An Opportunity for the Ages
The time is now for Jerry Reinsdorf, Kenny Williams, and Rick Hahn. The opportunity to achieve something narrowly missed just more than a dozen years ago. Something that fell apart late in the summer, after not only reinforcing a previous champion, but adding a bona fide star. Perhaps it was the effect of leaning on dependable arms too heavily the year before. A bullpen that couldn’t repeat previous magic. Two divisional rivals putting together magical seasons of their own. The year ninety wins was only good enough for third.
Now, an opportunity exists to wash away the pain of what could have been. Something that midway through the 2006 season, looked to be even stronger than the year before. The beginning of something protracted and dominant, rather than something on the verge of flaming out altogether too quickly.
Twelve seasons have passed on the South Side of Chicago with far too little excitement as it relates to baseball. Yes, there was the ‘08 “blackout game,” and ensuing postseason appearance. There was a somewhat surprising run in 2012. There were 148 mostly-sublime Chris Sale starts.
But the last dozen years since the collapse of a powerhouse 2006 team have been characterized far more by a sense of confusion as to a true direction — or the lack of a well-conceived plan upon which to execute — than the more infrequent blips on the radar of sustained organizational success.
Overlaid upon a White Sox tapestry that even GM Rick Hahn described as “mired in mediocrity” came the reemergence of the Cubs, who have made the postseason in four conservative seasons, beginning in 2015. Over those four years, the Cubs have not only reiterated a position of complete dominance in Chicago baseball, but have cemented themselves as one of Major League Baseball’s more dominant franchises in almost every respect, both on the field and off.
And yet it is this success of the Cubs, after literally and figuratively tearing down the rotting structure of a bloated organization — and rebuilding with a leaner, stronger positional foundation — that has led the White Sox to where they stand today. In search of their own cornerstone pieces, they have what is perhaps an unprecedented opportunity.
As a result of spending by traditional powers in previous offseasons, as well as a sudden staunch and stubborn shift to apparent financial responsibility, the White Sox find themselves as one of less than a handful of organizations seriously competing for two of baseball’s most compelling free agents.
Ultimately, this is more than an opportunity to merely jumpstart a rebuilding process demanding of patience. Rather, the White Sox have an opportunity to fire a shot across the bow not only of their rivals on the north side of City Beautiful, but across the division and the American League as a whole.
However, the ability to fire that warning shot will require far more than emerging as the victor in a battle of attrition with powerful agent Dan Lozano to land Manny Machado. Rather, the situation demands something far more secretive and complex, requiring elements of persuasion, precision and timing more customary of a Jack Ryan adventure than Major League Baseball free agency negotiations.
And yet, the events which have come together to present this opportunity are so uncommon — forming such an absolutely perfect storm — that the type of bold action they require should be obvious: the White Sox must sign both Manny Machado and Bryce Harper to long-term contracts to play on the South Side of Chicago.
The True Alchemy of the Development Model
Yes, the notion of this as something distinctly possible, particularly by the White Sox, is likely to elicit strong emotions of laughter, disbelief, perhaps sheer incredulity. And yet, that is precisely the reason they should attempt to achieve it. This organization, while it has thus far deftly maneuvered and executed a rebuilding plan that appears to be on the upswing, is in desperate need of legitimacy.
While developing from within has become the obvious model of preference for nearly every Major League organization, it is one fraught with unpredictability, setbacks and misidentification. The true alchemy of the developmental model in baseball is not some sudden epiphany that stockpiling youthful players may lead to unearthing young superstars.
Rather, it is the transformation of one’s payroll from bloated to lean and one’s roster from depthless to deep. Providing depth at a more affordable cost ultimately unlocks flexibility, allowing an organization to spend critical resources on the pieces that matter most: high-impact, all-star caliber, superstar ballplayers at their height of their powers. When the story of the next White Sox World Championship is written, it must tell the story of how their focus on developing from within allowed them to acquire two superstar ballplayers.
Yes, ever so often, the developmental model bestows upon an organization Ronald Acuña, Juan Soto or Eloy Jiménez. The White Sox are lucky to have Jiménez (thank you, Cubs), but too many organizations have been blessed by the baseball gods with the presence of a singular superstar and not reached the Promised Land.
