The Rise of the John Lackey Clause
When the Red Sox signed John Lackey as a free agent in December of 2009, they had some concern about an existing elbow injury, but not enough concern to walk away from the deal entirely. So, they (or maybe his agent) came up with a pretty creative solution, adding a league minimum club option to the end of the deal if Lackey missed significant time due to an elbow issue. Sure enough, Lackey’s elbow became problematic, and after the 2011 season, he underwent Tommy John surgery and spent the entire 2012 season on the DL, triggering the club option for 2015.
As a result, the Red Sox now own the rights to Lackey’s 2015 season at a salary of around $500,000. Given the recovery rates of Tommy John survivors, it’s quite possible that Lackey could still be a useful pitcher in a couple of years, even at 36-years-old. If he rebounds and becomes something like an average starting pitcher, that option could end up holding $10 to $15 million in value, which wouldn’t quite make up for the fact that the Red Sox paid Lackey $15.25 million to spend last year rehabbing, but it would certainly help balance the scales.
Well, it seems like that contract stipulation might be gaining in popularity. Yesterday, Felix Hernandez signed his seven year, $175 million contract with the Mariners, and it included a stipulation that might very well come to be known as The John Lackey clause.
According to Ken Rosenthal, the Mariners obtained a $1 million team option for the 2020 season if Hernandez spends 130 consecutive days on the DL within one season or in overlapping seasons. This clause only triggers if the DL stint is due to an elbow injury, however, so this is basically just a make-up season if Felix has to undergo Tommy John surgery. 2020 might sound like a long way off, but Felix will be 34 that year, so even if he has to go under the knife at some point in the next seven years, there’s a decent chance that having a 34-year-old Felix under contract for $1 million could be an extremely valuable asset.
In a lot of ways, this kind of clause makes a lot more sense than the various out-clauses and voidable options that have been worked in to previous deals. In most cases, a player is looking to get as much long term security as he can, and this kind of stipulation — along with his no-trade clause — guarantees that Hernandez will get to spend at least the next seven years in Seattle, even if he gets hurt. However, if he does need TJ surgery, the Mariners also retain a chance at getting seven healthy seasons from Hernandez, thereby mitigating some amount of the risk that goes with signing a pitcher to a long term contract.
It doesn’t make it a no-risk deal, of course. Lackey’s elbow caused his performance to suffer even before his elbow went out, and they clearly aren’t going to come out at anything close to break even on the transaction even with the extra year added on to the end. Getting control of one additional season for a guy in his mid-30s who has already had major elbow surgery obviously limits how valuable the option can be, but it gives the team a chance to recoup some of the value lost due to a potential injury.
From an outsider’s perspective, this kind of stipulation seems a bit less hostile than asking for some kind of voidable year at the end, as the Yankees did with CC Sabathia in his negotiation. The traditional vesting/voidable option is kind of baseball’s version of a pre-nup, and no one really enjoys talking about how they’re going to break up before they even get married. This “John Lackey Clause” is kind of the opposite of that, extending the relationship even further into the future in order to try and make sure that both sides are more pleased with the outcome of long term deals for pitchers.
Overall, I think this kind of clause could end up being pretty good for baseball overall. Historically, the risks and rewards of signing a premium pitcher to a long term deal have been slanted too far in favor of the pitcher, and the Lackey Clause might be one small way of balancing the risk between the two sides. While Lackey’s contract is looked upon with scorn from most in Boston, we may find that it set the stage for an interesting, innovative way for teams to enter into better long term deals with starting pitchers overall. The deal won’t work out for the Red Sox, but it may very well end up being a good thing for the sport as a whole.
Dave is the Managing Editor of FanGraphs.
If they had these 12 years ago, Mike Hampton might still be under contract for the league minimum.
Is it just a one-time clause or is it an extra year for every year you miss 130 consecutive days? In a 7 year window, I feel like Chris Carpenter missed two complete seasons basically.
It’s just a one time clause.
If a team wanted to get really crazy, a fun contract might be a deal that contained a perpetual one year option until a number of days on the active roster were met. So, say the Cardinals had signed Carpenter to a five year deal, and there are 183 days of service in each Major League season, so they’d essentially signed him for 915 days of active service. I don’t know if an agent or MLB would go for it, but theoretically, a team could construct a contract that adds a one year option to the end of the contract if Carpenter had not yet spent 915 days on the active roster during the life of the deal. It might have taken Carpenter seven or eight years to get to those 915 days, but by the time the deal expired, the Cardinals would have gotten five full years of service out of the deal.
In thinking about it, you’d probably have to set the bar a lot lower than the full term, so that a team couldn’t just get an extra year by sticking a player on the DL for a few weeks, or that they wouldn’t lose a free agent year because they took bereavement leave to go to their parents funeral or something. So, maybe you’d go 800 days of service, which would allow for 29 days on the DL per season.
