The Joe Singleton Deal

Houston Astros’ first base prospect Jon Singleton was offered a choice

Jordan Kobritzby Jordan Kobritz

For most of us, a working career can last upwards of 40 years, into our mid-60s or beyond. For athletes, a career lasting 10-15 years is the exception. Given that, here’s one athlete’s conundrum.

Houston Astros’ first base prospect Jon Singleton was offered a choice: Spend the rest of this season toiling in the minors working for approximately $40,000 and the next three for the Major League minimum, $500,000 (which is effectively the maximum salary). If he makes it that far, he will be eligible for salary arbitration for three years which will boost his salary at least four-fold in the first year, up to ten-fold in the third year. All told, he could earn as much as $10-15 million before he reaches free agency after six years of Major League service when he could auction himself off to the highest bidder.

The Astros offered to call him up to the majors now and guarantee him a minimum of $10 million over the next five years, including an immediate bonus of $1.5 million. That’s 40 times what he’s currently earning while toiling in the minors. The quid-pro-quo is that he foregoes arbitration and gives up the first three years of free agency, which are all at the club’s option. If the yearly options are exercised, Singleton will be paid an additional $20 million, meaning the contract could total $30 million over eight years. But free agency could net him a $100 million contract. Would you accept that deal?

Singleton answered that question in the affirmative last week setting off a debate among players, fans and media members.

For Singleton, and most 22 year olds, $10 million guaranteed is life changing money. Even after taxes, when invested wisely, that’s enough money to live comfortably for the rest of his life, with enough left over to provide for his kids and perhaps his grandkids. If Singleton suffers an injury – on or off the playing field – that prevents him from playing baseball at the top level, or if his Minor League potential doesn’t translate to Major League success, he could find himself working construction or in retail sales long before he’s in a position to cash in on free agency riches.

The Singleton deal isn’t for everyone. Another Houston prospect, outfielder George Springer, was given essentially the same offer in spring training and he turned it down. Likewise, the Pittsburgh Pirates were rebuffed when they tried to lock up their top prospect, Gregory Polanco, to a long term deal.

MLB is unique among the four Major League team sports in that it does not have a salary cap. In an effort to gain cost certainty in an era of escalating salaries, you can expect more and more teams – particularly those in small and medium size markets – to offer their young stars guaranteed money if they can buy out arbitration and free agent years. The Tampa Bay Rays pioneered the policy when they signed third baseman Evan Longoria to a long term deal shortly after he made his big league debut. But the Singleton signing was the first for a player with no Major League experience.

The deal isn’t without risk for the Astros. Singleton might turn out to be one of the hundreds of top prospects who have failed to live up to expectations. Furthermore, he has a history of drug abuse, having served a 50-game suspension at the beginning of the 2013 season for failing a Minor League drug test. Singleton once claimed to be hooked on weed and also admitted abusing alcohol after trying to kick the marijuana habit. Only time will tell if his new found riches motivate him to stay on the wagon or provide him with the financial security to revert to his old ways.

Not everyone was pleased with Singleton’s decision. Baltimore Orioles pitcher Bud Norris, espousing the union view, criticized Singleton for taking the quick money. But it’s easy for Norris to give advice. He’s making $5.3 million this year and will hit free agency after the season. Norris has already made as much money as Singleton is guaranteed and he’s on the cusp of a mega-contract.

While the money comes with a guarantee, an athletic career does not. No one should fault Singleton for securing his future.

Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor in the Sport Management Department at SUNY Cortland and maintains the blog: http://sportsbeyondthelines.com Jordan can be reached at jordan.kobritz@cortland.edu.

© Copyright 2014 Tanna Bk, All rights Reserved. Written For: Tinytown Unleashed
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