Monday, March 26, 2007

Jeff Weaver is who we thought he was!

Little known fact: Jeff Weaver's contract with the Seattle Mariners is actually really an innovative step forward, based on derivative options trading. Complex formula and in fact the M's hired a Sorbonne mathematics PhD to help structure the deal, as it's believed to be the first ever quant-based guaranteed contract in baseball, and apparently has muni bonds and subprime mortgages securitized along with it and is combined with some interesting risk-based incentives. It's so cutting edge, they decided to only try it as a one year affair to see how it works. Complex? Yes. Wildly imaginative? Absolutely. But in essence, in layman's terms, the contract works like this: for every basis point of ERA, Weaver gets $10,000. I hear he's shooting for an eight figure deal.

From the Seattle Times:

Weaver, on a one-year, $8.3-million contract with Seattle, had been 0-2 with an 8.31 earned-run average and four home runs allowed in four outings this spring.
This reminds me of a similar deal the M's worked out with some of the bars around the Dome (RIP) back in the days when Big Dave Valle caught Fassero and the like: domestic beers priced at Valle's batting average. I remember the furious dash to FX McRory's when Dave dropped the old BA to .147 or thereabouts. Now that's a cheap pint of beer.

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