Davis Signs With Baltimore (7/$161M, incl $42M deferred)

[BohKnowsBmore]

M

If you want my guess, the $1.4 mm/yr from 2032-36 was added in the final negotiation. That adds up to $7 mm and is the difference between $154 mm and $161 mm but since it is deferred for 16-20 years it's worth about half of that, depending on the discount rate you use.

Whether that was a pure concession by Angelos, or was traded for more deferrals on the original $154 mm, is anybody's guess.

I take issue with the idea by some posters that having $3.5 mm/yr committed from 2022-31 and $1.4 mm/yr in 2032-36 is so small that won't be felt at the time it's paid. The impact is less than if it was paid now, but it's still the kind of money that could get you a useful player or two in any given season. But with salary inflation being what it is, those sums won't buy as much by then as they do today (Kim and Flaherty, basically).

I just look forward to those (national-or even local-writers, mostly) who do not quite grasp the whole concept of TVM or the value of deferred payments (from the team's perspective), or simply are looking to have a hot take, going on about how the Orioles are still paying a guy who isn't on their team years later.

[backwardsk]

M

If you want my guess, the $1.4 mm/yr from 2032-36 was added in the final negotiation. That adds up to $7 mm and is the difference between $154 mm and $161 mm but since it is deferred for 16-20 years it's worth about half of that, depending on the discount rate you use.

Whether that was a pure concession by Angelos, or was traded for more deferrals on the original $154 mm, is anybody's guess.

I take issue with the idea by some posters that having $3.5 mm/yr committed from 2022-31 and $1.4 mm/yr in 2032-36 is so small that won't be felt at the time it's paid. The impact is less than if it was paid now, but it's still the kind of money that could get you a useful player or two in any given season. But with salary inflation being what it is, those sums won't buy as much by then as they do today (Kim and Flaherty, basically).

It's realistic that 1.4M is at or below league minimum at that time. It was no greater than 200k in 2000. Percentage wise, it's pretty similar to the increase of the past 16 years.

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[Babypowder]

Fair, however, a few points:

1) The "first few" years of the deal will still be in his prime, using the standard 28 - 32 prime often referred to.

2) In the two years where he passed that $17M number he provided a lot of excess value (BBref has him at 7.1 WAR in 2013 and 5.1 in 2015). We all know 2014 was not a good season (that said, both BBref and Fangraphs have it as above replacement, FWIW), but 2012 WAR is hard to judge because of him playing all over the place, so the defensive numbers may be a bit wonky.

3) I am not arguing that it's not a risk, but considering the deferred money, I think it's a good one.

There's a fair amount of evidence to suggest that players with his extreme offensive profile have shorter windows (especially the late bloomers), so in my estimation there is a not insignificant chance his prime doesn't last until 32. Regardless of that, I may not have worded that the way I wanted it to sound. I was basically just saying that even the first few seasons while still in his potential prime are still risky since he has already shown great volatility during recent prime years.

I'm all for excess value, but I don't like assigning value to a season past what a player could realistically be paid. So while a 7 win season may be "worth" 49 million dollars present day free agent value, no one gets paid 49 million dollars. I'll treat it at the maximum level of compensation, ~35 million. Past that level I'm not comfortable with using that baseline to justify actual compensation, until real players start getting paid that much in single seasons. I'd also rather he be worth more than what he is being paid 5 out of the 7 years than be really great in 2 of them and provide the same amount of wins during the contract. Though that's not really relevant yet.

Just on the surface and simply put, a 7 year deal seems like a giant risk for a 30 year old player worth 14 wins and only two great seasons under his belt. That's before even examining the profile and comps etc.

[schittenden]

Could you please elaborate your position? Perhaps we are speaking at cross-purposes. Or I am missing something special about baseball player taxes. It is my understanding that for the player, the income taxes will be paid once the cash is received by the player, even if it is "for" several years earlier. For example, let's say Davis has a one-year deal for $20M, with $15M to be paid in 2016 and $5M deferred into 2017. In this scenario, $15M would be 2016 income and $5M would be 2017 income.

From the IRS:

https://www.irs.gov/publications/p538/ar02.html

An article from the LA Times form a few years ago hits on the concept of deferrals:

http://www.latimes.com/sports/la-sp-worst-sports-contracts-20131117-story.html

I know there is some additional complexity to athlete income taxes, so I would be very interested to hear your position in a little more detail with respect to the taxation of deferred comp.

