Pablo Sandoval is perhaps the most interesting free agent of the offseason. He’s both good and fairly young for a free agent these days, so there’s an argument to be made that his contract might not carry him very far into the steepest of the aging curve, which is when teams have often gotten burned with big money deals. Of course, he’s also a big guy, with the body type of the kind of player who often ages poorly, and he’s spent a significant chunk of time on the DL during his tenure with the Giants.

This makes him a bit of a unique free agent, as you can argue that he’s either lower risk (due to age) or higher risk (due to body type), depending on which one you one put more stock in. And both arguments have their merit. Projecting future playing time is difficult enough for a normal player, much less a guy on the extreme ends of two variables that offer different conclusions.

So, it seems inevitable that whatever Sandoval signs for, it’s going to be a polarizing contract. Especially if he lands the six year deal that he’s seeking. From his agent, Gustavo Vazquez, via Henry Schulman:

“Pablo is 28,” Vasquez said. “He is still young. Maybe if he was 30 or 31 we could talk about four or five years. But he’s 28. He deserves more than that.”

The immediate reaction is to imagine what a 34-year-old Sandoval might look like, and shrink back from the idea of guaranteeing real money to, as Grant Brisbee put it, a “less athletic David Wells.” The odds of Sandoval still being a highly productive player in 2020 are pretty slim, and a six year deal would make it very likely that the signing team would have paid a hefty premium for a pinch-hitter or part-time platoon guy by the time the contract ends. However, in and of itself, that doesn’t make a six year contract for Sandoval a bad idea.

I wrote about this last year, but I think the point is worth revisiting: contracts should not be evaluated by how well a player will perform at the end of the deal. Almost every major free agent contract is going to result in the player being significantly overpaid by the end of the deal, and this is by design. In fact, teams want it this way.

Because of the time value of money, backloading contracts makes them cost less, and in baseball, teams have a far greater need for cash flow than the players do. To a player, the extra money is mostly just a status symbol, the measure that they use to feel properly respected, and the timing of when it is paid out is of secondary importance. For a team, however, moving $5 million from this year’s budget to a point in the future can create the ability to build a better roster in the short-term, capitalizing on the best years of the expensive free agent they ponied up for to begin with.

Backloaded contracts allow teams to give out larger total contracts — which players like — because they act as a kind of no-interest financing. Teams can essentially borrow from themselves by pushing the most expensive parts of a contract into the future, even though that means guaranteeing that the player is going to be drastically overpaid by the end of the deal. It’s a trade-off teams are willing to make, however, as pushing the largest salaries to the end of the deal often means that another front office — and sometimes, another owner — will have to deal with the ramifications of that backloaded deal, giving the guy who gave out the contract the largest benefit without having to personally incur the cost when the deal becomes player friendly.

To evaluate a contract, you have to look at it in its entirety, not just how well the player might be expected to perform in the final years of the deal. Players can, and often do, justify almost the entire cost of a long-term contract within the first few years of a deal, allowing the transaction to be reasonable even if it ends with the player being an albatross. The way contracts are structured in MLB, free agents agree to be underpaid at the front of a deal and overpaid at the back end, and everyone is perfectly okay with this arrangement.

So giving Sandoval six years can make sense as long as the return on investment in the first few years of the deal are slanted enough in the team’s favor. In fact, a contract of any length is reasonable as long as the salaries are modified to make that length work for the team. Even a ten year deal for Sandoval could work out for a team so long as he was only asking for $10-$12 million per year in salary.

The relationship between contract length and annual salary is a sliding scale; as one goes up, the other goes down. Just for fun, here’s a table of the annual salary of something like what I’d offer Sandoval based on different contract lengths between 1 and 10 years.

Years Contract Marginal Salary 1 $24,500,000 $24,500,000 2 $46,550,000 $21,550,000 3 $65,843,750 $19,293,750 4 $82,050,500 $16,206,750 5 $94,813,316 $12,762,816 6 $103,747,287 $8,933,971 7 $108,437,621 $4,690,335 8 $109,437,621 $1,000,000 9 $110,437,621 $1,000,000 10 $111,437,621 $1,000,000

Those numbers are based on believing Sandoval is a +3.5 WAR player for 2015, that he’ll lose half a win of value each season, and that the price of a projected win for players of his caliber this winter will be around $7 million or so. At $7 million per win, he’d be worth about $25 million for 2015, though you could bump that up a bit to include the value of being able to make a qualifying offer again next year, so maybe he’s worth something closer to $27 or $28 million for just 2015.

As you start adding years, however, and start buying out the expectation of reduced production, you simultaneously reduce the marginal amount of dollars you’d add to compensate for the lower expected performance. Instead of $25 million for the first year, he only gets $22 million for the second year, $19 million for the third, and so on. By the seventh year, when Sandoval would project as a fringy bench player, you’re adding just $5 million more in guaranteed money, and if he really decided he wanted a deal of 8-10 years in length, I’d just stick $1 million apiece on each year to reflect the fact that I’d expect him to produce no value in those seasons.

Realistically, though, there’s no real value to Sandoval asking for additional years at something just barely above the league minimum, so the longest deal he’d likely consider under this scenario would be seven years, and even signing up for that seventh year at $5 million probably isn’t all that appealing. But that sixth year nets him an additional $9 million in guaranteed money, and that’s probably starting to get to the point at which the additional guarantee is worth enough to get him to give up one more year of free agency.

The point here is that all these contract values are essentially the same price. If you’d take Sandoval for 1/$25M, or 2/$47M, then 3/$64M, 4/$82M, or 5/$95M are essentially the same contract. Yes, you’re taking on more risk and buying out his decline years, but you’re doing so at ever decreasing marginal salaries, so that the expected return on investment is consistent throughout each length of the deal. And the same goes for 6/$104M. If you’d do 5/$95M — and I think a lot of teams probably would — then the sixth year at $9 million in marginal money shouldn’t be seen as any scarier, really.

Now, teams mostly just skip over all of this stuff by focusing on the range of years that make sense for a given player type. Above average players that fall a bit short of stardom, as Sandoval does, get 5-7 years, so teams won’t even bother with the shorter or longer offers, most likely. The winning bidder will likely be the one who extends the most marginal money on the sixth year, and in the end, I’d expect Sandoval to sign for something like $110 million over six years, as someone will stretch a bit beyond the projected value.

But when they do, we shouldn’t freak out that a team was too dumb to realize that the 2020 version of Pablo Sandoval is going to suck. They know that. Pablo Sandoval probably even knows that, which is why his agent is trying to get him a guaranteed contract for that year in advance. Adding in an additional year when Sandoval is unlikely to be productive doesn’t make the contract a mistake, so long as the price of the deal comes down to account for the added length.

A sixth year for Sandoval is very likely to be an albatross, just like the first year for Sandoval is very likely to be a bargain. He won’t be worth $18 million in 2020, but he’ll be worth more than $18 million next year, and the goal for both sides is to just make sure that the up-front discount is close to equalizing the end-of-contract premium.

Which is why we can’t just reflexively judge a contract by how many years the player gets. As long as the price moves in tandem with the years, there’s nothing wrong with adding dead money to the end of a deal. Contracts that end badly aren’t always mistakes. They’re usually designed that way on purpose.