Breaking Down the Ackley Contract

I will warn you right from the get-go, this will be a very technical post. We're going to dig into the Collective Bargaining Agreement to understand exactly what the Mariners gave up when they gave Ackley a guaranteed major league deal. This will be a somewhat dense post, but I find baseball economics fascinating.

Dustin Ackley's contract is highly deceiving. It was originally reported that it's for $9.5 million. Then, it came out that it was $7.5 million with escalators. On top of all this, it is a major league deal. There is a bunch of technical language getting thrown around, and it's worth understanding. Digging in to Ackley's deal reveals that the M's hardly got a bargain, but also did some significant negotiating.

According to Jim Callis at Baseball America, here are the terms that Ackley agreed to:

• $6 million signing bonus
• MLB contract for 5 years (2009 - 2013)
• $1.5 million in guaranteed in salaries
• An additional $2.5 million is available based on how quickly Ackley reaches the majors

Let's start with the signing bonus. That's the easiest to understand. That's the money that is Dustin Ackley's once he signs his name. It's essentially a one-time lump sum. When it comes to the MLB draft and you hear a player "signs for 'x' amount of dollars," 99 times out of 100 that is the signing bonus. That's because draft picks are typically signed to minor league deals with a signing bonus.

Already, we can see why Ackley's deal is deceptive. Surely $6 million is well above MLB's recommended bonus for the second overall pick, but third pick overall Donovan Tate got a $6.25 million bonus.

The MLB contract is a big deal though. Tate did not get one, and few prospects get a guaranteed one straight out of the draft. To begin with, it requires the player to be added to the MLB 40-man roster. That means a team loses some roster flexibility while the player develops in the minor leagues. More importantly, from the player's perspective, it immediately puts them under the provisions of the Collective Bargaining Agreement.

What exactly does that mean?

It basically means a prospect is going to live the good life as they work towards the majors. Only players that have appeared in the majors, or are on a team's 40-man roster, are covered in the Collective Bargaining Agreement. All other players (the majority of minor-leaguers) are pretty much at the mercy of the franchise that controls them, until they are eligible for the rule 5 draft. Let's not get started on the Rule 5 draft here though.

Minor League Baseball's website says a minor leaguer makes at most $1,100 per month in their first season. After that, contracts are "up for negotiation."Assuming a player makes $1,100 a month for a six months (which is pushing it because a minor league season is more like five months), they will make $6,600. However, a player on his first major league contract, according to the CBA, must make a minimum of $32,500 in the minor leagues. So, to recap, a prospect not covered by the CBA gets $6,600 at most. A prospect covered by the CBA gets $32,500 at least. That's the difference a major league contract makes.

However, Ackley has it even better. He has a guaranteed $1.5 million in salaries for the duration of the contract, which averages out to $300,000 per year. That's well above the $32,500 minimum. However, it is also well below the $400,000 minimum major league salary. Hence, the $2.5 million "based on how fast Ackley makes it to the majors."

For this post's sake, let's assume that $2.5 million is spread evenly throughout the deal. That essentially makes it a $500,000 bonus per year for every year Ackley is in the majors. That would make his salary $800,000 per year for every year he is in the majors. That, of course is well above the $400,000 minimum.

Now it's time to throw out a hypothetical: What if Dustin Ackley had signed a more traditional contract? What if he had simply signed a minor league deal with a $6 million signing bonus?

We'll have to make some educated guesses. Let's say that Ackley spends all of 2010 in the minors, not even on the 40-man roster. Let's say he spends all of 2011 in the minors too, but on the 40-man roster. After that, we will assume he is in the majors, where he would earn the major league minimum through 2013. Even though at that point there will be a new CBA, we will assume the minimum salary stays at $400,000. In all likelihood, it will go up, but I'm trying to be as conservative as possible.

