Results tagged ‘ MLB Free Agents ’

Should MLB Teams Refuse the Mega-Contract?

Another free agency period is ahead with another Major League Baseball offseason. With so many superstars being signed to lucrative contracts with their existing clubs, players who reach free agency can make exorbitant amounts of money due to fewer players being available and television contracts that teams are using as revenue generating machines. With that being said, is a big-time contract a smart investment for a needy team this winter?

The Yankees as a Model

With Robinson Cano heading towards free agency after the 2013 season, the New York Yankees will be faced with a decision that could alter their original plan of getting under Major League Baseball’s $189 million luxury tax threshold. With $92.4 million due to six players (Alex Rodriguez, C.C. Sabathia, Alfonso Soriano (the Cubs are covering $13 of the $18 million owed to him), Mark Teixiera, Vernon Wells (the Angels are covering $18.6 of the $21 million owed to him), Ichiro Suzuki, and Derek Jeter (who has an $8 million player option), the Yankees, on the surface, appear to have some wiggle room in an offer to their superstar second baseman; however, the players mentioned above are the only players with guaranteed contracts next season.

Yankees vs. MarinersAdam Warren, David Phelps, and Eduardo Nunez are all pre-arbitration, so they can have their contracts renewed at the league minimum, but the club will have to deal with David Huff, Chris Stewart, Francisco Cervelli, Michael Pineda, Ivan Nova, Jayson Nix, Shawn Kelley, Brett Gardner, and David Robertson within arbitration, and determine whether Cano, Hiroki Kuroda, Kevin Youkilis, Andy Pettitte, Phil Hughes, Mark Reynolds, Boone Logan, Travis Hafner, Joba Chamberlain, and/or Lyle Overbay are worthy of being tendered a qualifying offer prior to reaching free agency. With up to 19 spots available for next season, the remaining $96.6 million doesn’t appear to be going very far.

While relief could be on the way with a possible 2014 suspension for Alex Rodriguez, from which his $25 million contract would be forfeited, the long-term contracts that the Yankees have handed out like candy are now causing financial issues as the club’s attendance continues to decline (43,733 in 2012 vs. 40,002 in 2013) along with the talent of the aging players.

Consider this:

Alex Rodriguez is 37 years old and is owed $86 million over the next four years.

C.C. Sabathia is 32 years old and is owed $76 million over the next three seasons (including his 2017 buyout).

Mark Teixiera is 33 years old and is owed $67.5 million over the next three seasons.

The three have been worth a combined WAR (Fangraphs) of 2.6 in 2013 while costing the Yankees $73.5 million in salaries. For comparisons sake, San Diego third baseman Chase Headley, Atlanta third baseman Chris Johnson, San Diego outfielder Chris Denorfia, Baltimore outfielder Nate McLouth, and San Francisco shortstop Brandon Crawford have each posted a 2.6 WAR in 2013…individually. If the Yankees had all five players this season, they would have spent just under $16 million, about $6.5 million less than they spent on Teixiera alone in 2013!

Why These Contracts Don’t Make Sense

By investing large sums of money into veterans when they reach free agency in the post-steroid era, teams are taking immeasurable risks.

1) They are assuming that a high-performing player will be capable of producing into their mid-30′s, and…

2) They are assuming that the high-performing player will stay healthy enough to be worth the investment.

When a player reaches free agency, they have at least six years of major league experience. The player likely had three seasons of pre-arbitration followed by three years of arbitration prior to reaching free agency. Considering that most players make their debuts between the ages of 21 and 24, a free agent is typically between the ages of 27 and 30. The magic prime age in baseball is apparently going to happen in a player’s age-27 season, lasting roughly three to five seasons. A player has reached their physical peak at this point, which allows the player to utilize their various tools to take advantage of the opposition through the use of their experience and mental approaches gained through those experiences. When a multi-year contract is given to a player at the age of 30, say a five-year contract, and that player is then declining for nearly three-fifths of the contract, what is the value to the club? Without performance-enhancers, normal aging processes, such as shoulder fatigue for aging pitchers and chronic knee soreness for a veteran position player, become normal once again. Can teams count on a 39-year-old shortstop to play in 162 games? Ask Derek Jeter how his season went.

