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Front Page: Find the Next Gerrit Cole? Twins Have Shown t...

Minnesota Twins Talk Today, 07:31 PM
Fresh off a Cy Young-caliber campaign and dominant postseason run, Gerrit Cole hits the free agent market as top prize among starting pit...
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Sign Yasmani Grandal, be open to trading Nelson Cruz if M...

Minnesota Twins Talk Today, 07:31 PM
Mitch Garver had a tremendous home run rate in 2019. If he is anything close in 2020 to the hitter he was in 2019, the Twins' have a spec...
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Front Page: Offseason Blueprint: Generics Over Brand Names

Minnesota Twins Talk Today, 07:30 PM
On a shelf sit two bottles of dishwasher gel. One is a brand name you’re familiar with, the other a generic. You start reaching for the b...
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Front Page: Women's Baseball Experience Part 2: Women...

Minnesota Twins Talk Today, 07:12 PM
When you sign up for the Women’s Baseball Experience, they only have “Program and Women in Sports Panel *Please check back for panel list...
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Front Page: Jhoan Duran Headlines Twins Roster Additions

Twins Minor League Talk Today, 07:05 PM
The Minnesota Twins have announced that right-handed pitchers Jhoan Duran and Dakota Chalmers, infielder Travis Blankenhorn and outfielde...
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3 Creative Ways for Twins to Leverage Their Spending Flexibility

The Twins find themselves with a lot of freed up money to burn this offseason. What we've learned about this front office is that they don't mind spending, but strongly prefer to avoid long-term commitments and backloaded contracts. Which... can make it kinda hard to spend on premium talent.

Thinking beyond your typical high-profile free agent contract, however, there are a number of interesting possibilities.
Image courtesy of Tommy Gilligan-USA TODAY Sports
In his Payroll Analysis feature for the Offseason Handbook, John Bonnes surmises that the Twins could plausibly push payroll to around $140 million this winter, giving them up to $70 million in spending flexibility. That total would push them past their 2018 and 2017 payrolls, but only modestly so. It's a reasonable target for a team that's in championship contention and experiencing a wave of renewed fan investment.

In three shorts years since taking over as general manager under Derek Falvey, Thad Levine has already made some of the boldest free agent splashes in Twins history. The contracts given to Jason Castro, Addison Reed, Lance Lynn, Nelson Cruz and Marwin Gonzalez may not be lofty signings relative to the rest of the league, but judged against the standard set by Terry Ryan, they were tremendously aggressive signings.

With the exception of Castro, however, none of these pacts were for more than two years. The Twins reportedly backed out of the Yu Darvish derby two winters ago because of his contract length demands. Minnesota epitomizes baseball's general aversion to bulky free agent deals, and to committing enormous guaranteed sums to players in their 30s.

You know what? It's undeniably smart, especially for a team with finite payroll constraints. Ongoing flexibility is a worthy aspiration and directive for this front office. Let's explore some ways the Twins could maximize their present cash surplus while staying true to their strategically prudent ways.

Frontload a Free Agent Contract

Are the Twins going to sign Gerrit Cole to a deal pays him $40 million as a 34-year-old in 2025? Probably not. In fact, they're likely aiming to avoid any huge financial obligations down the line. But let me throw a theoretical scenario at you.

Say Minnesota is targeting Madison Bumgarner. (You can insert the name of another high-end free agent starter as you please.) He has a five-year, $100 million offer in hand from another team, with salaries evenly dispersed across the length of the contract, maybe even backloaded. Pretty standard framework.

Okay, Twins might not want to go there. But what if they proposed this contract: five years and $96 million, with $30 million salaries in each of the first two seasons, followed by an opt-out clause, and then $12 million salaries in each of the final three seasons. This gives Bumgarner the ability to make an extra $20+ million over the next two years, then hit free agency again at age 32 for another big payday. Meanwhile, if things fall apart on him, he still has three years of solid paychecks guaranteed. Basically it gives him the ability to bet on himself while maintaining security.

From Minnesota's perspective, the extra money up-front doesn't matter much, and they ensure they won't be saddled with a major payroll drain just as guys like Jose Berrios, Miguel Sano, Byron Buxton and Taylor Rogers are getting expensive or reaching free agency.

You can tinker around with the specific terms and numbers, but in general I think the heavily front-loaded opt-out contract is a model that could help the Twins compete for prime talent in free agency while remaining nimble.

Trade for a Hefty Salary

Teams that are willing to take on a burdensome contract often give up less in prospect capital to acquire a player. As it happens, there are several teams looking to shed payroll this winter, even – if rumblings are to be believed – heavy hitters like the Red Sox and Cubs.

With considerable short-term flexibility, might the Twins be able to land a player like David Price ($32M/yr owed through 2023) or Kris Bryant (due around $40 million his final two years of arbitration, pending his service time grievance) for a relatively light return?

Frontload Internal Contract Extensions

This might not be as exciting as flashy outside pickups, but team-friendly extensions for core players – like the ones inked with Jorge Polanco and Max Kepler in the spring – are critical to the franchise's long-term health, enabling the front office to making impactful additions year after year.

In the cases of both Polanco and Kepler, the Twins gave large immediate raises in exchange for reasonable rates and team options during the latter portions (which also happen to encompass the players' primes). It'd be great to see the front office take a similar approach this offseason, maybe even bringing it a step further.

