Trevor Bauer’s $102 million cope with the Dodgers is exclusive — Here is why

The Los Angeles Dodgers lately signed 2020 Nationwide League Cy Younger winner Trevor Bauer to one of the vital distinctive contracts in Main League Baseball historical past.

Bauer agreed to a three-year, $102 million cope with the workforce on Thursday, making him one of many highest-paid gamers per yr, theoretically, because the pact unfolds. It has opt-outs that set off high wage, a deferment and a short-term mannequin construction. However most of all, it has flexibility, one thing a participant of Bauer’s expertise normally avoids.

“That is what this participant wished,” Jon Fetterolf, a associate at litigation agency Zuckerman Spaeder, informed CNBC on Thursday. Fetterolf is likely one of the two MLB co-agents who negotiated Bauer’s deal. The opposite is Rachel Luba of Luba Sports activities.

“We ended up doing a three-year deal the place he’s going to make much more within the first few years than we have traditionally seen,” he added, noting Bauer might make $85 million within the first two years of the deal.

 Once more, it is distinctive, and this is the way it’s structured.

Bauer is scheduled to make $38 million in his first yr. If he opts out of the deal, that whole turns into $40 million, because the Dodgers would pay him an additional $2 million on his means out.

The Dodgers can profit. If Bauer departs, they’ll defer $20 million of the wage for future cost – much like the Mets’ settlement with Bobby Bonilla. There’s additionally a $10 million signing bonus factored in to paid out over the 2021 season.

That bonus helps, for the reason that cash is simply taxed within the participant’s state residence, whereas MLB recreation checks are taxed based mostly on town the place golf equipment play in the course of the yr. 

Yr two of the deal totals $47 million. It is $32 million for the yr however, ought to he opt-out, the Dodgers can pay him one other $15 million.

These salaries make Bauer the highest-paid participant (per-year) in MLB for 2021 and 2022.

And if Bauer remains to be a Dodger after two years, he misses the $15 million buyout however recoups all of it with a $32 million cost for the deal’s ultimate yr. The entire: $102 million over three years.

“The construction provides him the prospect to guage the state of affairs year-by-year,” Fetterolf stated. “It is a completely different type of contract, and it additionally displays that he is a special type of individual.”

Bauer, 30, has made his share of public relations errors. However a participant of his caliber normally goes the long-term route – taking cash and safety over a number of years.

For instance, New York Yankees pitcher Gerrit Cole signed a nine-year deal valued at roughly $324 million in 2019. He was 28 on the time however was locked into his contract till age 37. Bauer and Cole have been teammates at UCLA, and each have been chosen on the high of the 2011 MLB Draft.

As soon as drafted and with an MLB membership, it takes gamers six years to turn out to be a free agent, and alongside the way in which, they make the minimal wage of the collective bargaining settlement. As soon as service time is reached, gamers have the correct to barter with the workforce on wage, and in the event that they disagree, there may be an arbitration panel to find out the compensation.

If gamers do not comply with long-term offers throughout that window, particularly beginning pitchers, they’re going to agree as soon as they hit free company. Bauer emulated new teammate, David Value, who took the same path to his mega deal.

Value put in his years of service with the Tampa Bay Rays, endured wage arbitration alongside the way in which, and guess on himself with a one-year cope with the Detroit Tigers for the 2015 season. He flipped that right into a seven-year, $217 million contract with the Boston Purple Sox at age 30.

Each Value and Bauer have been four-year wage arbitration gamers, traded by their golf equipment, and took one-year offers earlier than touchdown mega contracts. Now 35, Value was traded to the Dodgers final February and is scheduled to make $32 million for the 2021 season. He’ll be 37 as soon as the deal is up after the 2022 season.

Fetterolf and Luba have been employed to signify quite a few gamers in wage arbitration. Fetterolf defined why Bauer chosen the short-term mannequin as an alternative of the long-play.

“Theoretically, when you’re not going to go most years, most {dollars}, he desires to provide himself the power to regulate his life,” Fetterolf stated, utilizing short-term basketball contracts for instance.

“He might have performed the max,” Fetterolf stated. “He hasn’t performed that. Why? As a result of he desires to be sure that he is in a state of affairs that he likes. I feel that is completely different. We see that in basketball. I feel one of many causes we see it in basketball is these guys could make a lot cash off the courtroom, way over baseball gamers normally make,” he continued. “However lots of these guys wish to make sure that they’re in a state of affairs the place they are going to have an opportunity to win.”

Not all groups can afford contracts with expensive per-year salaries, although.

Coming off a 2020 World Collection win, its first since 1988, the Dodgers are capitalizing on a championship window. Touchdown Bauer at that wage will value the workforce.

Based on Spotrac, the Dodgers have a $234 million payroll, effectively above the Yankees’ $189 million (second-highest) and are set to be the one workforce to pay a aggressive steadiness luxurious tax invoice. Golf equipment are taxed greenback for greenback in the event that they exceed $210 million for 2021.

However the Dodgers are accustomed to taxes, having paid a file $43.7 million in 2015. The guess is Bauer’s deal will assist the workforce get their cash’s price with one other title, and this time with followers within the stands to make up the misplaced income in 2020 as a consequence of Covid.

“It is bought to be a membership that views itself in a (championship) window and tackle the wage,” Fetterolf stated. “And if it will get them to a World Collection and he leaves, so be it. And it eliminates lots of groups in baseball.”

Requested if extra gamers ought to think about the short-term play if accessible, Fetterolf stated circumstances differ however pointed to flexibility because the lure.

“A participant like Trevor seems to be at it and says, ‘I might moderately see if I can maximize my yearly earnings upfront and in addition get flexibility together with it.” He stated he solely expenses a 1.5% payment on contracts (extra notable MLB brokers can cost as much as 5%) and an hourly price throughout negotiations. The payment construction helped Bauer save on agent charges.

“The participant is completely different,” Fetterolf added. “He bought the contract he wished and bought a record-breaking contract at a less expensive price than everybody else. You are getting filet mignon, and also you’re paying half value. That is not a foul deal.”