Originally Posted by Blitz Dorsey
It's baffling they gave him the option year. I was OK with the 2-year, $15 million contract (which is how it was presented). But it was actually a 2-year, $19.5 million contract. Not a smart move by Walt there. No way Ludwick could have gotten more than that elsewhere. I thought paying him $7.5 million on average was pushing it, but was OK. But nearly $10 million a year for him? Bad investment. I know, easy to say that now, but I would have said the same thing if I had known about that 2015 option with the hefty buyout. That made it a bad deal for the Reds who had to be bidding against themselves at that point.
Check your math. Signing Bonus $2 Million, 2013 Salary $1 Million, 2014 Salary $7.5 Million, Buy-out, paid after the 2014 season, $4.5 Million equals $15 Million. The Reds are making a $3 Million outlay in 2013 while in the last season of MLB's national TV money deal and $7.5 Million in 2014 when the TV money doubles form the new national TV deal. They deferred $4.5 Million of the 2013 money until after 2014 when the money should be there from the new national TV deal. It's 2 years, $15 Million with $3 million paid now under current revenue conditions and $12 Million paid next year when the Revenue streams significantly increase, (and Votto's cash outlay drops by $7 Million for 2013 to 2014, Arroyo is off the books, Masset's and Arredondo's dead money are gone and likely a young cheap Hamilton moves in).
The Reds simply deferred $4.5 Million of this season's half of the deal until after next year when the money should be there. Good budget management IMO which also provides the Reds the option of keeping Ludwick if he's doing well and other options are scarece for a relatively small incremental cost of $4.5 Million.
The Red's deferring $4.5 Million of Ludwick's 2013 cash and getting $3 Million from the Indians while dumping Drew Stubbs arb case allowed the team to add a top notch guy like Shin Soo Choo to the mix for a season. It's basically how they financed adding his salary to a 2013 budget that was maxed out. If your fine with 2 years $15 Million as your post states, you should be ecstatic at how adding the option year made it all fit.