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Dead Money and What It Means for the Minnesota Twins


Death. That word doesn’t sure doesn’t look good, does it? Death is something we all have to face sooner or later but would like to put off as long as possible. Is this getting weird? Let me try to tie it to baseball. Today we’ll take a look at dead money and how the Minnesota Twins have done a good job of avoiding it.Like death, New York Yankee fans, and Logan Morrison shirseys, dead money is something to be avoided. So, what exactly is dead money? While money is technically a dead tree with a picture of a dead guy on it (at least in the US), that’s not what we’re going for here. Luckily, Craig Edwards of FanGraphs has an answer for us. According to Edwards’ recent article, dead money is, “1. Money paid to players who have been released… 2. Money paid to other teams as compensation for players who have been traded... 3. Money paid to players who are still in the organization but who have been removed from the 40-man roster…”

 

For a smaller-market team like the Minnesota Twins (I know they’ve set a payroll record for 2020 and I’m grateful for that, but still…) whose window is wide open, having every penny available to spend on players who will help the team win now is very important. Plus, arbitration-eligible players like Byron Buxton and Jose Berrios are becoming more expensive by the year, potentially giving the Twins less financial flexibility to spend on free agents. Let’s take a look at the MLB leaders in dead money and see where Minnesota sits.

 

Download attachment: Dead Money chart pic.png

 

Notice the Minnesota Twins aren’t included in that list. Keep dead money out of Minnesota! We see more large-market teams like Boston and LA and thanks to Prince Fielder, Detroit even makes an appearance (they really are still paying him!).

 

In recent years the Twins have dabbled a bit in dead money. The trades of Phil Hughes and Ricky Nolasco (Terry Ryan-Era contracts) left the Twins paying part of their salaries and Adison Reed’s DFA qualifies as dead money, but those were fairly insignificant and didn’t really handcuff the front office in any way. And it’s all out of sight, out of mind now. Our money is alive!

 

Do any current Minnesota Twins pose a threat to become “dead money”? For the most part, the front office has avoided the type of big-money, long-term contracts that tend to degrade into dead money, favoring one and two-year deals. Of the young core who have signed extensions with the team (Max Kepler, Jorge Polanco, and Miguel Sano) none present much threat of becoming bad deals as all three are good, young, and cheap. I suppose one could find risk in Sano’s injury history and past weight issues, but he’s happily situated in “the best shape of his life” interval, and although he’s the priciest of the bunch, the money’s still not all that much.

 

With the Josh Donaldson signing and the trade for Kenta Maeda, Minnesota now possesses a couple of four-year contracts, but the amount of risk is questionable. Maeda’s contract is incentive-laden, with the Twins only on the hook for $3 million a year (and LA covering the cost of 2020, contributing to their pile of dead money), so there is little risk there. 2020 is Donaldson’s age-34 season, and he’ll be making $23 million a year with some injury history to boot, which definitely presents some level of risk. However, he’s in impeccable shape and he brings intangibles like his willingness to share his experience and expertise with younger players, which has already shown at spring training. With the team in full-on, win-now mode, taking on a little dead-money risk (or more generally, bad-contract risk) was practically a necessity. While there’s some risk of future dead money in Minnesota, I’m not exactly shaking in my flipflops (It’s too hot for boots where I live).

 

And technically, to become dead money, Donaldson or Maeda would have to fit the aforementioned parameters, i.e. be traded, released, or removed from the 40-man roster. That means highly-paid players like Albert Pujols, Miguel Cabrera, and Chris Davis, while resembling the dead in performance, have yet to become official dead money. The fact that none of those three players will be donning a Minnesota Twins jersey in 2020 or beyond, should be enough to make any Twins fan happy to be alive!

 

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This front office has done a great job of shedding the dead money and avoiding putting themselves in a position to take on dead money. The team friendly deals they have signed have been with players who have upside and they’ve limited the potential amounts that injuries might cost them by being very selective with the multi year deals that they have been willing to give. That payed off this off season with the Donaldson signing.

 

Does a buyout option also count as dead money…it should?

 

It should also be pointed out that this front office is not totally averse to dead money. The previous front office would have kept Hughs and his contract taking up a spot on the major league roster until that contract expired. Also, it is my belief that between Bailey and Chacín whichever one is performing worse when Pineda returns will probably be released.

