Apr
04

Wade Davis’ $12.6 Million Pre-Arbitration Contract With The Tampa Bay Rays

The Tampa Bay Rays fear arbitration.  The club is one of the few teams that employs a “file-and-trial” strategy once it and one of its players exchange figures leading up to an arbitration hearing, which means that if numbers are exchanged, there will be no settlement pre-hearing.  The Rays do this to dissuade players and their agents from using a hardball strategy in negotiations, which costs the team time and money.

Another tactic that the Rays use to avoid spending time and money on arbitration is to lock up young pre-arbitration eligible players into long-term contracts, effectively buying itself out of the arbitration process itself.  Whether you think it was a good idea or not, the team used this tactic to sign James Shields to a 4-year, $11.25 million contract in 2008, when he was only 26-years-old and had less than 2 full seasons of MLB service.  The deal included 3 separate team options, which allows the Rays to extend that 4-year deal to up to a 7-year deal, paying Shields over $25 million more over those 3 extra years.

Rays executive vice president of baseball operations Andrew Friedman has decided to put that tactic to test again by signing unproven Wade Davis to a very similar deal that Shields signed 3 years prior.  Davis will make $12.6 million over 4 years, but the Rays also have 3 separate team options to extend the deal to a total of 7 years.  Interestingly, using the 3 extensions would pay David a little less than $25 million more over those 3 extra years.  Shields got better teams regarding the options.

Davis is a 25-year-old pitcher, and had 35 starts going into the 2011 season.  Signing this kind of deal is a great strategy for a player who is more conservative about his finances.  $12.6 million is no small chunk of change, and if invested properly, could be enough money for Davis to live on for quite some time.  He and his agent may be leaving money on the table by signing the deal now, but they could also be protecting Davis in case of poor performance, an injury, or some other event that would limit his earning potential.  Signing this type of deal at this stage of one’s career is a personal decision, and is not right for everyone.  That’s why it is important for an agent to understand his clients and give them advice on a case-by-case basis.

I am sure that Davis’ agent, B.B. Abbott of Jet Sports Management knows his client quite well and advised him accordingly.  He recently stated“I don’t think anyone can definitively tell you that it’s the wrong deal or a bad deal or a good deal. It was just the right deal for Wade and the right deal for the team.” It was a good deal for Davis, which could have been a wrong deal for a similarly situated player with a different mindset and circumstances.