Cubs sign Maholm - 1 yr/4.25 mil + club option

[RynoRules]

Wow, this is really cheap. Well done.

 

Agreed. I'm really surprised. I thought we were looking at 3 years and 18-19 mill, or something like that.

[Butterscup1679666578]

excellent.

[17 Seconds]

you don't really know what your team/payroll is going to look like 3-4 years into the future, and you don't know what your needs are going to be. if you figure a guy is worth 5 mil a year and he's going to be making 7-8 million towards the end of the contract because you backloaded it, that might end up hurting you more than you can anticipate.

 

it's risky because you're sacrificing future payroll flexibility to get him cheaper at the beginning. i don't really care that much about backloaded contracts, but saying it's "always" a good idea is pretty silly. you never know exactly what your team/situation is going to look like 3-4 into the future.

Edited January 10, 2012 by 17 Seconds

[BleacherBadger]

What Jersey said

 

also

 

Backloading creates a greater risk of a player underperforming his contract and making it more untradeable.

 

How? Whether the team that signed him to that deal paid that money sooner or later, they were going to pay it anyway.

 

Toss the money in with the deal if that's what's keeping the deal from happening.

 

Let's just keep throwing money at the player.

 

Assuming this was a normal Cubs signing of the past handful of years, the player was already 30+ and declining in value. In a 2/7.5 contract, I'd rather pay 4.8 and 2.7 assuming the player in his prime now will perform at a higher level then next year when older. Additionally, in year 2, a potential trade partner could view the lower value as an acceptable level of compensation instead of requiring money with the deal.

 

It's not about the total value you're spending on the player, it's aligning pay and performance.

 

If you want to backload a 5 year deal for a 26 year old, that'd align with expected performance curves.

[SouthSideRyan]

We don't have an undisciplined general manager anymore. We don't need to worry about the GM making dumb moves due to misunderstanding a smart concept.

[BleacherBadger]

Agreed, great deal signing, let's move on from backloaded discussion

[CubColtPacer]

What Jersey said

 

also

 

Backloading creates a greater risk of a player underperforming his contract and making it more untradeable.

 

How? Whether the team that signed him to that deal paid that money sooner or later, they were going to pay it anyway.

 

Toss the money in with the deal if that's what's keeping the deal from happening.

 

Let's just keep throwing money at the player.

 

Assuming this was a normal Cubs signing of the past handful of years, the player was already 30+ and declining in value. In a 2/7.5 contract, I'd rather pay 4.8 and 2.7 assuming the player in his prime now will perform at a higher level then next year when older. Additionally, in year 2, a potential trade partner could view the lower value as an acceptable level of compensation instead of requiring money with the deal.

 

It's not about the total value you're spending on the player, it's aligning pay and performance.

 

If you want to backload a 5 year deal for a 26 year old, that'd align with expected performance curves.

 

But if you pay the guy 2.7 and 4.8 instead, that gives you flexibility. You might only have to throw 1 million into the trade to make it work. Even if you have to throw in the full 2.1 to make it work, you're not in any worse shape than if you had paid the 4.8 to the player to begin with.

[SouthSideRyan]

Assuming this was a normal Cubs signing of the past handful of years, the player was already 30+ and declining in value. In a 2/7.5 contract, I'd rather pay 4.8 and 2.7 assuming the player in his prime now will perform at a higher level then next year when older. Additionally, in year 2, a potential trade partner could view the lower value as an acceptable level of compensation instead of requiring money with the deal.

 

You can budget it that way, but you literally should never actually pay a guy 4.8 one year then 2.7 the next. If your trade partner in year 2 views the guy at 1/2.7 as a good value, then you pick up 2.1 of the contract.

[Tracer Bullet]

We need to sticky a good backloading contracts discussion so we don't have to have it every few months.

[BleacherBadger]

And that's why I referenced Grabow's backloaded contract in the first place. That was his deal.

 

Edit: his was 2.7 and 4.8, but yes, we could go back and forth for a while

Edited January 10, 2012 by BleacherBadger

[17 Seconds]

that grabow contract is still amazing

[jersey cubs fan]

Assuming this was a normal Cubs signing of the past handful of years, the player was already 30+ and declining in value. In a 2/7.5 contract, I'd rather pay 4.8 and 2.7 assuming the player in his prime now will perform at a higher level then next year when older. Additionally, in year 2, a potential trade partner could view the lower value as an acceptable level of compensation instead of requiring money with the deal.

 

You can budget it that way, but you literally should never actually pay a guy 4.8 one year then 2.7 the next. If your trade partner in year 2 views the guy at 1/2.7 as a good value, then you pick up 2.1 of the contract.

 

No, not literally never. If you have a budget this year but for a variety of reasons are not going to use the entire budget, it can make a lot of sense to front load a deal, especially if you foresee bigger spending next year.

[SouthSideRyan]

Assuming this was a normal Cubs signing of the past handful of years, the player was already 30+ and declining in value. In a 2/7.5 contract, I'd rather pay 4.8 and 2.7 assuming the player in his prime now will perform at a higher level then next year when older. Additionally, in year 2, a potential trade partner could view the lower value as an acceptable level of compensation instead of requiring money with the deal.

