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August 2, 2013

Pebble Hunting

Are Early Extensions Still Club Friendly?

by Sam Miller

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It’s not always easy finding something to say about a fresh new contract extension. Most of them appear to be basically club-friendly, and follow a template set by previous players. Furthermore, they generally cover so much time that it’s even more impossible than usual to predict just what the player is likely to do that far out, and just what the team is likely to need that far out. Shoot, a lot of times they don’t even kick in until a time far enough into the future that our predictive powers go poof.

But we’re a few years into the extension era, and a lot of these moves are starting to have actual histories to judge. At the very least, we can look at the extensions signed two years ago and decide anew whether the teams should be happy or disappointed with the extensions they’ve signed. We can see whether these turn out as universally club-friendly as I tend to expect.

From Nov. 30, 2010 through the end of 2011, nearly 30 pre-free agency players signed extensions that bought out free agency years. Fourteen of those players were signed at least three years before their teams had to act—players with three or fewer years of service time, or players who had already signed extensions that were at least three years from culminating. In each case, the team forfeited their right to wait and see in exchange for future cost certainty and, presumably, a discount. Let’s look at the 14.

Troy Tulowitzki: Seven years, $134 million, signed three years before his previous deal expired.
Since then: In two and a half years, Tulowitzki has produced 8.5 WARP, and he has probably been the best shortstop in baseball in that time. He also hasn’t produced a single season that would crack his career top three, and he has played 61 percent of his team’s games.
Outlook: The injuries are worrisome, but he’s not in danger of losing his hold on the position, and he’s having the best offensive season of his career. Seems likely that he’d get more than seven years and $134 million if he were a free agent this winter, even with the injuries. I’d give him that much, and I don’t even have a place for him to play.
Would they sign him today for what he’s owed? Yes.

Jay Bruce: Six years, $51 million, with a club option, signed four years before free agency.
Since then: Bruce has produced 8.6 WARP, which, you’ve quickly realized, means he has been as valuable as Troy Tulowitzki. He also hasn’t come close to matching the career-high he had set in 2010, but there’s an outside chance that he could top it with two excellent months to end this season.
Outlook: Bruce hasn’t developed into a superstar, but he has been as consistent as anybody: 124, 118, 119, 121 go the OPS+’s since 2010. PECOTA seems him as a 3- or 3.5-win player right now, and he’s young enough that that projection should hold through the life of the deal. If they pick up the 2017 option, he’ll be paid $47 million and should produce 12 to 15 wins. So that’s a bargain. (Furthermore, he was a Super Two, and the Reds have certainly saved money on his first three arbitration years.)
Would they sign him today for what he’s owed? Yes

Carlos Gonzalez: Seven years, $80 million, signed four years before free agency.
Since then: At 7.8 wins, he’s been around Jay Bruce’s level, though his perceived value is likely higher still. This is arguably his best season. He has dealt with multiple injuries, but in small doses.
Outlook: PECOTA sees him as a tick below a three-win player, but other metrics like his defense more and a .324/.379/.620 line on the road this year has quieted accusations that he’s a park creation. He’s 27. He’s owed $63 million over the next four years, and unlike Bruce’s case, the final season isn’t a club option.
Would they sign him today for what he’s owed: Certainly, and factoring in future inflation, it would be justified.

Johnny Cueto: Four years, $27 million, with a club option. Signed three years before free agency.
Since then: Cueto has baseball’s second-best ERA+. He hasn’t been durable, and this year he has made only nine starts, but that’s outweighed by his development into something like an ace.
Outlook: He’s owed $10 million for next year; after that, the Reds can pick up a $10 million option for the next.
Would they sign him today for what he’s owed? Of course.

