Saturday, April 7, 2012

Breakdown of Votto contract

Joey Votto was rewarded with a rather hefty contract extension on Wednesday at 10yrs/$225MM. The deal ensures that he'll be sticking around the Queen City until at least the end of the 2023 season. Here's a look at what the Reds superstar will earn per year over the next decade:

2012: $9.5MM
2013: $17MM
2014: $12MM
2015: $15MM
2016: $20MM
2017: $22MM
2018: $25MM
2019: $25MM
2020: $25MM
2021: $25MM
2022: $25MM
2023: $25MM
2024: $20MM (club option, $7MM buyout)

Add it all up and you arrive at a maximum of $264.5MM (if you include the club option for 2024) and $251.5MM if the team opts for the buyout instead. That's an average of $20.96MM a season at the minimum.

Owner Bob Castellini is "all-in". Are you?

My take: That's a ton of money to guarantee to one individual player, no matter how you slice it. However, as a fan, I love the fact that Votto will now likely play out his entire career in Cincinnati. I also like the fact that ownership (Bob Castellini) has made a commitment to winning over profits, and his actions lately have backed that up.

But as a guy with a business degree I can't help but be a little weary of the long-term implications this deal may present. Giving a player nearly a quarter or more of the team's payroll is risky business. And that's exactly what the club has agreed to do over the course of the next decade. It's a move that could potentially handcuff the franchise financially, but serve as a springboard to success all at the same time. As the old saying goes: "high risk, high reward."

Yet the more I learn of this deal the more comfortable I get. Votto's contract is structured in a way that is very conducive to the team's future revenue streams. The 2010 NL MVP won't earn anymore than $20MM a season until 2017, at which time the Reds will have struck a new, lucrative TV deal with Fox Sports Ohio. This should allow the club to absorb his increase in salary with more ease than present day. It should also allow the team to keep some of it's up-and-coming stars at that time as well.

Another thing to consider is not only inflation, but the price tag of a player of his caliber in ten years -- it's undoubtedly going to be higher then than it is now. With the astronomical ticket and concession prices coupled with the cost of advertising and major TV deals, it's not out of the realm of possibility to see a player making $50MM a season by 2025. In short, Votto could be making exactly what he's worth by then even if his production does begin to decline with age.

The last and perhaps most obvious thing to consider about this deal is the expected result of it. WINNING. Winning leads to more excitement, more fans in the stands and most importantly, more revenue for the organization. The hope for all fans is that what ownership decides to do with that additional income is invest it back into the team. Luckily, that's precisely the case here with Castellini. He's banking on the fact that his commitment to putting a winner on the field yields an equal commitment of support by Reds fans. So, in essence a bit of the burden of the Votto extension falls upon the shoulders of the fanbase. Gone are the days where fans of the Redlegs could complain about the team being cheap. The tide has turned and it's partially up to them (us) to see that the new movement to win is a successful endeavor...and not just a financially-crippling travesty to baseball's oldest franchise.

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