Unfortunate Recent Examples

Albert Pujols signed his ten-year, $240 million deal with the Angels following his age-31 season in St. Louis. To make the deal more affordable and to allow the Angels some financial flexibility, Pujols’ contract was heavily back-loaded, meaning he will be making the most money at the end of his contract when he is approaching or passing the age of 40. In fact, in Pujols’ tenth season with the Angels, he is scheduled to make $30 million, the highest annual salary within his contract. After making a combined $28 million in 2012 and 2013, Pujols’ contract will jump to $23 million in 2014 and climb $1 million each season before reaching $30 million in 2021.

VottoHowever, Pujols hasn’t really lived up to the contract based on his production over the first 11 seasons in the majors, as he has posted the lowest WAR of his career in consecutive seasons (3.7 in 2012 and 0.7 in 2013). He was shutdown on August 19 due to a partial tear of his left plantar fascia and he  should be ready to go next season; however, since he isn’t undergoing surgery, how well will this injury heal? Although the tear supposedly did what the surgery would have, one has to wonder if it can be aggravated, torn further (since it is still a partial tear), and debilitating enough to plague Pujols throughout the remainder of his massive contract.

And what about the contract that the “small-market” Cincinnati Reds gave to Joey Votto? The Reds handed Votto a ten-year, $225 million extension in April of 2012. The contract hasn’t even started yet, as the first year of the extension will be the 2014 season, Votto’s age-30 season. For ten years, the Reds will hope that Votto will produce numbers similar to his 2010 MVP season, something that he hasn’t seemed capable of reproducing over the last three seasons, despite leading the National League in on-base percentage the last three seasons, four including 2010. When you consider that the Reds are winning in 2013 and they still average just 31,479 in attendance (16th in MLB), how will the team be able to contend when Votto is making $25 million per season beginning in 2018, when he is 34 years old?

Even worse, the contract that the Philadelphia Phillies gave to first baseman Ryan Howard. Howard received his extension in April of 2010 and it didn’t go into effect until the 2012 season, a five-year, $125 million deal that would begin in Howard’s age-32 season. Since the start of the 2012 season, Howard has played in 151 games while posting a .244/.307/.445 line with 31 doubles, 25 home runs, 99 RBI, and a whopping 194 strikeouts in 609 plate appearances. The previous seven seasons, Howard had a .275/.368/.560 line with an average of 26 doubles, 41 home runs, and 123 RBI per season, and that was including his declining 2010 and 2011 seasons, in which Howard posted the lowest OPS of his career (.859 in 2010 and .835 in 2011)…that was, of course, until his dreadful 2012 season (.718 OPS).

The Problem With TV Deals

I was able to get a response from Baseball Prospectus’ Ben Lindbergh when I asked him via Twitter, “Do you think MLB teams are going to shy away from mega contract due to the Pujols/Howard/Hamilton deals in post steroid era?” His response:

The TV money, which was mentioned previously, is an interesting enhancement to the revenue stream for major league teams. With the Los Angeles Dodgers getting over $6 billion over 25 years from Time Warner in  their TV deal, which will give the club nearly $240 million per year in revenue, the already crazy expenditures of the boys in blue could become even more egregious this winter. The club seems capable of locking up left-hander Clayton Kershaw to a contract worth $30 million per season or more this winter, AND signing Robinson Cano to take over second base from Mark Ellis, who has a $5.75 million option for 2014 or a $1 million buyout. By taking on those types of contracts on top of the Carl Crawford ($20.25 million in 2014), Matt Kemp ($21 million in 2014), Adrian Gonzalez ($21 million in 2014), Zack Greinke ($26 million in 2014), and Andre Ethier ($15.5 million in 2014) deals, the Dodgers will be willingly entering the luxury tax threshold in an effort to win the World Series.

KempBut what happens when money can’t buy titles? The New York Yankees seemed to always have the highest payroll in baseball and they haven’t won the title every season. Spending doesn’t quantify wins, it is, as Lindbergh referenced, the winner’s curse. This concept is outlined in Colin Wyers 2009 Baseball Prospectus piece titled The Real Cursewhich Wyers states:

The market for baseball players seems to more closely resemble a sealed-bid auction than it does a market. Since the person who wins that sort of auction is typically the person with the largest bid, it stands to reason that the person who “wins” is in fact the person who overbids…

The curse is then being the winning bid on a contract that was probably more than what another team was willing to bid. By evaluating players and making smart investments, teams that break the curse are able to get production out of what they spend, while teams that suffer from the curse are those that fail to get production out of their investment, as in the suffering that the Cubs went through with Alfonso Soriano, the joint suffering of the Blue Jays and Angels over the Vernon Wells contract, and the Giants’ suffering through the Barry Zito contract.

