How To (Hopefully) Be Successful At Business

A common adage in negotiating, whether it be a car, home, or multi-million dollar sports contract, is not to bargain your way down before you’ve reached the table.

So I suppose by that metric, Ron Fowler is doing alright. Of course, this adage only applies if there is someone sitting across the table from you. At this point, Ron Fowler is negotiating a Chase Headley contract to an empty chair. When Chase Headley publicly stated he had no interest in discussing an extension during the season it capped a busy 48-hours worth of news that really wasn’t.

Let’s start at the beginning. Ron Fowler, in what appears to have been an unprompted statement to the U-T, said:

…we will do an offer that will be the largest offer we’ve ever made to a player in San Diego history and think it will be very close to some of the numbers I read in the press.

The article read as if the offer had all but been made and you would be forgiven in believing that Chase Headley was aware of these thoughts from the owner of the Padres.

Except he wasn’t.

To be honest, this is not something we’ve discussed.

Huh. Ok.

So what value was there in Ron Fowler making such a statement? Was it over-exuberance by a rookie owner? A knee-jerk reaction at stemming the tide of a section of fans who are vocal in their displeasure of the direction of the team? Was he advised by someone that Headley was aware of the team’s intentions? Perhaps Headley is playing coy himself? I don’t know the answer to any of these questions. I only know what’s been reported. But it would seem to be a colossally stupid thing to say publicly. You don’t negotiate in the press. You don’t make statements that you will be forced to live up to. Unless you intend to live up to them.  So let’s look at the following two questions:

A.) What might it take to keep Chase Headley?

B.) What would constitute Ron Fowler keeping his word?

In negotiating, you are suppose to take emotion out of it. As fans, that’s a pretty tall order to ask when discussing contracts. So to begin, I went looking for an emotionless opinion on Chase Headley’s value. I went back to an article Baseball Prospectus did in February of this year. As part of a series of mock arbitration hearings, BP took on the case of Chase Headley. The club offer? $7.075 million. The player’s offer? $10.3 million. The decision, based on a three-person panel? 3-0 in favor of the club because:

We read, considered, and conferred. We decided unanimously in favor of the Club. Although Mr. Headley excelled toward the end of last season, prior to that, in both 2012 and previous seasons, he was an average player. Therefore, the Club’s offer to more than double his salary recognizes his achievement last year, and is fair.

First, let me point out the obvious flaws in using this as a barometer for determining Chase’s value. This is obviously only concerned about one season and does not take into account multiple year contracts. But it does point to the most telling issue in dealing with a Chase Headley extension and that is, can he match his 2nd half of 2012 output? This is the game of chicken both Chase and the team are playing right now. Assuming he does continue at or near that pace, his price tag will continue to increase. Should he revert back to his pre-ASG 2012 (when, it should be noted, he was still a very good player) then any thoughts of $100 million contracts would likely be out the window. Moreover, at what point has Chase provided consistent enough production for it to be safe to say that that is the kind of player he is and the fear of regression no longer exists? Half of this season? All of this season? Is it too late by then?

It was primarily this concern that his increase in production was so sudden and not alluded to in his previous seasons that the panel deemed $10 million to be too high a price. The club in the BP scenario was already doubling his salary from the year prior.

But let’s assume that Chase Headley is, at minimum, now worth $10 million a year. Any offer to him to meet the floor set by Ron Fowler of “richest in franchise history” would have to begin at that figure and be for multiple years. At 29, Headley won’t (nor should he) accept anything less than 5 years (and we know it won’t be 10 years). So let’s say 5 for the sake of conversation. 5/$50 million doesn’t seem like enough though and likely doesn’t equate to “fair market value.” But what is fair market value?

Pablo Sandoval, All-Star and World Series MVP, is paid $17.5 million a year. But only for a 3 year contract and Sandoval is 3 years younger than Chase.

Ryan Zimmerman signed a 6 year, $100 million extension with Washington last year with a club option for a 7th year at $26 million. Though Zimmerman has been far more consistent offensively for far longer.

The same can be said for David Wright who signed an 8 year, $135 million deal with New York.

I don’t think Chase Headley is in the same stratosphere as Zimmerman or Wright. Nor are the Padres, despite their financial situation, in the economic world of New York or D.C. (#1 and #9 respectively in television markets).

Alex Gordon and Ben Zobrist provide interesting non-third basemen contract comparisons. Gordon (KC) signed for 4 yrs/$37.5 million at the age of 28. Zobrist signed a 3 yrs/$30 million deal as he was rewarded for a breakout 2009 season (one that he has since been unable to repeat).

But I think we all know that it will take more than either one of those deals to get the job done. Is Chase Headley, today, a $100 million player? I don’t think he is. Does he have that potential? Absolutely. He could be well on his way to establishing himself as one. And such is the gambit the Padres are playing. Because if Chase Headley becomes David Wright West then the Padres will be forced to make an offer beyond what they are likely willing to stomach. And now, because Ron Fowler has made his intentions publicly known, he will have to make such an offer. Such is the corner Ron Fowler has put himself in for going public without talking to Headley. Because saying “richest in franchise history” is meaningless if the offer to Chase Headley isn’t fair.

A final word on fairness in this context. If I’m throwing out figures, a fair offer for Chase to me looks like 5 yr/$75 million. Something in that ballpark. If the Padres were to make such an offer only to watch the Rangers or Anaheim or whoever offer 6 yr/$100 million, did the Padres make a fair offer? Based on looking at this situation objectively I’d have to say they did. Because fairness can’t be judged by whether or not the player accepts the offer.

Fair offers lose out in bidding wars everyday. It doesn’t make them any less fair.

You can find my nonsense at Padres Public every Friday. And follow me on Twitter @LeftCoastBias for 140 characters worth of nonsense on a variety of subjects ranging from Padres to Pearl Jam to PGA Golf. And I like alliteration.

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  • http://twitter.com/The_NV Nathan Veale

    If I’m the Padres and I’m negotiating an extension right now, my opening offer is 5/65. I think it’s high enough to show they’re serious, but certainly not a best and final. Chase’s agent is probably thinking more along the lines of 6/95, but that’s not a best and final either. I think 5/75-80 with a 6th year option is the middle ground that makes sense. Of course, they aren’t negotiating right now and there are other factors than money to take into account.