Are $20 Million Per Season Contracts Ever Worth It?

When I saw that Clayton Kershaw signed a seven-year contract with an average salary of over $30 million per season, my first thought was: that’s definitely going to be an albatross contract. In my mind, anything over $20 million per season has always seemed to be that threshold where a player no longer has a realistic chance of performing to the value of the contract. But, I am smart enough to know that what is in my mind is not always the same as what is in reality, so this brief post will look at every player during the 2013 MLB season that collected a salary of $20 million or more. My goal was to get a rough idea of exactly how many players either outperformed, adequately performed, or underperformed their salary.

I collected data from the website baseballplayersalaries.com. In the table below, I’ve reported the names, teams, and estimated salaries of each $20 million plus player in the 2013 MLB season. I’ve also reported the percent of their team’s payroll each player received and the percent contribution that player made to the team’s on-field performance.

Table 1: Players with $20 million or greater salaries for the 2013 MLB Season

Player Name	Team	Salary	% Team’s Payroll	% Team’s On-field Performance
Alex Rodriguez	New York Yankees	$28,000,000	11.76%	0.97%
Johan Santana	New York Mets	$25,500,000	32.93%	0.00%
Cliff Lee	Philadelphia Phillies	$25,000,000	14.80%	40.56%
CC Sabathia	New York Yankees	$23,000,000	9.66%	0.97%
Joe Mauer	Minnesota Twins	$23,000,000	32.15%	27.00%
Prince Fielder	Detroit Tigers	$23,000,000	14.84%	3.27%
Mark Teixeira	New York Yankees	$22,500,000	9.45%	-0.65%
Tim Lincecum	San Francisco Giants	$22,000,000	15.19%	-2.14%
Vernon Wells	New York Yankees	$21,000,000	8.82%	-0.65%
Miguel Cabrera	Detroit Tigers	$21,000,000	13.55%	13.85%
Adrian Gonzalez	Los Angeles Dodgers	$21,000,000	9.19%	9.09%
Carl Crawford	Los Angeles Dodgers	$20,000,000	8.75%	3.86%
Barry Zito	San Francisco Giants	$20,000,000	13.81%	-9.29%
Matt Kemp	Los Angeles Dodgers	$20,000,000	8.75%	1.14%
Roy Halladay	Philadelphia Phillies	$20,000,000	11.84%	-5.00%
Ryan Howard	Philadelphia Phillies	$20,000,000	11.84%	3.33%
Matt Cain	San Francisco Giants	$20,000,000	13.81%	1.79%
Justin Verlander	Detroit Tigers	$20,000,000	12.90%	8.85%

 

The first thing I noticed was the number of players that underperformed their salary — 13 of 18. That’s just over 72%!

When it comes to players that I consider underperformed, there are too many to list. So, instead I’ll list the players who I consider adequately performed to their salary for the team they were on: Joe Mauer, Miguel Cabrera, Adrian Gonzalez, and Justin Verlander. That’s only 4 of 18, or about 22%. I did not include Cliff Lee in the list because he clearly outperformed his salary based on this measure. He was the only one of 18 players to do so. That translates to only 6% of players with $20 million plus salaries outperforming.

Even more staggering was when I calculated the average percent of team payroll an individual player on my list made, and compared it to the average percent of team on-field performance. The average player on the list made 14% of their team’s payroll, but only contributed to 5% of their team’s performance.

I realize that the criteria I have used is limited in many ways. For example, players on a poor-performing team (ex. Cliff Lee) will have a higher percent of on-field team performance, and vice versa. Or players on a team with a low total payroll will have a higher percentage of team payroll. However, I feel these numbers are so overwhelmingly lopsided that I’m not sure if you would be able to find any objective criteria that would show an opposite trend.

Given that these high-paid players consistently underperform their salary, an entire new set of questions arise. Why are teams still so willing to hand out these contracts? Do underperforming ‘star’ players really generate enough additional team revenue to justify their cost? What would happen if a large-market team properly valued their players?

With the precedent set by the Kershaw contract, maybe in the not-so-distant future $30 million will be the new $20 million, but as of the 2013 season a $20-million salary almost guarantees the player will not be getting the short end of the stick on that deal (in terms of performance at least).