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I think the Twins signing young players to long term contracts, even though the players still have a few years of team control left, was a big indicator the new FO is moving in a different direction.

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Just 15 more years on Bonilla's Mets contract.  I would make that guy show up to spring training every year, just to make him run sprints, shag flyballs, pitch some BP....

I was gonna ask if the Mets money was still Bonilla's. I don't know who his agent was but I hope Bobby bought him something nice after that contract.

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Several thoughts on this:

 

  • Bonilla is still being paid $1.2M per year by the Mets, but that is not included in the dead money above (rightfully in my opinion). The Mets total is $9M, which is entirely David Wright. Those details are included in the article linked in the original post.
  • Bonilla's amount is deferred compensation, which I do not think should be included as dead money, because deferred compensation is determined in advance and can be directly planned for.
  • Again, in my opinion, dead money is not something that should be avoided at all costs. Once signed, player contracts are sunk costs, and management should do all they can to not include future amounts owed as a factor when determining roster composition.

 

 

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Just 15 more years on Bonilla's Mets contract.  I would make that guy show up to spring training every year, just to make him run sprints, shag flyballs, pitch some BP....

Nope, the Mets were stupid enough to sign this contract, they can live with it. If I were them, I would ask his agent to make a presentation every year to remind them of how foolish they were.

 

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Nope, the Mets were stupid enough to sign this contract, they can live with it. If I were them, I would ask his agent to make a presentation every year to remind them of how foolish they were.

Deferred money is a poor investment for the player, not the team.

That $1.2 million he's getting this year has far less value then it did when he signed the contract, far less.

Investing a huge chunk of money at 0.0 interest is laughably foolish. Or at least I'd think it is, I'm not an economics expert.

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Deferred money is a poor investment for the player, not the team.
That $1.2 million he's getting this year has far less value then it did when he signed the contract, far less.
Investing a huge chunk of money at 0.0 interest is laughably foolish. Or at least I'd think it is, I'm not an economics expert.

 

Typically yes, but the Mets' payout actually included an 8% interest rate. There was only 6M left on his contract and the original money was actually only deferred through 2011, everything that he's gotten since 2011 is the interest on the original deferment.

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Dead money is only an issue when you have ownership that imposes tight budgets and sets that as top priority. It’s only a bad thing when it’s a hinderance or opportunity cost, if you will. Nobody is excepting an owner to take a loss due to dead money, but realistically, it never gets to that point if you have competent roster management and development personnel.

 

Dead money isn’t necessarily a bad thing. Cutting unproductive players loose despite their contract isn’t a bad thing (some of the same people applauding the Twins for managing dead money were just ridiculing them for keeping Mauer around not long ago - can’t do that while being intellectually honest). Signing marquee players to significant contract and reaping the benefits early in the contract isn’t a bad thing (we may see it with Donaldson). I’d trade a championship for a bunch of dead money in a heartbeat (the earnings in the championship season more than offset the future loss, anyway, especially when discounted to present value). Trading a highly paid player for high-end prospects and eating some of the contract to facilitate a rebuild isn’t a bad thing.

 

When actually thinking about dead money, there are actually many more benefits in terms of a teams performance than negatives. As mentioned above, dead money may actually make you more money (negating the term “dead money” when netted against revenues).

 

As everyone knows, there is no salary cap in this game. The only thing that $0 in dead money is demonstrating is that you don’t award good players big contracts and go after safe profits over championships, which is an awful thing...,and frankly a slap in the face for fans. See Tampa Bay Rays, Oakland Athletics, Minnesota Twins and others who have a couple of nice years occasionally, only to get throttled by big spenders in the playoffs, offset by decade long rebuilds.

 

This is spun in a very Polad Pocket Protector-esque manor. Nobody, except the Poland’s accountant, should really give a rip about dead money. In fact, fans should welcome it as a sign of aggressive ownership/management that puts high value on winning (in the majority of cases).

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@Mr. Brooks - Bobby Bonilla didn't take a bad deal, he robbed the Mets blind. He had 6 million left on his contract that he deferred at 8% interest. Now they owe him $1.2M until 2035. He didn't give them an interest free loan.

My mistake.

That is indeed a great deal for Bonilla.

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