It is beyond dispute that watching Chris Sale winning a championship in Boston is not a fate the White Sox wish to repeat with Jiménez. The possibility of this history repeating is undoubtedly one very significant factor in their pursuit of Harper and Machado this offseason. The White Sox recognize it is extremely unlikely — indeed likely impossible — to build a championship contender entirely from within their own organization. A solid developmental base is indeed just that; a foundation from which they must build.
The strong foundation the White Sox have constructed must be legitimized. Legitimacy is what transforms an organization from a dark horse to a perennial contender. Legitimacy is what changes an organization from a talking point to a central theme. Legitimacy is what alters an organization from a potential fit for future free agents to a destination. Legitimacy is what puts fans in stands, creates ratings, and sells merchandise. Ultimately, legitimacy bequeaths upon an organization a systemic and cyclical pattern of revenue generation, elite performance and unprecedented levels of success.
It can be argued, quite convincingly — if we’re approaching this experiment with any honesty — that adding either Manny Machado or Bryce Harper would absolutely legitimize the White Sox’ rebuilding efforts. All but the most demanding critics will be euphoric with landing one of these 26-year old superstars. As late as November of last year, the White Sox were not seriously considered, outside of a fairly small geographical radius of Guaranteed Rate Field, as a potential landing spot for either player.
In fact, it was the Cubs who were considered among the favorites to land Harper, and the White Sox were not on the boards of offshore betting sites to land either Harper or Machado.
And yet, here we are — weeks away from position players reporting to Spring Training — and the White Sox have emerged as favorites to land Machado. While the Phillies remain keyed on Harper, and are widely considered the favorites to sign him, there are undertones that Harper has, well – how does one communicate this – a bit of pause regarding playing in Philadelphia.
Perhaps his hesitation is in part due to his time spent opposing the Phillies as a member of the Nationals. Perhaps he would prefer not to be so far from his home in Las Vegas. While the precise reasoning behind Harper’s concern is not exactly known, and has certainly not been publicly voiced by those in his camp, it has persistently lingered underneath the substrate of mainstream reporting.
Additionally, there have been similar whispers regarding Manny Machado’s interest level in playing in red pinstripes. Interestingly, Machado has been heavily linked to the White Sox for weeks, once it became apparent that the Yankees were more interested in adding highly-priced bullpen additions rather than their former AL East rival. T
he Phillies, for their part, while remaining interested in Machado, have hardly been linked to him outside of the visit he paid to Philadelphia shortly before Christmas. Perhaps they simply see Harper as the better fit, which is logical given their additions this offseason, or perhaps they’re reasonably aware of Machado’s preference for New York or Chicago.
Talk is cheap, and rumors run rampant, but sometimes, where there is smoke, there is indeed fire, emanating from the weakest of flames. The perception of such personal preferences would explain the incredibly tepid market for both Machado and Harper’s services.
The White Sox seem to firmly believe the only threat of losing Machado would come from the Bronx —not the City of Brotherly Love — and such a threat doesn’t seem to be considered serious by White Sox brass, who apparently are content to wait Dan Lozano out as the number of days before Spring Training dwindles.
Scott Boras, on the other hand, seems disinterested in engaging the Phillies even as time ticks on, instead preferring to attempt to lure other potential suitors, as improbable as they might seem (I’m looking at you, Farhan Zaidi).
Meanwhile, there have been subtle indications that Harper is indeed intrigued by the idea of joining the White Sox. While the Sox seem to have been primarily engaged with Lozano in recent weeks, for a player they have been targeting for more than a year (they did, indeed, attempt to acquire Machado from Baltimore at the ‘17 Winter Meetings), they have continued an ongoing dialogue with Boras in the background, keeping him reasonably apprised of the status of negotiations with Lozano.
It is well known that Harper enjoys Chicago, at least in part due to his close relationship with childhood friend and Chicago Cubs’ star Kris Bryant, and the two superstars’ wives are said to be friendly. Harper also appears to enjoy the City’s cultural richness. He’s been known to enjoy taking in Chicago’s world-class food scene, as well as cheering on the Blackhawks at the United Center, however, his allegiances have since been stolen by his hometown Las Vegas Golden Knights.
