No matter the profession, everyone desires financial stability. This principle played a role in driving Jon Singleton, a first baseman in the Houston Astros’ organization, to sign a historic contract earlier this week. On Monday, Singleton became baseball’s first prospect to ever agree to a long-term deal before playing a game in the major leagues.

Worth a guaranteed $10 million over five years, with the potential to reach as high as $35 million through eight seasons, according to Yahoo! Sports, the contract has many critics. Former Oakland Athletics pitcher Mark Mulder tweeted, “Either he doesn’t believe in himself to be great or he has a terrible agent,” while the Baltimore Orioles’ Bud Norris complained via Twitter, “Sorry but this Singleton deal is terrible. Wish…Jon listened to the union and not his agent.”

The thought is that if Singleton lives up to his potential as a perennial 30-home-run slugger, he could be worth far more than what he’ll be paid. Mulder and Norris, among others, seem to be concerned that Singleton’s decision to sacrifice future earnings for a promotion may set a precedent that other MLB prospects will be forced to follow.

So will it change the business of baseball? Let’s take a look.

Why Singleton took the deal
Guaranteed money is the obvious reason Singleton agreed to the Astros’ offer. The 22-year-old has experienced his fair share of off-field issues thus far, most notably a 50-game suspension for marijuana use last season. If he has any more slip-ups in the future, his new contract ensures there will be an eight-figure security blanket waiting for him. And given the deal’s relative cheapness, there’s little pressure on Singleton to perform at an elite level.

Using basic sabermetrics, he’ll only need to be the 30th-best first baseman in baseball to justify his annual base of $2 million. That’s assuming the MLB’s average market value per win is $5 million, and a top-30 first baseman notches a win above replacement of at least 0.4.

ALSO READ: Eight Companies That Owe Employees a Raise

It’s also worth pointing out that if Singleton becomes an MVP-caliber player deserving of a larger paycheck, the Astros can pay him an extra $25 million over three additional years. The team holds club options it can exercise if Singleton’s play warrants them. If this best-case scenario comes to fruition, $35 million over eight years is actually more than other potentially comparable players have made in the past.

Data via Baseball-Reference. Graph compiled by author. *Full value of Singleton’s eight-year deal with club options.

 
Adrian Gonzalez, a standout first baseman for the Texas Rangers and San Diego Padres during his early years, made a little over $16 million his first eight seasons. James Loney and Adrian Beltre, by comparison, each made less than $30 million.

While this group of players is by no means an exhaustive sample, it does indicate Singleton’s contract isn’t as awfully valued as the critics suggest. And if he outright flops, like many other promising prospects before him — Lastings Milledge, Josh Booty and Matt Bush are just a few examples — retiring with $10 million in career earnings will make Singleton look like Nostradamus.

What it means for the business of baseball
Still, from a business standpoint, there are concerns. Houston’s decision to call up Singleton appears to be directly tied to his willingness to sign a long-term contract. Although the team hasn’t officially confirmed this, the timing of his promotion is too curious to ignore.

If the Singleton deal sets a precedent that other teams can keep talented prospects in the minors when they don’t sign pre-MLB contracts, it will significantly distort the negotiation process. Teams will have the upper hand when discussing terms of a new contract, and a player’s admission to the major leagues can essentially be held hostage if he doesn’t sign a team-friendly deal. It’s this issue Mulder and Norris likely have a beef with.

And in fact, some argue the Pittsburgh Pirates are already doing it with über-talented prospect Gregory Polanco. Polanco remains on Pittsburgh’s Triple-A club despite hitting over .350 with 46 RBI in 56 games this season. The outfielder, who’s tenth on Baseball America’sminor league rankings, turned down a seven-year $25 million contract earlier this year, Yahoo! Sports’ Jeff Passanreports. He clarifies the situation: “Polanco rejected the deal and remains at Triple-A Indianapolis, a casualty of Major League Baseball’s service-time rules that continue to give teams an incentive to bury some of the best prospects in the minor leagues until June…”

By “service-time rules,” he is alluding to the Super Two rule, which gives certain players the right to negotiate a higher salary earlier than is typically allowed by the MLB. Passan explains, “By keeping a player in the minor leagues until after the Super 2 cut-off, which is usually in early to mid-June, teams estimate a savings of millions of dollars.”

Most likely, if Polanco chose to accept the Pirates’ deal, he would’ve been called up immediately. With him locked up in a long-term contract, the team would have no reason to fear the Super Two rule. The same goes for the Astros and Singleton. The first baseman probably wouldn’t have made his major league debut this week if he didn’t agree to a deal.

The bottom line
No one can fault Jon Singleton for accepting the Houston Astros’ offer. A significant number of minor leaguers are never promoted to the MLB, and of those that make it, many fail. There’s a chance Singleton won’t live up to the expectations, and given this possibility, his decision to take a guaranteed $10 million makes sense. If he actually earns the $35 million maximum, he’ll be paid more than some elite sluggers have made in the past.

Still, the deal sets a dangerous precedent for the business of baseball. It’s unethical for any team to base a player’s big league promotion on whether he accepts a potentially discounted contract. If more players follow in Singleton’s footsteps, the MLBPA and MLB may need to address it in the next collective bargaining agreement come 2016.

 

Outstading potential
Every year, The Motley Fool’s chief investment officer handpicks one stock with outstanding potential. But it’s not just any run-of-the-mill company. Last year his pick skyrocketed 134%, and previous top picks have gained upwards of 908%, 1,252% and 1,303% over the following years. Believe me, you don’t want to miss what could be his biggest winner yet! Just click here to download your free copy of “The Motley Fool’s Top Stock for 2014.”

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.