Also, just for fun, Andrew McCutchen's pay stub from a while back that went up online:

All of those tax jurisdictions

You are correct about the timing of taxation. The money will be taxed in the later years when it is paid. However, it will still be taxable based on time spent performing services in the state during year when it was earned. For example, if Davis worked 100 out of 200 workdays in Maryland in 2017, then when the deferral from 2017 is paid in 2025 (or whatever year, I don't have the agreement in front of me), 100/200 (1/2) of the amount deferred will be considered Maryland-source income and be subject to Tax in Maryland, even if he lived the entire year (2025) in Texas.

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[BohKnowsBmore]

You are correct about the timing of taxation. The money will be taxed in the later years when it is paid. However, it will still be taxable based on time spent performing services in the state during year when it was earned. For example, if Davis worked 100 out of 200 workdays in Maryland in 2017, then when the deferral from 2017 is paid in 2025 (or whatever year, I don't have the agreement in front of me), 100/200 (1/2) of the amount deferred will be considered Maryland-source income and be subject to Tax in Maryland, even if he lived the entire year (2025) in Texas.

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Gotcha. It seems we were indeed speaking at cross purposes as my initial comment was based on timing.

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[schittenden]

Gotcha. It seems we were indeed speaking at cross purposes as my initial comment was based on timing.

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I see. The comment from USA Today implies that he was saving a bunch on taxes because he will be living in Texas. That's not correct. He is changing the timing of when he gets paid and when he has to pay taxes, but not avoiding taxes. The tax man always cometh.

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[TonySoprano]

On MLB this morning, Matt Vasgersian in particular, said we already had enough offense; the money would have been better spent on a top starting pitcher. Peanut Reynolds chimed in that, well, we do have the offense, Hardy was hurt, we have Wieters..for one more year, and Schoop should bounce back. Roch Kubatko had to tell him that spending on top pitching is not how the Orioles like to do things. He thinks Fister is a possibility instead.

<blockquote class="twitter-tweet" lang="en"><p lang="en" dir="ltr">From Saturday: Signing of Chris Davis won’t matter unless <a href="https://twitter.com/hashtag/Orioles?src=hash">#Orioles</a> upgrade rotation. Column: <a href="https://t.co/zeAf4y7zCL">https://t.co/zeAf4y7zCL</a></p>— Ken Rosenthal (@Ken_Rosenthal) <a href="

">January 18, 2016</a></blockquote>

<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>

[Frobby]

I'm all for excess value, but I don't like assigning value to a season past what a player could realistically be paid. So while a 7 win season may be "worth" 49 million dollars present day free agent value, no one gets paid 49 million dollars. I'll treat it at the maximum level of compensation, ~35 million. Past that level I'm not comfortable with using that baseline to justify actual compensation, until real players start getting paid that much in single seasons.

I disagree with this point. Just because no player makes more than $35 mm in a season doesn't mean no season is worth more than $35 mm. The team that signs the contract is hoping that the average value of production will exceed average salary paid, but for any player, there's likely to be more variance in performance over a long term contract than there is variance in salary.

[DrungoHazewood]

On MLB this morning, Matt Vasgersian in particular, said we already had enough offense; the money would have been better spent on a top starting pitcher. Peanut Reynolds chimed in that, well, we do have the offense, Hardy was hurt, we have Wieters..for one more year, and Schoop should bounce back. Roch Kubatko had to tell him that spending on top pitching is not how the Orioles like to do things. He thinks Fister is a possibility instead.

<iframe id="twitter-widget-0" scrolling="no" frameborder="0" allowtransparency="true" allowfullscreen="true" class="twitter-tweet twitter-tweet-rendered" style="position: static; visibility: visible; display: block; width: 500px; height: 203.766px; padding: 0px; border: none; max-width: 100%; min-width: 220px; margin-top: 10px; margin-bottom: 10px;" data-tweet-id="689094130266406912" title="Twitter Tweet"></iframe>

<script async="" src="//platform.twitter.com/widgets.js" charset="utf-8"></script>

I don't now, nor have I ever, understood the "signing X guy doesn't matter unless we also fix Y". Of course Chris Davis is a very likely upgrade over whomever they had penciled into first base three days ago, and that will improve the team. You can argue pretty persuasively that the team as currently constructed isn't a lock for the playoffs, and part of that is a weakness in the starting pitching.

But the implication is that unless you have some particular level of starting pitching you can't win no matter how good the offense is. Which is just false. The Indians had the same record as the Orioles despite having one of the best rotations in the league, while the Blue Jays won the division easily with a rotation not appreciably better than the Orioles'.<iframe id="rufous-sandbox" scrolling="no" frameborder="0" allowtransparency="true" allowfullscreen="true" style="position: absolute; visibility: hidden; display: none; width: 0px; height: 0px; padding: 0px; border: none;"></iframe>

[bobmc]

Sounds riveting! Lol.

Fister is who we go after I think. Buck type guy.

