The good and bad of Giancarlo Stanton’s opt-out clause

As of this writing, Giancarlo Stanton is still a member of the Miami Marlins. As the Giants are having meetings with Stanton’s agent about their future and a no-trade clause, Stanton’s future is still very much in the air. The Cardinals don’t appear out of it, yet, and sometime in the next two weeks we will probably know Stanton’s destination. We’ve discusses Stanton a lot around these parts, but haven’t had a full-fledged talk on Stanton’s opt-out clause.

There is a prevailing thought out there that Stanton’s opt-out clause isn’t such a bad thing. That if Stanton is good for three years, then he leaves, that means you just got a very good if not great player for three years on a good deal and you no longer have to worry about future commitments. There is some logic to those statements.

If Stanton does opt-out and he gets a contract that is perhaps only slightly bigger than the remaining $218 million owed to him that means that you are no longer obligated to pay what is roughly a free agent market rate. Free agents cost the most money, and perhaps now you have freed up a lot of future dollars that you can spend on younger players who generally provide much better value. In addition, you are no longer saddled with the risk of an aging player whose production might fall off.

There are two problems with argument. First, that opt-out isn’t here now. It doesn’t happen for another three seasons. During the next three seasons you still get all the risk of a 10-year deal so saying he will opt-out and having that be a good thing is very uncertain. Two, the opt-out caps the ceiling for the contract and eliminates a lot of very good outcomes. If you’ve gotten a surplus in the first three years, it’s possible to say “who cares that he’s gone, we just got a surplus on the contract.” Let’s play out a real life example with the benefit of hindsight.

You probably remember Matt Holliday. His last two years in St. Louis weren’t particularly good, totaling just 703 plate appearances and just 1.6 WAR with a 116 wRC+. The hitting wasn’t too bad, but with the lack of health or good defense, his value to the Cardinals wasn’t high, especially for a player who made $34 million over those two years. It would seem that is an example of why a player opting out is good, so a team doesn’t have to deal with those declining years. That would be wrong.

Right now, Stanton can opt out 30% of the way through his remaining contract. For Matt Holliday, that would have meant an opt-out after two seasons of his seven-year deal. After putting up more than 10 wins with a 150 wRC+ for just $34 million in 2010 and 2011, if you buy the opt-out is good argument, you believe it is good for Holliday to walk away from the remaining five years and $86 million to sign a six- or seven-year deal for around $120 million to $140 million. The Cardinals would be off the hook.

Here are the WAR leaders for NL outfielders from 2012-2014.

Holliday was one of the best players in baseball from 2012-2014. His 12 wins ranked 24th among all MLB position players. The Cardinals were able to weather the loss of Pujols because one of the best hitters in baseball remained. An opt-out would have forced the Cardinals to sign Pujols to a massive contract they would likely regret or bring back Holliday by paying him more money and taking on more of his less valuable seasons.

The Holliday as one of the best hitters in baseball is the kind of outcome you miss with an opt-out while retaining every single bad one. Those last two years of Holliday might not have been very good, but over the last five years of the contract, Holliday totaled 13.7 WAR, worth about $100 million with the Cardinals paying him less than that even after getting a huge surplus the first two seasons.

Over at FanGraphs, I assumed that Stanton’s current talent was around five wins and projected him for 16 wins over the next three seasons. With that, I made another assumption, that Stanton’s contract is roughly market value. I found that Stanton opts out just around 30% of the time, and when he does not opt out, the contract goes bad nearly 70% of the time.

If you think the opt-out is good, think about how much the Cardinals would have missed Matt Holliday in the middle of the Cardinals lineup after Pujols left or if they were still paying him $20 million a year to play left field in 2018. Or if they were still paying Pujols $25 million a year for four more seasons.

The opt-out is bad. Any risk you remove is heavily countered by two things.

1. The potential reward is much lower.
2. None of the general risks of a long-term deal are removed, and it becomes more likely that you end up with a negative deal.

None of this is to say the Cardinals should not acquire Giancarlo Stanton. They most certainly should. Just don’t act like the opt-out is a positive thing.