I cannot recollect it.  I'll look through the forum to read about it again.

2.  With respect, this is not the NFL.

3.  I would recommend they be given the minimum contract, or up to two years @ $500k.  However, your proposal and my theory are really no different money wise, it is a matter of player status.  One one hand, your player is listed as a prospect contract, and mine is listed as a MLB contract.

4.  I think we've thought two different things this whole season, at least between you and me.  I've reserved just over $10 million in cap space for the sole reason being that I'd be paying bonuses this year in order keep the players I draft as prospect players...

...I guess my main concern is allowing these players we give MLB contracts to right from the get go receive prospect contracts when their MLB contract is up.  It seems backwards to me as to how the process should work.  Roy, your proposal makes perfect sense, I might be a bit too linear in my thinking.  But I see a player getting a prospect contract, then landing the major league deal, never the opposite.  I have a feeling that we've been planning for the same event in two opposite ways...

[Mr.TradeKing]

I have to side with Jake on this one. I am relatively new here so I am unaware of any prior discussions on this matter. However since you asked what I would propose,

If you sign a prospect to a non-prospect contract and it expires before the "prospect clock" begins, then you should be allowed to resign them to a contract with a 50% increase.

i.e. Yonder Alonso 1mil (2010)* Its now the offseason and my boy Yonder is a potential FA. Inorder to resign him, I would need to sign him to an extension of 1.5mil per year (50% increase) for a max of 5yrs.

*-not actual contract year

Now I'm not on the RC, but I think this would fit into the rules and like Jake said keep them on "non-prospect" contracts.

~MTK

[Dan Wood]

I have to agree with Roy on #4, and I have argued it from the get go. Say the Marlins with a crap payroll, or the Padres had the first overall pick this year (in actuality the Mets do). Bryce Harper obviously #1. The Marlins would have to give up a huge percentage of their payroll in order to pay his bonus. This is counter productive to being competitive. Do you honestly think a GM will hang around year after year waiting on his prospects to finally mature and have a competitive team when the Phillies, Yanks etc will be loaded year after year, because they can afford to go out and sign FAs. Granted this is a discrepancy that exists in the majors, whether by choice (real life Marlins) or by circumstance (real life Padres). IMHO I want a league that gives every team a chance to win year in and year out, through smart moves, good prospecting, not simple luck of having 3 guys have career years at once - (Marlins last year). If a team is terrible, just let them have the pick, take who they want, and have him at a prospect contract. This would be all well and good if this was in fact moneyball, and we can go out and sign Scott Hatteberg and have him accumulate stats for us on the cheap, but we as GMs in this league can only react to what the real MLB presents to us. Case in point, you think a small market team could afford a 10 mil bonus to aaron Hicks(Mets in 2010), or a 10 mil bonus to Justin Smoak(Angels in 2009), or 12 mil to Alex Avila (Cubs in 2010) - I notice a pattern there. Also some GMs were already at a disadvantage because some teams were allowed to cherry pick top prospect in the cheap, prior to this league becoming fully operational with active GMs. I honestly don't understand the love affair with bonuses. Those picks were earned either through having a bad team or trading away talent, I think that is cost enough already.

As far as Roy's original argument, Colby told him that it wouldn't be a problem, and as the rules are set up, it shouldn't. If the player hasn't accumulated his benchmark of statistics, then he can still be signed as a prospect regardless if a team resigns him, or if a team signs a once owned player out of the FA pool.

[lp815]

Dan, I agree that the bonuses were a tad excessive during free agent signings, but that will not be an issue any more, as all top prospects have been taken and, more than likely, will be kept and not released.  And we cannot help that some teams took advantage of the prospects available during the first months of the league.  It is something we cannot change prior, but won't be occurring again.

We are attempting to stick with MLB rules in all aspects of the league, and draft signing bonuses are as much a part of it as any other facet.  Yeah, it would be nice to just draft a guy for 500k with nothing extra added on, but that isn't the way it works in the real pros.

