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View Full Version : Clemens Contract - Guess What?


jabrch
01-13-2004, 07:48 AM
Astros signed RHP Roger Clemens, who had been with the Yankees, to a one-year, $5 million contract.
$3.5 million is being deferred for two years. In addition to his base salary, Clemens can earn an additional $1.4 million based on the Astros' attendance. The 41-year-old Clemens figures to get the start on Opening Day for Houston. He'll probably move into 11th or 12th on the all-time win list and second place in strikeouts if he says healthy this year.

Next time deferred money comes up, can we please not make it out to be a criminal offense? I'll blame JR for a lot of things. But deferring money on contracts is a standard practice in baseball. EVEN STEINBRENNER DOES IT.

steff
01-13-2004, 08:59 AM
Originally posted by jabrch
Next time deferred money comes up, can we please not make it out to be a criminal offense? I'll blame JR for a lot of things. But deferring money on contracts is a standard practice in baseball. EVEN STEINBRENNER DOES IT.



What does Steinbrenner have to do with Clemens contract with the Astros..??

anewman35
01-13-2004, 09:17 AM
Originally posted by steff
What does Steinbrenner have to do with Clemens contract with the Astros..??

Nothing, but Steinbrenner does use deferred money - he did it with the Sheffield contract.

jabrch
01-13-2004, 09:41 AM
Originally posted by steff
What does Steinbrenner have to do with Clemens contract with the Astros..??

I am tired of a few people bashing the use of deferred money Steff. It makes it sound like that is a terrible thing that our management should be shot for. Really, every team uses deferred money. With today's interest rates, you lose so little money by deferring it out a bit. It just gives the clubs more flexibility and doesn't require them to borrow the money and risk being in violation of the MLB debt ratio policy that owners must follow.

Steinbrenner, as anewman said, deferred money on the Sheffield deal. Hicks deferred some money in the A-Rod deal. The Colon deal to Anaheim was backloaded. These are standard practices in the game.

Lets bash JR for the things he does that warrant it - but not for offering Colon (or anyone else) a deal with deferred money in it.

soxfan26
01-13-2004, 09:41 AM
Originally posted by jabrch
Next time deferred money comes up, can we please not make it out to be a criminal offense? I'll blame JR for a lot of things. But deferring money on contracts is a standard practice in baseball. EVEN STEINBRENNER DOES IT.

I could not agree more. Deferred money, back loaded contracts, performance incentives and vesting options to name a few are used by many teams. Although when the Sox do it, it is a malicious act.

Fans can read it any way they want to, but I don't see any difference in the incentives in Clemens' contract, the back-loaded money in Vlad's contract, or the deferred money in Sheff's.

soxfan26
01-13-2004, 09:42 AM
Originally posted by jabrch
It just gives the clubs more flexibility and doesn't require them to borrow the money and risk being in violation of the MLB debt ratio policy that owners must follow.


Can you tell me more about the debt ratio policy?

Iwritecode
01-13-2004, 11:08 AM
I think the problem people have when the Sox defer money or back-load a contract, it's because it seems like they never keep the player around long enough to pay him the full amount of his contract.

Maggs is a perfect example of this. All of a sudden he's making more money this year in the contract they gave him and now they can't afford him?

It just seems like JR uses this strategy to get a couple of years out of a player without having to pay him too much and then unloading him on another team and letting them pay the rest.

CubKilla
01-13-2004, 11:22 AM
Originally posted by Iwritecode
I think the problem people have when the Sox defer money or back-load a contract, it's because it seems like they never keep the player around long enough to pay him the full amount of his contract.

There's nothing wrong with the occasional offer of a contract w/salary deferrals. It's another thing totally when every contract offered by the White Sox Organization to what some would describe as a premier player (Maggs, Colon, Thomas, etc.) has 1/3 to 1/2 of the total contract deferred for 10 years.

