April 21, 2011
Transaction Analysis Blog
The Brewers Extend Ryan Braun
Despite already having Braun under contract through the 2015 season, the Brewers have ensured he will not be testing the free agent markets anytime this decade by signing their star left fielder to an extension through the 2020 season. The deal is worth $105 million according to Ken Rosenthal, and is the third extension handed out by Milwaukee over the last seven months (along with Corey Hart and Rickie Weeks)
The Brewers have spent between $80 and $90 million on player salaries over the last three seasons, so giving any player a deal that calls for an annual average value exceeding $20 million is jarring. In reality, the contract is broken down in a way so that Braun will not bring home $20 million each season. Instead, as Buster Olney tweets, Braun will receive a $10 million signing bonus with some of the remaining salary deferred and an additional $4 million placed aside as a buyout on a mutual option for the 2021 season.
There is a lot to digest with Braun’s extension. The time value of money comes into play, as $105 million from 2016-to-2020 is different than $105 million from 2010-to-2015. Even then, the Brewers are assuming a huge risk by giving Braun this contract nearly five seasons before his current one expires. It is unclear what the Brewers gain here—besides the entirety of the risk—as Braun does not appear to be taking a discount in exchange for security.
The points in favor of extending Braun are that Doug Melvin and the front office know his conditioning habits and medical records better than any outsider could and that they have a better grasp on the Brewers revenue stream and potential for growth. Still, giving any player an extension of this magnitude is questionable.
And the real question to answer is why now. Whether Braun appears worth the contract in 2011 or not is almost irrelevant. Braun is a good player—a real good player, even—but a high talent level in 2011 does not ensure or remotely guarantee a high talent level in 2016 or 2018. Signing any player—really, just about any player—to a contract until he is 37-years-old is a gamble, and doing so when the player signs it at age 27 only magnifies the probability of doom.
One has to admire the Brewers moxie and commitment to keeping their star players in town, but at the same time, one has to wonder if this—like the Troy Tulowitzki extension—will appear overzealous before the new deal even kicks in.