I had a reader ask me about what exactly the rumored six-year $50 million was. Now, I have nothing inside about this rumored offer, everything you are going to read here is an educated guess.
Let’s start with the dollar figure, $50 million. It seems likely that dollar figure includes a signing bonus, something every player drafted gets when they sign with a major league team. I compiled the signing bonuses of the top five selections over the last four MLB First Year Player Drafts (2005-2008).
As you can see, the top bonus out there was a $6.2 million bonus for Giants CA Buster Posey. Let’s just assume Strasburg breaks that record with a $7 million signing bonus (it makes the math easier later on).
That leaves $43 million to be allocated. It seems almost guaranteed that Strasburg will receive a major league contract which immediately places him on the 40-man roster.
I would imagine that Boras is looking at a contract with similar parameters to what David Price or Pedro Alvarez received in the past two drafts. Basically, Strasburg would receive a major league salary if he was on the 25-man roster and a minor league salary, if not.
Here is my back of the envelope guess of how that $43 million could be spread out.
- 2010: $1 million if on the major league roster; $100K if in the minors
- 2011: $2 million if on the major league roster; $200K if in the minors
- 2012: $5 million if on the major league roster; $500K if in the minors
- 2013: $8 million if on the major league roster; $800K if in the minors
- 2014: $12 million if on the major league roster; $1.2 million if in the minors
- 2015: $15 million if on the major league roster; $1.5 million if in the minors
That adds up to a six-year $50 million contract. But that is its maximum value. The contract could be worth less than that if the Nationals were to option Strasburg to the minor leagues for four full seasons, which according to the CBA they could do. If he spent the full 2010-13 seasons in the minor leagues, the Nationals would be on the hook for $1.6 million in minor league salary and $27 million in major league salary. Adding that to the the signing bonus and you have a $35.6 million outlay.
I don’t believe that Strasburg is going to get anywhere close to the $50 million but that is how I could see it working out dollar-wise.
Beyond posturing, what exactly could Boras be trying to do with such an offer?
- He is attempting to get Strasburg paid well beyond what the MLB CBA dictates players with his service time can receive. Players in their first three seasons have no control over their salaries. Teams are allowed to assign the salary according to some minimum guidelines. The major league minimum salary for 2009 is $400K. And teams will provide small raises over each of the next two seasons. Ryan Zimmerman made $1.192 million over his first three seasons of major league service. Given that the major league minimum increases slightly each year, it’s a good bet that Strasburg would make no more than $1.5 million over his first three years under normal rules. Once he hits arbitration and assuming he is performing as expected, Strasburg could expect to see a jump in his salary after his third year of service. Again using Zimmerman as the example, this past off-season was his first in arbitration. He agreed to a $3.325 million contract which was an over 600% increase in his salary. My guess-timate above has Strasburg earning more than double that ($8 million). And the same holds true for years five and six where Boras’ demands would far outpace what arbitration would normally dictate.
- He is attempting to accelerate Strasburg’s progress towards free agency. Boras is doing everything within his power to get Strasburg the six years of service time necessary for his client to hit his big payday at as an early an age as possible. Strasburg will likely sign his first professional contract at 21 years of age. If he spends the next six full seasons on the 25-man roster, he will be entering his free agency at age 27, his prime where if things go well, he could sign a Sabathia-esque deal (seven years $160+ million). While free agency is theoretically possible after 2015, I would imagine that the Nationals would delay his 25-man debut by about 30-45 days in 2010, just to push his free agency out one season (until after the 2016 season). Teams do this all of the time.
These are just a couple of reasons off the top of my head. There are plenty more and the ones I provided have additional nuances that are “inside baseball.”
I may be incorrect in specifics, but the generalities, I believe, are true. The bottom line is that Scott Boras (or his PR folks) are laying the groundwork for maximizing the financial opportunities of their client, Stephen Strasburg