Financial Consequences of Releasing a Player
Dec 10, 2017 18:40:40 GMT -8
Erick RockiesGM and David - Cleveland like this
Post by aaron_commissioner on Dec 10, 2017 18:40:40 GMT -8
There was discussion today on Slack about releasing players and how contracts are structured. After some more research, I feel like I learned a lot and am here to share you the specifics of releasing a player.
As our league grows older, so too do expensive contracts. Instead of trading them, some may consider releasing the player to gain the roster spot in their lineups. However, are there any other benefits to releasing a player?
Things to consider:
1) Once you release a player, you are responsible for ALL GUARANTEED future salaries over the ENTIRE DURATION of the contract.
2) If a player retires, you are free from any financial commitments at the moment of retirement.
3) If a player is released mid-year, salary is distributed evenly among all years, but the current year is still measured as a partial year, if applicable
4) Releasing a popular player will affect fan interest
Let's put this into practice:
Player 2019 2020 2021 2022 2023
Giancarlo Stanton $25M $25M $30M $30M $25M
Total owed: $135M over 5 years
All of Stanton's salary is guaranteed. If Stanton is released on or before Opening Day, this becomes a very simple arithmetic problem. $135M over 5 years equals $27M/year. As such, the team will be responsible for $27M over the 5 years of the contract.
EXAMPLE 1
Player - Money owed 2019 2020 2021 2022 2023
Stanton (released April 1st, 2019): $27M $27M $27M $27M $27M
However, if a player is released mid-year, some of his contract has already been paid. This only minimally changes money owed per year, provided the contract is relatively even.
EXAMPLE 1.2
Player - Money owed 2019 2020 2021 2022 2023
Stanton (released July 1st, 2019): $26.6M* $27.2M $27.2M $27.2M $27.2M
*Since already half a year has accrued and Stanton was paid $12.5M the remaining $122.5M is split up evenly among the contracts remaining 4.5 years. The 2019 money owed number reflects the $12.5 paid Stanton while on the team + $13.6 for the remaining half year after release.
If a player has a team option, it seems that money after the option is not owed to player, but the years after the option can still be used to pay money.
Player 2019 2020 2021 2022 2023
Bumgarner $20M $20M $20M $20M $20M(T*)
*Team option in 2023 includes a buyout of $5M dollars. There is a total of $85M guaranteed in this contract.
EXAMPLE 2.1
Player - Money owed 2019 2020 2021 2022 2023
Bumgarner (released April 1st, 2019) $17M $17M $17M $17M $17M
Only $5M is guaranteed to Bumgarner in 2023, but the entire guaranteed salary of $85M is spread out over all salary years.
EXAMPLE 2.2
Player - Money owed 2019 2020 2021 2022 2023
Bumgarner (released July 1st, 2019) $18.3M $16.7M $16.7M $16.7M $16.7M
*Again, $10M was paid to Bumgarner in the first half of 2019. The remaining $75 guaranteed is divided over the remaining 4.5 years of the contract.
Some points to note:
HOW IS MONEY OWED TRACKED?
After some testing, I've determined that money owed to players is tracked in two places (on the accounting page in finances):
CONCLUSIONS:
Overall, I feel like I have a better feel on releasing player and the financial impacts, but there may still be more that I do not understand. No where explicitly does it say that money is evenly distributed over the remaining course of a contract, but in all of my tests it is. I would love it if other people did more research on this.
In the end, I think the system is well laid-out that matches the MLB system. There does not seem to be a way to take advantage of releasing a player in OOTP. In my opinion, there are only three instances in which to do it:
As our league grows older, so too do expensive contracts. Instead of trading them, some may consider releasing the player to gain the roster spot in their lineups. However, are there any other benefits to releasing a player?
Things to consider:
1) Once you release a player, you are responsible for ALL GUARANTEED future salaries over the ENTIRE DURATION of the contract.
2) If a player retires, you are free from any financial commitments at the moment of retirement.
3) If a player is released mid-year, salary is distributed evenly among all years, but the current year is still measured as a partial year, if applicable
4) Releasing a popular player will affect fan interest
Let's put this into practice:
Player 2019 2020 2021 2022 2023
Giancarlo Stanton $25M $25M $30M $30M $25M
Total owed: $135M over 5 years
All of Stanton's salary is guaranteed. If Stanton is released on or before Opening Day, this becomes a very simple arithmetic problem. $135M over 5 years equals $27M/year. As such, the team will be responsible for $27M over the 5 years of the contract.
EXAMPLE 1
Player - Money owed 2019 2020 2021 2022 2023
Stanton (released April 1st, 2019): $27M $27M $27M $27M $27M
However, if a player is released mid-year, some of his contract has already been paid. This only minimally changes money owed per year, provided the contract is relatively even.
EXAMPLE 1.2
Player - Money owed 2019 2020 2021 2022 2023
Stanton (released July 1st, 2019): $26.6M* $27.2M $27.2M $27.2M $27.2M
*Since already half a year has accrued and Stanton was paid $12.5M the remaining $122.5M is split up evenly among the contracts remaining 4.5 years. The 2019 money owed number reflects the $12.5 paid Stanton while on the team + $13.6 for the remaining half year after release.
If a player has a team option, it seems that money after the option is not owed to player, but the years after the option can still be used to pay money.
Player 2019 2020 2021 2022 2023
Bumgarner $20M $20M $20M $20M $20M(T*)
*Team option in 2023 includes a buyout of $5M dollars. There is a total of $85M guaranteed in this contract.
EXAMPLE 2.1
Player - Money owed 2019 2020 2021 2022 2023
Bumgarner (released April 1st, 2019) $17M $17M $17M $17M $17M
Only $5M is guaranteed to Bumgarner in 2023, but the entire guaranteed salary of $85M is spread out over all salary years.
EXAMPLE 2.2
Player - Money owed 2019 2020 2021 2022 2023
Bumgarner (released July 1st, 2019) $18.3M $16.7M $16.7M $16.7M $16.7M
*Again, $10M was paid to Bumgarner in the first half of 2019. The remaining $75 guaranteed is divided over the remaining 4.5 years of the contract.
Some points to note:
- If a player has more than one team option year (as Bumgarner does in the ABL), both buyouts are considered guaranteed.
- If a team has enough budget room to take on the entire remaining expenses, they will be provided with the option to do so all at once, rather than having it split up over many years.
- If a player retires, you are officially free from any financial burden from the moment of retirement. If you decided to pay the entire remaining salary in one lump sum, you will not be able to recoup any money. Once it is paid, it is paid.
- When a player is released, their full yearly salary is attached to the budget at the beginning of the year. It is paid in its entirety at the beginning of a budget cycle (start of offseason).
HOW IS MONEY OWED TRACKED?
After some testing, I've determined that money owed to players is tracked in two places (on the accounting page in finances):
- Misc Player Expenses
- Cash From Owner*
CONCLUSIONS:
Overall, I feel like I have a better feel on releasing player and the financial impacts, but there may still be more that I do not understand. No where explicitly does it say that money is evenly distributed over the remaining course of a contract, but in all of my tests it is. I would love it if other people did more research on this.
In the end, I think the system is well laid-out that matches the MLB system. There does not seem to be a way to take advantage of releasing a player in OOTP. In my opinion, there are only three instances in which to do it:
- Roster spot is needed
- Future obligations can be spread to team option years
- Your team is doing very well financially and annually making a profit