About a year ago, Sam Miller speculated about the future of contract extensions, which had by then been embraced by big-market teams after years of mostly being the province of small-market clubs. “When that happens,” Sam wrote, “the market inefficiency might as well be gone.” To regain an edge, teams would have to get more creative with the kind of extensions they offered.
One of Sam’s suggestions was that we might start to see much longer extensions—contracts that would pay a player for 15 years or more. That hasn’t happened yet. However, Sam made two more predictions that have come to pass. First, he suggested that a team might offer a player an extension before his big-league debut, which has since occurred in the cases of George Springer and the Astros and Gregory Polanco and the Pirates. And second, he proposed that teams that lock up more marginal players than had previously been considered extendable. “Of the 20 players who have signed extensions longer than four years since the start of last season, all are, if not stars, something close to it,” Sam wrote. Since then, non-stars Jedd Gyorko, Yan Gomes (debatable), and Jose Quintana have signed five-year deals, not to mention Michael Brantley and Sean Doolittle, who’ve inked four-year pacts.
As Sam noted, getting adventurous with extensions could make a team the subject of some criticism. But that criticism could be a sign that it’s doing something smart.
“But that’s so risky!” they’ll say, just like they said about John Hart and the Indians in the 1990s. But that’s the point: the ability to carry risk is an asset that a team can use or waste. The more risk there is, the better their potential position.
In light of recent developments, it might be time to add another candidate to Sam’s list of potential extension innovations. The cresting wave of contract extensions has become one of the biggest stories in baseball. Even more momentous: the rise in the rate of Tommy John surgeries. I smell a crossover.
Earlier this week, Tom Verducci made the case that because of the damage done to immature arms by rising velocities and heavy amateur workloads, torn ulnar collateral ligaments have increasingly become a young man’s affliction:
What used to be an injury of attrition (Tommy John was 32 and had thrown more than 2,000 major league innings before his groundbreaking surgery) has become an injury of too much too soon — too much velocity and too much stress. The average age of the 22 major league pitchers to need Tommy John surgery this year is just 23.4 years old.
That average age puts today’s torn UCL sufferers right in the contract extension sweet spot. While the Rangers’ Martin Perez, who appears likely to be the next confirmed Tommy John case, signed a four-year deal with Texas last November, quite a few recent victims—Jose Fernandez, Jarrod Parker, Patrick Corbin, and many more—have yet to land their first multi-year commitment. If they hadn’t hurt their elbows, we (and their teams) would be talking about them as extension candidates. The lengthy rest and rehab regimen they’re facing (or have already begun) would seem to put that speculation and discussion on hold until they’re back on the mound in a major-league game. But maybe the long road back is exactly the right time for their teams to talk contract.
The commonly cited recovery rate for Tommy John patients is roughly 85 percent, although as Glenn Fleisig noted at this year’s SABR Analytics Conference , the percentage among major-league pitchers may be somewhat lower—perhaps as low as three in four. This creates an opportunity for teams, who are better equipped to absorb the risk that a pitcher never comes back at close to full strength than the pitcher himself is. The team’s player portfolio is diversified, so it can survive, and even thrive, if one asset sinks. The player’s financial security, though, is tied to a single stock.
We’ve seen many players sign extensions for less than they might have made otherwise, knowing that a major injury could wipe away their future earnings. How amenable might a pitcher be, then, to taking a life-changingly-large guaranteed payout after such an injury has occurred? He’d be selling himself low, but he’d also be avoiding the worst-case scenario that someone like Daniel Hudson (whose first TJ didn’t take) now faces: washing out without ever making much more than the major-league minimum. (Remember Ryan Madson? And Joel Zumaya? And Joey Devine? And Brandon Beachy and Cory Luebke and Kris Medlen and…)
There are some proto-precedents for this sort of signing, and not just the one-year deals for guys like Gavin Floyd and Mike Pelfrey, who were coming off of Tommy John surgery but expected to pitch most of the season. Teams have inked pitchers who’ve recently undergone Tommy John to multi-year deals, knowing that the first year might be a complete loss but banking on getting a positive contribution at a below-market rate in year two. The Yankees pursued this strategy with Jon Lieber and David Aardsma, the Reds with Jose Arredondo, the Rangers with Joakim Soria, and so on. It’s far from a perfect comparison—these players were signed as free agents to fairly short-term deals—but the principle is similar: buy low on a guy who’s hurt, stick with him through the rehab process, and hope to more than make your money back when he (hopefully) returns to play. In a sense, it’s not that different from taking an amateur who has TJ on his to-do list with a first-round pick, as the Nationals did with Lucas Giolito in 2012 and as some other teams might do with draft prospects Jeff Hoffman and/or Erick Fedde this season.
The crucial question, of course, is when to approach the player. Given that early extensions have earned a reputation for favoring the team (thanks, Evan Longoria!), even though that’s not necessarily true to the same extent that it once was, the club would have to take great care to avoid the appearance of profiting from the player’s misfortune. Instead, the general manager would have to try to convey a more positive message: We have so much faith in your future that we don’t need to wait to see what happens—we want to make this commitment now. That’s no more manipulative than making a low-ball offer to a top prospect who’s mashing in Triple-A.
Clearly, the club wouldn’t want to present the player with the paperwork while he’s on the operating table or in the recovery room. Nor would it want to wait too long; as Corey Dawkins explained on Tuesday’s episode of Effectively Wild, TJ rehabbers typically start to do some small amount of throwing 4-5 months after the operation, progressing from flat ground to delivering from the mound at the 5-6-month mark. At that point, it’s easier to envision a positive outcome, and the pitcher’s confidence starts to swell.
Before that, though, there are always dark days. For the first two or three weeks after the surgery, the pitcher’s arm is immobilized. “It’s not until almost 2 or 2 ½ months in that they start regaining just the full motion of their elbow,” Dawkins said. During the weeks when he can’t even straighten his arm, even the most self-assured athlete goes through the occasional blue period when he wonders whether his talent will return. Any capable agent would advise his client not to panic and sign something regrettable at a moment of weakness, but at certain points in the rehab process, even a “modest” eight-figure offer might start to sound appealing.
The worst-case scenario for the club—assuming that the player isn’t permanently incapacitated—is that the GM does a bad job of broaching the subject of an extension, offending the injured pitcher (and perhaps other players, on the injured pitcher’s behalf) and convincing him to demand a trade or to depart via free agency. The best-case scenario, though, might justify the risk. In this feeling the team plays the percentages and wins, as the player makes a complete recovery. Even better, he comes out of the ordeal with the belief that the team stuck by him through a tough time. And best of all, he’s locked up at a relatively low rate, even though he’s closer to arbitration and/or free agency after accruing service time during his days on the DL. Then the team can kick back and enjoy the savings during the five-year “honeymoon period” in which the pitcher is supposedly less likely to suffer a recurrence of the same injury.
Ligament replacement surgery is a lengthy interruption, but it’s rarely an end, and in some cases, it could be an opportunity. With more and more young pitchers of extension-signing age going under the knife, fewer and fewer impact players available on the open market, and a lot of smart people working to make further refinements to the Tommy John surgery/rehab process, it might be only a matter of time until a team tries to lock up a player who’s recently suffered an injury that once would have ended his career.
Thanks to Dan Brooks for asking the question that inspired this article. Sam Miller and I discussed the same subject (among other things) on today’s episode of Effectively Wild.
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It takes a lot of gumption for a player to reject a reasonable deal. It makes sense that these contracts are proliferating.