Additionally, Harper and his wife Kayla apparently were very impressed by the White Sox’ commitment to their community, through the tireless and generous work of White Sox Charities.
The White Sox, for their part, have been incredibly quiet regarding Harper since their meetings with he and Scott Boras at Harper’s home in Las Vegas in November, and again at the Aria Resort and Casino during the Winter Meetings in December. While their interest in Machado has been more difficult to obscure, due to the outward recruiting efforts that trading for Yonder Alonso (brother-in-law) and signing Jon Jay (close friend) have signaled, the lack of digital ink spilled regarding their interest in Harper may not be at all indicative of their desire to land the superstar outfielder.
In fact, it may very well all be part of a master plan.
The Coup d’état
The White Sox checked in with both Dan Lozano and Scott Boras very early in the offseason. In fact, it seems as though the White Sox likely recorded some type of presentation at the United Center for Bryce Harper in the morning hours of November, 8th, as photos were leaked of Harper’s name across a digital banner at the UC that same morning.
They followed that up with a visit to Harper’s Las Vegas home that included organizational ambassador and special assistant Jim Thome on November 19th. The Sox then hosted Manny Machado at Guaranteed Rate Field, as well as various locations around the City in a well-publicized visit on December 17th.
It is likely that discussions have been ongoing since those meetings occurred, which, at the very least, have given the Sox some indication of where the agents view the worth of their respective star players. The larger question, however, is this: Did the White Sox share their desire, with Manny Machado and Bryce Harper, and perhaps more importantly, with Dan Lozano and Scott Boras, of their intentions, at least under a certain subset of scenarios, to sign both players?
There are indeed some sources that believe they have. Not only are both Machado and Harper aware of the White Sox interest in doing so, but they are willing to accommodate such a coup d’état under certain scenarios. What exactly those scenarios are is something probably known only to a few individuals, however, it is safe to say they likely involve both players being paid handsomely, being provided with opt-outs that generally align with one another, such that if something were to derail such a grand experiment, one player would not be left for dead while the other rides off to greener pastures.
To be clear, the White Sox’ interest in such a strike is not necessarily a secret. Reporters Bob Nightengale of USA Today and Jon Morosi of mlb.com have tweeted the White Sox have interest in signing “both” players.
#WhiteSox interested in *both* Manny Machado and Bryce Harper, source confirms, although it’s too early to know how realistic it is for them to sign either. #WhiteSox have second lowest current 2019 payroll commitment of any @MLB team. Story: https://t.co/vSXgIqh3VL @MLBNetwork
— Jon Morosi (@jonmorosi) November 5, 2018
This reporting, when considered in isolation, may not seem like much at first glance. Perhaps it is simply excited exuberance, embellishment, or dreams of grandiosity. However, its mere existence seems to add credence to those who say that this aggressive plan has indeed been shared with both Machado and Harper.
To make such a pitch, it is also important to note, especially for an organization known for its conservative financial nature as it relates to free agents, it likely means the White Sox have considered the impacts of some $600 million weighing on future payroll – nearly half the current value of the entire franchise — and didn’t rule out the possibility.
If the White Sox were indeed intrigued by the possibility of both Harper and Machado at some point a few months ago, is it possible they are still aggressively pursuing such a plan? It would seem difficult to understand why that interest might have waned given recent developments.
While the Yankees, Nationals, Dodgers, and Cubs apparently expressed varying levels of due-diligence into the two, all four have made acquisitions this offseason to push their respective payrolls fairly close to the luxury tax threshold. San Diego has recently expressed interest in both players, while San Francisco visited with Harper last week.
However, Machado clearly would prefer not to play on the west coast, and there are serious questions regarding the willingness of both organizations to offer the magnitude of commitment these players will almost certainly command. While each of the above organizations obviously has their own concerns regarding engaging in such a commitment, the general themes are simple:
1) an unwillingness to absorb significant tax penalties; and/or
2) an unwillingness to meet or exceed the level of interest both players already have from their most serious suitors.