When spending goes wrong, it can financially cripple a franchise, who is then responsible for allocating funds to an under-performing player while still trying to field a competitive team around that player. Teams seem more likely to take those types of risks, though. Due to the incoming revenue from the TV deals, teams like the Cleveland Indians, who celebrated the sale of the franchise owned SportsTime Ohio to Fox Sports this winter by signing Michael Bourn and Nick Swisher, are more capable of making these potentially fatal bids.

Will the money continue to be there for clubs to take on these large, risky contracts?

Pete Kotz had an amazing story about the leagues finances, and while discussing television deals, he says:

With no one saying no, the networks see sports as a no-lose racket, with ESPN as its piper. The sports channel charges cable companies $5 a month per customer, by far the highest monthly fee in national television. While that may seem a pittance, it’s big money when spread over the 100 million U.S. households with pay TV. And it’s made the other big boys envious.

NBC and CBS have launched their own sports channels. Another from Fox is on the way. Even regional sports channels are starting to broach that $5 mark. Their bet is that viewers will always be willing to pay more. And more. And more.

…Today, the average TV bill rests at $86 per month, about half of which pays for sports programming. That’s more than double a decade ago. So it’s no coincidence that the cable and satellite industries have been jettisoning customers for nine years straight.

 “I can’t tell you what will be the trigger,” says Matthew Polka, president of the American Cable Association. “But I am certain that at some point in the very near future, that balloon will burst.”

As cable and satellite customers are forced to pay more and they continue to leave those companies in an effort to save money, the money will eventually not be coming in. The cable and satellite companies will likely battle with the club’s networks to get lower rates, and there could be something drastic, like CBS being taken away from major markets. Eventually, the boom in finances and long-term contracts will go away and the inevitable crash will make it harder for clubs to make large financial commitments to star players. Imagine if the housing market was responsible for financing people’s salaries and when the market for home sales crashed how disastrous that could have been…but it did and it was miserable for the entire economy.

Major League Baseball is exempt from some things due to anti-trust laws, but nothing is too big to fail.

Who Is Worth a Mega-Contract?

harper troutIt may seem easy to say that locking up players within their pre-arbitration or arbitration years to lucrative, long-term contracts seems more intelligent than waiting until free agency, as the annual salaries can slowly increase rather than starting and sitting at $25 million per year for eight straight seasons. A few examples of players who could be worth a long-term investment in this scenario:

  • Angels’ outfielder Mike Trout is earning $510,000 in 2013 and he is pre-arbitration in 2014 before being eligible for arbitration in 2015, 2016, and 2017. If Trout continues his torrid pace for the next four seasons and reaches free agency in 2018 at the age of 26, what types of maniacal offers will he be receiving at that point?
  • Nationals’ outfielder Bryce Harper signed a major league contract and will be arbitration eligible in 2016, 2017, and 2018 before reaching free agency at the age of 25 in 2019. Like Trout, he has posted absurd numbers, given his age, and, with Scott Boras as his current agent, could own half of a franchise based on what he will be offered in free agency.
  • Orioles third baseman Manny Machado, Nationals’ right-hander Stephen Strasburg, Marlins’ right-hander Jose Fernandez, Marlins’ right-fielder Giancarlo Stanton, and Mets’ right-hander Matt Harvey (upon his return in 2015 from elbow surgery…if he is just as productive and dominant) are additional players who fit this mold.

Why are these types of players worth a long-term investment? Because they are young, producing prior to their prime years, and are more likely to continue producing towards the end of a 10 to 15 year extension than a player who turns 40 or 41 in year ten of their long-term contracts, like Joey Votto and Albert Pujols.

These are the types of mega-contracts that seem more reasonable and realistic for franchises, while being less likely to provide a curse on the investing bidder. Because the player is within the grasp of the franchise already, the team has all kinds of data available to analyze, they have coaches and front office personnel who have strong relationships with the player, and the fan-base, media, and community surrounding the player are already familiar, so it could be assumed that there are fewer outside influences that could impact player performance.

