Jayson Werth signs w/ Nationals for 7y/$126m

[PANatsFan]

Or, they just wanted to take the saved money and invest it.

That way, they're paying less of the contract.

That's absurd. Let's say they get a 10% return on 8 million dollars. Who cares?

[Lintyfresh85]

That's absurd. Let's say they get a 10% return on 8 million dollars. Who cares?

No it's not.

Look at what the Mets did. It happens all the time.

[Ray D]

Look at what the Mets did.

Hope this money is better invested.

[spidernat]

Not a huge fan of that. His last 4 years will have him being owed 83 Million while he is declining making him untradable.

They may be hoping for a miracle.

God forbid but what would happen if Werth suffered a serious injury that forced him to retire?

No it's not.

Look at what the Mets did. It happens all the time.

PANatsFan has a different angle on this one though so for him it's a mindfact absurdity.

[Lintyfresh85]

They may be hoping for a miracle.

God forbid but what would happen if Werth suffered a serious injury that forced him to retire?

I'm sure they've set up an insurance policy.

No way do you take that much risk with no promise of some salary relief if something bad happens.

[PANatsFan]

They may be hoping for a miracle.

God forbid but what would happen if Werth suffered a serious injury that forced him to retire?


PANatsFan has a different angle on this one though so for him it's a mindfact absurdity.

Yeah me and Kilgore, jackass

[EdStroud]

Oh man... they got dicked over on that deal.

For those who don't know... the Mets signed Bonilla and got him to take a deferred amount of money, much larger than what his contract was... the only thing was, they would spread it out in small payments for years and years after Bonilla had retired.

With the money they saved on the deferment, they thought they'd be smart and stick with a hedge fund guy... so, they give whatever the amount was, 20-30 million dollars to some dude named Bernie Madfof. They think they got a killer deal from this guy... he's promising 10-15% returns on investment, whatnot... so why not invest the money now, and get a 3 million return on investment yearly before you start paying Bonilla?

Of course, we all know who Madoff became... and the Mets lost all of the money they sent to him to invest.

So, now, not only are they out the money on the long term deal on Bonilla, they lost all the money they pocketed by deferring as well.

NEW YORK — The eldest son of disgraced financier Bernard Madoff hanged himself by a dog leash in his Manhattan apartment on Saturday, the second anniversary of his father's arrest in a multibillion-dollar Ponzi scheme that swindled thousands of investors of their life savings, law enforcement officials said.

[daveb32]

NEW YORK — The eldest son of disgraced financier Bernard Madoff hanged himself by a dog leash in his Manhattan apartment on Saturday, the second anniversary of his father's arrest in a multibillion-dollar Ponzi scheme that swindled thousands of investors of their life savings, law enforcement officials said.

HAHAHAH That's another Ponzi scheme!

[JCA-CrystalCity]

You back load a contract for two reasons. First, it is a way to play net present value.  The NPV is less than the AAV x the number of years because the out year dollars are worth less than near term dollars.  Second, you backload a contract to take advantage of the way the luxury tax is calculated. The luxury tax is calculated off of AAV.  If you expect to spend more in the future, you backload the contract, take the AAV hit upfront, in order to leave spending room in the out years.  The only mitigating reason would be if you were concerned about cash flow, but if you are LANC and not LAC, it does not matter.

Warning - comparison to Red Sox payroll management coming up That is essentially what the REd sox did with Youkilis, Lester, and Pedroia. They have backloaded contracts.  They took the AAV hit in 2009 and 2010 in order to have spending flexibility in 2011, 2012, and 2013.

[PANatsFan]

You back load a contract for two reasons. First, it is a way to play net present value.  The NPV is less than the AAV x the number of years because the out year dollars are worth less than near term dollars.  Second, you backload a contract to take advantage of the way the luxury tax is calculated. The luxury tax is calculated off of AAV.  If you expect to spend more in the future, you backload the contract, take the AAV hit upfront, in order to leave spending room in the out years.  The only mitigating reason would be if you were concerned about cash flow, but if you are LANC and not LAC, it does not matter.

Warning - comparison to Red Sox payroll management coming up That is essentially what the REd sox did with Youkilis, Lester, and Pedroia. They have backloaded contracts.  They took the AAV hit in 2009 and 2010 in order to have spending flexibility in 2011, 2012, and 2013.

If you swap the luxury tax number with a likely ceiling given to Rizzo for this season, it makes sense. Again, Kilgore gets it.

[NatsDad14]

The Nationals won't have to worry about Luxury tax until at least 2013

[JCA-CrystalCity]

If you swap the luxury tax number with a likely ceiling given to Rizzo for this season, it makes sense. Again, Kilgore gets it.

