Back-loaded contracts

[AdamGreenwood]

The recent Martin signing represents a return to the back-loaded contract.

Martin will be paid just $7 million in 2015 (what a deal!). But in 2017, he goes up to 20 million for the next three years.

So in 2019, the Jays will be paying $20 million for a 36-year-old catcher.

But AA doesn't have to worry about that. Because if he doesn't make the playoffs, he's out of a job anyway.

That $20 million will be somebody else's problem. In other words, he's essentially taking a loan from a future GM, so that he can risk everything now.

 

Allowing a GM to trade away everyone on the farm, and cripple the team with bad future contracts digs a giant hole for future GM's.

Do we really have to wait until EE and Bautista sign somewhere else, our farm is empty, and we're loaded down with horrendous contracts to make a change.

 

Jays President should ban back-loaded contracts.

[BTS]

This is what happens when you're involved in a stalled fantasy draft and keep F5'ing the forum.

[TwistedLogic]

Backloading is actually beneficial in many ways. Not only do you actually save a significant amount of money through inflation, in the case of both Reyes and Martin where neither of them has a no-trade clause, you have at least the possibility of moving the contracts and unloading a large amount of the dollars owed. You also save in the earlier years, allowing far more flexibility on the current roster, where money is always tighter.

[READERsince2006]

2017 Blue Jays:

 

$42M for ...

Reyes (will turn 34 and is already an injury-prone, mistake prone SS)

Martin (34 year old catcher)

 

Backloading is fun!

 

and if we win a world series in 2015 or 2016 nobody will give a f*** about payroll for 2017

[Stangstag]

Lets not forget that AA was able to offload the Wells contract. Im not concerned at all with Martin's contract.

 

The only contract on this team that scares me is Reyes'. Hopefully AA realizes the time to move Reyes is NOW

[LongTimeReader]

Backloading is actually beneficial in many ways. Not only do you actually save a significant amount of money through inflation, in the case of both Reyes and Martin where neither of them has a no-trade clause, you have at least the possibility of moving the contracts and unloading a large amount of the dollars owed. You also save in the earlier years, allowing far more flexibility on the current roster, where money is always tighter.

 

Inflation doesn't move nearly that fast...

[dineke]

Baseball will be dead by 2017.

[saskjayfan]

The recent Martin signing represents a return to the back-loaded contract.

Martin will be paid just $7 million in 2015 (what a deal!). But in 2017, he goes up to 20 million for the next three years.

So in 2019, the Jays will be paying $20 million for a 36-year-old catcher.

But AA doesn't have to worry about that. Because if he doesn't make the playoffs, he's out of a job anyway.

That $20 million will be somebody else's problem. In other words, he's essentially taking a loan from a future GM, so that he can risk everything now.

 

Allowing a GM to trade away everyone on the farm, and cripple the team with bad future contracts digs a giant hole for future GM's.

Do we really have to wait until EE and Bautista sign somewhere else, our farm is empty, and we're loaded down with horrendous contracts to make a change.

 

Jays President should ban back-loaded contracts.

 

The Jays have 7.5 mil from Romero and 19 mil from buehrle coming off the books after this year...so back loading to allow room for other moves this year made sense. Getting a couple cheap years early is important because Martin will have a couple of solid years and there will always be rich teams willing to trade for big contracts. If we could get rid of wells we can get rid of anyone.

[AdamGreenwood]

Backloading is actually beneficial in many ways. Not only do you actually save a significant amount of money through inflation, in the case of both Reyes and Martin where neither of them has a no-trade clause, you have at least the possibility of moving the contracts and unloading a large amount of the dollars owed. You also save in the earlier years, allowing far more flexibility on the current roster, where money is always tighter.

 

In theory, you save some NPV, but the Jays always seem to add an extra 10% to the contract in exchange for the player accepting the back-loaded deal.

We were talking 3/39. I just don't see anyway we could have failed to sign him for 5/65 if we didn't do this back-loaded nonsense.

And even though that's terrible value, practically usury, AA doesn't care because if he makes the playoffs all is forgiven, and if he doesn't, that's somebody else's problem to deal with.

 

While logic would dictate that it would be much harder to move the contracts of aging players with back-loaded contracts, LA teams continue to contradict me.

[Stangstag]

In theory, you save some NPV, but the Jays always seem to add an extra 10% to the contract in exchange for the player accepting the back-loaded deal.

We were talking 3/39. I just don't see anyway we could have failed to sign him for 5/65 if we didn't do this back-loaded nonsense.

And even though that's terrible value, practically usury, AA doesn't care because if he makes the playoffs all is forgiven, and if he doesn't, that's somebody else's problem to deal with.