Billy Butler: Four years, $30 million plus a club option, signed three years before free agency.
Since then: Butler has hit about like Jay Bruce, but without the positional value. Still, it’s more than six WARP through two and a half years.
Outlook: Butler had his best year last year and this year is having his worst year since he was 22. Overall, PECOTA likes him about as much as it likes Bruce and Carlos Gonzalez: a three-win player over the course of a full season. He almost never misses a game, and he’s 27. He’s owed $8 million next year, with a $12.5 million club option for 2015.
Would they sign him today for what he’s owed? Yes.

Alexei Ramirez: Four years, $32.5 million plus a club option, signed three years before free agency. (He signed two contract years before free agency, as he had previously agreed to a one-year deal for 2011.)
Since then: His offense disappeared in 2012 and hasn’t come back. He hit 18 home runs the year before he signed his extension and has one this year. His walk rate is now one of the league’s worst, and after FRAA graded him as a +20 defender in 2010, it rates him below average now.
Outlook: Other metrics disagree about the defense, and PECOTA considers him an average player. He’s about to turn 32, though, and the skills that carry his value—speed and shortstop defense—can fade quickly at that age. He’ll get $29.5 million over the next three years, if the White Sox pick up the $10 million option.
Would they sign him today for what he’s owed? It wouldn’t be the worst deal if they did, but I’d guess not.

Wade Davis: Four years, $10.1 million with three team options, signed five years before free agency.
Since then: 359 innings, 89 ERA+, 2.7 WARP, with almost all the value coming as a reliever. Traded to the Royals.
Outlook: At the least, it’s likely that Davis could be an effective high-leverage reliever, as he was for Tampa Bay in 2012. At the most, it’s likely that Davis won’t be much more that that, though a big boost in his strikeout rate as a starter this year could earn him indefinite chances to stick in that role. PECOTA puts him inches above a replacement player. He’ll make $4.8 million next year, and then the more expensive options kick in (or don’t).
Would they sign him today for what he’s owed? The Rays might not, but certainly some team would give him one year and $4.8 million if he were a free agent, particularly as he comes with no-risk options in case something clicks next year. But Davis would still be under club control, and $4.8 million is more than he would be making at this stage of arbitration.

Clay Buchholz: Four years, $29.9 million plus two options, signed four years before free agency.
Since then: Two good years disrupted by injuries, one bad year in which he stayed on the field. Cumulatively, 2.6 WARP, but punctuated by one of the league’s best first halves this year. Now sidelined by a shoulder injury.
Outlook: The only thing less reliable than a healthy pitcher is an injured pitcher, and Buchholz has by now earned the injury-prone tag. If he could put together 200 innings, PECOTA projects a 3- to 3.5-win player. He is owed $20 million over the next two years, with $13 million options the two seasons after that. He doesn’t need to be on the field much to earn that, but he needs to be on the field some. The options could be bargains or they could be easy passes, but the Red Sox will have plenty more information by then.
Would they sign him today for what he’s owed? This would be his final year of arbitration, so they would have the option of waiting him out and seeing how he recovers. Given his current injuries, and the fact that he would likely make less in arbitration than the $7.7 million he’ll get paid next year, my guess is they wouldn’t.

Trevor Cahill: Four years, $30.5 million, plus two options, signed four years before free agency.
Since then: After his 2011 season (which we rated below replacement level), the A’s traded him (and Craig Breslow and cash) to the Diamondbacks for Jarrod Parker, Ryan Cook, and Collin Cowgill. So, for the A’s, the extension was great. He has produced 1.6 WARP in two and a half seasons since. He has generally been durable, but hasn’t reached a new level or performance.
Outlook: PECOTA likes him for a couple wins a year when healthy. His deal is almost identical to Buchholz’—two more years, $19.7 million, plus the options—but Cahill has almost the opposite profile.
Would they sign him today for what he’s owed? It’s right on the fence. The options might seal the deal.

