CBT loopholes/strategies

In terms of strategies, I'd like to propose a wrinkle to the front-loading salary idea. Let's say you want to sign a guy to a 2/20 contract. Instead of offering him $19.25 the first year and $750k the second year, you offer him literally any amount of money the first year, and make his second year a team option year with a buyout equal to the second-year salary. For example, you could pay him $10 million the first year, and have a $10 million dollar option for year two with a $10 million buyout. The end result, in theory, is a player with a $20 million luxury tax hit the first season, and a $0 luxury tax hit the second season.

I don't know if it's allowed to have a buyout equal the salary. I could see having to modify this such that salary - buyout = minimum salary, for example. If there's no rule about buyout size, though, we might be able to go even further if we wanted. Imagine a $10 million contract with a $15 million buyout. You'd then in theory have a $-5 million luxury tax salary hit for the second season of the deal. It feels like there's gotta be a rule, though, so I'm assuming that a $750k luxury tax hit for year two is the best you're going to do.

We know that front-loading AAV in the typical way is nice because it can give a player more trade value. You'd only want to engage in these buyout shenanigans for a player you strictly do not intend to trade. The main benefit I see is allowing a team to move payroll around depending on their luxury tax situation.

For example, let's imagine we have a team that is projected to go $750k under the luxury tax for the next three years. Everyone on the team is under contract for the next three years except for Johnny Baseball, who the team desperately wants to sign to a 3/30 contract. Not wishing to pay the luxury tax three years in a row, though, our GM decides to offer him the following contract:

2/20, with a 1/10 team option and $9.25 million buyout. In terms of AAV, this translates to a $14.6 million AAV for the first two seasons, followed by a $750k AAV for the third season. The end result: the team only pays the luxury tax in the first two seasons but just barely avoids it in year 3, allowing them to reset the tax penalties.

Why is it that all of these megadeals arent frontloading money to some extent?

Like, take Bogaerts' deal. Why not set that up with something like $34.7 million for the first 8 years, league minimum for the last three years? That requires the owners pay a bit more, since money is worth less later and opportunity cost is a thing, but it would allow them to easily trade these players away at the ends of their contracts. That means avoiding the luxury tax concerns with the last few years of megadeals, while also using those last few years to keep the AAV lower.

Like, what's the risk of signing Devers to like a 16/320 deal, but frontloading the salary such that the last six years are league minimum salary? The Sox get $20 million AAV for all of Devers prime, and then when he starts to suck at the end of his career, you can easily trade him to someone; no risk in a league minimum salary, just like we have with Hosmer.

Is the only risk an updated CBA that patches this loophole? Or I suppose a career-ending injury or ludicrous performance drop off that makes the player impossible to trade at the end of the deal even on a league minimum salary? Feels like an obvious way for owners to flex financial muscle and field the best possible team within the CBT framework. Maybe players don't like deals that have a near certainty of them getting traded at the end, even if it means getting paid more?

Ah, this might be it.



Need commissioner approval for a pay decrease of more than 80%. He'd probably put the kibosh on anything egregious.

1. I think the idea of "you can just trade him away" seriously underestimates a players desire control, or at least have an idea of, where they will be. Not only, as noted, are there 10/5 rights to deal with, I'm not sure structuring a deal in such a way that you are making it obvious to the player that you are going to trade them down the line is a great way to lure a free agent in.
2. If a player starts to really suck, a team won't take them in a trade even if they are free. There's no motivation to help out a competitor for no return. So, there is still a risk.
3. As also noted, MLB can, and almost assuredly would, not allow a crazy contract. I doubt the Player's Association would be all that happy about it either, though they obviously have a little less power than the MLB office in these matters.
4. The owners don't want to pay more upfront. Money now costs more than money later.

Bonus: 5. This is actually a strategy that I use not too infrequently in my OOTP Baseball games. I believe there is a limit built in to disallow too larger of a disparity from year to year, but I push it to the limit. Since it's not my money, or even real money, I don't care that money now is more expensive than money later and I like the flexibility of being able to move declining players on the back-end of contracts easier. And the AI doesn't seem to have anything programmed into it that makes players averse to heavily frontloading contracts. But ya, not real world variables there.

Number 4 here isn't really a thing for these purposes. Most of these games have to do with surtaxes and other things extraneous to the deal between the team and the player -- if you can game those then the amount of compensation the player agrees to costs the team less to produce and it's a win-win as far as the team and the player are concerned. This isn't that. While yes, money now is worth more than money later, that's true in equal part to both the team and the player. A player will demand a higher $$ number if those are deferred dollars and will be satisfied with a lower number if they're front-loaded. There's no free cash being gained or lost to "the system" so point 4 here is zero-sum.

All the rest sounds right to me.  Especially the part about "it wouldn't be allowed". We all remember when we signed A-Rod, right?

It's definitely hard, but I look at it as you can't win if you don't play. Perhaps Casas, Rafaela, Yorke or Mayer wins ROY in the next three seasons and we get an extra pick. The more of your top kids whose arrival in The Show you're able to time, the better your chances of picking up an extra pick once a decade or so.

It's worth the shot because the rules have titled away from big-market teams so much in the last decade. Looking back at drafts when Theo Epstein was here, we had 5 R1 and R1-S picks in 2005, four in 2006, three in 2010, and four in 2011 with no limit on draft spending. I miss those days.

I think it’s due to the Net Present Value of the money…. the NPV of Xanders 11/280 contract at 8% returns (conservative) is $180M. For the same contract but with all the value paid out in the first 6 years and the rest league minimum would be 11/229

So either Xander would have to leave $51M cash on the table or the team would have to lose $51M on the bottom line. You could argue the player should care equally about the NPV and leave the $51M on the table, but I’m not sure it’s appealing for them to pass up guaranteed 8%+ returns.