The Nationals won't have to worry about Luxury tax until at least 2013

Right on both counts.  they probably have an expanding budget the closer they get to contention. smaller in terms of cash now, more later when they get close. If we ever got into Philly's position around 2014 or  2015, when Werth is still under contract, the backloading could help if the cap were an issue.

[Lintyfresh85]

JimBowdenXMFOX

Mike Rizzo Nats GM just told us that Jayson Werth is going to takes reps in CF and could play there in early years of the deal (Harper RF)

Please oh please oh please.

[cmdterps44]

Please oh please oh please.

Willingham - Werth - Morse!!?

That'd be pretty awesome if we got a decent 1b.

[Terpfan76]

No it's not.

Look at what the Mets did. It happens all the time.

I'm still not getting where you are coming up with this Madoff investment angle. That's not what the Mets did with that money. They used the money that would have been spent paying Bonilla to sign several of the free agents that were important to their WS run.

Here’s what happened. Fresh off a loss in the National League Championship Series, the New York Mets were trying to build a team capable of advancing to the World Series. But standing in the team’s way was aging, disgruntled star Bobby Bonilla and his lucrative $5.9 million contract.

Eager to rid themselves of Bonilla and free up enough money to bring in fresh blood, the Mets bought out his contract and postponed payment for 11 years. They also agreed to pay him interest and found common ground on a fair rate.

“The idea wasn’t completely unilateral,” said Dennis Gilbert, who represented Bonilla earlier in the star’s career. “Both sides thought it was a good idea.”

In the short-term, the plan seemed to work. The Mets signed several key players with the money they saved from deferring payments to Bonilla and the team advanced to the World Series for the first time since 1986. (They lost to the Yankees.)

From a long-term perspective, the team’s decision on Bonilla doesn’t look so smart. Starting one year from today, the Mets will begin paying for the Bonilla buyout. And they’ll pay a lot. Having agreed to an interest rate of 8%, from 2011 to 2035, the Mets owe the retired player an annual salary of close to $1.2 million, or close to $30 million in total.

http://blogs.wsj.com/metropolis/2010/07/01/thanks-to-interest-mets-still-owe-bonilla-298-million/

[NatsDad14]

Absolute derision, but Werth is a better fielder, this is a better deal.

http://www.fangraphs.com/blogs/index.php/crawford-and-gonzalez/

Shows why Holliday is an underrated player.

[PANatsFan]

http://www.fangraphs.com/blogs/index.php/crawford-and-gonzalez/

Shows why Holliday is an underrated player.

How is Jeter on there with that insane BABIP and that incredibly bad fielding value? Positional adjustments are ridiculous, I guess.

[Lintyfresh85]

How is Jeter on there with that insane BABIP and that incredibly bad fielding value? Positional adjustments are ridiculous, I guess.

Well the difference in a full year of DH'ing versus a full year of playing catcher is 30 runs, or three games... so yeah, positional adjustment is crazy.

[NatsDad14]

How is Jeter on there with that insane BABIP and that incredibly bad fielding value? Positional adjustments are ridiculous, I guess.

BABIP tends to be more stable for position players. 5 year sample size is big enough to say that Jeter is pretty close to that when it comes to BABIP. I don't think positional adjustments are that huge. Look at what the average SS produced (.262/.319/.374, 91 OPS+) compared to a 1B .264/.350/.452, 120 OPS+. That is a huge difference. It's hard to play offense and defense at SS at the same time.

[natsfan4evr]

The Lerners are praying that this team is competitive when Werth is cashing in big time.  If they can have a +100 million dollar payroll by then, it wouldn't be such a burden on the rest of the team.

[daggerrrrrr]

Some dumb ass blogger want to compare the Jayson Werth deal to that of Alfonso Soriano. He's saying it will be just as bad as the deal Soriano signed with the Cubs.     http://cubsbillygoatblog.blogspot.com/2010/12/bad-contract-waiting-to-happen.html  Why is everybody hating on the Nats?

[Lintyfresh85]

Soriano has been worth 14.1 wins in his first four years with the Cubs.

Right now wins are 'werth' 4.5 million a win.

14.1/4 = 3.52 wins a year

3.52 x 4.5 million = 15.86 million a year.

Not a terrible return on your investment. Especially with Werth's deal.

[The Chief]

Or, they just wanted to take the saved money and invest it.

That way, they're paying less of the contract.

PA is just having a conniption at this comment because he's hyper-sensitive to possible LAC remarks, but IMO this was not a LAC remark.

[PANatsFan]

PA is just having a conniption at this comment because he's hyper-sensitive to possible LAC remarks, but IMO this was not a LAC remark.

It was a conniption over the logic. Read Kilgore.

[The Chief]

I did.  Not saying I think backloading to horde interest makes sense I just think Linty's comment was an independent musing.