Investing in Small Caps: Sox Lock Up Pedroia for Six Years
Santa Claus will be driving a Brinks Armored Truck to the Pedroia household in Arizona this Christmas.
According to Peter Gammons on ESPN.com, the Red Sox have signed 2008 American League MVP Dustin Pedroia to a six year $40.5 million contract. This deal eliminates his 3 arbitration years and extends him another 2 seasons beyond his original free-agent date. The Sox then hold a 2015 team option on Pedroia, at which point he’ll be 31-years-old.
All that can be said is that it looks like a tremendous deal for the Red Sox, assuming Pedroia manages to stay healthy. The Sox pay more up front than they need to, but will end up saving a great deal of money in arbitration and free agent costs (Pedroia would have almost certainly been awarded an 8-figure salary as soon as 2011).
He’s among the top three second basemen in baseball, and one of the premier contact hitters in the game. This deal will keep him at the top of the Red Sox batting order throughout his prime years. We like it.
UPDATE: Here is the structure of the deal, per Tony Mazz at Boston.com:
Signing Bonus – $1.5 million
2009 – $1.5 million
2010 – $3.5 million
2011 – $5.5 million
2012 – $8 million
2013 – $10 million
2014 – $10 million
This payment schedule is favorable for the Sox (Finance 101: it’s better to pay less now and more later).
Agreed. And here’s hoping they can lock up Youk with something similar.