We'll say Ackley doesn't even play in 2009, and earns $5,000 in the minors in 2010. Then, he earns $32,500 in 2011. After that, he earns $400,000 for two seasons. That's five years (the same length as the deal he signed), and an additional $837,500 in salary paid to him. With the $6 million bonus, that's a total of $6,837,500.

Let's make a little more realistic estimate. Let's say Ackley spends all of 2010 in the minors, but is up in the majors halfway through 2011. Also, let's assume the minimum salary goes up to $425,000 for 2012 and beyond. Since Dustin is a top pick, let's say the M's give him $6,000 total in 2010. We also already know he will play in 2009, so let's give him $1,100. Then, he makes around $220,000 total splitting time between the minors and majors in 2011. The next two years, at $425,000 per year, Ackley makes $850,000 total. So, over 5 years, with the the $6 million bonus, Dustin Ackley makes a total of $7,077,100.

Consider the same hypothetical career track from the last paragraph with Ackley's actual deal. We'll estimate the prorated amount of $300,000 per year for 2009 to be around $60,000. Spending all of 2010 in the minors gives him $300,000. Splitting time between the majors and minors in 2011 comes to $550,000. Finally, for the last couple years, Ackley makes $800,000 annually. With the signing bonus, that comes to a grand total of $8,510,000.

More terms on Ackley's deal are not known right now, and the odds are he probably earns more in the back end of the deal. That would drive up the the total money he earns. Still, the difference between Ackley's MLB contract and what he would have received otherwise is likely in the neighborhood of $1.5-2.5 million dollars. It's hardly a bargain for the Mariners, but a portion of the money agreed to in the contract is money that Ackley would have earned anyway without the guaranteed MLB deal. Also, that extra $1.5-$2.5 million is spread over five years, making it easy to absorb.

Dusting Ackley's deal did not happen in a vacuum though. Scott Boras said he was going for Mark Teixeira-type money. Teixeira, when he was drafted in 2001, also got a guaranteed MLB contract. Furthermore, Ackley was one of three 2009 draftees to receive a Major League contract, along with top pick Stephen Strasburg and ninth pick Jacob Turner. All these deals were negotiated by Boras. Here is a look at them side by side. Estimated values are in italic:

	Teixeira	Ackley	Strasburg	Turner
Bonus	$4.5 mil	$6 mil	$7.5 mil	$4.7 mil
Year 1	N/A	$200K	$400K	N/A
Year 2	$250K	$250K	$2 mil	$800K
Year 3	$750K	$500K	$2.5 mil	$900K
Year 4	$1.5 mil	$850K	$3 mil	$1.1 mil
Year 5	$2.5 mil	$1.1 mil	N/A	$1.5 mil

The known terms of Turner's deal right now is that he makes anywhere between $800,000 to $2.15 million annually depending on how quickly he reaches the majors. There are also some options years, and a few opt out clauses I chose to neglect to keep this comparison somewhat simple. Furthermore, Turner's terms only start with the 2010 season (which is why year 1 in the table is marked "N/A"). For this comparison, I'm assuming Turner spends two and a half years in the minors. That's a very fast track for a high school pitcher like him, but he went to the Tigers, who brought up prep pick Rick Porcello after only one full season in the minors. I'm taking complete guesses on how Turner's contract escalates, in case you are wondering.

For Ackley's deal in the comparison, I decided to take guesses at how it might escalate (since it likely does). I assumed he makes the majors part way through the 2011 season. That's a full year ahead of Turner in this projection. My guesses on how Ackley's deal escalates are what cause the table's numbers to look different than my initial analysis, where I simply averaged total values over the length of the deal. You'll notice that the total in the table for Ackley comes to a little over $9 million, which is within range of my above analysis. The Year 1 total would be prorated, just as Strasburg's is.

Compared to other guaranteed MLB deals in draft history, Ackley's looks good. His total approaches Teixeira's, but the structure is noticeably different. The bonus is bigger, but this is also 2009 versus 2001. Inflation must be considered. Also, Ackley will only maximize his deal if he gets to the majors in a hurry - a provision that wasn't a part of Teixeira's initial deal, or Strasburg's for that matter.

