Dammit Jim, you really did not listen to me. It was not a very good signing. The Cubs could have spent just as much money as they did for Soriano and Mark DeRosa and signed Julio Lugo and Ray Durham. They would have gotten about twice as much of an increase in runs that way. But oh well.
Well, there's one thing about the Soriano that is helpful. It's backloaded. In the new CBA the minimum salary is going to go up by about seven percent on average each year for the next three seasons. Over long hauls this has mirrored both the average salary and average payroll growth. Since the 2002 season the latter figures have had annual growth rates around four percent. Given the market this season, I'd say that's going to go up significantly with marginal players getting eight figures. For simplicity purposes I am going to average the figures to get an estimate of the price index annual growth rates for major league baseball players over the length of the Soriano contract. They average to about 5.98%.
Soriano got eight million dollars the day he signed the contract, I don't believe the Cubs spread out the payment of his signing bonus, so it's relavent. It doesn't even go on the 2007 payroll. Signing bonuses and contract buyouts do not go in the payroll nor are they subject to the luxury tax. At this point, for all intents and purposes the Soriano deal is eight years and 128 million, still a large chunk of change. Soriano is officially making nine million next season, which in 2006 dollar terms would be about $8,500,000. In the sense of one year it doesn't make that big of a deal. However, since the deal is severely backloaded with him making 18 million a year the last five years of the contract - none of them are worth over fifteen million in 2006 deal terms. In fact the eighteen million he is due in 2014 is worth less than Kerry Wood's 2006 salary. The entire value of the contract is worth less than $100 million over the course of the contract.
Of course this says nothing about the value (or lackthereof) his contract is. It's just an analysis to show how signing players to backloaded contracts in this sense are good. Also the net present value of the contract isn't 136 million - or 128 however you want to look at it. It's about 108 million, which of course is a lot. On the other side of the coin, we have Carlos Lee's contract. It's backloaded, but only as a deal that's short. In real terms, Lee is going to make more each season than Soriano except 2007. The oh wow shock value impact (not adjusting for baseball inflation) for AS contract is over 30 million, but under 20 million for Carlos Lee. That said, Carlos Lee isn't signed for 2013 or 2014 which makes a difference.
Well, there's one thing about the Soriano that is helpful. It's backloaded. In the new CBA the minimum salary is going to go up by about seven percent on average each year for the next three seasons. Over long hauls this has mirrored both the average salary and average payroll growth. Since the 2002 season the latter figures have had annual growth rates around four percent. Given the market this season, I'd say that's going to go up significantly with marginal players getting eight figures. For simplicity purposes I am going to average the figures to get an estimate of the price index annual growth rates for major league baseball players over the length of the Soriano contract. They average to about 5.98%.
Soriano got eight million dollars the day he signed the contract, I don't believe the Cubs spread out the payment of his signing bonus, so it's relavent. It doesn't even go on the 2007 payroll. Signing bonuses and contract buyouts do not go in the payroll nor are they subject to the luxury tax. At this point, for all intents and purposes the Soriano deal is eight years and 128 million, still a large chunk of change. Soriano is officially making nine million next season, which in 2006 dollar terms would be about $8,500,000. In the sense of one year it doesn't make that big of a deal. However, since the deal is severely backloaded with him making 18 million a year the last five years of the contract - none of them are worth over fifteen million in 2006 deal terms. In fact the eighteen million he is due in 2014 is worth less than Kerry Wood's 2006 salary. The entire value of the contract is worth less than $100 million over the course of the contract.
Of course this says nothing about the value (or lackthereof) his contract is. It's just an analysis to show how signing players to backloaded contracts in this sense are good. Also the net present value of the contract isn't 136 million - or 128 however you want to look at it. It's about 108 million, which of course is a lot. On the other side of the coin, we have Carlos Lee's contract. It's backloaded, but only as a deal that's short. In real terms, Lee is going to make more each season than Soriano except 2007. The oh wow shock value impact (not adjusting for baseball inflation) for AS contract is over 30 million, but under 20 million for Carlos Lee. That said, Carlos Lee isn't signed for 2013 or 2014 which makes a difference.
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