Monday, October 30, 2006

Weighing Your Options

Now that the World Series is over, we're now in that awkward first stage of the off-season, where teams and players (mostly teams) have to make decisions about contract options, and where prospective free agents actually declare themselves available on the open market.

Today we're talking about contract options. Some Yankees have already seen their options become guaranteed--in 2006, both Jorge Posada and Mariano Rivera were able to meet playing time goals that guaranteed them contracts in 2007. The following Yannkees have options that the club has to make a decision about (all numbers courtesy of the Unofficial MLB page) sometime soon:

Mike Mussina (17MM in 2007 or $1.5MM buyout) -- This is actually more than one decision. It's a no-brainer to say that the Yanks should take that $1.5MM buyout. Mussina was a very good pitcher in 2006, but he wasn't $17MM worth of good (actually, to be realistic, you have to think of it as $15.5MM good--the value of the contract less the value of the buyout, which is a sunk cost the team will pay if they choose to keep the player or not). The question is whether--and at what cost--to re-sign Mussina once you've told him that you don't think he's a $15.5MM pitcher. Is he still worth eight digits to the Yanks? Perhaps. How many years do you give him? Mussina has previously said he wants to pitch three or four more years to reach some milestones. But does it make sense to guarantee Mussina--who turns 38 in December--a major league contract until the age of 41 or 42? It's seldom wise to give any pitcher four years, but two could definitely be in the cards, with an option for a third. You get that deal, at $7-8MM per year (Kris Benson Money(tm)), it might be an acceptable risk. If we crawl over $10MM per year, or guarantee a third year, not so much so.

Gary Sheffield (Option for $13MM, no buyout) -- Sheff's already agitating for a multi-year deal, which is a reaction to the rumor that the Yankees will pick up this option, just to trade him. We've heard this stuff before--almost from the moment that he agreed to his current Yankees contract, Sheffield was already complaining that he wanted to get interest on the deferred money. It's a mistake to take Sheffield's negotiating postures as having an effect on the value of his bat to the team. For all of Sheffield's threats that he'll make things miserable for a team that doesn't [insert here: re-negotiate his contract, give him an extension, cut him loose in free agency] he's never carried through on those threats. Coming off an injury, I doubt that Sheff could get more than $13MM yearly salary for 2007. I say call his bluff. If he decides to go Operation Shutdown on the Yankees, they lose nothing. If the Yankees keep him, and he hits the way he can when he's looking for a new contract, then it's good. If he induces the Angels, Phillies, or Braves to step up and offer something of value--and he should be attractive to all three clubs--then you're ahead of the game.

Then again, it's easy for me to say--I'm not the one putting up the $13MM.

Jaret Wright ("Option" for $7MM, $4MM buyout, player option to void the contract) -- Technically, this is most often referred to as a "right to void" the contract, which was activated by Wright spending a certain amount of time on the DL in 2005 with a bad shoulder. The thing to remember (unless Wright goes nuts and voids the contract himself) is that all that's at stake for the Yanks is $3MM--the $4MM "buyout" is a sunk cost, money that's gone no matter what the Yanks do. So the question the Yanks have to ask themselves is: is Jaret Wright worth $3MM--and maybe some B-grade trade swag--to anyone in the majors, including the Yankees. I think the answer is yes. Let's put it another way--the performance Wright put in last season was worth about $5 million on the open market. I'd suspect that Orioles might be in the market to get Wright back under Leo Mazzone's win, and $3MM is small money for someone who's not actively waiver bait.

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