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Strasburg deal doesn’t break bank for Nats
The deal was supposed to be groundbreaking. It was supposed to create an earthquake across baseball and change the way newly drafted players are evaluated.
But Stephen Strasburg’s four-year, $15.1 million contract with the Washington Nationals, despite being the largest ever given to a drafted player, is being hailed as a generally fair deal that has the potential to satisfy both sides.
The contract includes a $7.5 million signing bonus for the highly touted pitcher from San Diego State and gives Strasburg financial security plus the potential to make millions more in the future. But the Nationals hardly bankrupted themselves with the deal and are protected in the event Strasburg gets hurt or is a bust.
“I think it doesn’t break the mold,” said Vince Gennaro, author of “Diamond Dollars” and consultant for major league teams. “It was a deal you could rationalize from both sides, not just the player’s side, and I think that it bodes well for Major League Baseball that the Nationals didn’t do anything too crazy on the high end.”
Until the Nationals and Strasburg’s agent, Scott Boras, struck a deal at 11:58 p.m. Monday, speculation was that Boras was asking for at least $20 million and that the Nationals would be reluctant to offer much more than the record $10.5 million the Cubs gave pitcher Mark Prior in 2001. In the end, it appears the two sides met somewhere in the middle.
“I feel great about the deal,” Nationals president Stan Kasten said. “It’s something we wanted to happen. I always thought it would, but you can never be sure. It raised the bar a little bit, but that’s OK. We didn’t change the system.”
One of the greatest fears in baseball circles was that Strasburg would not sign with the Nationals and join an independent league team or even play in Japan. Such a maneuver could have led to a showdown between owners and the MLB Players Association over the draft process during the next round of labor negotiations in 2011.
“The Nationals didn’t upset the apple cart,” said Maury Brown, editor of the Business of Sports Network and bizofbaseball.com. “They were really under some pressure. If they had gotten up above $20 million or [Strasburg] somehow went into free agency, it would have created all kinds of turbulence.”
Strasburg’s $7.5 million bonus was nearly double the suggested bonus under Major League Baseball’s slotting system. But Kasten and several baseball analysts said Strasburg’s unique talent necessitated a higher deal.
“This was maybe a little bit of a bigger jump, but it was for an aberrational player,” Kasten said.
Of greater concern was likely the number of lower round draft picks who signed for considerably over slot.
“I do think MLB will be addressing this or needs to address this in the next collective bargaining agreement,” Gennaro said. “Because one of the things you want to avoid is that if this is the low-cost source of talent, you don’t want to have that eliminated.”
One apparent key for the Nationals was protecting against the risk of Strasburg getting hurt or not performing expectations. For that reason, the team declined offers from Boras for a longer deal involving more money, even though such a deal might have protected the Nationals against future pay increases for Strasburg. Under the terms of the new contract, Strasburg could be eligible for arbitration as soon as the 2013 season.
Many teams in recent years have offered long-term contracts that “buy out” those arbitration years, often as a way to ensure cost certainty and predict payroll budgets. But the Nationals’ decision to go with a shorter contract could leave them on the hook for millions of additional dollars if Strasburg performs well.
“If he’s anywhere as good as people say he’s going to be, what are his [arbitration] years going to cost?” said Kevin Goldstein, a baseball scouting analyst and writer for Baseball Prospectus.
Kasten declined to say whether the team considered accepting a longer deal, except to note that the negotiation involved a number of different contract structures.
“On the morning when I convened our first meeting, I had about 15 scenario sheets in front of me,” he said. “We considered everything and more. There were 100 different variations, and we wound up with this one. I can’t explain it except that there was a lot of give and take.”
About the Author
Tim Lemke has been the sports business reporter for The Washington Times since 2005, writing on a wide variety of issues ranging from the construction of the Washington Nationals new ballpark to steroid hearings on Capitol Hill. He writes a weekly column titled “SportsBiz” and maintains a blog with the same name. Highlights of his career include playing some very ...
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