Thought that this was worth passing along. This article may be subject to subscription or monthly free article limits.
http://www.economist.com/blogs/gametheory/2015/12/contracts-baseballThe synopsis:
Opt out clauses are generally structured to coincide with the back half of a player's projected peak performance age rage of 27-32 years old. More often than not, they actually end up benefiting the club by providing better value (calibrated here as AAV per WAR) during the pre-opt out portion of the contract than the player would otherwise represent if given a true market rate of the same duration of contract without the portion of the contract beyond the opt out off season (i.e. players would prefer to sign a longer contract with more aggregate guaranteed money over an X year period than to take on risk to get higher $/year, shorter term contracts multiple times).
Obviously, for the opt out clause exercise to make sense for a player, he and his agent have to be confident that the player will garner a higher aggregate value for the next contract received than he would have been paid to play under the previous contract. As the article lays out, the club that signs the player has been shown to overpay significantly per WAR relative to the general market value of AAV/WAR. The Economist has this to say on that (given that all the teams are or should be aware of this):
Clubs are of course aware of the perils of inking a player on the wrong side of 30 to a long-term deal. But in a classic demonstration of the winner’s curse in auctions, it only takes one team to decide that a star is the “last piece of the puzzle” to a championship…or that his arrival will make the franchise more attractive to other players…or that it will demonstrate to fans a commitment to win…or just that this time is different, for the opt-out to yield a windfall.
So, the long and short of it is that opt out clauses have been mutually beneficial to teams and players (until I read this article, I had not realized that 6 of the 7 players given opt out clauses elected to utilize them and all gained a nice chunk of change by doing so), so long as the team isn't the one signing the player after he opts out.
The logic and analysis contained here favors signing guys like Heyward (26) or Davis* (29) and giving them opt out clauses over older players such as Gordon (31) and Zobrist (34). Also, it supports what we already knew: Colby Rasmus is an Alabaman Slammin' Maverick that takes his money like he likes his women, stacked high and one at a time, and preferably located somewhere near a ranch.
*He might be closer to the riskier end of the range (a Vernon Wellsian Opt-iner), particularly when considering past PED issues (although I'm not a sharp study on him specifically and Nelson Cruz is an example of a former PEDer that is still mashing into the back half of his 30s).
As I think is consistent with the general consensus here of confidence in the current Astros management, I think the current regime will not fall victim to the "winner's curse" and sign players of this type to big money contracts, as it would contradict "The Process" prosecuted so far, but I thought the article was relevant given the time of the year and in that it cogently states a case that contradicts the common (or perhaps just the loudest) opposition to opt out clauses based on an assumption that players opt out only to his own benefit and to the detriment of the original signing club.
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