Over the last few years the Rays have signed several players to long-term contracts. The list currently on their roster includes Evan Longoria (signed through 2022 with an option for 2023), Ben Zobrist (signed through 2014 with an option for 2015), Matt Moore (signed through 2016 with three years of team options), Joel Peralta (through 2014 with team options from 2015-2017), James Loney (through 2016), Yunel Escobar (through 2016, team option for 2017), David DeJesus (through 2015, team option for 2016), Ryan Hanigan (through 2016, team option for 2017) and most recently, Chris Archer (through 2019, with team options through 2021). At this writing the Rays are sitting in last place in the AL East, 4 and a half games behind the Yankees. Matt Moore is out for the rest of 2014 and likely part of 2015 with Tommy John surgery. Have the Rays made a mistake signing so many players to long term deals?
Long-term contracts bring the Rays some advantages: first, they enable the Rays to lock players in at below market rates, and second, they fix salary costs, so the team can control their long-term costs. The Rays, operating in a small market, need those advantages. Rays owner Stuart Sternberg and head of baseball operations Andrew Friedman both made a lot of money on Wall Street. They understood that not every stock deal makes money; that’s the price of taking risks. But they expected that over time they would make enough profitable deals so that the money made in the good deals will far outweigh money lost in the bad ones. Sternberg made enough good deals that he could afford to buy the Rays, so he is going to use a similar strategy when it comes to contracts.
Similarly, signing several players to long-term deals spreads the risk. One or two players may not perform up to expectations, but if most of the players perform well the strategy is a winner. It’s a win for the players, too. They are doing their own risk analysis, and choosing financial security over the possibility of a larger payday down the road. Younger players like Matt Moore and Chris Archer gain long-term financial security and still are preserving the possibility of a big free agent payoff in their early 30s when their contracts are over. A deal that works for both parties is a good deal every time. Maybe if you sign one or two players to long extensions it is too risky, but by giving out deals to so many players, your total risk is minimized. That’s why the Rays should continue to look for promising young players that they can sign for the long haul.
There’s another reason this strategy makes sense. In a fragmented media world, where people are abandoning traditional networks for services like Netflix and saving shows to watch on the internet, live sports remains one of the few programs that cut through the clutter. I worked in sports television for many years, and the one constant was that sports rights were always rising. Rights fees for MLB and local cable rights for Rays games are almost sure to rise for the forseeable future. In fact, there was a new TV deal that started this season which netted every team an extra $2o million per season, and we can expect more of that in the future. Keeping the team’s costs fixed as low as possible through long-term contracts helps guarantee increased profits going forward, and also frees up more money to spend on other players down the road.
Of course the team shouldn’t sign every player to a long-term deal. They will want to preserve some roster flexibility every year. But given the Rays’ challenge of building a winning team in a small market with low attendance, I think it’s likely the Rays will continue to sign players to long-term deals in the coming years.