SeligRegardless of the potential that these younger players possess, any long-term contract remains a risk for the franchise. If the clubs suddenly refuse to offer these types of contracts, however, the league and its owners would likely be accused of collusion. The mega-contract isn’t going away anytime soon. Despite future reluctance to meet the demands of players and agents to attain these large salaries, there will likely be enough money, or a few teams with large enough revenue streams, for at least one of these deals to be made each offseason. As fewer and fewer star players seem to reach free agency due to long-term commitments with their existing franchise (like Votto, Troy Tulowitzki, and Carlos Gonzalez), the stars that do reach free agency will likely continue to get the lucrative deals.

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Top Non-Tendered Talent

WilsonNovember 30 is the last day to offer a contract to arbitration-eligible players, and if team’s are uninterested in doing so, they are non-tendered, allowing those players to hit free agency. There are several names that hit free agency yesterday that could help out your favorite team. Let’s take a look at those top, new free agents.

Brian Wilson, RHP

Wilson is just 30 years old and was one of the top closers in baseball from 2008 to 2011, compiling 163 saves over four seasons. In late 2011, Wilson started having elbow issues, then he made just two appearances in 2012 due to Tommy John surgery. He is expected to be ready to go in spring training, but he may have to settle for a one-year deal, similar to Ryan Madson with the Angels, to show he is fully recovered and capable of regaining form.

Jair Jurrjens, RHP

Jurrjens will only be 27 years old on Opening Day in 2013 and he already has 53 wins and 750 innings under his belt; however, it’s the wins and innings he doesn’t have that are the concern with him. He made $5.5 million in 2012 in his second year of arbitration, and the Braves let him go after they were unable to trade him, and with good reason, his shoulder was a great concern. Jurrjens shoulder issues could be overblown, as they started in August of 2007, but then in 2008 and 2009, Jurrjens went 27-20 with a 3.10 ERA over 403.1 innings. He had issues with tightness and inflammation, once again, in February of 2010, but it was his knee issues, which needed surgery, that caused him to miss starts. Jurrjens rebounded to a 13-6 record and 2.96 ERA in 2011, only to miss more starts due to his knee. If Jurrjens can prove to teams that it is his knee that was of concern and not his shoulder, I don’t see why he shouldn’t have a line of teams knocking at his door while you’re reading this.

Rafael Perez, LHP

He’s breathing and he is left-handed, but more than that, Perez has been a very, very effective relief pitcher for a number of seasons. Perez had one really, really bad season, 2009, when he posted a 7.31 ERA over 54 games and 48 innings, but if you look at the rest of his career, Perez has a 3.01 ERA over 284 games and 281 innings. He missed 146 games due to a shoulder ailment, which he didn’t have surgery on until late September, so team’s may be hesitant to guarantee him much. An incentive-laden, one-year contract would be a good way for the lefty to get a job quickly.

reynoldsMark Reynolds, 1B/3B

Reynolds is an American League team’s dream. He can handle third base or first base, but not really play either well, while providing an incredible amount of right-handed power to the lineup. He also will frustrate teams with his tremendous number of strikeouts, while posting a batting average near the Mendoza-line every season. He is what he is, as Reynolds has been this player since 2007. Reynolds doesn’t even turn 30 years old unti August of 2013 and he has compiled 181 home runs and a career .807 OPS in his six seasons. He has also struck out in 32.6 percent of his career at-bats. With his ability to sit in the middle of an order to provide power as a first baseman, third baseman, or designated hitter, Reynolds will interest several clubs.

Brandon Snyder, 1B/OF

Snyder was non-tendered by the Texas Rangers and the 26-year-old could be very valuable for the right team. He just turned 26 and Snyder only has 98 career at-bats, but he posted a .275/.331/.431 line over six seasons in the minors. He has more doubles power than home run power, having hit 14 in 2011 in Triple-A as a career high, but he would be a solid, affordable platoon partner for a club.