Just the thought of repeating Fister's name ad infinitum is riveting to me! :slytf: Now Latos and his tatts, I can dig! :hearts:

[DrungoHazewood]

I disagree with this point. Just because no player makes more than $35 mm in a season doesn't mean no season is worth more than $35 mm. The team that signs the contract is hoping that the average value of production will exceed average salary paid, but for any player, there's likely to be more variance in performance over a long term contract than there is variance in salary.

I think the most productive players are almost guaranteed to be good values in today's salary structure because nobody will pay them for 7, 8, 9 win seasons at the rate they pay all the other free agents. If the Sox are going to pay Price $31M/year for six wins, but someone is going to pay a guy like Trout/Harper/Machado only $30M for 8-9 wins when they hit free agency, then the Harper/Trout team has a large advantage.

[bobmc]

I don't now, nor have I ever, understood the "signing X guy doesn't matter unless we also fix Y". Of course Chris Davis is a very likely upgrade over whomever they had penciled into first base three days ago, and that will improve the team. You can argue pretty persuasively that the team as currently constructed isn't a lock for the playoffs, and part of that is a weakness in the starting pitching.

But the implication is that unless you have some particular level of starting pitching you can't win no matter how good the offense is. Which is just false. The Indians had the same record as the Orioles despite having one of the best rotations in the league, while the Blue Jays won the division easily with a rotation not appreciably better than the Orioles'.<iframe id="rufous-sandbox" scrolling="no" frameborder="0" allowtransparency="true" allowfullscreen="true" style="position: absolute; visibility: hidden; display: none; width: 0px; height: 0px; padding: 0px; border: none;"></iframe>

This is the kind of unbounded enthusiasm I pay for here! Screw RZ's negativity ....... :angry fire: Ed Note: Does the emoji save me from being banned? :scratchchinhmm:

[DrungoHazewood]

This is the kind of unbounded enthusiasm I pay for here! Screw RZ's negativity ....... :angry fire: Ed Note: Does the emoji save me from being banned? :scratchchinhmm:

The 2015 Orioles and Blue Jays rotations were almost dead even if you average out their FIP/xFIPs. The O's starters actually had a higher K rate by about one per nine.

And if we're looking for reasons to be a little optimistic, the Jays' and O's current rotations are both projected at about 9 fWAR on Fangraphs. Of course the Jays' offense is a bit ahead...

[Number5]

The 2015 Orioles and Blue Jays rotations were almost dead even if you average out their FIP/xFIPs. The O's starters actually had a higher K rate by about one per nine.

And if we're looking for reasons to be a little optimistic, the Jays' and O's current rotations are both projected at about 9 fWAR on Fangraphs. Of course the Jays' offense is a bit ahead...

...And if the Orioles were to sign Cespedes, the offensive gap would be very narrow, if not closed. And our cefense and bullpen are superior. There is more than one way to skin a cat. There have been quite a few successful teams that didn't have top-flight starting rotations.

[SteveO]

The 2015 Orioles and Blue Jays rotations were almost dead even if you average out their FIP/xFIPs. The O's starters actually had a higher K rate by about one per nine.

And if we're looking for reasons to be a little optimistic, the Jays' and O's current rotations are both projected at about 9 fWAR on Fangraphs. Of course the Jays' offense is a bit ahead...

I think there are reasons to be a little optimistic. The moves we have made to date will give us enough offense IMO that this team is unlikely to be an utter disaster but they are not enough for me to feel like our post season chances are all that great to be honest.

The good news is that there are still some moves out there that can help provide more depth and alternatives if some of our question marks are not answered by play on the field to our liking.

Since when has pointing out that not addressing the very thing (pitching) that even our GM admitted was not good enough and needed to improve has not been improved. I really do not think it is unreasonable to look at a rotation in which Miguel Gonzalez is your 4th starter and Ubaldo is your 3rd ....as lacking if you want to be considered a serious contender. Yes things could go great, maybe KG steps up, maybe Miggy rebounds, perhaps Tilly and Ubaldo bounce back. All that could happen or what is just as likely is that a couple of guys have better years and a few have worse (either because of injury or performance). I don't think that is negativity, its simply facing reality. The odds that the Orioles pitching staff as constructed now is good enough to get this team in the playoffs is pretty slim IMO. Is there a shot its good enough with a modest addition or two? Absolutely. Without some depth and options to account for regression, injury and other unexpected occurrences, I don't see it. I don't think that is being negative, I think that is simply being honest.

Just because one points out the obvious issues and elephant in the room (SP) does not mean they are being negative, it means they are being realistic. DD went into this offseason and made it a point to say we needed to improve the pitching. To date, I don't see we have, if anything our staff is weaker.