 

While logic would dictate that it would be much harder to move the contracts of aging players with back-loaded contracts, LA teams continue to contradict me.

 

Where the hell are you getting these numbers from? Martin signed for 5/82 and you think he would have signed for 5/65 if we didn't backload? You're an idiot

[RealAccountant]

The time value of money principle dictates that money today is worth more than money tomorrow. By back loading contracts AA is generating huge savings for the organization

[reedjohnsonfan]

You guys are hilarious.

[saskjayfan]

Sorry, Charlie ... that's not true ... see my post above this one.

 

I quit reading your post when you mention CPI and baseball in the same sentence. I'm pretty sure the rate of increase of baseball salaries over the last 3 decades on a percentage basis has outpaced CPI..lol.

[closetjaysfan]

imo backloading makes sense with this roster. By 2017 we will have replaced expensive pitching contracts with cheap (but quality) rookies.

[connorp]

Mia back loading that Stanton deal looks pretty damn smart

[o2cui2i]

this entire discussion could be irrelevant if Rogers has decided to have increased investment. Our farm looks healthy at this point and adding Dollars is cheaper and a better bet than trading talent.

 

it's amazing that some of the people who bitched about the trades made 2 years ago because the Jays let talent go and now they are bitching because the the Jays spent money.

 

I just dont have enough cheese to go with all of the whine.

[RealAccountant]

Sorry, Charlie ... that's not true ... see my post above this one.

 

It is. You see moogy money that Rogers doesn't have to pay Martin now and pay in later years can be used to finance Rogers operations. There for the inflation % is the wrong number but Rogers WACC is the right number which I think is around 10% ( investor return expectations )

 

N don't call me charlie

[glory]

It's too early to really speculate because in a worst case scenario the Jays will be rebuilding in two years, and in a best case, they would have made the playoffs in 2015 and 2016 and will be increasing payroll to match revenue. Until we know how the team performs over the next two years, we can't really say whether this is good or bad. I do agree that backloading in general is not a smart idea, as there are too many variables involved in being able to determine whether the contract will be an albatross or not when it really gets large, but at this point AA only cares about the next two years, and will worry about Martin as a $20M player when that time comes.

[AdamGreenwood]

Me: Hey honey, I bought a new Porsche.

Wife: What the f***? How are we going to pay for that?

Me: Don't worry. I set it up so that we only make payments of $300 a month this year.

Wife: And what about next year?

Me: Then they jump up to $2000 a month for a year, and then $10,000 a month, but that's two years away. Pfffftt!

Wife: That's a brilliant master stroke. I love the flexibility you've give us with our budget. I love you.

Me: I love you too.

[guylaroche5]

Me: Hey honey, I bought a new Porsche.

Wife: What the f***? How are we going to pay for that?

Me: Don't worry. I set it up so that we only make payments of $300 a month this year.

Wife: And what about next year?

Me: Then they jump up to $2000 a month for a year, and then $10,000 a month, but that's two years away. Pfffftt!

Wife: That's a brilliant master stroke. I love the flexibility you've give us with our budget. I love you.

Me: I love you too.

 

i'm not understanding why you're so against this, we only have bautista/EE for the next 2 years. if it means sacrificing some cash down the line i'm ok with it, especially with the young pitching staff emerging and rickeyro getting off the books

[RealAccountant]

Me: Hey honey, I bought a new Porsche.

Wife: What the f***? How are we going to pay for that?

Me: Don't worry. I set it up so that we only make payments of $300 a month this year.

Wife: And what about next year?

Me: Then they jump up to $2000 a month for a year, and then $10,000 a month, but that's two years away. Pfffftt!

Wife: That's a brilliant master stroke. I love the flexibility you've give us with our budget. I love you.

Me: I love you too.

 

So common finance sense dictates that you even out the payments but only pay 300. Suppose that you had two options for your Porsche

 

Option A-pay $1150 a month for two years, total cost = $27,600

 

Option B-pay for 2 years, year 1 payments of $300, and year 2 payments of $2,000. Total cost = $27,600

 

Under Option A you would pay $1150 every month.

 

Under Option B you could take $1150, but pay $300 every month, and put $850 in the bank to pay as part of your $2000 next year. Using this option you would generate an extra $276.00 if you can earn 5% interest in the bank. So now which option would you prefer

[ElNik2013]

They're deferring 9M from Martin's 16.4 per year salary and spreading it out over 2017, 2018 and 2018.

Hopefully itt ends up working out

[RealAccountant]

Of course it has. But that has absolutely nothing to do with the discussion ... and the post I was responding to, which talked about the benefits of TMOV. Maybe you should just quit reading altogether if you can't do it properly.

