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Larry Stone gives his take on a wide array of baseball issues and weighs in about the Mariners, too.

February 11, 2013 at 10:59 AM

Contract protection for potential injuries has much recent precedent in MLB

felixthrows.jpg

(Photo by Getty Images)

I believe it was Sir Walter Scott who first said, “Oh, what a tangled web we weave, when contract details are leaked before results of the physical are received.”

Sir Walter needed a little work on his pentameter, but he had a point.

Geoff has an optimistic take on the Felix Hernandez contract negotiations, which were stalled after the original bombshell by USA Today’s Bob Nightengale that the two sides had agreed upon a seven-year, $175 million contract (which appears to more accurately be a five-year, $135.5-million extension to the two years and $39.5 million Hernandez still has left on his current deal).

Then came bombshell No. 2 yesterday, that concern had developed over the condition of Hernandez’s elbow.

You can’t blame the Mariners for wanting to fully vet their nine-figure investment, and for wanting to put language in the deal that protects them in case of elbow problems down the road. That holds true even if Hernandez is healthy enough to start the season, as appears to be the case.

There is much precedence for this, with teams being much more vigilant ever since the disastrous trade between the Blue Jays and White Sox after the 2000 season. The White Sox sent pitcher Mike Sirotka, a 15-game winner the previous season, along with three minor-leaguers to Toronto for 20-game winner David Wells. Sirotka developed shoulder problems that kept him from ever throwing another pitch in the major leagues, and Toronto filed a grievance that the White Sox hadn’t disclosed an existing condition. But commissioner Bud Selig ruled that it was the Blue Jays fault for not fully checking out Sirotka before the trade.

Ever since, teams have much more closely monitored the health of their acquisitions. And as free agent prices have skyrocketed, the practice of including protective language in contracts has increased as well.

In February of 2004, for instance, the Tigers signed free agent Ivan Rodriguez to what was announced as a four-year, $40-million deal. But only about $19 million of that was guaranteed. Rodriguez had a history of back problems, and the Tigers stipulated, according to Associated Press, that if he went on the DL for 35 or more days in 2004 or 2005 because of a lower spine injury, the Tigers could pay a $5 million buyout to void the remainder of the contract. And if Pudge went on the DL for 35 or more days in 2006 because of a lower spine injury, they could terminate the deal by paying a $4 million buyout.

The AP story said, “It is believed that this is the first contract in modern history to include clauses that void entire seasons of a deal involving a previously healthy player for health reasons. Normally, contracts of this sort are structured as two-year deals, with option years that vest if the player stays healthy.”

Rodriguez, by the way, played four healthy years for the Tigers and got all his money. The Tigers made the World Series in his third year with the ballclub.

Detroit did something similar the following February when they signed Magglio Ordonez to a five-year, $75-million deal. It had a maximum value of $105 million over seven seasons, but the Tigers retained the right — again, according to AP — to void the contract after the 2005 season if Ordonez had a reoccurence of a left knee injury from his previous season with the White Sox. The deal would be voided if Ordonez spent 25 or more days on the DL because of the knee.

Ordonez wound up playing just 82 games in 2005, but his injury was a hernia that required surgery that knocked him out for more than two months. But because it wasn’t a knee injury, his contract remained intact, and Ordonez wound up serving the full seven years and receiving all $105 million.

The next example I could find occurred in 2007, when the Red Sox and J.D. Drew agreed on a five-year, $70-million deal – 52 days after the first announcement that a deal had been reached.

The Red Sox were worried about Drew’s right shoulder, which had given him trouble in previous years, and the sides haggled over language to be included. According to Gordon Edes in the Boston Globe, “Under the terms of the contract, if Drew goes on the disabled list in his third year for issues related to the shoulder for a proscribed length of time, the Sox have the option to void the final two years. If he winds up on the disabled list in his fourth year, the Sox have the option of voiding the final year.”

Drew also fulfilled his entire contract.

The Red Sox included protective language when they signed free agent John Lackey to a five-year, $82.5 million deal prior to the 2010 season. The contract called for a sixth year, at the major-league minimum, to be added to the deal if Lackey missed extensive time for elbow problems. He underwent Tommy John elbow surgery after the 2011 season and missed all of last year. Thus, the sixth year was added, which transformed the deal to six years and $83 million, lowering Boston’s payroll for luxury tax purposes. Theoretically, that allows them more flexibility to add players and not have to pay the luxury tax. Also, if Lackey, who is making a comeback this year, stays healthy, they will have a very cheap pitcher in 2015.

The Yankees assuaged their concerns over CC Sabathia’s shoulder in November of 2011 when they reworked his original contract to keep him from opting out of the seven-year, $161-million contract he signed prior to the 2009 season. The resulting five-year, $122-million extension allowed the Yankees to get out of the $25 million option for 2017 (with a $5 million buyout) if Sabathia finishes 2016 on the disabled list, spends more than 45 days on the DL in 2016 due to a shoulder injury, or is forced to pitch out of the bullpen six times in 2016 because of shoulder problems (all thisaccording to the New York Post).

Already this offseason, two players have had injuries mess up their free agent contracts. Mike Napoli had his reported three-year, $39-million contract with the Red Sox reduced to one year and $5 million guaranteed because of a hip issue discovered during the physical. Incentives could raise Napoli’s salary to $13 million. And pitcher Francisco Liriano had a two-year, $12.75 million contract with the Pirates until he broke his right arm, reportedly the result of banging on the door on Christmas day to startle his kids. The upshot was that the Pirates reworked the contract, and Liriano is now guaranteed just $1 million in 2013, with the opportunity to earn the original $12.75 million based on how much (or little) time he spends on the disabled list.

In all those cases, a little creativity was needed to give the team protection. In most of the cases, the player still kept the ability to maintain his full earning power, as long as he stayed healthy. If that’s where the Felix Hernandez contract ends up, that would be a reasonable untangling of the web.

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