Opt-out clauses don't sound especially exciting. And they aren't, unless contract loopholes get your pulse pumping.
But they have reshaped the MLB offseason landscape, and they're redefining the nature of marquee free-agent negotiations. Whether that's a good thing or a bad thing for players and front offices is a matter of some debate.
We know where Commissioner Rob Manfred stands. He thinks they're a raw deal for the teams that grant them, as he explained to Fox Sports' Ken Rosenthal:
The logic of opt-out clauses for the club escapes me. You make an eight-year agreement with a player. He plays well, and he opts out after three. You either pay the player again or you lose him.
Conversely, if the player performs poorly, he doesn't opt out and gets the benefit of the eight-year agreement. That doesn't strike me as a very good deal. Personally, I don't see the logic of it.
He's not wrong. On the surface, an opt-out clause is, simply, an opportunity for a player to bolt mid-contract for a larger payday.
We just watched Zack Greinke do exactly that. Baseball's reigning ERA leader left three years and $71 million on the table from the Los Angeles Dodgers and got a six-year, $206.5 million commitment from the Arizona Diamondbacks.
Greinke's new contract doesn't feature an opt-out, but David Price got one from the Boston Red Sox. Technically, Price is inked for seven years and $217 million, but he can hop back into the free-agent pool after the 2018 season.
He'll be 32 years old and would be eschewing more than $120 million. Yet with the way salaries are going, if he pitches like an ace in Beantown, he might very well pull the opt-out ripcord.
Here's where the issue gets a little murkier, though. Let's assume Price delivers three typically excellent seasons for the Red Sox, for which they will have paid him $90 million. Then let's say he elects to test the market and gets an even gaudier contract from someone else. Does Boston really lose in that scenario?
Yes, in a very real sense they lose Price. But they will also be shedding the responsibility to pay a pitcher into his late 30s, when performance often declines and sometimes craters.
The opt-out, in this sense, can be seen as a way for teams to pay out large sums for a player's peak years and then pass the liability on to someone else.
Writing about the San Francisco Giants and Johnny Cueto—who has an opt-out after two seasons built into his six-year, $130 million deal—McCovey Chronicles' Grant Brisbee spelled out this line of thinking:
If the player performs so well that he opts out, the team doesn't have to pay for the back end of the contract, where most of the risk is.
This is a good thing. The Giants didn't sign Cueto to a six-year deal because they're expecting him to be an ace in 2021. They signed him to that deal because he could get it on the open market, and the Giants valued his short-term value enough to accept the risks of an expensive 35-year-old pitcher.
The risk, in other words, is the same whether a long-term contract features an opt-out or not. In both cases, the fear is that the player won't perform as well as expected and become a payroll-crippling albatross.
Eliminating the opt-out doesn't mitigate that risk, but including it actually can.
Here's another way it benefits both parties: An opt-out in the middle of a long-term deal incentivizes a player to stay sharp and in shape and play for that next potential raise.
The Chicago Cubs signed Jason Heyward for eight years and $184 million, but he can opt out after 2018 or 2019. Basically, that's two "contract years" within the contract, when Heyward will have financial incentives to be at his very best.
If Greinke has another Cy Young-caliber season with the D-Backs in 2016, Dodgers fans will no doubt curse the opt-out.
But if you want a cautionary tale on the other side of the ledger, consider the New York Yankees and CC Sabathia. The big left-hander had an opt-out built into his deal after the 2011 campaign, but the Yankees extended him before he could exercise it.
At the time, it made sense. Sabathia was an unmitigated stud in his first three seasons with New York. But, after making the All-Star team in 2012, his numbers began to tumble as he succumbed to injuries and off-the-field issues.
If they could do it over, there's no question the Yankees would let Sabathia split after 2011 and spend the $20 million-plus annually on someone else.
More of these high-stakes decisions are coming soon. Clayton Kershaw can opt out after 2018, along with Price and Heyward. And Giancarlo Stanton can do so after 2020.
In each case, clubs will have to weigh the loss of a superstar player against the risk of shelling out even more money and years.
As with all contract machinations, there won't be perfect answers, except in hindsight. Injuries and declines can strike at any time, just as some players will maintain peak performance longer than expected. That's why building a winner is an art as much as a science.
As for the original question, are opt-outs good or bad for players and front offices?
They're always good for players, who reap all the reward and assume virtually no risk. But they can likewise be good for front offices that employ smart evaluators, make sound forward-thinking decisions and cultivate fertile farm systems so there's always a cost-controlled Plan B in the pipeline.
Be smart, in other words, and you'll be fine. Be stupid, or unlucky, and you'll be left holding the opt-out bag.
All statistics and contract information courtesy of Baseball-Reference.com unless otherwise noted.
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