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In your Rodon bullet point, you mention the "waste" of Ryu's money next season. But don't the Jays have insurance to cover that loss? I would think that's almost a mandatory get for big FA contracts. Or maybe $88M or whatever it was wasn''t deemed a big enough risk at the time?
I'd say it's very unlikely that they have it fully insured, if at all, but maybe they have some protection. They don't disclose stuff like that, but the premiums to get pitcher deals insured are really high, and I think Ryu's age and health history might have made it more trouble than it's worth.
It's not mandatory for MLB clubs to get deals insured, so they have to go into the open marketplace and get it done one a case-by-case basis. A 2016 Washington Post piece suggested that the premiums for pitchers can be something like 7%, that there are plenty of exemptions, that they don't get all of the money back, and that, at the time, the Nationals had found the process "vexing" and hadn't insured any of their $100m+ deals (Scherzer, Strasburg, Werth, Zimmerman).
Other teams don't so much find it vexing as they simply don't think it's worth it — including the Blue Jays back in the Paul Godfrey days. I don't think we can draw much from the way the team operated three CEOs ago, but in a 2007 Toronto Star piece, Godfrey told Mark Zwolinski that the team paid big premiums for years and never collected, so they stopped doing it. Zwolinski added this detail:
"Insurance policies only kick in when a player is lost for the entire season, or for the remainder of his contract.
"In those situations, a player must first be sidelined for 60 days, after which the team receives only 50 per cent of the balance of his salary for that season."
This is old info, so it may not be exactly how it works now, but based on the other piece I'd say the shape is similar. If so, I can see Godfrey's point.
Ryu will have missed like 60% of this season. He'll likely be healthy enough to at least be removed from the IL at some point in the back half of next year (what they do with him at that point is obviously another question). The Star piece is saying that this year the Jays would get 50% of 60% of Ryu's $20 million salary, which works out $6 million. A 7% premium over the life of the contract would be $5.6 million.
The WaPo piece said it's more like 60-80%. He'll miss probably 60% of next year, at least, so even at 50% that's another $6 million. But, of course, the Jays didn't know all this at the time they'd have been getting him insured. And then you have to factor in that they'd be paying premiums on other big deals, too.
The Post says 7% for pitchers, 3% for position players. If we assume that if they'd insure one big multi-year deal they'd insure them all, that means premiums paid for Springer, Chapman, Berríos, Gausman, and Kikuchi. At those percentages that's $4.6 million paid out, plus $1.4 million for Ryu. So... for 2022 that's $6 million paid out to receive $6 million back. And probably a similar calculation for next year.
Now that's the premium content I'm here for, haha. Thanks for the thorough explanation!
In your Rodon bullet point, you mention the "waste" of Ryu's money next season. But don't the Jays have insurance to cover that loss? I would think that's almost a mandatory get for big FA contracts. Or maybe $88M or whatever it was wasn''t deemed a big enough risk at the time?
I'd say it's very unlikely that they have it fully insured, if at all, but maybe they have some protection. They don't disclose stuff like that, but the premiums to get pitcher deals insured are really high, and I think Ryu's age and health history might have made it more trouble than it's worth.
It's not mandatory for MLB clubs to get deals insured, so they have to go into the open marketplace and get it done one a case-by-case basis. A 2016 Washington Post piece suggested that the premiums for pitchers can be something like 7%, that there are plenty of exemptions, that they don't get all of the money back, and that, at the time, the Nationals had found the process "vexing" and hadn't insured any of their $100m+ deals (Scherzer, Strasburg, Werth, Zimmerman).
Other teams don't so much find it vexing as they simply don't think it's worth it — including the Blue Jays back in the Paul Godfrey days. I don't think we can draw much from the way the team operated three CEOs ago, but in a 2007 Toronto Star piece, Godfrey told Mark Zwolinski that the team paid big premiums for years and never collected, so they stopped doing it. Zwolinski added this detail:
"Insurance policies only kick in when a player is lost for the entire season, or for the remainder of his contract.
"In those situations, a player must first be sidelined for 60 days, after which the team receives only 50 per cent of the balance of his salary for that season."
This is old info, so it may not be exactly how it works now, but based on the other piece I'd say the shape is similar. If so, I can see Godfrey's point.
Ryu will have missed like 60% of this season. He'll likely be healthy enough to at least be removed from the IL at some point in the back half of next year (what they do with him at that point is obviously another question). The Star piece is saying that this year the Jays would get 50% of 60% of Ryu's $20 million salary, which works out $6 million. A 7% premium over the life of the contract would be $5.6 million.
The WaPo piece said it's more like 60-80%. He'll miss probably 60% of next year, at least, so even at 50% that's another $6 million. But, of course, the Jays didn't know all this at the time they'd have been getting him insured. And then you have to factor in that they'd be paying premiums on other big deals, too.
The Post says 7% for pitchers, 3% for position players. If we assume that if they'd insure one big multi-year deal they'd insure them all, that means premiums paid for Springer, Chapman, Berríos, Gausman, and Kikuchi. At those percentages that's $4.6 million paid out, plus $1.4 million for Ryu. So... for 2022 that's $6 million paid out to receive $6 million back. And probably a similar calculation for next year.
WaPo: https://www.washingtonpost.com/news/sports/wp/2016/09/09/worried-about-your-aces-100-million-arm-there-is-insurance-for-that/
Star: https://www.thestar.com/sports/2007/05/13/insurance_gamble_costly_for_jays.html