Let’s Imagine Some Asymmetric Contract Structures

Last week, Mets owner Steve Cohen addressed his team’s ongoing contract negotiations with Pete Alonso. During a panel discussion in front of fans, he expounded on the process at length:

“We made a significant offer to Pete. He’s entitled to explore his market. That’s what he is doing. Personally, this has been an exhausting conversation and negotiation. I mean, Soto was tough — this is worse. A lot of it is, we made a significant offer … I don’t like the structures that are being presented back to us. It’s highly asymmetric against us. And I feel strongly about it. I will never say no. There’s always the possibility. But the reality is we’re moving forward. And as we continue to bring in players, the reality is it becomes harder to fit Pete into what is a very expensive group of players that we already have. That’s where we are. And I am being brutally honest. I don’t like the negotiations. I don’t like what’s been presented to us. Listen, maybe that changes. Certainly, I’ll always stay flexible. If it stays this way, I think we are going to have to get used to the fact that we may have to go forward with the existing players that we have.”

That quote caught my eye for a few reasons. First, the length! That’s not a no comment or even close to one. He noted a few specific points where the negotiations had gotten stuck, mentioned that the deal gets less likely as the offseason goes on, and at least nodded in the direction of how an Alonso offer affects team construction. That’s not exactly par for the course when owners give quotes; I’m looking at you, Bill DeWitt Jr., who early this winter said, “The best way to build a championship club is to have good young players.”

Second, I kept coming back to “highly asymmetric against us.” I can’t help it. I’m a contract nerd. I immediately started thinking about what that could mean. The possibilities are nearly endless. Accumulators? Collars? Conditional ownership share? Alonso gets to choose the roster every Tuesday?

Well, probably not. Agent Scott Boras threw some cold water on my ideas in a response. “Pete’s free-agent contract structure request[s] are identical to the standards and practices of other clubs who have signed similarly situated qualifying-offer/all-star level players,” he told The Athletic’s Will Sammon. “Nothing different. Just established fairness standards.”

Okay, then. I’m not going to litigate this disagreement for them, because I don’t have all the facts. But I felt like a challenge, so I decided I’d try to guess what contracts could fit both descriptions. So let’s talk about three theoretical “highly asymmetric” contracts, but ones that fit accepted norms fairly closely.

A Digression on Asymmetry

Cohen made his money in finance, so when he says asymmetry, he probably means options. A bonus when a player makes an All-Star team or wins MVP? That’s a symmetrical incentive – the player and team both profit together. Julio Rodríguez’s wild contract? Mostly symmetrical – the better he plays over the next four years, the bigger the terms get in the back half of the deal. If he’s great, he and the Mariners will both win monetarily. If he’s merely good, the team will pay him a bit less, but get less in return. For asymmetry, you need one side to have monetary incentives that the other side doesn’t share.

An easy example: Carlos Rodón’s deal with the Giants before the 2022 season. He signed a two-year, $44 million deal with an opt out after the first year. He played well and opted out, signing a bigger deal with the Yankees. Rodón’s upside was asymmetrical; the Giants didn’t share fully in his success. If Rodón had flopped, the Giants would have borne the downside along with him, but they didn’t get the juice when things worked. That’s asymmetry.

On the flip side, Ozzie Albies’s deal has paid off handsomely for the Braves, and while much of that is just his low average annual values over many years, the two club options for 2026 and 2027 are incredibly asymmetrical. If he’d turned into a utility infielder, that’d be a bummer for him and no big deal for Atlanta, who could just decline the $7 million (what?!) team options and move on with life. Since he’s great, the team reaps the benefits, but he’s still getting paid like Trevor Williams (two years, $14 million). The deal is asymmetrical in Atlanta’s favor. That disconnect – one side of the deal capturing all the upside without offsetting risk – is what I’m aiming for in my pitches today.

The Mega Pillow

Rodón’s deal with San Francisco doesn’t register as particularly asymmetrical because it wasn’t. It’s minor in the grand scheme of things; the Giants didn’t miss out on that much when he opted out, because he would’ve been under contract for only one more year if he’d stayed. On the flip side, if he’d gotten injured or otherwise turned out to be worse than expected, well – he was only under contract for one more year. Most of that deal was about paying Rodón for one year of playing, with minor assurances for him on the backside.

We can do better. My first hypothetical Alonso deal takes that structure and goes nuts: five years, $100 million, with an opt out after every year of the deal. If Alonso is great in 2025, this contract would behave exactly like Rodón’s. The Mets would get one year of star-level performance, then he’d opt out to get a bigger deal on the open market. But the other side of things? Wildly asymmetrical, because of the length.

Here’s another way of describing that contract: It’s either one year and $20 million for an All-Star, or five years and $100 million for a role player. If Alonso is great in 2025, he wouldn’t stick around for four years at $20 million per year. If he’s bad, on the other hand, he’d almost certainly stay. And that’s just the first opt out. Let’s say Alonso is bad in 2025, bad in 2026, and then has a resurgent 2027 in a booming, inflation-induced free agency market. As soon as the Mets would be happy to pay Alonso to stay, this contract would enable him to leave.

Carlos Correa signed a contract that was broadly similar to this one before the 2022 season — a three year, $105.3 million deal with the Twins that had an opt out after every year. His agent? Scott Boras. That deal went about as expected; Correa was good in year one and opted out. My hypothetical Alonso deal is similar enough to that one that I think Boras’s quote and Cohen’s quote could both apply to it.