I doubt we ever see anything like that, but it’d be an interesting experiment.
Yeah, I agree that agents or MLB wouldn’t be keen on this notion.
Given how much sleight of hand is done by teams with either the DL or holding players for service time reasons, I think teams would abuse this sort of flexibility pretty quickly.
Put it this way: Would you trust Loria and company to use this ethically, if there were a hypothetical deal with one of their pitchers that was built this way?
The player’s union would shoot down that type of abuse quickly. They are good at what they do.
They might not shoot it down if it’s in exchange for a higher base salary. MLBPA likes to see high-dollar contracts. It doesn’t matter how much is deferred or how much the present value is – they like the headline-grabbing base salary. If a player got a bigger contract than they otherwise would’ve received, then maybe the MLBPA would go for it.
MyrEn, I mis-read what you posted. I thought you meant they’d shoot down the contract clause, but you meant they’d shoot down the way teams abused it.
it should also trigger the removal of the no-trade clause during those final 2-3 years of the contract. At that age/point, he could be more valuable asset to the team as a trading chip.
I don’t think the players’ union would go for how that conflicts with how 10-and-5 works right now. Would they?
The 10 and 5 rights is just the default rule. Players have contracted around it in the past.
Default rule?
It’s written into the Basic agreement. Certainly players can agree to waive their 10/5 rights but that is always the player’s option and is usually waived only if player can no longer deal with his current team’s situation, he is paid $$$ to waive his rights, or it puts him in a position to win a ring.
i assume lowering the AAV for luxury tax purposes has something to do with it as well.
Are the Mariners likely to be struggling to get under the cap?
its a 7 year deal, and potentially 8. who knows where they will be 5 years from now? a few years ago i wouldnt have thought the rangers or dodgers payroll would be what they are now.
just saying its an added bonus that im sure was considered.
If the money isn’t guaranteed, then it doesn’t count for AAV.
it would once it went in to effect.
I wonder how they came up with the 130 day threshold.
I think it is great for the league so long as it doesn’t get out of control with teams pushing for the clause to cover multiple parts of the body.
It seems perfect for pitchers as at this point there is a standard amount of time a player will be sidelined after TJ surgery.
My guess would be that 130 days accounts for signs of trouble in the first half of the season, pitcher “mans up” and tries to play through it, it gets so bad they shut him down right after the ASB, and then they end up missing half of the next season coming back from rehab…? Or same for looking sketchy in spring training, they go on with him anyway, and then something blows out around late April.
That would definitely be it Chris from Bothell. I also think it’s possible that at some point in the near future we could see guys coming back from Tommy John in less than a year so a pitcher could go under the knife October 5th right after the season and show back up on the big league club in September of the next year as Lackey talked of doing last year. We know recovery times for ACL’s are getting quicker and the UCL procedure is similiar. The difference I guess would be that when you fix a knee you are trying to get an athlete back to a natural movement while when you fix the UCL you are trying to get a player back to a very unnatural movement.
I hope this won’t lead to players trying to come back too soon after an injury in order to keep the injury option from vesting. I can see a player wanting to come off the DL, the team not letting him, then an arbitrator voiding the option when the player files a grievance.
Of course, the value of that clause is probably what motivated Lackey to conceal his injury, pitch hurt/terribly during 2011. A season in which the Red Sox famously missed the playoffs by one game…
So, enjoy that cheap option guys!
Do you have any evidence this is the case?
I don’t know how you’d distinguish between “secretly hurt” Lackey and “normal (aka frequently bad)” Lackey.
This isn’t evidence, but Lackey had a short DL stint in May/June that year for his elbow. Then right after he returned to action (I believe) Peter Gammons published a piece saying John Lackey would need to have TJS after the season. Surprise surprise, Lackey had TJS in the offseason as well as displayed many symptoms of needing it during the season (totally lost command of his pitches and had elbow related soreness throughout).
I don’t think Lackey “concealed” his injury at all, but instead he put up with the injury for longer than most pitchers would. Who knows if he was motivated by this contract provision, but basically there was talk of him needing TJ surgery for over 4 months! Given how pitchers are handled in the present, that seems excessively long to “monitor” an injury to see how it develops over time. It was clear to everyone that it wasn’t improving (just look at his 9.13 ERA in September).
As Lackey alludes to in this article from late June 2011, he’d been long hounded by reporters about the topic: http://sports.espn.go.com/boston/mlb/news/story?id=6719120
I think there’s definitely an argument to be made that Lackey waited longer than most other pitchers before finally conceding to TJ. Was it because of this contract provision? Maybe. But given that this was the first iteration of a contract clause like this and it transpired the way it did, it looks very suspicious.
