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Injury Clauses: A New Inefficiency?

March 27, 2011

Nick Cafardo of the Boston Globe had a really interesting article regarding injury clauses popping up in Major League contracts these days. With the high cost that teams incur with injuries, it seems some clubs are trying to mitigate their risk by having clauses in contracts related to people’s injuries. He provides a few examples, such as John Lackey‘s contract with the Red Sox which has a clause that states that if Lackey misses significant time (not sure what it exactly is though I am sure it is well stipulated in the contract) with an injury to his pitching elbow that the Red Sox get an additional year of Lackey at the league minimum salary. Sounds like a pretty smart idea from the smart men in the front office of the Red Sox.

Like many smaller-market teams the A’s trying to catch some great comeback by taking on guys returning from injury. They often come cheaper, though carry with them higher risk. Last year for example the A’s went after Ben Sheets, a pitcher who had he not been injured, given his track record, would have been far out of the A’s price range. Sheets of course did not work out as he again reinjured himself over the course of the season, missing the last few months of baseball and also being injured early enough that the A’s were also unable to dangle him out at the trade deadline. This year the A’s have gambled on coming back from missed or all-but-missed seasons from Brandon McCarthy and Rich Harden, with Harden already succumbing to injury several throws into spring training. But what if the A’s were able to write clauses into these contracts? Could this be a new method for the A’s being able to take these risks, but still hedge their bets? What about if we had had a clause like this from Eric Chavez? How would that deal have changed?

Small-market clubs have a great amount of difficulty signing players to long-term deals because unlike the Yankees or Red Sox an injury can create a contractual albatross for a franchise that truly sinks their ability to compete. The prime example of this perhaps is the Cleveland Indians. In March of the 2006, they signed center-fielder Grady Sizemore to a six-year deal as he was the cornerstone in their lineup. The next spring, looking to compete they extended pitcher Jake Westbrook to keep him with the club through 2010. Then, in a year in which they were several outs from winning the American League, they signed Travis Hafner to an extension on July 11th of 2007 to lock up a key bat in that competitive lineup for a few years to come. The April following their near American League Championship they re-signed 2007’s surprise star, Fausto Carmona to a long-term deal as well. These deals looked good for a small-market club looking to keep together a core of players who had proven they could play at a high level.

Then the injuries struck. Sizemore who had played in 162 games in both 2006 and 2007, followed by another impressive 157 appearances in 2008, went to participating in only 106 games in 2009, and only 33 in 2010. This season he will be starting the year again on the disabled list. Westbrook would give the Indians 25 starts in 2007 as they went to the ALCS, but then followed it up with five starts in 2008 before missing the entire 2009 season.  Burly Hafner, played in 152 games in 2007, and then followed it up with campaigns of 57 (2008), 94 (2009) and 118 (2010) games after with much of his power sapped (his ISO from 2002-2007 being .262, his ISO since .172). Finally Carmona missed significant time with a hip strain his innings pitched going from 215 in 2007 to 120 2/3 in 2008 and 125 1/3 in 2009. Westbrook has since moved onto the Cardinals, traded last season, but on this year’s edition of the Indians: Sizemore, Hafner and Carmona represent nearly 63% of their payroll.

Now if Boston is already doing it, it is unlikely the A’s could really view this as some sort of market inefficiency in reality, but despite that it could be a good way for the A’s to stock up on guys and perhaps give themselves a bit more flexibility as well, particularly for pitchers coming back from injury as the Coliseum will help them reestablish their value quickly, and for the A’s looking to set long-term deals perhaps with guys like Andrew Bailey or in the future Tyson Ross who both are candidates for arm trouble due to their pitching motions and injury histories (there is no indication that another injury risk, Brett Anderson, has any such clause in his contract). Though as Eric Chavez showed us, someone perfectly healthy can turn into an injury riddled contractual nightmare, virtually overnight with little warning.

Cafardo’s article illuminates an interesting part of baseball transactions these days but also, as one of the few East Coast writers who acknowledges baseball is played somewhere that is not within spitting distance of I-95, he uses Oakland as a cautionary tale, “A’s players went on the disabled list 22 times in 2010 and their players missed more than 1,500 days of work”. Caveat emptor indeed.

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