Of course, backloading a contract then trading a player when he's due to make the money while the Organization now screams poor is another sign of a Mickey Mouse Organization.

steff
01-13-2004, 01:03 PM
Originally posted by anewman35
Nothing, but Steinbrenner does use deferred money - he did it with the Sheffield contract.


Ahh.. I see. I guess I missed that part in the article he quoted.. :?:

steff
01-13-2004, 01:04 PM
Originally posted by jabrch
I am tired of a few people bashing the use of deferred money Steff.



I agree it's not an issue...... most of the time..

steff
01-13-2004, 01:07 PM
Originally posted by soxfan26
Can you tell me more about the debt ratio policy?


This is going to be way too much information.. but here it is..


Debt capital divided by total assets. This will tell you how much the company relies on debt to finance assets. When calculating this ratio, it is conventional to consider both current and non-current debt and assets. In general, the lower the company's reliance on debt for asset formation, the less risky the company is since excessive debt can lead to a very heavy interest and principal repayment burden. However, when a company chooses to forgo debt and rely largely on equity, they are also giving up the tax reduction effect of interest payments. Thus, a company will have to consider both risk and tax issues when deciding on an optimal debt ratio.

:D:

soxfan26
01-13-2004, 01:55 PM
Originally posted by steff

This is going to be way too much information.. but here it is..


Thanks Steff! In his post jabrch talks about a MLB policy dictating what the ratios must be for individual owners, I did not know that there was any such policy. How long has there been a policy? Is there a penalty for going over? Any help is always appreciated...


Originally posted by jabrch

It just gives the clubs more flexibility and doesn't require them to borrow the money and risk being in violation of the MLB debt ratio policy that owners must follow.

anewman35
01-13-2004, 03:08 PM
Originally posted by soxfan26
Thanks Steff! In his post jabrch talks about a MLB policy dictating what the ratios must be for individual owners, I did not know that there was any such policy. How long has there been a policy? Is there a penalty for going over? Any help is always appreciated...

It's one of those policies that I think has pretty much always been there, but Bud only enforces it when he feels like it...

soxfan26
01-13-2004, 03:50 PM
Originally posted by anewman35
Bud only enforces it when he feels like it...

Now would the Commissioner of Baseball do that?

StillMissOzzie
01-13-2004, 10:00 PM
Originally posted by jabrch
Next time deferred money comes up, can we please not make it out to be a criminal offense? I'll blame JR for a lot of things. But deferring money on contracts is a standard practice in baseball. EVEN STEINBRENNER DOES IT.

I think deferred money contracts are actually pretty common. There are tax advantages to the player and cash flow advantages to the owner. I suspect the Sox' problem stems from their offers being 10% current money and 90% deferred money.
There are other concerns, too. The length of the deferral and the interest, IF ANY, credited to the deferred portion.

SMO

gosox41
01-14-2004, 08:14 AM
Originally posted by soxfan26
I could not agree more. Deferred money, back loaded contracts, performance incentives and vesting options to name a few are used by many teams. Although when the Sox do it, it is a malicious act.

Fans can read it any way they want to, but I don't see any difference in the incentives in Clemens' contract, the back-loaded money in Vlad's contract, or the deferred money in Sheff's.

I think it's more ignorance of the fans about business world of baseball. People read Sheff. gets $39 mill over 3 years (or whatever it is) but don't bother to read the rest of the article to see how the contract is structured.

Bob

soxfan26
01-14-2004, 08:40 AM
Originally posted by gosox41
I think it's more ignorance of the fans about business world of baseball. People read Sheff. gets $39 mill over 3 years (or whatever it is) but don't bother to read the rest of the article to see how the contract is structured.
Bob

Your calling me ignorant about the structure of a contract, yet you don't know what it is yourself? I'm not pretending to be an expert by any means, but when you read about a contract and it says that $13.5m is deferred, that means there is deferred money in the deal. Unless your eluding to the fact that Shef will make interest on the deferred money, or that the deferred money in this deal gets into Shef's pocket quicker, I don't see your point.

More on the structure of the contract:

3 year deal @ $39m

$13.5m deferred and a $13m club option for 2007