By the way, any doubt that the Nationals want Strasburg in the majors on opening day 2010 at the latest should be gone. Just look at the deal he signed. Nobody is paid millions to develop in the minors. Boras knows that too. It's no mistake Strasburg's contract runs out after what will be presumably three full seasons in the majors. It preserves all of Stephen's arbitration years. In the end, Washington gave up all the years that they could have payed Strasburg the league minimum, and got no breaks in return. Talk about a player-friendly deal.

Strasburg is a special case though, at least in most people's eyes. What's more interesting is comparing Ackley's contract to Turner's. Dustin Ackley is a college position player, while Turner a high school pitcher. Clearly, Turner is a higher risk pick. He was also selected later than Dustin, albeit only four slots later. However, while Turner's bonus was smaller, he probably will have higher annual salaries than Ackley. That's remarkable, considering Turner will probably spend longer in the minors, and is a much higher risk to flame out.

In the end, Dustin Ackley got paid. He's a clear winner in the deal. Not only did he get a bonus way above slot recommendation, he got an MLB contract that will pay him above MLB minimum salaries to boot. Scott Boras represented him quite well.

The Mariners should be happy too though. Compared to the other MLB deals signed this year, Ackley's is the most conservative, even though he is the safest bet to pan out. Furthermore, Boras did not get a Teixeira deal, even though the money could be similar. Ackley will have to earn it though, because of the $2.5 million tied to when he makes the majors. That's a safeguard that wasn't in Teixeira's contract.

I'm not a fan of giving draft picks MLB contracts, but Ackley is worth it. The deal is reasonable. The M's had room on the roster right now. There is a decent chance Dustin would have forced his way on to the 40-man roster by as early as next year anyway. I'd still say Boras won these negotiations, but I'm not going to call the Mariners losers.

Trade Deadline Recap

The trade deadline came and went yesterday with one big move and a flurry of smaller ones. The nature of the deadline has changed considerably the last couple years as bad teams are much less willing to part with their superstars. That's partly because contenders are also less willing to give up their best prospects. As a result, deadline trades are often moves involving second-tier players and either marginal or extremely young prospects. Here's a look at what happened this year (numbers in parentheses are the player's value according to my rating formulas; in the case of prospects with minor league numbers, their adjusted Major League rating is first followed by their raw, unadjusted rating):

