Major League Extensions

There’s a new fad taking baseball by storm; buy early and you will save money.  It’s the new rage with young players, and it’s going to leave teams like the Yankees and Mets, who thrive on the free agent market, standing there with their pockets bulging but nowhere to spend.

Typically with arbitration and free agency, teams can control their players until about age 25-29 depending on what age they came to the MLB.  This is advantageous, because players are unable to leave their drafting team until this period ends or the GM moves the player elsewhere.  So now they hit the open market in their late 20’s; and they’re such a good player that teams are falling over themselves to pay.  10 year contracts worth upwards of 25 million dollars are becoming the norm, not an exception.  Now, the new team has locked up that superstar.  Towards the end of their contract they’ll be an “old” player, aged 35 and up.  Their dwindling stats won’t be the least bit representative of their salary.  That’s the risk you take in free agency, and that’s pretty much what it takes to land a superstar.

One alternative is long term extensions.  Rather than try and pray for the hometown discount, you lock up a player when he’s young.  Would you rather guarantee less than 16 million a year to Troy Tulowitzki until age 35, or would you rather land Carl Crawford on the open market for 20 million dollars until the same age?  Tulo is just one example of the offseason; Ryan Braun is the latest and Carlos Gonzales is another.  If you ask me, the strategy is brilliant.

With the current “extend for a few years and lose them to free agency” you have players often changing uniforms.  Then you have all the hype around the negotiations and free agency, you have dwindling stars still locked in for years after their playing days should have ended, and you have angry fans tossing monopoly money at players who left their team.

Let’s face it, some teams can afford more than others.  The Yankees, BoSox, Mets, Tigers, Phillies, Cubs – these are the teams that can go into free agency and drop a lot of money on a player they want.  Tampa fans who actually had half a clue all realized that Crawford would not take the hometown discount and would follow the money elsewhere.  Be honest with yourself, wouldn’t you do the same?  Would you honestly love 15 thousand fans a game in Tampa so much you’d leave 7 million dollars a year on the table?  And there’s the built in hazard for the team’s signing them.  Carl Crawford is in month 1 of a 7 year 142 million dollar contract and he’s got an OBP of .186 and a slugging percentage of .365.  Those numbers are horrible, and the Boston top brass might be wondering at least a tiny bit whether they’ll ever see the guy they thought they had signed.

Crawford isn’t exactly the worst contract ever.  If you think “great starting pitcher, I sure hope my team signs him” when you hear the name “Barry Zito” you must be stuck in 2006 when he was making every start and had an ERA of 3.55.  Now, he’s a punchline who can’t win more than 10 or 11 games and is currently a trip to the disabled list.  Other notably bad contracts include Mike Hampton (121 million over 8 years), Jason Giambi (120 million over 7 years) and Carlos Beltran (119 million over 7 years).  In the past few seasons, free agent money has gotten even more ridiculous than that.  3 players this offseason got 100 million dollar contracts, and Jayson Werth is making 4 million more than Albert Pujols.  Give Tulo, Braun, and Cargo an MVP each, and see what they’d fetch on the open market in 5 years.

It’s even a risk signing a guy to a longish term extension.  Look at the Cardinals and the soon to be 32 year old Albert Pujols.  Do you sign him for 30 million until 39 or 41, or do you let another team take on your prized player and all his risks and benefits?  The Twins faced a similar issue with Joe Mauer, and gave the 28 year old 23 million a year for the next 7 years.  Already back on the DL, it’s looking like early trouble for that contract.

What they should have done is probably the same thing as the Rockies and Brewers have just done.  Sign your ‘can’t miss’ athletes to some crazy long contracts and bank on the fact they can be great players until then.  If they fall short at the end, it will cost you 15 million a year until they’re 35 instead of 24 million a year to age 40. It keeps the fans happy because people are more inclined to buy a jersey of a player who will be there for the next 10 years.  It allows your franchise to play the hero, and not lose your players to free agency.  Most importantly, it keeps together a group of young players who you can build around, and win a championship around.

What’s the risk involved?  Carlos Gonzales is only 25 years old but looks to be a player who can be a 30/30/.300 guy.  He already has a gold glove and placed third in MVP.  He also has only 1 full season under his belt, and his 2 part seasons before that were less than impressive.  Infield Chatter gave rave reviews to Troy Tulowitzki last week as did SI, ESPN, etc, but there’s still a risk there.  A take out slide, a concussion, or just some bad luck can really derail a career.  Ryan Braun is the latest in this group of young players with big money.  Today he was given an extension for 145 million dollars until 2020.  Will the ROY and perennial MVP candidate put up these numbers until he’s 37 years old?  Will Milwaukee still pay to win around him?  It remains to be seen.

Looking ahead, these moves for lower money but longer years seem to be very smart, and have the opportunity to make their GM’s look brilliant.  None of this is guaranteed however, and the game is still and always will be played on the field.

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This post was written by Philip Gardner who has written 206 posts on Infield Chatter.

3 Responses “Major League Extensions”

  1. grafe April 22, 2011 3:41 pm #

    The Giambi contract worked out pretty well for them, he got hurt a couple years but was still putting up high obps and high slugging at the end of it. Beltran’s another story but I don’t think it deserves to be anywhere near something such as the Zito or Hampton contracts, he put up three fantastic years for them and when healthy the past couple years he’s still been pretty good. Not the best contract but better than Zito where the best they can hope for is that he’s an average pitcher or Hampton where he only had one or two decent years and spent the rest of it either hurt or pitching terribly.

  2. Phil April 22, 2011 3:53 pm #

    Giambi definitely had some mixed success for the Yankees, but overall he didn’t live up to the price tag they paid for the guy that they signed. His time with the Yankees compared with the A’s, his average was about 50 points lower, games played were down, and he still had some downright miserable seasons. He sort of changed his approach in NY and became homer happy. Whatever the reasons for it were, NYY Giambi was not as good of a player as Oakland Giambi.

    As for the other guys, granted there are varying degrees of bad contracts, but when you’re dealing with players you commit that much money to (over 100 million dollars) there’s a certain expectation of performance. Most contracts that large don’t get players who live up to them, and i think a lot of that has to do with the age of these guys when they sign them. Players under 30 are far more consistent than ones over 30, and yet 30 is when many of these guys get the big money.

    Thanks for your comments

  3. Phil April 22, 2011 4:03 pm #

    Also, it’s important to mention that the Yankees are a team that’s able to absorb a bad contract like that far more easily than other teams. Even compared to the Mets. That helped take some of the sting away from the Giambi deal. With a lot of teams, Giambi’s value to the team could have wrecked their chances rather than made them