I wouldn’t offer this contract if I were the Mets, though I would have done the Correa deal if I were the Twins. The devil is in the details. The Correa deal was a huge discount to his initial asking price that winter, as well as his projected market; his median crowdsourced estimate was eight years at $30 million per year. The Twins offered significantly fewer years in exchange for flexibility. Alonso’s crowdsourced projection is five years at $25 million per year, so the Mets wouldn’t get the same discount in total guarantees in this scenario.

The more years that are covered by opt outs, the bigger the asymmetry, which is another reason why these deals don’t feel similar to me despite their superficial likeness. The longer the post-opt-out tail, the less the two sides’ incentives align. I’d consider a five-year deal with opt outs every year “highly asymmetric,” and at least arguably “identical to the standards and practices of other clubs.” This is a reasonable guess, in my estimation.

The Cliff Diver

We don’t have to stop there. Consider a five-year, $100 million dollar deal with only one opt out, after year three. That sounds fairly team friendly, no? But let’s further stipulate that the annual salaries are $30 million, $30 million, $25 million, $7.5 million, and $7.5 million. Now, it’s essentially a three-year, $85 million pact, plus $15 million of insurance if Alonso were to collapse to replacement level.

In this case, the last two years of the deal – at $7.5 million apiece – don’t function the same way as the opt outs in our first example. These aren’t about whether Alonso maintains his established level – he could be meaningfully worse than he’s played in recent years and still command a higher salary than that on the open market. It’s entirely about lopping off the left tail of his distribution, the ever-present but unlikely risk that a player will fall off completely.

Some examples are in order. Starling Marte racked up 5.2 WAR in 2021 and 3.5 WAR in 2022. He’s combined for 0.3 WAR and a 90 wRC+ in the subsequent years. Whit Merrifield put up 8.3 WAR on a .303/.358/.451 slash line in his age 29 and 30 seasons; he hasn’t matched a single one of those slash line stats in any season since then, and only once has he been even an average hitter. DJ LeMahieu and Anthony Rizzo were great right up until they weren’t. None of these players would merit a two-year, $15 million deal this offseason. That’s asymmetrical risk right there; the Mets would be on the hook if Alonso’s career were to take an unlucky turn for the worse.

To be honest, I’d probably offer this contract if I were the Mets. The asymmetry is much less sharp than in the previous deal with the series of opt outs, and the first three years of the deal don’t feel ruinous for either side. The worst part of player options, from a team perspective, is that your upside is capped. If the player’s great, they’re gone right away. Baseball is a high-variance sport; some players age incredibly well and get better with time, some collapse, some bounce back and forth. The upside with Alonso would be getting a thumping middle-of-the-order hitter for the next three or so years; a deal that would let him leave after the first year if you get that good outcome feels like a bad plan to me. This roller coaster structure would at least have him stay for three.

The Reverse Cole

Those first examples are simple, one-way options. Let’s get funky. Gerrit Cole notably opted out this winter. He’s still on the Yankees. That’s because his opt out wasn’t really an opt out. Instead, it was voidable if the Yankees agreed to guarantee him an extra year. Cole and the Yankees ended up sticking with his original deal, but the point is, the opt out wasn’t the absolute right to hit free agency, in the way that most are.

Cole’s agent? Boras. Juan Soto’s deal (agent: Boras) has a similar clause; Soto can opt out after five years, but the Mets can cancel that opt out by guaranteeing him $40 million more over the subsequent decade. This idea – giving the player some agency to force the team to pay him more if he performs well in the first half of the deal – is a kind of bounded option, and I think it’s mostly been applied well. It lets teams and players share in the upside without having the “he was too good so he left” downside.

That’s the way that Boras has historically negotiated deals, but let’s reverse it: a five-year, $100 million deal, with a few modifications. First, we’ll give the Mets a club option. Oooh, fancy. It would be for two years and $40 million, which could extend the deal to $140 million over seven years. But here’s the kicker: The Mets would have to decide whether or not to pick up that club option after the second year of the deal. If they decline, Alonso would have the right to opt out immediately.

Cole’s and Soto’s deals are, in the abstract, in a simple shape: The player can force the team to pay him a little more money if he plays well, but the team gets the final decision. In fact, it’s a tough spot for the player: Opting out to attempt to secure the extra money without knowing if it’ll work out is risky. Cole didn’t actually want to hit free agency, as you can see from the fact that he went back to the Yankees without securing a raise. When you flip the script, the decision is much harder for the team – and easier for the player. Now, the team has to decide whether to guarantee more money without knowing what’ll happen if they don’t. That’s information asymmetry, and it’s potentially quite valuable (or costly, depending on which side you’re on).

I think I’d probably offer this deal if I were the Mets, or at least offer a deal with this general structure. While it is asymmetrical, it’s more bounded than the others in my eyes, less likely to lead to a result that feels disastrous to fans. But it’s also weird. There aren’t a lot of contracts in this style, “If you don’t give me money you give me an opt-out.” The closest I can remember is Yusei Kikuchi’s initial MLB deal (agent: Boras). The Mariners had a club option that would’ve covered the 2022-24 seasons, but the contract allowed for him to opt out immediately if they declined their option. That’s exactly what happened, and he became a free agent. Rodríguez’s deal has a similar general idea, with a player option that kicks in only if the club declines its own option. That’s basically it, to my knowledge. I can imagine teams balking at signing something with that odd structure – though, again, I’d be comfortable with it.

Are any of these contract offers the one Cohen and Boras are feuding over? I have no clue. But I think they all fit the descriptions that each side gave, and I think they provide an interesting look at how contracts are about sharing upside and downside in addition to everything else. Deferrals and signing bonuses aren’t the only “one weird trick” in town this offseason. As a hopeless nerd, I’m hoping for a contract or two that makes me look back at this article and go, “See? I knew it!”

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