In summary, it appears as though much of the potential market has moved on, leaving Harper and Machado in its wake.
As a direct consequence of this shrinking marketplace, the anticipated cost of converting on a Machado, or perhaps more surprisingly – a Harper signing — has fallen significantly. What was believed to be a total commitment in the realm of $375 – $400 million over nine or ten years as recently as late last season is now believed to be potentially less than $300 million over seven or eight years. Negotiations which were once expected to involve as many as ten teams for each player now include only two or three teams.
The undisputed fact is, Major League Baseball free agency has undergone a metamorphosis in just a few short offseasons. And while I have addressed some of the causes (and potential effects) of this in previous pieces, it is critical to understand this much: this market is no longer functioning efficiently.
The definition of an inefficient market is one in which an asset’s market price does not always reflect its true value. Over the course of his career, Manny Machado has accumulated 30.2 fWAR and 33.8 bWAR, while Bryce Harper has accumulated 30.7 fWAR and 27.4 bWAR, respectively, over seven seasons. Essentially, these two superstars have averaged something in the neighborhood of 4-5 Wins Above Replacement over the first seven seasons of their careers
If we make a reasonable assumption that one Win Above Replacement is worth something in the neighborhood of eight or nine million dollars, it might seem as though an offer in the neighborhood of eight years, $250 million for Manny Machado or Bryce Harper might be a reasonable offer. A $31.25 average annual value is just beneath market value for an average of four Wins Above Replacement annually over the life of the contract.
However, we must recall that both Machado and Harper are just twenty-six years of age. Each of these players is likely entering the peak of their careers. It is very possible – indeed fairly probable – that the next five years of their careers will result in the greatest cumulative stretch of Wins Above Replacement they will produce
. Furthermore, on a seven or eight year deal, the final two or three years under contract will be their age thirty-two and thirty-three seasons. These seasons will likely represent the final two years of the peak of their careers.
Essentially, what it appears the White Sox and Phillies have thus far offered, is a framework which slightly undercompensates Machado and Harper’s present average annual production, prior to them reaching their true career peaks, for the seven or eight years which likely encompass the entire peaks of their careers, at values which do not indicate an inflationary increase in the value of a Win Above Replacement. And these are the best offers on the table, as we find ourselves just days before the beginning of Spring Training!
It remains somewhat shocking that opening bids for these players began somewhere in the two-hundred-ish million range. What is even more shocking is that the offers apparently haven’t progressed much beyond those opening figures. The reason? There simply are not enough buyers near the true value of the asset, which in our case, is likely closer to five Wins Above Replacement at an average cost of $8.5 – $9 million to account for inflation, resulting in an average annual value of $42.5 – $45 million and a total value of some $300 million over seven years or $340 million over eight years.
Indeed, the true value of Manny Machado and Bryce Harper may be as much as $75 – $100 million above the current speculated offers. Due to the lack of liquidity near the true value of the asset, the asset price has been driven down far below its real value.
And that, my fellow White Sox fans, is why Jerry Reinsdorf must be willing to write two checks the likes of which he has never before written.
Surprisingly, signing big checks is perhaps the easiest part of executing the White Sox plan. The more difficult part, which I alluded to previously as something more befitting of the Tom Clancy character Jack Ryan, is convincing not just the players – but perhaps more importantly – the agents to buy into this master plan.
The “master plan,” of course, is to convince both Machado and Harper to sign nearly simultaneously. The execution of such a plan, however, is where its true genius lies. The challenge is simple:
1) neither agent wants his player to agree to terms without knowing those of the other player, as presumably, this could result in accepting a deal well below the relative value of the other; and
2) both agents would prefer that one of the Phillies or White Sox face the possibility of not converting on either target, therefore increasing their desperation and inducing them to pay more.
While the first of these challenges is not always as critical or difficult to navigate in a well-functioning and efficient market – since market outcomes are likely to be far more predictable – it is a particular disadvantage in an inefficient market, as the true value of the asset may not be recognized by the marketplace. Therefore, all market outcomes in an inefficient market are by their very nature unpredictable, and may result in an especially poor outcome for one party.
