The Reality of Giancarlo Stanton’s Record-Breaking Contract

In mid-November, the Miami Marlins signed slugging-outfielder Giancarlo Stanton to a heavily back-loaded, 13 year/$325 million contract—the largest contract in North American professional sports history. While it was thought that the deal was structured in such a way as to give the Marlins the financial flexibility needed over the next six seasons to surround Stanton with a solid supporting cast, the Marlins believe there is also another benefit for them.

According to Pittsburgh Tribune writer Rob Biertempfel, Pittsburgh Pirates president Frank Coonelly elaborated on how the Marlins do not anticipate having to pay the full $325 million amount. Coonelly told the PirateFest crowd about a recent conversation he had with Marlins owner Jeffery Loria and president David Samson, in which they explained their reasoning behind the humongous contract.

From Biertempfel’s article on triblive.com:

When asked for his reaction to Marlins outfielder Giancarlo Stanton‘s 13-year, $325 million extension, president Frank Coonelly chuckled and said, “It seems like Monopoly money, doesn’t it?”

Coonelly then got off his stool on the stage and stepped toward the crowd. He talked about an exchange he had with Miami Marlins owner Jeffrey Loria and president David Samson during the recent owner’s meetings.

“They thought it was a great deal,” Coonelly said. “I just couldn’t get my head around the $325 million. They said to me, ‘You don’t understand. (Stanton) has an out clause after six years. Those first six years are only going to cost $107 million. After that, he’ll leave and play for somebody else. So, it’s not really $325 million.’ “

It would hardly be anything shocking if Loria were to have this type of underlying plan. Loria is known for very frugal spending habits, having even butted heads with the MLB Players Association twice since 2009 to increase payroll—once before the 2010 season which resulted in Major League Baseball requiring he Marlins to boost payroll for 3 years, and prior to the 2013 season in which the MLBPA threatened to again go to the commissioner’s office.

Stanton’s contract is broken down like this:

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*Opt-out year
**Club option worth $25 million, but can be bought out for $10 million—meaning the $10 million figure is the minimum amount he would earn in 2028
 

If the conversation Loria and Samson had with Coonelly is true, then that $325 million mark is nothing but fools gold—as Stanton will not even get close to it if the Marlins do not believe. In order to understand why, Giancarlo Stanton’s massive contract must be understood, as it can essentially be broken into 3 separate portions:

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The first two seasons—in which he makes $15.5 million—cover what his remaining two arbitration years and is money that the Marlins would have likely payed him regardless of his new contract, assuming he was not traded within the next two seasons. Therefore, it can be inferred that the $15.5 million total he will make over the next two seasons is representative of what the Marlins valued him to make in his two remaining trips through the arbitration process. However, $15.5 million is likely well under what Stanton might have gotten if he were to go through the process—as Juan C. Rodriguez of the Sun Sentinel reasoned that $23.5 million was reasonable as it gave him an even AAV of $10 million through the arbitration process, which was above Freddie Freeman‘s $8.9 million AAV and well below Mike Trout‘s $14.1 million that each received through the arbitration years of their individual contract extensions. Through Stanton’s deal, though, he makes a total of $22 million through his three arbitration seasons—earning an AAV of $7.33 million, which is less than Freeman and almost half of what Trout is getting paid for his arbitration years.

The second part of the 13-year contract is the four years after arbitration and before his opt-out, in which Stanton will make $91.5 million. In essence, this is the contract the Marlins are signing Stanton to. This part of the contract covers Stanton’s first four free agent seasons and obtains an AAV of $22.875 million which is, by no means, a terrible salary for Stanton himself. However, it is substantially less than the final four years of the deal—not including his 2028 club option—in which Stanton would make $118 million, resulting in an AAV of $29.5 million for his age 34-37 seasons. In other words, Stanton is being paid substantially more for his decline years than he is for his prime years from age 27-30.

As the graphs above alludes to, Stanton makes the overwhelming majority of his $325 million dollar contract in the third part of his contract, which occurs after his 2020 opt-out. This portion of the deal is worth a minimum of $218 million, but could rise to $233 million if the Marlins were to exercise his 2028 $25 million club option as opposed to exercising the $10 million buyout. Through a buyout of his club option, the latter half of Stanton’s contract will have a $31.143 million AAV—as opposed to the $29.125 million AAV that would be a result of the exercising of the club option. The 3rd part of Stanton’s contract essentially represents an offer of 7 years/$218 million that the Marlins would give him were he a free agent that season. Therefore, if Stanton were to opt-out and elect free agency following the 2020 season this is the contract he would be trying to improve upon, which is entirely plausible if Stanton continues to play at such a high level and MLB salaries continue to grow like they are currently. What this portion also represents is a fall back plan for Stanton’s side, in the case that his value has dropped due to injury, poor performance in previous years, or various other problems that could occur. In that case, Loria and the Marlins will not be thinking they got such a steal—as Stanton surely wouldn’t opt out if he were to face one of those problems.

It’s no surprise that Loria & company feel like they just got the steal of the century. If Stanton were to opt-out like it appears they expect him to, they are paying him less through arbitration then they might if they went through the process. At the same time, the Marlins also paid $91.5 million for his first four free agent years—which are in the prime of his career.

However, it’s not as if Stanton and the Wasserman Group were duped by Jeffery Loria. In the end, Stanton & Co. have the ultimate final say on whether the Marlins pay only 1/3 of the overall contract or the entire thing. Stanton would have to opt out to end this deal, and if he were to not then there is nothing the Marlins can do about it. The heavily back-loaded post-opt-out is set up in such a way that while it takes money away from Stanton in the present, it also allows him to have the financial security of knowing he will likely make that $218 million amount as a minimum.

The Marlins also continue to maintain, despite Loria’s comments, that they indeed signed Stanton for the long-term. In an interview on MLB Network Radio, Marlins president of baseball operations Michael Hill alluded to having not control of the opt-out, as he stated “there are certain provisions we have no control over.”

He also reasoned that the comments might have been taken out of context:

While Hill brings up a good point that the context of Loria’s comments were not known, it’s tough to imagine a scenario in which they reflect the same wholesome and joyous attitude the Marlins have been celebrating since they were able to ink Stanton for ’13 years’.

What Loria has truly done, if Stanton doesn’t stay like he expects, is gained the talents of Giancarlo Stanton for the price of 6 years/$107 million—which, at a $17.833 AAV, is below market value for one of the best outfielders in the game. As a result, the Marlins now obtain prime Stanton for less than the price of Hunter Pence, Jayson Werth, Shin-Soo Choo, and Matt Kemp, by their respective AAV’s.

Although Stanton has the final say, it appears Loria may have already come to the conclusion that Stanton will opt-out, which would make this record-breaking contract a huge win for the Miami Marlins. However, Stanton’s contract is only around a month old—not to mention that his 2020 option is still 6 years away. Never-the-less, the decision Stanton makes regarding his option year will be one that is interesting—regardless of the choice.

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