Talking about millionaires can be a very polarizing topic. You either love them, or hate them…or think they are ok (to quote Mitch Hedberg). At the very least, it is hard to find people who actually feel sorry for them.
Feel sorry for someone who is making millions of dollars? Give me a break! (cue ESPN’s 30 for 30 music) What if I told you there is a millionaire who you might actually be able to feel sorry for and it’s a baseball player?
Feel bad for a millionaire who gets paid to play a game for living? Give me another break!
Ladies and gentlemen, I submit to you, Arizona Diamondbacks first baseman Paul Goldschmidt.
Before we begin can we agree on one thing? We cannot talk about sports like we do real life.
Mutli-millionaire from Corporation X is not the same a multi-millionaire athlete. Derek Jeter gets paid because people come to the ballpark to watch him. You don’t see anyone grab a hotdog and a coke to go watch the CEO of Target.
Sports are basically a fantasy land and therefore should be talked about as one.
Just look at a current sports topic. Where will Carmelo Anthony sign to play basketball next season? Will he sign with the New York Knicks for 5 years worth $126 million, or will he sign with the Los Angeles Lakers for 4 years worth $96 million?
Fantasy. Let’s proceed.
The world of business and contracts in Major League Baseball can be confusing. I’ll try to be brief.
When a player is called up to the major leagues he is under that team’s control for three years, during which, he makes the minimum. After those three years are up, the next three years can be spent in arbitration.
Arbitration involves Player X saying something like, “I’m worth a $6,000,000 contract next season,” and the team saying, “We think you are worth a $4,500,000 contract next season.” If they can’t come to terms they send those two numbers to an arbiter who must decide which side is most correct. Teams and players like to avoid arbitration as often as possible. If this process plays out, then on year 7 the player becomes a free agent, and if he does not have a contract, he can sign wherever he pleases.
Rarely do you ever see this process play out with a star. The team will want to “lock him up” and the player will want “more than the minimum.” Since the player is under the team’s control, it limits his negotiating power. “Locking him up” can happen at any time.
For example, the Houston Astros signed Jon Singleton to an 8 year, $30 million deal before he even had a single major league at bat.
2014 is Paul Goldschmidt’s third year. Being very proactive, the Diamondbacks approached Goldschmidt about a contract extension in March of 2013. He had just come off a very promising 2012, and was poised to get even better.
The Diamondbacks saw an opportunity to make a potentially great business move, and Goldschmidt saw a way to get a raise from his $482,000 salary in 2012, and $500,000 upcoming in 2013. They agreed to a deal that could end up being 6 years and $46 million.
Major improvement for Goldschmidt wouldn’t you say?
Not only does he get a raise in his third year, but he does not have to worry about arbitration. The sacrifice he makes is that he has to give up two years of free agency, but his contract in those years will be $11 million and $14 million. They all come out winners right?
Well, sort of.
The 2013 season begins and Goldschmidt immediately started tearing the cover off the ball. Halfway through the season people reflected back on his new contract and suggested he might have made a mistake.
$46 million! A mistake? It was even suggested that Goldschmidt might have left as much as $75 million on the table.
If he only waited one more year he could have been in line for an even bigger payday. After the 2013 season, Atlanta Braves first baseman Freddie Freeman signed a contract extension for 8 years and $135 million. Goldschmidt, although 2 year older, had a better 2013 season than Freeman.
Did the Diamondbacks pull a fast one on him? Did they sneak into his room while he was asleep placed a pen in his hand, and then used a scribble as his signature?
Paul Goldschmidt’s signing bonus after being drafted was $95,000. He then went on to make very little money playing minor league baseball. His first two years in the major leagues he made a total of $982,000. Great, great money but below average money in the fantasy world of sports, where money is thrown around with little to no regard.
The moment Goldschmidt signed his new contract, his third year salary became $1,000,000. If someone offered you a deal to make as much money in one year as you did the previous 2 years you would probably take it, right? Well what about this scenario…
You are a consultant. You consult for my fake company Baker Inc. You help me work on business deals, and you are showing great promise. Out of college I hired you on for two years. I paid you $40,000 after bonuses last year, and this year I am paying you $45,000 after bonuses. What if I came to you and said that I want to sign you for 4 more years and will pay you $90,000 in your third year of employment, but you have to forgo bonuses. The three years after that would be for $105,000, $115,000, and $135,000 and again would be bonus free.