• Rangers trade 1B Mark Teixeira (86) and LHP Ron Mahay (68) to the Braves for C/1B Jarrod Saltalamacchia (72), SS Elvis Andrus (37/68), RHP Neftali Feliz (23/93), LHP Matt Harrison (59/84), and LHP Beau Jones (30/71) - This was easily the biggest trade of the deadline, as it would be the biggest pretty much any year. This is a huge deal for the Braves as they shored up their biggest hole in the lineup, and even got a little bullpen help while only moving one guy off their major league roster. Atlanta was in the hunt for the wild card before this move, but now they are right there with the Mets for the NL East crown, and have also positioned themselves for a World Series run. This is the type of deal that makes giving up great young talent worth it. As for the Rangers, they really had to trade Teixeira. They did have control of him next year, but he turned down a contract extension worth about $140 million, so it was clear he wasn't interested in staying, and keeping him would have turned ugly. The Angels were rumored to be offering 1B Casey Kotchman (85) and LHP Joe Saunders (76/85), which is the deal I would have picked between these two, but the concern of trading within the division is understandable. In the Braves deal the Rangers got five legitimate prospects, though it will be some time before anyone besides Saltalamacchia contributes. All in all, an amazing deal for Atlanta and a good one for Texas.
• Red Sox trade RHP Joel Pineiro (56) and cash considerations to the Cardinals for a player to be named later - The only intriguing thing about this trade is if that player to be named is worth paying attention to. Pineiro certainly isn't at this point. I think St. Louis wants to have a starting rotation completely comprised of converted relievers by the end of the year.
• Astros trade 3B Morgan Ensberg (67) and cash considerations to the San Diego Padres for a player to be named later - Without a doubt, Ensberg has slipped some, but the Astros never fully valued Ensberg's ability to work counts. They couldn't get past his low batting average the last couple years. Unlike most deals that are this small, I could see Ensberg making a bit of an impact in San Diego.
• Royals trade RHP Octavio Dotel (65) to the Braves for RHP Kyle Davies (65) - The Royals got the better end of this deal. Dotel is an oft-injured mediocre reliever in the twilight of his career at this point, while Davies is a struggling young starter. Dotel has more value to the Braves right now, but these two players are of essentially equal value right now, except one is on his way down and the other on his way up.
• Dodgers trade INF Wilson Betemit (75) to the Yankees for RHP Scott Proctor (53) - This deal is going to blow up in the Dodgers' face. Betemit, much like Ensberg, wasn't valued thanks to a low batting average. However, he has shown good plate discipline and very good power, and he's also just 25 years old. On the other hand, Scott Proctor's ERA will jump up in a hurry if he doesn't start pitching better. The Dodgers could use some help in the bullpen, but not at this price.
• Giants trade RHP Matt Morris (80) to the Pirates for OF Rajai Davis (77/88) and a player to be named later - This gets my vote for oddest trade at the deadline. I can't believe that of all the teams looking to upgrade pitching the Pirates end up landing the best pitcher at the deadline. However, in classic Pirates fashion, they still got the worst end of this deal by far. This is a great move for the Giants because they unload Morris's contract and they have plenty of talented young pitchers. What they don't have are younger position players, and Davis looks like a leadoff hitter cut out of the Juan Pierre/Willy Tavares mold (though Davis has a little pop too). I don't get what the Pirates are thinking here, but I could say that for virtually anything they have done in the last 15 years.
• White Sox trade OF Rob Mackowiak (74) to the Padres for RHP Jon Link (39/72) - This is another underrated move by the Padres. Mackowiak is a tremendous option off the bench thanks to his solid bat and versatility. Really, he's good enough to be a serviceable starter. It probably made sense for the ChiSox to move an outfielder and make space for OF Jerry Owens (66/73), since he fits the small-ball style Ozzie Guillen prefers, but they either should have got a little more for Mackowiak or offered OF Darin Erstad (68) instead.
• Padres trade LHP Royce Ring (75/83) to the Braves for LHP Wil Ledezma (54) and RHP Will Startup (64/75) - I wonder if the Braves know how good Royce Ring is, because though Mahay is being heralded as the lefty the bullpen needed, Ring is younger and better. Ledezma has had a tough year, but he's young and not as bad as he has performed this year. Talent-wise the trade is pretty equal, but Ring clearly upgrades Atlanta's bullpen (if they are smart enough to put him there and not AAA) and I don't see how Ledezma and Startup really help the Padres, though they don't hurt the team either.
• Rangers trade RHP Eric Gagne (74) and cash considerations to the Red Sox for LHP Kason Gabbard (73/81), OF David Murphy (65/76), and OF Engle Beltre (6/65) - This deal would have been great for the Rangers even with only Gabbard included, but they also got a solid outfielder in Murphy, and a complete wild card in Beltre. As for the Red Sox, I don't see why they did this deal given how strong their bullpen already is. They mortgaged a little too much young talent for a rather minimal gain.
• Mariners trade RHP Julio Mateo (67/75) to the Phillies for SS Jesus Merchan (66/94) - Really, this move was all about letting Mateo move on. Merchan intrigues me, but he's shown only marginal hitting ability at any level before this year. However, it was clear that Mateo was going nowhere with the Mariners. I included Mateo's unadjusted rating, but considering his age and MLB experience, in all likelihood he has peaked around the 67 rating. Mateo is going to be a nice addition to the Phillies bullpen, and maybe the M's really got something in Merchan.