Ryan Braun: Five years, $105 million, signed five years before his previous deal expired.
Since then: An MVP award; a second-place finish; a PED suspension; shame; frenzy; A-Rod; hot takes; general outrage; etc.
Outlook: Braun’s offense dipped this year before the suspension, though it’s hard to know how much of that is due to hand injuries and how much those hand injuries should concern us when we’re talking about a deal that doesn’t even kick in for two and a half more years. This one’s still awfully hard to evaluate from a performance standpoint, but it’s safe to say thatthe Brewers would prefer to have waited.
Would they sign him today for what he’s owed? No.

Jaime Garcia: Four years, $27.5 million, plus two options, signed four years before free agency.
Since then: Hasn’t come close to matching his rookie season, hasn’t stayed healthy, has consistently pitched like a league-average starter.
Outlook: He’ll miss the rest of this season with shoulder surgery, so no forecast would make sense until we see him throw. Right now, he seems to combine the worst aspect of Cahill’s deal (low upside) and Buchholz’ deal (bad health) at about the same contract structure.
Would they sign him today for what he’s owed? No, especially because Garcia would still be under club control for 2014.

Jose Tabata: Six years, $15 million, plus three options, signed four-plus years before free agency.
Since then: 0.1 WARP, a demotion to Triple-A, no power development, deteriorating base-stealing skills, and merely average defense in the corners.
Outlook: PECOTA sees him as about a one-win player. At that level, the margin of error makes the question of whether he should be getting $1 million or $7 million a bit murky. He’ll get $11.5 million over the next three years, all of which would have been covered by arbitration. There’s still the possibility that he’ll develop into a player who earns the $6 million, $7 million, and $8 million options in his ages 28-30 seasons.
Would they sign him today for what he’s owed? No. It likely cost the Pirates around $5 million to $7 million compared to going year-by-year, assuming they wouldn’t have non-tendered him.

Sergio Santos: Three years, $8.2 million, plus three options, signed four years before free agency.
Since then: The White Sox traded him almost immediately, likely benefiting from his controlled cost. He has thrown nine innings in two seasons since. Currently on the 60-day DL with shoulder inflammation, making $2.8 million in what would have been his first year after arbitration.
Outlook: Not good. Could be good. Might not throw 10 more innings in his life. Who knows. Owed $3.75 million this year, then three club options that are unlikely to be picked up.
Would they sign him today for what he’s owed? No.

Matt Moore: Five years, $14 million, plus three options, signed six years before free agency.
Since then: 300 innings, better than league average, not quite the phenom we might have expected, but 4 WARP. Arm has held together nicely.
Outlook: Better than all but a few young pitchers, if something short of immediate Hall of Famer. Still a year away from what would have been his first arbitration appearance.
Would they sign him today for what he’s owed? Yes, though it’s so early that they wouldn’t have to, which remains sort of the point.

So that’s 14 extensions, six or seven of which I figure still look great and seven or eight that are either on the fence or outright bad contracts. Other than the Braun deal—an outlier in all respects—the downside of the bad ones has been light, a few million bucks here and there, while some of the successes have shown a ton of upside. Excepting the Braun deal, then, we can conclude that these sorts of deals are as variable as any other but skew to the club’s benefit.

During the same time period, a bunch of teams signed players to extensions closer to their free agencies, extensions that are still in effect. Somewhat counterintuitively, these contracts collectively look less attractive today, though some are bargains: Dan Uggla, Ricky Nolasco, Chad Billingsley, Carlos Marmol, Rickie Weeks, Jose Bautista, Adrian Gonzalez, Yunel Escobar, Jered Weaver, Matt Kemp, and John Danks. So, based on this particular 13-month period, we might conclude this: clubs are indeed smart to leverage their superior negotiating position before players have made their first fortune, and these sorts of early extensions are as club-friendly as we all thought—if not automatic wins. We might also conclude that, once clubs lose that leverage, they should be hesitant about giving up their right to wait. Without a clear discount at play, clubs are better off waiting.

Sam Miller is an author of Baseball Prospectus. 
Click here to see Sam's other articles. You can contact Sam by clicking here

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