A Look Back at Last Year’s Extensions

While a few stray free agents remain unsigned, the upcoming baseball news landscape is going to be dominated by new contracts for players already in camp for spring training. Clayton Kershaw, Freddie Freeman, Michael Brantley, and Julio Teheran have kicked off the start of the 2014 extension season, but they won’t be the last players to sign long term deals with their current clubs. Between November of 2012 and June of 2013, 12 players re-signed with their organizations for deals that last at least five years, and if that trend holds, we’re likely to see another wave of long term extensions over the next few months.

What can this year’s crop of potential extendees learn from the players who signed a year ago? Let’s take a look at those 12 deals and see how they’ve worked out for both the team and the player. For reference, all total listed years and dollars are from the point of the signing through the expiration of the extension, and in some cases, include years already covered by a previous contract.

The Win-Wins:

Buster Posey: 9 years, $167 million
Justin Verlander: 7 years, $180 million
Felix Hernandez: 7 years, $175 million
Evan Longoria: 10 years, $135 million

Four of the game’s elite players cashed in with big new contracts last winter, and in each case, it’s hard to argue that either side has many regrets. Posey and Verlander took small steps backwards in performance from 2012, but both were still elite players, and it’s unlikely that either would have signed for fewer dollars this winter — one year closer to free agency — than they did a year ago. Posey is in the same service time class as Freeman — who landed $135 million over eight years — so Posey’s $159 million over the next eight might seem a little light in comparison, but there probably wouldn’t be a huge gap between that number and what he’d be able to negotiate this winter.

Likewise, Verlander might already be showing some signs of aging, but given that he’d only be 12 months from the free agent market, it’s hard to see the Tigers getting him for less than the six years and $160 million he has remaining. Hernandez and Longoria were their usual excellent selves and perhaps could have gotten a little more by waiting an extra year and generating more leverage, but neither plays for a large revenue team that could have pushed their annual salaries much higher, and both likely took a bit of a discount to remain with their original organizations. Overall, I think all parties involved in these deals are likely content with the agreements they struck last year.

Left Money on the Table:

David Wright: 8 years, $138 million
Adam Wainwright: 5 years, $98 million
Paul Goldschmidt: 5 years, $32 million
Chris Sale: 5 years, $32 million
Allen Craig: 5 years, $31 million

Regret probably isn’t the right word for a player who signed up for somewhere between $31 and $138 million in guaranteed income, but in each of these five cases, the player could have made substantially more money by simply waiting one additional year in order to negotiate. Wright and Wainwright both would have been free agents, with Wright pushing Robinson Cano as the best available player and Wainwright clearly being the best arm on the market. Wright likely would have been able to exceed $200 million as a free agent, and Wainwright likely could have argued for more than the $150 million Zack Greinke got from the Dodgers last winter. Both likely settled for between 60% to 70% of their open market value.

And then there’s Goldschmidt, who probably cost himself between $50 and $100 million in guaranteed money by signing last winter. With a high finish in the MVP running and establishing himself as one of the game’s best young sluggers, Goldschmidt would have the leverage to command a nine figure deal right now, even still four years away from free agency. Along with Andrew McCutchen, Goldschmidt’s deal is probably the most team friendly extension signed in recent years, given his current value on the market.

Sale, likewise, could have commanded a much higher price by waiting another year. For a pitcher with a history of some arm problems, he certainly had reasons to sign early and avoid the chance of blowing out his arm before his first big payday, but given that he did stay healthy, Sale’s deal now pales in comparison to what he would get if shopping for an extension right now. As for Allen Craig, his age and injury history would always work against him landing a mega contract, but after another year as one of the game’s best run producers, Craig would certainly be able to ask for more than the $31 million he was guaranteed a year ago.

In Hindsight…

Elvis Andrus: 10 years, $131 million
Matt Harrison: 5 years, $55 million
Anthony Rizzo: 7 years, $41 million

Because we’re using information gathered over the last 12 months — information that the teams simply couldn’t have had access to at the time the deals were agreed to — it’s easy for sit back and say that these deals don’t look so hot, when in reality, all of them had a rational basis at the time.

Harrison got hurt, which pitchers do sometimes, but his deal would be a bargain if he had stayed healthy. The White Sox, Mariners, and Tigers gambled on pitchers and came out even or ahead, but the Rangers drew the short straw and saw their pitcher hit the disabled list. This is the risk you take with signing arms to long term contracts, and it doesn’t mean the Rangers made a mistake by doing the deal. It’s pretty clear that they could have gotten him for less now had they waited an additional year, however, or at least not had such a large commitment riding on his ability to rehab and come back at full strength.

Andrus didn’t get hurt, but he hit like he was; after racking up 43 extra base hits as a 23 year old, he fell to just 25 last year, and his offensive regression ate up a lot of his value. Andrus’ glove and baserunning stil made him a useful player, but he probably wouldn’t be able to ask for a $125 million extension this winter coming off a year where he hit .278/.328/.331 while playing in a ballpark that inflates offense. If any of the long term deals look regrettable in retrospect, it’s probably this one, especially since the Rangers gave him a pair of opt-outs so that he can earn even more money if he has a breakout season and becomes the star they hope he can be.

As for Rizzo, I think the Cubs actually would still do this deal even with the benefit of hindsight, but it’s tough to call this a win-win when Rizzo regressed at the plate and was a below average first baseman. The price was low enough that the Cubs still aren’t really overpaying him, and he probably wouldn’t have cost much less this winter, but he certainly didn’t have the season that was hoped for. If he doesn’t have a big breakout this year, the Cubs might end up with a long term commitment to a mediocrity, rather than the future star that they thought they were committing to.

Overall, though, you could make a case that teams would sign 10 of the 12 long term deals again today if given the chance, a pretty high success rate for deals of this magnitude. And there’s no question that the overall net of these 12 deals saved money for the teams, as any amount that one could argue Andrus and Harrison are overpaid by is more than dwarfed by the tremendous bargains in Wright, Wainwright, Goldschmidt, Sale, and Craig. These long term, pre-free agent deals have been very good for the teams, so expect prices to rise in response this spring, as more teams look to get in on these deals and agents push back to get deals that balance risk and reward a little more evenly.