Geovany Soto, Catcher

Soto will be turning 30 in January and he will be very popular in coming days. After hitting .264/.370/.466 with 73 doubles and 51 home runs from 2008 to 2010, Soto has hit just .214/.297/.381 with 38 doubles and 28 home runs the last two seasons. Soto had shoulder surgery in September of 2010, so the fall in productivity could be related. Soto wasn’t ever above average behind the plate, but teams seem to be picking on his arm the last two seasons, stealing 150 bases while getting caught just 57 times (28 percent, which is league average). He’ll have plenty of suitors as a young, power hitting catcher.

Mike Pelfrey, RHP

Pelfrey will be 29 years old in January and he is about as average as it gets as a starting pitcher. He’s had a couple of seasons with an ERA around 3.70 and a few hovering around 5.00. Pelfrey has statistical averages that put him at around 200 innings per season with an ERA of 4.36, so he would be a solid filler in the back-end of a rotation. The 6’7″ right-hander had Tommy John surgery in May of 2012, so he will probably be getting an incentive-based, one-year contract to show that he has recovered. He may not be ready for the start of the season due to the 12 to 18 month recovery time for the elbow surgery.

Tom Gorzelanny, LHP

After posting a 2.88 ERA for the Nationals in 2012, it was surprising to see Gorzelanny’s name on the non-tender list. It is possible that his experience as a starter in his career would drive up his arbitration costs, although he made just one start in 2012, after making $3 million for Washington last season. Gorzelanny has proven himself as a valuable left-handed reliever, posting a 3.32 ERA over 82 games and 114 innings, with a 1.25 WHIP. When you look at those numbers, you can see why teams would jump at the opportunity to sign the 30-year-old southpaw; however, if a team is looking at him as a starter, they may want to look at his 4.61 ERA over 111 starts and 621 innings, with a 1.48 WHIP. Gorzelanny would do better for himself if he locks himself in as a solid, left-handed relief pitcher, and teams should only view him as such.

Ben Francisco, OF

Francisco is a platoon outfielder, and he has been that player for his entire career to every team that he has played for, outside of the Cleveland Indians. Unfortunately, he really isn’t a platoon player. Francisco has a career .260/.324/.430 line against right-handers and a .252/.329/.414 line against left-handers. Francisco, at 31, is nothing more than a 25th man. He can play left and right field and he can provide a little bit of pop, a little bit of speed, and a little bit of patience at the plate. He keeps getting chances and he keeps getting platoon roles, but I’m not sure that he is any better than what some minor league free agent types could do if given around 200 at-bats per season. Teams may still be interested in him, though, for whatever reason.

StewartIan Stewart, 3B

Stewart turns just 28 in April, which is shocking considering it feels like he has been around forever, having received his first taste of the majors in 2007. Stewart was once one of the most promising, having been rated as high as No. 4 by Baseball America, prior to the 2005 season. That sort of thing happens when a guy hits 30 home runs as a 19-year-old in Low-A. Stewart has even had some success at the big league level, as he hit 53 home runs and drove in 172 runs between 2008 and 2010. Stewart’s .246/.346/.454 line over that time wasn’t fantastic, but the Rockies gave up on him in 2011 after he posted a .156/.243/.221 line. He didn’t do much better for the Chicago Cubs in 2012, but he had wrist issues, which he had surgery on in July of 2012, which dated back to August of 2011, when Stewart was in Triple-A with the Rockies. Still very young, a healthy Stewart deserves another opportunity. He has proven capable of hitting major league pitching in the past and he will be very affordable. It’s unfortunate that he may become a career backup due to one miserable season and some injuries.

2012 MLB Free Agents Rankings

This is the second installment of this list (pitchers found here: http://thebaseballhaven.wordpress.com/2011/08/24/2012-free-agent-class-starting-pitchers/ and hitters found here: http://thebaseballhaven.wordpress.com/2011/08/24/2012-free-agent-class-hitters/), as the first didn’t have the top names for the pure fact that you probably knew who they were.  The player’s position and age as of Opening Day 2012 are shown.  There are also players with opt-out clauses or options on this list, those players have an asterick next to their name (*), as well as details of the contract.

1. Albert Pujols, 1B, 32

He is the prize.  Chicago and St. Louis are really the only places he could end up.

2. Prince Fielder, 1B, 27

Probably the wisest of the long-term contracts that will be handed out this offseason due to his age, Fielder will be sought after by San Francisco, the Angels, and the Cubs (if they lose out on Fielder).