The biggest problem is it incentivizes players to not get hurt. So when a player does get hurt, it incentivizes them to do everything else in their control before accepting that they will miss time.
The Red Sox missed the playoffs by one game, while Lackey pitched miserably in the last 2 months of the season. Things could have potentially gone very differently…
The suggestion that he tried to “conceal his injury” is absurd. He spent 24 days on the DL for elbow strain in May-June 2011. The medical staff looked at it and cleared him to pitch.
Just because the medical staff allowed him to pitch doesn’t mean that the theory is absurd. For a lot of these injuries, the diagnosis depends a lot upon the players’ description of symptoms and willingness to have surgery. Without the clause, maybe Lackey isn’t as motivated to pitch through pain and ineffectiveness and goes under the knife in midseason 2011. This would have spared the Sox his 6.82 ERA in August and September and might have allowed him to come back in 2012.
Funny thing is, if Lackey’s 11 Aug-Sep starts had been replaced by a replacement level SP, like Felix Dubront, the Red Sox would have likely won at least one more game, and they would have made the playoffs.
Their epic collapse would have never become a story, Tito would have never been fired, Epstein may have never left, Valentine would have never been hired, Youk would have never been traded for peanuts, perhaps AGon would have not been dealt, and the Red Sox would be a completely different team.
John Lackey strikes again!
Indeed. While players and teams have never agreed on the traditional “for richer or poorer” clause, this does begin to approach “in sickness and in health.”
With Lackey at least, what is the real value of that 2015 option though? He will be 36. What are the odds that he’ll actually pitch for $500k versus just retiring?
I see how it could give the team some leverage to get him to sign some kind of below market two year deal, but it seems optimistic to consider this as an actual league minimum year.
Similarly, Felix will have just finished a deal for $175 million. How likely is he to actually pitch for the league minimum?
He’ll only be 34, and may well be working on a hall-of-fame case. Felix retiring rather than taking the minimum doesn’t look too likely, there will still be too many years left in his career to do that.
do you really think he will retire at 33?? just to not have to play for 1 year at league minimum.
Assuming he is moderator healthy the odds of him retiring are somewhere south on none.
I wouldn’t be surprised if Felix were obligated to pitch for league minimum, he might just sign a team friendly extension. Assuming you’re right about these guys feeling above pitching for nothing.
any salary at league minimum potentially has value. even if he’s just a generic reliever at that point
For a while now it’s been clear to me that the option should vest in the season after a pitcher’s return rather than the last season of the deal. That would leave him many millions of reasons to stick around rather than return before the 1/1 year kicks in.
That should read ‘retire’ rather than ‘return’.
I’m wondering why every contract doesn’t have such language?? Maybe even include a bonus should you remain healthy? The player is still getting a huge guaranteed portion and it gives the team some insurance. Will there ever be a time in baseball where only a portion of the contract is guaranteed?? (like football)
Nope, not following Curt Flood, Marvin Miller and 250 million dollar guarunteed contracts.
Every contract doesn’t have that language because the player has to agree to it, and a contract is better for the player without such a clause included.
To follow up on Atreyu, it’s because the agent/player just needs 1 team that doesn’t require that sort of language in the contract. And if a team wants to land the free agent, many of them are willing to take that risk.
I think it bears mentioning that if MLB suddenly collectively started refusing to offer guaranteed contracts, the MLBPA would hit them with a collusion lawsuit so fast their heads would spin. And the MLBPA would win, too.
The football union, by way of contrast, is totally gelded. So football players don’t have the protections that baseball players do.
Which is outrageous on a moral level, given the injury rates and serious, lifetime disabilities that playing football exposes you to. But, hey, the NFL gets good ratings.
I understand making $1 million in salary doesn’t set a person up for life anymore. Making $15 million in one year? Yeah, that should secure basic life necessities – and then some – for you and yours. Just baffles me that guys can be injured for a chunk of their contract and still collect all that money…from their fans nonetheless.
Time spent on the DL should automatically drop your salary 75%. Still making good income compared to production. And still making more income than 99% of the population that’s working (or trying to work) at their 9-5 grind.
I don’t understand this sentiment at all. Would you rather the billionaire owners get the money instead? Do you get personally offended by the salaries of movie stars, musicians, and other entertainers?
I was only commenting on the rightness of players taking a LOT of guaranteed money while not on the field.
If a movie star/musician/entertainer mailed it in for a performance I pay full price for? Yeah I’d be offended. And if they don’t show up at all?
Maybe if they injure themselves off the field I can get behind you, but most injuries are from guys pushing themselves.
