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Why Clayton Kershaw’s $215 Million Contract is a Bargain

Baseball
Why Clayton Kershaw’s $215 Million Contract is a Bargain

The LA Dodgers recently gave their pitcher Clayton Kershaw a seven year contract extension worth $215 million. Kershaw became the first pitcher, and only the 6th player in the sport’s history to sign a contract of at least $200 million. The other players in the exclusive $200 million club: Alex Rodriguez, Albert Pujols, Robinson Cano, Prince Fielder and Joey Votto.

Every player wants to be in the $200 million club, but these large, long-term contracts often do not pay off for the teams. Before this off-season, three players Rodriguez, Pujols and Fielder were reaping the benefits of their $200 million dollar contracts, and the only one to somewhat approach his career average offensive production was Fielder.

So it’s not surprising that the Kershaw contract is being viewed with skepticism. Time will be the ultimate judge as to whether the Dodgers made a smart move signing a pitcher to a contract that averages $30 million a year. But if there ever is going to be a $200 million player that pays off… it will be Kershaw. In every way, he is the perfect player, and the Dodgers are the perfect team to offer this record-breaking contract.

The Face You Want on Your Franchise

Clayton Kershaw, Vera Clemente

To be worth $30 million a year to a franchise, a player needs to do more than just excel on the field, he needs to be the face of the franchise. Someone that kids can look up to and adults can admire. A $30 million dollar player needs to be someone the organization is proud of, on and off the field. With Kershaw, the Dodgers are lucky enough to have a completely dominant player, who appears to be an even better person.

With considerable wealth and free time, many of today’s professional athletes focus on unsavory pursuits off the field. Yet with Kershaw, the Dodgers have a young man who seems dedicated to making a difference in the world. In 2012, Kershaw was 24 years old and completed his fourth season in the Majors by winning both the Cy Young Award for the league’s best pitcher, and the Clemente Award for the sport’s best humanitarian.

That year Kershaw and his wife Ellen (his eighth-grade sweetheart) spent a considerable amount of time and money in the Republic of Zambia building an orphanage. The orphanage houses and educates nine children who, without their help, would be living on the streets. Clayton and Ellen have also created a charitable foundation, Kershaw’s Challenge, to raise funds for charitable activities in both Los Angeles and their hometown of Dallas.

When asked by USA Today about his 2012 awards, Kershaw stated the Roberto Clemente Award meant the most to him. “It’s not even close,” he says. “When you win the Cy Young, it’s like, well, you’re a baseball player, that’s what you’re supposed to do. When you win the Clemente Award, you don’t do it to get recognized for your work, but it means so much more than baseball. You play baseball. You play a lot of games. You win a lot of stuff. You win a World Series. But if that’s all you’ve done, what have you got to show for it?’’

At the press conference to announce the record-breaking extension, according to MLB.com Kershaw said, “to whom much is given, much is expected. There’s an unlimited effect we can have on a lot of people with this money.” When discussing his orphanage he said, “now we have significant funds to maintain it forever.”

Great On and Off the Field

Clayton Kershaw, Ellen Kershaw

If you are a baseball team considering giving a player the biggest annual contract in history, Kershaw’s off-the-field persona is exactly what you want. But he’s not the only great guy in the game, and to be worth $30 million a year, he needs to be a spectacular player too! Kershaw is not just any pitcher, he is a generational talent.

If you could make the perfect pitcher, he would look like Clayton Kershaw. He’s a tall, strong, dominating, left-handed pitcher with flawless mechanics. Since Kershaw’s contract is guaranteed, a serious injury is the worst-case scenario for the Dodgers. Any pitcher can suffer an arm injury, but since Kershaw combines the right body-type with sound pitching mechanics, the injury risk or a rapid decline in performance is minimized. Plus, because he has never been injured, the Dodgers were able to take out injury insurance, limiting some of the financial risk.