Maybe a go between could be reached.  Possibly with the way extensions work, bonuses could be paid like salaries, or out over years based on draft selection/amount.  An example would be with Bryce Harper.  His $7m bonus could be applied out over 2 years (so $3.5m) instead of one lump sum.  If he is traded, the remaining bonus goes with him. However, we would probably have to rework the bonuses, since we have figures like x.5 that cannot be divisible in 500k amounts.

This way, the players keep their prospect status, and the lump sum bonus can be broken down into an affordable way for small market or bad teams to draft the talent they need on their team.

[Canada8999]

I am going to have to agree with Jake on this one - it is not within the intent of the rule for prospects to be signed to MLB contracts (spreading out the bonus) only to be re-signed on prospect contracts.

1.  This is not the first time this has come up.  We were ALL told that we could spread out the bonuses without losing their prospect status at the end of the standard contract prior to FA.  I asked the question on the main page, becasue I knew it would come up later, and the response was that such players revert back to prospect status if they have not exhausted their eligibility.  I'm formalizing the rule now, because apparently this caveat as Colby put it was not noticed by all of the owners.  I'm sure some owners were aware of this and chose to take the one year hit as part of their overall strategy for the future.

If we were all told this, it would be in the rules - however, as you mentioned this was discussed but never resolved.  I'm sure there are also owners who did not sign prospects to MLB contracts because they were unsure of what the rules were when they went to re-sign them (myself included).  One person may have said yes, and another said no, that does not mean yes - that is what the RC is for (and this topic).

I think we need to lay out all of the pro's and con's and get some good discussion on this one.

If we need to make exceptions to the rule, then we'll handle that later, but lets not make a bad decision just because it's easy.  We need to make a decision that is in the best interests of the league moving forward, not looking backwards. 

[lp815]

I am going to have to agree with Jake on this one - it is not within the intent of the rule for prospects to be signed to MLB contracts (spreading out the bonus) only to be re-signed on prospect contracts.

If we were all told this, it would be in the rules - however, as you mentioned this was discussed but never resolved.  I'm sure there are also owners who did not sign prospects to MLB contracts because they were unsure of what the rules were when they went to re-sign them (myself included).  One person may have said yes, and another said no, that does not mean yes - that is what the RC is for (and this topic).

I think we need to lay out all of the pro's and con's and get some good discussion on this one.

If we need to make exceptions to the rule, then we'll handle that later, but lets not make a bad decision just because it's easy.  We need to make a decision that is in the best interests of the league moving forward, not looking backwards. 

I did bring up the idea of spreading out the bonus on a prospect contract, without necessarily making it a MLB contract.  We would have to rework the bonus values to coincide with years, but I think I might have a solution for that also.  By making all prospect bonuses payable over 2 years and only two years (only 1 year for 500k bonuses), we would actually halve the bonus amounts owed to a player.

In my example of Bryce Harper, his $7m due can be either $7m for one year, or the GM can pay it out over 2 years at $3.5m.  He has two options, and the second option can be more economic for small market teams.  After the second year, it's back to the minimum prospect salary, and he remains a prospect.  As I stated earlier, the bonuses would have to be reworked to include numbers evenly divisible by 2 (years).

Another example could be the #2 rated rookie, which has a $6m bonus.  The team who drafts him has two options to sign him:

1.) 1 year bonus of $6.0m
2.) 2 year bonus of $3.0m each year

These 2 year bonuses can be kept the same way that releasing a player with years remaining works.  Gary Matthews, for example, is owed $5m this year, $2.5 in 2011, etc.  This setup can be tracked in the same way on the spreadsheet, I'm pretty sure.

This option allows the prospect to keep his prospect status and not have to switch between a MLB contract and Prospect contract, will keep the bonuses intact and not elminiate them, and will help the small market teams and their stricter salary caps.

Just an idea to try and allow everyone to have their cake, in a sense.