3. C.C. Sabathia, LHP, 31* (opt-out clause after 2011)

If he opts-out, Sabathia would get more than the $25 million annually that Cliff Lee received from Philadelphia last offseason.  He will be courted by many, but may just be using it as leverage to get a contract that extends to when he is ready to hang it up.

4. Jose Reyes, SS, 28

The ultimate risk-reward of the 2012 class.  If Reyes plays 162 games in a season and he doesn’t lose his tools due to minor injuries, he is gold.  If he gets hurt and loses his tools over a 7-year deal, it could be the worst $100 million deal this side of Michael Vick.  He will probably stay with the Mets but he could receive offers from Boston or  Philadelphia (if Rollins leaves).

5. C.J. Wilson, LHP, 31

His arm doesn’t have the mileage and his results speak for themselves.  He will be a very rich man after this Winter.  The Mets, Red Sox, Yankees, Tigers, Rangers, Marlins and Braves could all be looking his way.

6. Chris Carpenter, RHP, 36* (Team option, $15 million or $1 million buyout)

Carpenter earned a lot of respect after his dominant game five start in the NLDS against Philadelphia.  His contract is one that could be on the chopping block in St. Louis if they need to make sure they are paying Albert Pujols.  He may sign for less money if the Cards buy him out, but he would be a great veteran on a two or three year deal for a contender if he does move on.

7. Roy Oswalt, RHP, 34* (Mutual option, $16 million or $2 million buyout)

His option is steep and his arm and production aren’t the same as they once were.  He could call it quits if he wants to, but he could get offers from Atlanta and Washington to be a leader for their young rotations.

8. Mark Buehrle, LHP, 33

Old-reliable.  The man shows up and does a fine job every season.  He could be headed for a decline, but he is an innings-eating leader for wherever he lands.  St. Louis or a reunion with Ozzie Guillen with the Marlins is the call here.

9. Jimmy Rollins, SS, 33

His greatness is overlooked due to the number of great shortstops he has played with during his tenure in Philadelphia (Reyes, ARod, Jeter, etc.).  Rollins may end up finishing his career where it started, but he could also look to cash in one last time.  He is coming off of another solid season, still showing solid speed and the ability to drive the ball.

10. Nick Swisher, OF, 31* (Team option, $10.25 million or $1 million buyout)

Swisher is highly undervalued and would be a nice addition to several clubs.  New York will keep him at the $10.25 million and could lock him up in an extension prior to next offseason.  He has played in 150 each of the last three seasons while averaging 32 2B, 27 HR, 85 RBI and an .854 OPS since landing in New York in 2009.

THE REST:

11. Heath Bell, RHP, 34

12. David Ortiz, 1B/DH, 36

13. Edwin Jackson, RHP, 28

14. Ryan Dempster, RHP, 34* (Player option, $14 million)

15. Carlos Beltran, OF, 34

16. Grady Sizemore, OF, 29* (Team option, $8.5 million, $500K buyout)

17. Aramis Ramirez, 3B, 33* (Team option, $16 million, $2 million buyout)

18. Adam Wainwright, RHP, 30* (Options vested due to 2010 Cy Young, but Team had the ability to void if he had an arm injury and finished 2011 on the DL – he had Tommy John and missed the 2011 season)

19. Jose Valverde, RHP, 34* (Team option, $9 million)

20. Francisco Rodriguez, RHP, 30* (Team option, $17.5 million, $3.5 million buyout)

21. Jonathan Papelbon, RHP, 31

22. Ryan Madson, RHP, 31

23. Erik Bedard, LHP, 33

24. Jonathan Broxton, RHP, 27

25. Joel Pineiro, RHP, 33

26. Josh Willingham, OF, 33

27. Jason Kubel, OF, 29

28. Aaron Hill, 2B, 30

29. Kelly Johnson, 2B, 31

30. Rafael Furcal, SS, 34* (Team option, $12 million)

31. Michael Cuddyer, 1B/2B/OF, 33

32. David DeJesus, OF, 32

33. Coco Crisp, OF, 32

34. Carlos Pena, 1B, 33

35. Cody Ross, OF, 31

36. Jason Marquis, RHP, 33

37. J.D. Drew, OF, 36

38. Alex Gonzalez, SS, 35

39. Bartolo Colon, RHP, 38

40. Ryan Ludwick, OF, 33

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