Earlier this week, Cody Christie looked at five extension candidates, and of course Berrios was at the top of the list. The 25-year-old is projected to make somewhere around $5 million in his first turn at arbitration this offseason, but what if the Twins bumped that up to – say – $9 million, with an ensuant raise the following year? What kind of discount might that score for his first few years of free agency?

The bottom line is that Minnesota has a ton of spending flexibility right now, but it's a fleeting reality if the Twins hope to keep their core intact. They have at least seven key players in the arbitration process now, which puts those fixtures on a rapidly rising pay scale.

Moves like the ones above will serve the team's short-term and long-term goals, aggressively pursuing a winning window while maintaining the freedom to keep the band together.

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34 Comments

Front-loaded deals sound good on paper, but since nobody does it, I have to assume there are more downsides. One was mentioned above. I imagine there are significant tax differences too. Not all $100 million contracts equal the same amount.

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tarheeltwinsfan
Nov 09 2019 07:26 AM

 

Player-Option - Player chooses to pick up the option in the contract or become a Free Agent (Opts-Out)

 

Club Option - Team chooses to exercise the option in the contract to keep the player or declines the option and the player is a Free Agent...typically there is a buyout amount that the club pays to end the contract

 

Mutual Option - Either Player or Team can pick-up or decline the option in the contract 

 

Fan Option - No such thing...but it's fun to wish and hope for some to stay and others to go

Thank you for this explanation.

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whosafraidofluigirussolo
Nov 09 2019 09:11 AM

Front-loaded deals sound good on paper, but since nobody does it, I have to assume there are more downsides. One was mentioned above. I imagine there are significant tax differences too. Not all $100 million contracts equal the same amount.

 

Teams tend not to do it because, independent of other payroll concerns, expected inflation means that $X (whatever amount) a few seasons from now is less than $X now. So in "real" monetary value (granted, a pretty abstract concept), the same dollar amount in a multi-year contract is somewhat smaller if it's back-loaded than if it's front-loaded or at a flat yearly rate.

 

That's the explanation I've heard. I suppose players might like the greater "real" value of a front-loaded contract—but maybe also wouldn't like the chances that decreasing salary in the later years of a contract could make it easier for their teams to trade them.

 

Anyway, those are general cases, and I don't think it's impossible that a team or a player would be more interested in a front-loaded contract under particular circumstances. Having a young core that's a year or two away from getting expensive seems to be a reason to consider it.

 

When the FO refused to offer Darvish the opt out he wanted, Falvey said something to the effect of, "I don't imagine a scenario where I'd ever consider giving a player opt out."

When the FO refused to offer Darvish the opt out he wanted, Falvey said something to the effect of, "I don't imagine a scenario where I'd ever consider giving a player opt out."

To which the obvious rejoinder is, "then you are putting yourself at a negotiating disadvantage relative to other teams when targeting the very top-end talent, and you will have to compensate with more guaranteed money, or other inducements."

 

I don't much like the opt-outs either, despite repeated arguments they don't really hurt, but they're a necessary tool.

    • DocBauer likes this

To which the obvious rejoinder is, "then you are putting yourself at a negotiating disadvantage relative to other teams when targeting the very top-end talent, and you will have to compensate with more guaranteed money, or other inducements."

I don't much like the opt-outs either, despite repeated arguments they don't really hurt, but they're a necessary tool.


Also not a fan of opt outs. You have a good thing going, you'd like to keep it going and not allow a fixture on your team from walking away and now you have a hole to fill all over again.

Then again, if your milb system is healthy, you may have an option ready or about ready to help plug that hole. Futher, let's say you get Wheeler for 3 great seasons and he opts out looking for that one final big deal. Theoretically, someone else now gets stuck overpaying for his final years.

Absolutely understand the negative impact and the FO mot cozying up to the idea. But I sure hope they re-consider because it really could be a useful tool.

 

Also not a fan of opt outs. You have a good thing going, you'd like to keep it going and not allow a fixture on your team from walking away and now you have a hole to fill all over again.

Then again, if your milb system is healthy, you may have an option ready or about ready to help plug that hole. Futher, let's say you get Wheeler for 3 great seasons and he opts out looking for that one final big deal. Theoretically, someone else now gets stuck overpaying for his final years.

Absolutely understand the negative impact and the FO mot cozying up to the idea. But I sure hope they re-consider because it really could be a useful tool.

I'm almost more concerned about the negotiation psychology, of getting sucked into committing to one extra year at too high a price, with the rationalization that "eh, he'll probably have opted out by that time anyway."

    • DocBauer likes this

I'm almost more concerned about the negotiation psychology, of getting sucked into committing to one extra year at too high a price, with the rationalization that "eh, he'll probably have opted out by that time anyway."


Agreed. And that sounds almost exactly like the Darvish contract doesn't it? Extra year plus the opt out. Really, really puts FULL control in the hands of the pitcher.
    • ashbury likes this

What term would have been used if the Twins had chosen not to pay Cruz's option for 2020? I'm not arguing a point, I'm just trying to gets the term for when the team elects to sever a contract by not renewing the contract, or buys it out? Apparently, it would be incorrect for me to say that the team "opted out " of the contract in that scenario.

Buy out. It’s what the Twins did to Perez.

If they had picked up the team option on Perez he would have been paid 7.5M to stay on the team. If they chose to not keep Perez, which they did, the player gets an agreed on amount that was made when the contract was first signed. They bought him out for 500K, essentially paying him that to go away.

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