 

Its TVM not TMOV

 

the fact that you didn`t use the right abbreviation tells me that you don`t know anything about time value of money, or finance for that matter. I am very disappointed because you lead posters on to thinking that you are a financial expert but you really aren`t. Using inflation to account for time value of money instead of Rogers cost of capital also makes me doubt you have an understanding of the matter. Its more likely that you are just a poser.

 

In any case, if anyone is interested the reason we use Rogers WACC is because this is the cost at which Rogers must raise funds to finance projects. As such any money that is not used to pay Martin today, and delayed can be used to finance their operations, thus leading to savings

 

Finance is a thing.

[SAAviour]

So common finance sense dictates that you even out the payments but only pay 300. Suppose that you had two options for your Porsche

 

Option A-pay $1150 a month for two years, total cost = $27,600

 

Option B-pay for 2 years, year 1 payments of $300, and year 2 payments of $2,000. Total cost = $27,600

 

Under Option A you would pay $1150 every month.

 

Under Option B you could take $1150, but pay $300 every month, and put $850 in the bank to pay as part of your $2000 next year. Using this option you would generate an extra $276.00 if you can earn 5% interest in the bank. So now which option would you prefer

 

s*** son, are u a real accountant?

[o2cui2i]

Me: Hey honey, I bought a new Porsche.

Wife: What the f***? How are we going to pay for that?

Me: Don't worry. I set it up so that we only make payments of $300 a month this year.

Wife: And what about next year?

Me: Then they jump up to $2000 a month for a year, and then $10,000 a month, but that's two years away. Pfffftt!

Wife: That's a brilliant master stroke. I love the flexibility you've give us with our budget. I love you.

Me: I love you too.

 

Difference... Rogers has a budget of whatever dollar amount they decide and the money is already going to be there. they could afford to pay it up front if they wanted too and budget less in the future? They are shifting cost and have the money available....

 

and then we have you and the fact than you will NEVER have the money to buy a Porsche?

[SAAviour]

Its TVM not TMOV

 

the fact that you didn`t use the right abbreviation tells me that you don`t know anything about time value of money, or finance for that matter. I am very disappointed because you lead posters on to thinking that you are a financial expert but you really aren`t. Using inflation to account for time value of money instead of Rogers cost of capital also makes me doubt you have an understanding of the matter. Its more likely that you are just a poser.

 

In any case, if anyone is interested the reason we use Rogers WACC is because this is the cost at which Rogers must raise funds to finance projects. As such any money that is not used to pay Martin today, and delayed can be used to finance their operations, thus leading to savings

 

Finance is a thing.

 

Yup, really a real accountant I think.

[reedjohnsonfan]

You guys are crazy. Who cares? The Jays have almost nothing on the books in a few years, it's ok for a mid-high market team to have a couple of bad contracts. This move makes it easier for the Jays to hopefully add an impact outfielder and a starter or at least some bullpen help. I don't see what the issue is.

[AdamGreenwood]

and then we have you and the fact than you will NEVER have the money to buy a Porsche?

 

Why do you say that? Is it because I'm black? You think black people can't afford nice things?

[saskjayfan]

Me: Hey honey, I bought a new Porsche.

Wife: What the f***? How are we going to pay for that?

Me: Don't worry. I set it up so that we only make payments of $300 a month this year.

Wife: And what about next year?

Me: Then they jump up to $2000 a month for a year, and then $10,000 a month, but that's two years away. Pfffftt!

Wife: That's a brilliant master stroke. I love the flexibility you've give us with our budget. I love you.

Me: I love you too.

 

Me: Oh and I spoke with Porsche dealer and this special edition Porsche we purchased is no longer available. When those rich pricks Roger Dodger, Bobby Redsox and Angel Jiminez at the end of the block see this special edition Porsche they are all going to want it, so in 2 years when the payments go up they will be fighting each other to take them over.

Wife: I knew there was a reason I married you instead my highschool boyfriend Adam Greenpecker.

[o2cui2i]

You guys are crazy. Who cares? The Jays have almost nothing on the books in a few years, it's ok for a mid-high market team to have a couple of bad contracts. This move makes it easier for the Jays to hopefully add an impact outfielder and a starter or at least some bullpen help. I don't see what the issue is.

 

the problem is that some people just have to pretend they know more even if they really dont. the same people who are whining about this signing would be whining if the Jays traded a top prospect to bring in Russell.

 

2016 almost all the contracts that the jays have today will be off the books. Jays need a couple more pieces this year and now have the money there to make a couple more moves to take a run this year without hurting them going forward.

 

expect Melky or Aoki to be signed to play LF.