Would you sign that deal? I’m giving you more than you made the previous two years, but you run the risk of out performing your contract. Especially because you may help me close a billion dollar business deal that you would normally get a cut of.
The safe play would be the take the deal. Who knows what the years will bring.
You could go to the bonus structure and only make $40,000 or you could make $300,000. It sounds like a silly scenario but it is exactly the dilemma Goldschmidt and other major league players face. Goldschmidt could see his potential and say, “forget a contract, I’m going to arbitration and I’m gonna shoot for $15 million a season.” He could accomplish that or 5 games into the 2015 season he could break his back and never be the same again. You do not have to look far to find that example…
In 2008 the Arizona Diamondbacks had arguably one of the top 3 pitchers in baseball, Brandon Webb. He was all set to sign a contract extension for 3 years, worth $54 million. Almost $20 million a season, and believe me when I tell you, he was that great.
The contract did not get signed though because the Diamondbacks were concerned about his shoulder. What happens? Opening Day 2009, Brandon Webb hurts his shoulder and NEVER PITCHES AGAIN. It is an absolutely depressing true story. Yes, Webb made millions playing baseball, but he was about to make $60 more millions, and in an instant it was gone.
Goldschmidt could have tried to wait it out but he didn’t. He saw a chance to set his family up and he took it. He is getting paid to play a game for a living, and someone wants to give him millions of dollars to do it? Where does he sign?
Why do I say that he might be someone we should feel sorry for?
I’m not suggesting we feel sorry that he left money on the table. The money he left on the table was only hypothetical. He is in a position that I believe no other player is in right now. Goldschmidt’s contract is so team-friendly, that I could not imagine a scenario where you trade him.
When you take into account his contract, he might be one of the top two un-tradeable players in baseball. Mike Trout, of the Los Angeles Angels of Anaheim, is viewed as untradeable because he is 22 years old and one of the best players in the game. However, when you look at Trout vs. Goldschmidt under the production & contract umbrella, who would you rather have?
Here are their numbers from last season.
Trout
Year Age Tm Lg G PA AB R H 2B 3B HR RBI SB CS BB SO BA OBP SLG OPS
2013 21 LAA AL 157 716 589 109 190 39 9 27 97 33 7 110 136 .323 .432 .557 .988
Goldschmidt
Year Age Tm Lg G PA AB R H 2B 3B HR RBI SB CS BB SO BA OBP SLG OPS
2013 25 ARI NL 160 710 602 103 182 36 3 36 125 15 7 99 145 .302 .401 .551 .952
After last season Trout signed a contract extension for 6 years worth $144 million. Remember, Goldschmidt signed for 6 years worth $46 million.
Are you really going to get $100 million more worth of production from Trout during that same time? Goldschmidt is in the position of being so good, and having a contract so good, that no matter how good or bad the Diamondbacks are they cannot trade him.
Sure, you can trade him and rebuild if you are a bad team, but even then you may not find an equal replacement in terms of value. If I ran the Diamondbacks and a team wanted to trade for Goldschmidt, I would tell that team, “OK, the trade package to get him has to start with your three best prospects then we will work out something from there.” A team would never make that trade, but I would not trade Goldschmidt for anything less.
Who knows what Paul Goldschmidt will look like at the end of his contract. He might continue to be an all star, and then he will be in line for a gigantic payday. Or he may be a flash in the pan and an afterthought in 6 years.
Regardless of what happens, his contract should never be viewed as a failure by the Arizona Diamondbacks. His contract is so good that he will most likely continue to out perform his peers who are making tens of millions more than him. His contract is so good that he might spend the next 6 years on a bad team, just because there is no justification for ever trading him. You may never again find production at such an amazing value.
Paul Goldschmidt is the untradeable first baseman who is out performing his quite possibly one of the most team-friendly contract in the history of mega-millions baseball. 162 times a year he gets to go out onto the field and remind us of that fact, and he does it all with a smile on his face because he is getting paid millions of dollars to dominate a game he loves.
That is why he is the only millionaire worth feeling sorry for…because if he doesn’t feel sorry for himself, maybe we need to.
