In a stunning reversal of a summer-long drama, the Pirates and top draft pick Pedro Alvarez last night agreed to terms on a revised four-year, major league contract worth a guaranteed $6,355,000, according to three sources intimately familiar with the talks.
The contract is expected to be signed once Alvarez passes a physical, which could happen early this week.
It was not immediately clear which side instigated the new talks, when they began or whether they occurred with the blessing of Major League Baseball and its players' union. But one source indicated that a signed contract between the Pirates and Alvarez likely will quash a related grievance filed by the union against commissioner Bud Selig's office, offering a sign that all concerned have been duly informed of this development.
That grievance, filed Aug. 27, alleged that MLB violated its labor pact with the union by approving the verbal agreement reached between the Pirates and Alvarez minutes after the midnight Aug. 15 deadline. The first hearing on the matter before arbitrator Shyam Das occurred Sept. 10 in New York and included testimony from Selig. The next two hearings are scheduled for tomorrow and Wednesday.
The original agreement between the Pirates and Alvarez called for a $6 million bonus, payable with $3 million this year and the same amount the next, on a minor league contract. Because it was a minor league contract, it guaranteed nothing beyond the bonus.
The new agreement calls for Alvarez's bonus to remain $6 million, but it will be payable over four years. From there, Alvarez would receive salaries of $400,000, $500,000, $550,000 and $700,000 for time spent on the Pirates' major league roster. For time spent in the minors, he would receive $88,750 each year.
Because Alvarez, a standout third baseman at Vanderbilt University widely regarded as the best hitter taken in the June 5 draft, is seen as capable of zipping through the minors in a year or two, the major league salaries above are more likely to come into play.
There also are two club options beyond the four years, and those are complicated: The Pirates retain the right to tender Alvarez a contract worth $1.63 million in the fifth year if he is in the majors. But the player can void that if he is arbitration-eligible, which happens after three full seasons in the majors, and pursue what surely would be a much bigger salary. If Alvarez, for whatever reason, still is floundering in the minors going into that fifth year, the club can exercise an option that pays $700,000 in the majors, $500,000 in the minors for that year and the next.
As for the change from a minor league to major league contract: Alvarez would have to be added to the Pirates' 40-man roster immediately as opposed to three years after his signing. Also, the team would have to begin using options to demote him from the majors to the minors earlier.
Depending on one's perspective, this can be seen as a victory for either side: The Pirates might maintain that, because Alvarez's bonus is spread over twice as many years as the original, the actual guaranteed value of the deal, when weighing interest and inflation, actually is $5.67 million in total. The Alvarez side might maintain that the major league contract will bring Alvarez more money sooner, perhaps $900,000 more than in the original.
Either way, based on Alvarez's most likely route to the majors, the numbers probably will not wind up far apart.
No one from the Pirates or the office of Alvarez's agent, Scott Boras, would comment for this report. Alvarez has not spoken with anyone in the media since the draft.
The case between the players' association and the commissioner's office had -- and still might have, if it proceeds -- the potential to be seismic in the industry, in that it challenged Selig's authority to unilaterally work around the deadline upon in the labor pact and could have nullified several contracts, not just that of Alvarez.
The public exchanges between Pirates president Frank Coonelly and Boras, longtime rivals from Coonelly's time in MLB's legal offices, grew testy at times. Coonelly charged that Boras was not acting in the best interests of his client in a lengthy press release the day the grievance was filed. Boras charged that the Pirates flouted the rules and, using Coonelly's connections with MLB, orchestrated an extension of the deadline to pressure his client into the original agreement.
The Pirates stated at that time and beyond that they would not be willing to reopen talks with Alvarez if it meant paying more. Boras strongly indicated that he would be willing to discuss a revised settlement.
Even if Alvarez signs soon, he probably is too late for the Pirates' first option for his inauguration into professional baseball this fall, that in the Florida Instructional League. But he still has time to be assigned to prestigious prospect-only leagues in Arizona or Hawaii.
Dejan Kovacevic can be reached at firstname.lastname@example.org .