How Players Might Distinguish Risk in New Contracts

Player contracts can be fascinating because of how we tend to examine them. We can do it through a micro lens, figuring how each one impacts the shape of the team and its ability to compete; or we can look at them with a macro perspective and see how they do or don’t impact the overall business of a franchise. As fans and analysts, we usually go the micro route.

Part of going the micro route in examining player contracts is questioning whether a player just became overpaid or underpaid upon signing his new deal. Dave Cameron did just that when considering Jean Segura’s recent extension, expanding on how Segura may well have left money on the table when he inked his 5 year, $70 million extension earlier this month:

Perhaps Segura just really likes Seattle, likes the ballpark, likes the organization, and isn’t as concerned about whether he’s on a sustained winner. But 18 months from free agency, it seems like he might have had a chance to earn more money on a team with a more certain future, so him taking an extension now is certainly a risk on his part, as he could end up as an underpaid asset on a team without enough around him to win consistently. That’s not what you generally want.

This is  a fair thought. Players rarely – if ever – have the chance to influence what the market will pay them, and where. Signing a deal that potentially pays anything less than maximum value, then, could certainly be regarded as shortsighted and a risk.

It’s at this moment in evaluating new contracts that it becomes worthwhile to ask: on whose behalf might the player be leaving money on the table, and for whom is it a risk? Them, or players down the line?

Players should absolutely push for every dollar the market is willing to pay them. This idea becomes emphasized when we remember how disparate the split in revenue is between players and owners. It doesn’t matter that the dollar amounts on both sides are absurd to most people. Players gain zero benefit by taking less pay.

But if we consider recent economic research, we might see
why Segura didn’t necessarily push for every single dollar. Doctor George Simon
comments on a study from Christian Bayer at the University of Bonn and Falko
Juessen at Dortmund University that details how money doesn’t necessarily buy
happiness but that levels of financial certainty do impact our general well-being. And the bottom line is Segura’s
new deal still comfortably puts him in a mental place where he is “gaining
steadily in [his] overall sense of security. He can put in the same exact work
as he did before signing this contract and feel much more at ease.

The real risk in deals like Segura’s, then, may be for other players in the future. The micro approach for him – the part of his signing that considers only the needs of Jean Segura and his family – is something he clearly finds satisfying. Otherwise, he probably doesn’t sign. But the macro perspective, or the one that would consider how his new contract could be used as a benchmark for others in the future, is probably left wanting.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s