Kershaw is so gifted physically, at 21 years old, his manager Joe Torre compared him to the most dominating pitcher in baseball history, Sandy Koufax. Not only is Kershaw gifted physically, he has the mental makeup necessary for pitching greatness. Torre told ESPN that, in Kershaw’s first big league game, he gave up a home run to the first batter he faced. With the ball sailing over the fence, Torre looked to the mound to see how his young pitcher was going to react. Completely unfazed, Kershaw gestured to the catcher to give him another ball. Torre said, “he always had the confidence,” needed to be a great pitcher.

As a pitcher, Kershaw possesses three devastating pitches: an exploding fastball, a nose-to-toes curveball, and a slider with so much break it’s been called ‘filthy’. It’s an unusual arsenal of pitches. Most pitchers only feature one breaking ball; Kershaw throws two. Four years ago he developed the slider, and when he mastered that, he went from promising prospect, to the game’s most dominating pitcher.

Financially, the Dodgers are the right team, and now is the right time 

Clayton Kershaw

It’s been 25 years since the Dodgers have won the World Series, and the team has seen some difficult times, cumulating with the disastrous McCord ownership fiasco. Frank McCord purchased controlling interest in the Dodgers in 2004 through a highly leveraged financial move. McCord’s desire to be a team owner exceeded his financial capabilities. So the Dodgers, an iconic franchise in the country’s second biggest market, had to operate on a shoestring budget. Both the losses and the debt piled up, and then McCord and his wife Jamie went through a very public and cantankerous divorce. As a result, in 2011, the McCords, the ownership group, and the Dodgers found themselves in bankruptcy court.

The Dodgers’ fortunes changed literally and figuratively in 2012 when a new, and extremely wealthy ownership group that includes Magic Johnson bought the team from McCord. The new owners arrived with cash in hand and anxious to return the team to its previous winning ways, so they began spending money on new players. Now, the Dodgers have owners with the sport’s deepest pockets, and the desire to put a winning club on the field. In addition to spending money, they also began leveraging the Dodgers brand, highlighted by signing the richest broadcast rights agreement in the history of baseball, a 25-year, $8.5 billion cable TV contract with Time Warner Cable.

Now, the Dodgers have usurped the Yankees as the sport’s richest team. The club’s local television package pays them an average of $340 million per year. Compared to other clubs, not counting a team’s possible equity stakes in a network, the Dodger TV deal surpasses the next largest contracts (Rangers and Angels) by $210 million. Financially, the Dodgers have the sport’s largest revenues and wealthiest owners. So it makes sense that they now have the player with the league’s highest average yearly salary.

Why Kershaw IS Worth $215 Million

Clayton Kershaw

As both a player and as a person, Kershaw is determined to live up to this contract, he’s given it a lot of thought. Last summer, the Dodgers and Kershaw’s agent held contract  extension talks. At that time the Dodgers offered Kershaw a contract larger than the one he just signed, Kershaw turned it down. When the news of Kershaw turning down a record-breaking contract reached the public, it was met with outrage because people assumed Kershaw was being greedy, or wanting to leave LA.

Now that the new contract is signed, Kershaw stated at his press conference, “this is the deal [wife] Ellen and I always wanted,” he said. “I want to be able to see the end, and know I can pitch at a very high level. Anything longer, I would be overwhelmed… I want to know I will be at my absolute best.”

Seven years from now, the Kershaw signing may be viewed as a mistake, but the odds are against it. When this contract ends, Kershaw will be 32 years old, still in his prime. A dominant left-handed pitcher, with a great make-up. It’s hard to imagine Kershaw being anything but a model citizen, someone the club felt wears the ‘Dodger Blue’ proudly. The current Dodger team made the playoffs and ownership seems determined to surround Kershaw with talent, so a World Series championship or two is not out of the question. If this happens, the $215 million Kershaw contract will be viewed as the linchpin to a Dodger dynasty and money well spent.

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