MLB's desire to limit contract lengths would benefit the Red Sox
The Boston Red Sox have allowed some of their best homegrown talents to slip away in recent years due to ownership's reluctance to pay a fortune to star players on massive long-term deals that extend until the end of their careers. That concern might be alleviated if the MLB owners get their way.
According to Evan Drellich of The Athletic (subscription required), MLB owners want to limit the length of major league player contracts.
“A reform that has been of interest to ownership for a number of years is a limitation of contract length,” said MLB commissioner Rob Manfred. “Obviously players love it, it gives them financial security for a very long period of time. The difficulty — and I think players will come to appreciate this as time goes by — those contracts result in a transfer from the current stars to yesterday’s stars. At some point, that has to be true. And I think it is an issue that is important for us to stay focused on, because it creates inflexibility that affects the quality of the teams that you put on the field.”
This change clearly isn't imminent since the Major League Baseball Players Association will fight anything that caps a player's potential earnings. Tony Clark, the executive director of the MLBPA, called it an "assault" on guaranteed contracts. We don't know what those limitations would be if they were ever implemented but we don't need to dig deep to see how this change could benefit the Red Sox.
Contract limits would help the Red Sox keep their stars
The Red Sox ownership group led by John Henry has proven they are willing to fund one of the top payrolls in baseball. Boston had MLB's highest payroll in 2018 and 2019 while ranking in the top three for a couple of years before that. They are still top-10 entering this season despite the perception that the Red Sox are operating as if they are a small-market team. They will spend. What they won't do is commit to a player on a long-term deal that extends until their late 30s or early 40s.
The free agency landscape has evolved in recent years with teams showing an increased willingness to splurge on lucrative long-term deals. Their intentions extend beyond an attempt to lure star talent with the highest total dollar figure. These deals are meant to circumvent the luxury tax rules by creating a bit of extra wiggle room beneath the threshold. Players are willing to sacrifice for a lower average annual value, which luxury tax payments are calculated upon, in exchange for the security of more years. This ensures they are still paid to be stars long after their skills have eroded to the point where they are no longer worth their salary, while the team gains short-term flexibility with some savings on the current payroll.
Boston hasn't bought into this strategy. While their stubbornness to adapt to the changing market has prevented them from competing for the top free agents, history suggests they are wise to be cautious. There is a long track record of superstars who earned mammoth long-term deals that didn't pan out. Miguel Cabrera, Albert Pujols, Robinson Cano, Prince Fielder and Alex Rodriguez are notable examples of players whose production drastically declined several years before the contract ended. Those contracts became an albatross that hindered the team's financial flexibility to build around their fading star. Those teams were forced to eat a significant chunk of salary on the back end of those deals after the players were no longer worthy of an everyday spot in the lineup or were designated for assignment.
Some teams are willing to gamble on these long-term deals, treating the sunk cost on the back end of the deal as if they were deferred payments. It's the price of doing business in modern free agency. It's going to backfire eventually, but the risk might be worthwhile for the chance to compete for a World Series title while the star player remains in their prime. The Red Sox are reluctant to pay that price since it's counterproductive to their goal of sustainable success.
Former Red Sox stars are now wearing different uniforms
While their aversion to these long-term deals might eventually be proven to be the wisest path, it has been frustrating for fans to see their favorite players leave for greener pastures.
We're still stinging from the devastating departure of Mookie Betts. The Red Sox offered the former MVP a fair deal that paid him approximately the same amount he ended up getting from his extension with the Los Angeles Dodgers on an average annual basis. Boston wasn't willing to go beyond 10 years though.
Betts aimed for a higher total value that put his contract among the highest in MLB history, which required tacking on an uncomfortable amount of years. Boston was backed into a corner that forced them to trade Betts to the Dodgers, who gave him the deal he wanted that lasts until he's 39 years old.
Last winter, the Red Sox claimed re-signing Xander Bogaerts was their top priority, only for the San Diego Padres to swoop in with an 11-year deal that blew their best offer out of the water. We can criticize the front office for their disrespectful offer the previous spring when they had the chance to lock him up long before Bogaerts hit free agency. That failure will haunt them.
However, when Bogaerts did hit the market, Boston was willing to pay him more per year than the Padres did. Once again, it came down to years. The Red Sox only wanted to commit six years for a 30-year-old shortstop and they were legitimately shocked when he ended up getting nearly twice as many years from San Diego.
Two cornerstones of Boston's last championship are now gone but we can imagine a world where both players had stayed if MLB had limitations on the length of contracts.
If MLB does eventually force the hand of the MLBPA by implementing contract reform, it's unclear what those limits would look like. Would teams be prohibited from offering contracts longer than 10 years? Boston probably keeps Betts if that had been the case when they negotiated with him. Would the limits be reduced based on the player's current age? Bogaerts might still be wearing a Red Sox uniform if a 30-year-old wasn't allowed to sign a deal longer than six years.
The Red Sox found the perfect extension for Rafael Devers
The Red Sox did budge on their stance regarding long-term deals when they signed Rafael Devers to an 11-year, $331 million extension. The difference is that Devers is only 26 years old. He'll be 36 in the final year of his deal, an age where he could conceivably still be a productive hitter.
The Devers extension is a perfect example of how the Red Sox would prefer to handle retaining their stars. Not only do they not have to worry about paying Devers a star's salary until he's approaching his 40th birthday, but the deal also doesn't include opt-outs.
The Red Sox had Bogaerts on a team-friendly deal that he was essentially guaranteed to opt out of as long as he was healthy. That put the team in an awkward position. They still wanted him for the next several years but not for another decade. Perhaps if they paid him more over the course of his previous contract, they could have avoided the inclusion of the opt-out clause that led to his departure. There are no such concerns with the Devers deal.
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An opt-out clause came back to bite the Padres with the contract for Bogaerts' new teammate, Manny Machado. The Padres signed the star third baseman to a 10-year, $300 million deal in 2019 that included an opt-out after the 2023 season, which Machado threatened to trigger if he wasn't given an extension. San Diego ended up giving him a new 11-year, $350 million deal earlier this year to prevent Machado from hitting free agency after this season. Instead of having Machado locked into a deal that pays him $30 million per year until he's 35 years old, the Padres gave him a raise on a new deal that lasts until he's 40. San Diego will ultimately end up paying Machado about $500 million between the two contracts, well more than they initially signed up for.
The current market is extremely favorable to the players. Teams are handing out mammoth deals to star players that extend beyond their prime. The opt-out clauses are becoming more common, giving players more of an advantage. If they perform to the expectations of their deal and the market explodes, they will opt out to get a bigger contract. If their performance declines or they get injured, they have the security of the years remaining on that existing deal.
We don't know if MLB's reform plans would address opt-outs but it might be a moot point if contract limits are short enough to make the clauses less appealing. Even if that's not the case, shorter deals would still fit into Boston's plans.
Unless the market shifts again with teams pivoting away from decade-plus long deals, the Red Sox will continue to be at a disadvantage to acquire the top free agents or retain their own stars until they change their stance on contract lengths. If Manfred and the MLB owners succeed in their goal to implement limitations, they will have found the solution for them.