Wednesday 16 January 2013

David Price beats fiscal cliff deadline by signing clever $10 million contract with Rays

AL Cy Young Award winner David Price probably has a great agent in Bo McKinnis. But, as columnist Jon Paul Morosi of Fox Sports points out, it also doesn't hurt if the client is smart enough to attend Vanderbilt.

Morosi notes that Price's most recent contract, which is worth about $10 million for the 2013 season, was signed a little before the calendar flipped to January. The deal breaks down into a roughly $1 million base salary for this season, with $4 million deferred until 2014 and $5 million given in a signing bonus immediately. As in a $5 million payment before 2013 started. As in before the U.S. Congress passed the American Taxpayer Relief Act of 2012, which raised the top federal income tax rate from 35 percent to 39.6 percent. (Not to mention before the expiration of the payroll tax holiday.)

And here it seemed a slam dunk that Cliff Lee, if anyone, should get the nickname "Fiscal." Instead, it has to be Price. Way to beat The Man, David! Or should we call you "Fiscal Dave"?

There's another side to Price's sweetheart deal, Morosi says. It's about that deferment:

Because Price is set to become a free agent after the 2015 season, the Rays likely will need to trade him in the next 12 months if they want to maximize their return. (Acquiring teams generally want at least two years of control on a player in order to surrender elite prospects.)

So, what’s the significance of that $4 million deferral? Because the Rays won’t pay that money before next winter, the collective bargaining agreement allows them to negotiate a way for Price’s (theoretical) new team to assume that obligation.

It appears the guys who work for the Rays also got into fancypants colleges. In a way (in several ways) it's too bad for Tampa Bay if the Rays can't keep Price longterm. At the same time, they've managed to work around their financial limitations and maintain competitive teams in the toughest division in baseball. Like they did with Matt Garza and James Shields, they could trade Price and simply refuel, and reset the roster a little. A difference in this case would be that Price is a better pitcher than Garza and Shields, someone whom a team could build around. Inducement to keep him. Another difference: Rays GM Andrew Friedman could get a lot more in return for Price, who is just 27.

And who knows? When the time comes to move Price, perhaps the Rays will have found a box of money and use it to build a revenue-producing stadium.

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