Due to the unpredictable nature of these conditions, the first player that does agree to terms will serve as an important data point for the second player. The team(s) that continue to negotiate with the second player, on the other hand, will lean heavily on the framework of the first player’s terms, leveraging it against the few days remaining until Spring Training begins, and attempt to anchor the second player to the terms agreed to by the first.
The second player’s agent, most likely to be Scott Boras, should we accept history as our guide, will attempt to build off the terms accepted by the first player. He’ll argue that his player brings significantly more to the table than Machado – presumably greater television ratings and gate receipts – and if teams want the long-term services of his client, they will need to compensate him accordingly.
More importantly, particularly for Scott Boras, is the fact that he will remove any possibility of signing a contract below that of Manny Machado, and will once again have successfully negotiated the largest contract of the offseason.
The second challenge is the one most likely to threaten the White Sox’ master plan. That is because they will have to convince Scott Boras, again, accepting history as our guide, to forego the only scenario he likely believes is in his favor in this poorly-functioning market.
As long as Manny Machado remains on the market, both the Phillies and White Sox will hedge their bets on Harper. However, once Machado is no longer available as a fallback option, a significant amount of leverage shifts back to Boras and Harper. That leverage – perhaps the only true leverage he can utilize in this market – is not something that Boras will forego easily.
To overcome both of these challenges, and perhaps serving as the most clear evidence that Machado and Harper are well aware of the White Sox’ desire to orchestrate a dual strike, is the likely requirement of absolute transparency with the agents and players.
To convince both agents to accept the terms of a deal before the other has signed will likely require both agents having at least a general knowledge of what each player is being offered. While it is unlikely in any scenario that Machado’s offer will outpace Harper’s, even in one wherein Lozano somehow outlasts Boras, and Harper signs first, it is difficult to imagine Lozano advising his client to accept a deal that is significantly less than Harper’s. Meanwhile, Harper’s offer will likely need to be significant enough that he and Boras are willing to forego being the last man standing.
Therefore, while not impossible, to execute on their plan, the White Sox will need to offer the following:
1) an extremely attractive offer to Harper, perhaps something in the range of eight years, $320 million; and
2) a significant increase to their rumored offer to Machado, perhaps eight years, $280 million; and 3) this is the real kicker – concurrent and contingent “swellopt” provisions, that require the White Sox to either trigger the sixth, seventh and eighth option years of both Machado and Harper’s contracts after the third year of the contract, or else allow both Machado and Harper the option to re-enter free agency after their age twenty-nine seasons.
Such an unprecedented arrangement would seem to be equitable for all parties from a number of different perspectives, which is exactly why it just might work.
From the players and agents perspectives, it provides both Machado and Harper with average annual salaries of at least $35 million and it ensures the White Sox make a significant commitment to winning by forcing them to commit to both players for the entire term of their contracts.
Should the White Sox not be willing to do so after three seasons, both players receive the option of re-entering free agency at an age which guarantees them another opportunity at significant riches.
From the White Sox’ perspective, it provides them with the opportunity to sign both megastars for roughly $600 million – likely less than they might have originally anticipated – and even more importantly, a golden opportunity to completely legitimize and entirely transform their organization. Additionally, it allows them an opportunity to limit their liability to a worst-case scenario wherein they must pau Harper and Machado for five years rather than eight, should they refuse the option to pick up years six, seven and eight, yet both players refuse to opt-out after year three. While this scenario is unlikely, it would protect them against shelling out significant dollars for Harpr and Machado’s age thirty-one through thirty-three seasons, should something take a dramatically ugly turn.
Of course, there is the small matter of the Phillies. How could they allow this to happen? Where are they in all of this? Well, if the White Sox have their way, the Phillies will be completely oblivious to their blitzkrieg. Certainly the White Sox would require absolute secrecy regarding such an arrangement, and while it is possible one of the agents could spoil things, if both players truly are intrigued by what the White Sox have to offer, one could easily anticipate adding both superstars would only amplify such interest.
The White Sox are at a crossroads in their history. They have been provided with an opportunity that dreams are made of.
Jack Ryan, where are you?
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