scottmerkin Scott Merkin

Interesting note on John Danks: His 2012 salary is $500,000. He then gets a $7.5 million signing bonus, paid between June, '12 and Oct., '12

That seems odd, maybe they are cash strapped right now?

That seems odd, maybe they are cash strapped right now?

 

That is what it screamed to me.

That is what it screamed to me.

 

You know they have operating surplus if needed. They are working to a budget and this frees up even more cash for this offseason and this year.

 

 

You know they have operating surplus if needed. They are working to a budget and this frees up even more cash for this offseason and this year.

It also fits with attempting to move salary at the trading deadline too (i.e. perhaps moving part of Peavy's contract away).

It also fits with attempting to move salary at the trading deadline too (i.e. perhaps moving part of Peavy's contract away).

I agree. The way the Danks contract is structured, it seems KW moves are hindered by Peavy's contract this upcoming year.

They need the extra $7 million for the coming Vlad Guerrero and Miguel Tejada acquisitions.

They need the extra $7 million for the coming Vlad Guerrero and Miguel Tejada acquisitions.

 

Vladapalooza!!!!!!

You know they have operating surplus if needed. They are working to a budget and this frees up even more cash for this offseason and this year.

 

If they went profitless or lost last year, they don't have a surplus. With the profits being reinvested every year, they stay on the books annually. That's why simply adding the annual profits doesn't mean anything.

Paging Richard Allen to the courtesy Sox Financials booth.

the signing bonus hits 2011's budget. seeing as 2011 took a loss, might as well make 2012's books better looking.

the signing bonus hits 2011's budget. seeing as 2011 took a loss, might as well make 2012's books better looking.

Maybe Im reading this wrong, but the bonus still comes in 2012...

Maybe Im reading this wrong, but the bonus still comes in 2012...

PAID in 2012.

 

he was SIGNED in 2011.

PAID in 2012.

 

he was SIGNED in 2011.

I don't think that's how it works. FY is different from calendar year. I know nothing about the Sox fiscal calendar. Does anyone else?

PAID in 2012.

 

he was SIGNED in 2011.

 

Honestly it doesn't really matter. The Sox are no where near the tax threshold, so all that matters is cash flow. This isn't the NFL with regards to salary cap considerations.

PAID in 2012.

 

he was SIGNED in 2011.

So it still hits the books in 2012, so how would that help?

So it still hits the books in 2012, so how would that help?

typically you give a signing bonus in the year you sign. look at the nfl. since they have a salalry cap, signing bonuses became the norm. a bonus that was paid out in the first year. it went down a bit as the CBA was adjusted to make the signing bonus part of the cap, but spread out over the life of the contract.

now, baseball dosent have a cap, so contracts can be front or back loaded in any which way or form. the sox ARE giving danks 8 million in 2012, but the signing bonus is being treated as a 2011 expense.

 

it's like borrowing from yourself in a way.

typically you give a signing bonus in the year you sign. look at the nfl. since they have a salalry cap, signing bonuses became the norm. a bonus that was paid out in the first year. it went down a bit as the CBA was adjusted to make the signing bonus part of the cap, but spread out over the life of the contract.

now, baseball dosent have a cap, so contracts can be front or back loaded in any which way or form. the sox ARE giving danks 8 million in 2012, but the signing bonus is being treated as a 2011 expense.

 

it's like borrowing from yourself in a way.

I just don't get how it's a 2011 expense, if it was it would have been paid in 2011. At least that's how it works in accounting...

I just don't get how it's a 2011 expense, if it was it would have been paid in 2011. At least that's how it works in accounting...

then why not just give him the 8 million as 2012 salary?

obviously kenny and the bean counters found a way to make this work

http://www.southsidesox.com/2012/1/12/2701...hat-weird-bonus

 

A couple days ago, Scott Merkin tweeted a strange feature of John Danks' five-year, $65 million contract:

 

Scott Merkin @scottmerkin

 

Interesting note on John Danks: His 2012 salary is $500,000. He then gets a $7.5 million signing bonus, paid between June, '12 and Oct., '12

 

Merkin followed by saying Danks is still an $8 million man on the payroll, so there's no real difference overall. But still, I can't recall ever seeing a signing bonus used in this way. Usually a bonus will be given up front to lessen the salary on the back end of the contract, but this bonus only shifts the money around over the course of one year, and rather drastically.

 

Thinking it through, there seem to be two conclusions.

 

The mystery one: In the event the 2012 White Sox are still over their budget, the delay allows Kenny Williams to extend the trade market to the deadline without any financial cost.

 

The sensible one: As Larry pointed out, the Los Angeles Dodgers' bankruptcy filing showed the White Sox were the fifth-largest unsecured creditor at $3.5 million. That's the same amount as the Dodgers were supposed to pay towards Juan Pierre's 2011 salary. The Dodgers are in the process of being sold -- Jan. 23 is the deadline for initial bids -- so maybe Jerry Reinsdorf is using the Danks contract as a way to balance the books for the first half of the year, expecting the Pierre payment to come in sometime during the second half.

 

I'm rooting for the mystery box, myself.

Pretty ironic how far off many of us were in our assumptions of Danksy's willingness to sign long term here.

 

Not only did he sign a fairly reasonable deal, but he agreed to this goofy arrangement in the first year.

With the exception of Greg Maddux, wouldn't we say the Braves' model for most of their 14 year run was based on this principle, particularly for position prospects...

 

You think of all those guys like Andruw Jones, Chipper Jones, Javier Lopez...of course, the first group with Pendleton and Sid Bream (FA's), but for the majority of the roster, they were youngsters beginning to peak and get over the hump (Glavine, Smoltz, Avery) all at the same time.

 

Then there was the acquisition of Smoltz from the Tigers, aka Grand Theft HOF Arm.

 

Or if you think of those Indians powerhouses of the 90's/early 00's, same thing, with a few exceptions (Vizquel/Felix Fermin trade)...or even the second wave with the Indians that was fully torn apart with the trades of Sabathia, Lee, Victor Martinez, Peralta, Blake, etc. Pretty much the only one left still hanging now is Grady Sizemore.

Edited January 12, 201214 yr by caulfield12