Thoughts about opt-out clauses?

[waroriole]

My thought is it's just another thing that is preventing us from participating in the free agent market competitively. And that really, really sucks.

We have so many excuses for why we can't sign premium talent. Whether they're FA or international amateurs. Always some "principle" involved.

[weams]

We have so many excuses for why we can't sign premium talent. Whether they're FA or international amateurs. Always some "principle" involved.

I've decided to give up my principles for New Years.

[Ornithological]

At first I thought opt-outs only benefited the player. Now I see how they can be good for the GM too.

1.) The player is incentivized to perform

2.) You can sign the player at a lower AAV

3.) In the opt-out year, you can give the qualifying offer and potentially get a draft pick.

For example, these are possible scenarios for the Dodgers after the Kazmir contract.

a.) Kazmir has a great 2016 season and opts out. Then the Dodgers give him the qualifying offer and he rejects it to sign with another team. The Dodgers benefit by getting excess production in 2016 and a draft pick in 2017

b.) Kazmir gets injured or does not have a good enough season to opt-out. The Dodgers were able to sign him for a lower AAV then they would have without the opt-out, and there is a possibility he bounces back in the final two years of the contract.

[weams]

At first I thought opt-outs only benefited the player. Now I see how they can be good for the GM too.

1.) The player is incentivized to perform

2.) You can sign the player at a lower AAV

3.) In the opt-out year, you can give the qualifying offer and potentially get a draft pick.

For example, these are possible scenarios for the Dodgers after the Kazmir contract.

a.) Kazmir has a great 2016 season and opts out. Then the Dodgers give him the qualifying offer and he rejects it to sign with another team. The Dodgers benefit by getting excess production in 2016 and a draft pick in 2017

b.) Kazmir gets injured or does not have a good enough season to opt-out. The Dodgers were able to sign him for a lower AAV then they would have without the opt-out, and there is a possibility he bounces back in the final two years of the contract.

I've decided to write a tome on the advantages for a player with multiple "Club Options" in his contract.

[Hallas]

I've decided to write a tome on the advantages for a player with multiple "Club Options" in his contract.

A 2/90 contract with club options is probably more valuable than a 5/100 for a large number of players on the market. You can't make these determinations while ignoring the cost difference. I take Dan's earlier comments on the subject to mean that he'd rather avoid them, but I don't think he's so dense to think that they're bad no matter the price point.

[weams]

A 2/90 contract with club options is probably more valuable than a 5/100 for a large number of players on the market. You can't make these determinations while ignoring the cost difference. I take Dan's earlier comments on the subject to mean that he'd rather avoid them, but I don't think he's so dense to think that they're bad no matter the price point.

I take the man at his word.

[weams]

A 2/90 contract with club options is probably more valuable than a 5/100 for a large number of players on the market. You can't make these determinations while ignoring the cost difference. I take Dan's earlier comments on the subject to mean that he'd rather avoid them, but I don't think he's so dense to think that they're bad no matter the price point.

There are no 2/90 contracts so that is just a fanciful exaggeration to show how the math could possibly work. But I see you point that there are no absolutes.

[Crazysilver03]

If the Yankees had not resigned Arod and Sabathia when they opted out then they would have been in great shape.

I am sure you don't agree but in those two cases the opt out would have worked for the team.

Of course the team has to be prepared to let the player walk and have a good idea what type of production the player will produce.

The Yankees failed the test.

I read the other day that if the Red SOX had signed A ROD to that first contract, they were planning on letting him go when he opted out. Of course they could have also severly revised their take over the years.

[weams]

I read the other day that if the Red SOX had signed A ROD to that first contract, they were planning on letting him go when he opted out. Of course they could have also severly revised their take over the years.

Or they might just be saying that.

[Frobby]

At first I thought opt-outs only benefited the player. Now I see how they can be good for the GM too.

1.) The player is incentivized to perform

2.) You can sign the player at a lower AAV

3.) In the opt-out year, you can give the qualifying offer and potentially get a draft pick..

I think the bolded point is a key one for people to understand. In negotiations, everything is a trade-off. You can still sign premium free agents without giving an opt-out clause, but it will cost more money to do it. The Camden Depot article does a nice job of illustrating the trade-off.

[waroriole]

I've decided to give up my principles for New Years.

Now that's s resolution I can get behind.

[Number5]

I agree with DD. Opt-outs make no sense for the Orioles, and most other teams. Only the very few teams with almost unlimited resources can afford them -- and they are the ones writing those contracts. The Dodgers, Red Sox, and Yankees can absorb the potential downside of one of these hideous contracts. Most clubs simply cannot. Long-term massive contracts are risky enough, and often price most teams out of the bidding as it is. Adding an opt-out clause that keeps all of the risk, while eliminating the best case scenarios for teams pretty much makes these deals unworkable for the majority of teams. I think we are stuck with them for awhile, but I believe the problem will take care of itself as the rich teams find themselves getting burned in the coming years.

The only kind of deals that an average team can consider an opt-out, IMO, would be on a shorter-term deal similar to the 3year (1-year opt-out) deal Kazmir signed. The issue with that particular deal was simply the high price of it (3/$48) the Dodgers paid, which was well beyond what the other interested teams were reportedly discussing with Kazmir.

[Number5]

I think the bolded point is a key one for people to understand. In negotiations, everything is a trade-off. You can still sign premium free agents without giving an opt-out clause, but it will cost more money to do it. The Camden Depot article does a nice job of illustrating the trade-off.

But it isn't really happening that way, is it? Kazmir wasn't being offered $16 million/year by any other team. How many teams were offering Price $30 million per year? This sounds well and good, but from what I am seeing these deals are only being offered by the wealthiest teams, and they come with a high enough AAV. Any slight reduction in AAV that we are seeing is more than made up for the insane risk on the back end of these deals, IMO. Frankly, the Orioles have never been real players in high-end free agency, like most teams. The opt-out clauses only serve to widen the already huge gulf between the teams that can afford to regularly swim in this end of the pool and those many other teams that cannot.

[awannabegeek]

If the Yankees had not resigned Arod and Sabathia when they opted out then they would have been in great shape.

I am sure you don't agree but in those two cases the opt out would have worked for the team.

Of course the team has to be prepared to let the player walk and have a good idea what type of production the player will produce.

The Yankees failed the test.

Those two cases are why opt-outs are exactly bad for a club. If there was no opt-out they wouldn't have to resign for a longer-higher-dollar-deals.

Opt-outs push the pendulum of risks way over to the team's side. Jason Heyward has a great three year run he can opt-out and go back into free agency and get a larger contract. If Heyward turns into Nick Markakis the Cubs are stuck with an albatross. It maybe this is the reality of free agency moving forward, which it likely is, but to sell it as some sort of win for the teams is just false. Especially for pitchers.

[Can_of_corn]

Those two cases are why opt-outs are exactly bad for a club. If there was no opt-out they wouldn't have to resign for a longer-higher-dollar-deal.

Opt-outs push the pendulum of risks way over to the team's side. Jason Heyward has a great three year run he can opt-out and go back into free agency and get a larger contract. If Heyward turns into Nick Markakis the Cubs are stuck with an albatross. It maybe this is the reality of free agency moving forward, which it likely is, but to sell it as some sort of win for the teams is just false. Especially for pitchers.

The team didn't "have to resign". They made a bad decision and chose to retain a player.

If a team is prepared and does the proper work then they can avoid that pitfall.