I remember Jr. hurting himself making an amazing catch into the wall at the Kingdome. Why should he take a paycut because he sacrificed himself to make the play?
You’re assuming one great play is a wise choice. If the team had an option, I’m willing to bet they’d rather give up a double than lose Jr. for any stretch of time.
For me it is mostly a problem with the mega-contracts. Guys making league minimum? I’m with you.
If I’m making $10,000 per game, I don’t feel bad about ‘only’ making $2,500 per game while injured – to use an arbitrary DL paycut. Still going to earn more in a month (while NOT doing your job) than most people earn in a year.
We live in a culture of excess. When is enough enough?
“from their fans nonetheless.”
Incorrect. The team pays the player’s salary, not the fans.
The price of tickets is based on how much fans are willing to pay. The price of tv contracts is based on how much cable tv thinks they can raise prices on everyone, including non baseball fans, and not lose subscribers.
Notice that the recent increases in revenue are directly tied to cable companies paying big bucks for tv rights and have nothing to do with the contract demands of players.
Can open. Worms everywhere…
Baseball is a product. There are costs (players, parks, etc) and there is income. You can say the income isn’t all coming from fans, but if nobody liked baseball it wouldn’t make money. Onwers want to have less costs than income right?
Advertisers know they can make ‘x’ from consumers of baseball, and in turn pay (‘x’- profit margin) for access to those consumers. Still, the money ultimately comes from fans.
I’m open to the idea that a portion of revenue comes from completely external sources, but haven’t heard a sound argument explaining such sources.
Contracts are based on what owners believe their income will be. That income, I would argue, is ultimately coming from baseball consumers…no corporation donates to the sport.
This is not entirely correct. Players are not paid by fans. Players are paid by owners. Owners, in turn, are paid by fans. If you don’t like the way that baseball salaries are currently structured, talk to the owners. The players sign the contracts that they are offered, and it is the owners doing the offering.
Owners aren’t offering guaranteed money to be nice guys. (Costs them even more to turn around and insure said contracts.) I’d imagine agents have the most to do with what I’m whining about.
I also think in ‘the ideal’ more than is probably healthy…
So you think anyone injured on the job is entitled to nothing?
Besides, it’s not like teams don’t not have the option of insuring the contract.
Furthermore, teams get to pay guys like Mike Trout league minimum for 3 years and then below market rates the next 3 years. They have plenty of savings from these below market deals to eat a couple of bad contracts.
No, that’s not what i think.
Thus why i said something different.
Not very different
“Just baffles me that guys can be injured for a chunk of their contract and still collect all that money…from their fans nonetheless.
Time spent on the DL should automatically drop your salary 75%”
Yeah, 25% of a lot of money is more than “nothing” isn’t it?
you should get a gig at a corporate HR department
These argument threads are exactly as repetitive and uninteresting as the PED ones — nobody says anything new, and nobody persuades anyone else.
Hey let’s argue about politics and religion next!!
Golly gee that Obama. Isn’t he (a) a swell, altruistic super-genius or (b) a nefarious, scum-of-the-earth simpleton.
(Choose a or b depending on your political persuasion and then look for any and all evidence to confirm what you already thought while totally dismissing any evidence to the contrary.)
Ok ready aaaaaaaand GO!!!
I assume the 1 year $1 mill option is voidable if traded, since the team he’s being traded to didn’t incur the cost of a lost year.
If that’s the case, and assuming Felix were to incur a lengthy injury earlier in the contract, then this option also becomes a sort of anti-trade clause as the Mariners would have incentive to keep him and cash in on the option year.
Why would you assume that the option be voided in the event of a trade?
He has a full no-trade anyway–and the team refused to trade him when it might have landed them some overhyped Yankee detritus anyway. It’s rather a nonissue.
If he ended up having Tommy John, could Felix not just retire rather than play for 1 million/year?
He could, but unless the Tommy John surgery happened in the very last year of the deal (not counting the added-on year), he would be forfeiting tens of millions of dollars by retiring.
i assume he meant retiring the offseason before the $1M year.
Ah, I see. People discussed that scenario above – he could do it, but will still be relatively young.
He could also (if healthy and still an effective pitcher) renegotiate the last year of the deal as part of an extension. The team would give up a year of way under-market value for the long term cost certainty of a couple extra seasons of an effective pitcher.
He could do it, and monkeys might fly out of my butt.
The Lackey clause sounds good on paper, but a couple of considerations.
Lackey actually cost the Red Sox 2 years with his bad elbow, an awful 2011 where he was pitching with pain, and all of 2012. 2 for 1 is not a good deal.
Also, there are no guarantees Lackey will not retire after his age 36 season instead of playing 1 yr at league minimum,
King Felix is younger, so retiring may not be as much of an issue, but it’s possible.