 

You can budget it that way, but you literally should never actually pay a guy 4.8 one year then 2.7 the next. If your trade partner in year 2 views the guy at 1/2.7 as a good value, then you pick up 2.1 of the contract.

 

No, not literally never. If you have a budget this year but for a variety of reasons are not going to use the entire budget, it can make a lot of sense to front load a deal, especially if you foresee bigger spending next year.

[jersey cubs fan]

Assuming this was a normal Cubs signing of the past handful of years, the player was already 30+ and declining in value. In a 2/7.5 contract, I'd rather pay 4.8 and 2.7 assuming the player in his prime now will perform at a higher level then next year when older. Additionally, in year 2, a potential trade partner could view the lower value as an acceptable level of compensation instead of requiring money with the deal.

 

You can budget it that way, but you literally should never actually pay a guy 4.8 one year then 2.7 the next. If your trade partner in year 2 views the guy at 1/2.7 as a good value, then you pick up 2.1 of the contract.

 

No, not literally never. If you have a budget this year but for a variety of reasons are not going to use the entire budget, it can make a lot of sense to front load a deal, especially if you foresee bigger spending next year.

 

That doesn't support your "literally never" comment.

[Rob]

The whole "backloading of contracts" thing is a hell of a lot less about budgeting and more about making things as cheap as possible.

 

Let's look at a hypothetical 2 year contract worth $20 million dollars. Let's also assume you can get a 2% annual rate of return by investing that money into stocks/bonds/mcdonalds property across the street.

 

Scenario A: Frontloaded contract that pays $15 mil the first year and $5 mil the second year - You make $100,000.

 

Scenario B: Evenly split contract that pays $10 mil each year - You make $200,000.

 

Scenario C: Backloaded contract that pays $5 mil the first year and $15 mil the next. - You make $300,000

 

As long as you believe you can make any money at all investing, backloading a contract will help out your bottom line.

[SouthSideRyan]

Assuming this was a normal Cubs signing of the past handful of years, the player was already 30+ and declining in value. In a 2/7.5 contract, I'd rather pay 4.8 and 2.7 assuming the player in his prime now will perform at a higher level then next year when older. Additionally, in year 2, a potential trade partner could view the lower value as an acceptable level of compensation instead of requiring money with the deal.

 

You can budget it that way, but you literally should never actually pay a guy 4.8 one year then 2.7 the next. If your trade partner in year 2 views the guy at 1/2.7 as a good value, then you pick up 2.1 of the contract.

 

No, not literally never. If you have a budget this year but for a variety of reasons are not going to use the entire budget, it can make a lot of sense to front load a deal, especially if you foresee bigger spending next year.

 

That doesn't support your "literally never" comment.

 

Huh? I'm saying never hand over 4.8M to an employee when you can hand them 2.7M and put 2.1M into a CD.

[KingCubsFan]

The whole "backloading of contracts" thing is a hell of a lot less about budgeting and more about making things as cheap as possible.

 

Let's look at a hypothetical 2 year contract worth $20 million dollars. Let's also assume you can get a 2% annual rate of return by investing that money into stocks/bonds/mcdonalds property across the street.

 

Scenario A: Frontloaded contract that pays $15 mil the first year and $5 mil the second year - You make $100,000.

 

Scenario B: Evenly split contract that pays $10 mil each year - You make $200,000.

 

Scenario C: Backloaded contract that pays $5 mil the first year and $15 mil the next. - You make $300,000

 

As long as you believe you can make any money at all investing, backloading a contract will help out your bottom line.

That might make sense in an economics book, but we all know the real reason someone like John Grabow gets a backloaded contract is because Hendry had needs across the roster and needed to fill those holes with a limited budget.

[BleacherBadger]

Can we agree that a backloaded contract has more to do with just TVM and investing the difference?

[ConstableRabbit]

I was really surprised to see how cheaply he came. Great job, Theo!

[Guest]

Another moveable contract at the deadline. Theo is flipping this house.

[ctcf]

Another moveable contract at the deadline. Theo is flipping this house.

 

He should make Wrigley shout "MOVE THAT BUS" at the trade deadline.

[Clem Fandango]

I'm wondering if his decision to sign for what appears to be under his market value has anything to do with having Theo at the helm. Is it a stretch to think that a lot of players would probably like to be part of a Theo Epstein run organization?

[Rob]

For the record, I'd also like to state that I was WAY off on what I expected the contract to be. I was thinking something like 3/20. At this price he's definitely flippable if healthy.

[ctcf]

I really have to think that this kind of stuff is how Theo and Jed decided to combat the changes in the new CBA. Obtaining prospects via rehab projects and trades as opposed to stockpiling in a draft and IFA.

[haubrich91]

Great deal. I'm assuming he's guaranteed a spot in the rotation. So if Garza isn't dealt, Wood-Volstad-Wells-??? compete for 4 and 5?