Jamie Moyer just re-signed with the Phillies for the next two years at $13 million. This is where estimating expected marginal revenue product becomes a pure art. Moyer will be 46 and 47: ages at which most humans can’t play baseball any more. There is no aging curve to follow; it’s more about whether or not he’s going to wake up one morning and have his body say “enough!”
So for this valuation I’ll just note that his value over the past three seasons has been between $10 and $11 million per season. $6.5 million for two seasons is probably a good gamble to take. The contract also includes performance bonuses to compensate Moyer for pitching benchmarks that he’ll likely be worth if he surpasses them.
He will receive base salaries of $6.5 million in each of the next two seasons, and he can make an additional $1.25 million in performance bonuses each year: $250,000 each for 150, 160, 170, 180 and 190 innings pitched.
In addition, his 2010 base can escalate by up to $4.5 million: $250,000 each for 150 innings and 23 starts, and $500,000 each for 160, 170, 180 and 190 innings, and 25, 27, 29 and 31 starts.