Cardinals Under Contract: Matt Holliday

The newest addition to this group of Cardinals under contract long-term is Matt Holliday. His highly publicized signing this past week now makes Holliday the Cardinal under contract the furthest into the future. Matt Holliday's new contract could keep him with the Cardinals through the 2017 season with all options.

Contract Terms: Matt Holliday's new contract will pay him $119 million over the next seven seasons. The Cardinals hold a team option for $17 million for the 2017 season as well. The deal does not feature any back-loading or front-loading with Holliday receiving the $17 million average annual value each year.

2010: $17 million
2011: $17 million
2012: $17 million
2013: $17 million
2014: $17 million
2015: $17 million
2016: $17 million
2017: $17 million (Club Option - $1 million Buyout)

In addition to the financial aspect of the contract, Scott Boras and John Mozeliak negotiated a few interesting clauses as well. Matt Holliday holds a full no trade clause during the entire contract. The option for the 2017 season must be exercised within five days of the completion of the 2016 World Series, but it becomes guaranteed if Holliday finishes in the top ten of the 2016 MVP voting. Holliday's contract also stipulates that he stays in a suite while on road trips, possibly related to his propensity for bringing his wife and young children on road trips last summer.

The Rationale Then: I won't bore anyone by rehashing why Matt Holliday has been resigned, you can read about that anywhere!

The Outlook Today: I would like to address briefly two interesting parts of this contract. First, Holliday will have $2 million deferred without interest from his $17 million salary each year. My rough estimate is that this will reduce the present-day value of the contract at signing by about $6 million. This estimate assumes an average inflation rate of 3.5% in 2010 through 2029 and some variables were simplified somewhat. For more information on this phenomenon, check out the forthcoming post on the Time Value of Money in MLB Contracts.

The second interesting clause regards the 2017 option. The contract reportedly stipulates that the Cardinals must accept or decline the option within five days of the completion of the 2016 World Series and that the option is guaranteed with a top ten finish in the 2016 MVP voting by Holliday. The clause about the MVP voting might be the most irrelevant clause in Cardinal contract history. This assertion is based two facts. First, the Cardinals would obviously exercise the option if Holliday was still performing at that level in 2016. Second, but more importantly, the MVP voting is not released within five days of the completion of the World Series. The Cardinals have to accept or decline the option before the necessary information is available to know if the option has vested or not! For the sake of brevity, I won't delve into this topic more in this post.

Moving Forward: Some fans have expressed worries over the length of the contract. Holliday will be 36 years old for the 2016 season and there are not many outfielders of that age that produce at a $17 million level. The time value of money could be important in this long-term deal, but Holliday's health and aging process are the major determinants of how this deal will be remembered at the end of the decade.
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