At some point yesterday a writer from ESPN – I can’t remember which one – made a comparison between Joey Votto and Cal Ripken Jr. Which is fair, I suppose. After signing his latest contract, Votto, like Ripken, is set to remain with one organization for his entire career, a rarity indeed. But let’s not forget something, though. Votto’s new contract – 10-year, $225 million – is now the fourth highest amount ever, trailing both of Alex Rodriguez’s deals and the one Albert Pujols signed this winter. So it’s not like he took thatbig of a hometown discount either.
Anyway, I tend to rant a little bit about long term contracts and how they generally are poor decision based on immediate need, not on the team’s overall future (see Yadier Molina, my previous rant). And this Votto deal is really no different. Not for the return on investment, because that’s surprisingly high, but because what it will potential do to the franchise in the coming years.
By the end of this ten-year extension – remember, it doesn’t start until after 2013 – the Cincinnati Reds will actually pay Votto less than his projected value.
Using aging curves (found here) and a 5.0% inflation rate for the value for wins above replacement, or WAR (found here), Votto’s likely to earn approximately 33 wins during the contract’s duration, which is worth $243 million, almost $20 million less than the reported value. Below are the calculations:
Once injuries are figured in, the money should come out about even.
But the problem is how the deal is potentially structured and what that means for the franchise’s future.
This contract is reportedly back-loaded – specifics haven’t been reported yet – and with an annual average of $22.5M, it’s not unlikely that the organization will end up paying Votto between $26 and $30 million during the final years of his contract.
And the Reds, the very definition of a mid-market team, have never had a payroll of $82 million, in their entire history.
Say they increase their payroll 5% every year, in Votto’s last year of his contract he will be about 20% of the amount while providing little to no value. Over the last four years of his contract Votto should be worth about seven wins, a one less than the league average starter.
Teams can’t consistently win with that business plan, especially mid-markets ones.
Sure, they can win now because the team has a strong core of players. But what happens when they can’t sign them? Or a few drafts don’t pan out well and they need to dip their toe into free agency? Obviously, their payroll is going to hit a limit sometime, right? Maybe it won’t be with Brandon Phillips. But it will happen.
Heed this warning, Cincinnati Reds fans: The joy of having Joey Votto for his entire career is not going to last forever; neither will your playoff contention.
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