Early Extensions: Yay or Nay?
For many years, teams would try to retain their star players in free agency. They were often unsuccessful. In more recent years, teams have begun offering their budding stars contract extensions with the intent of buying out free agency years and maintaining more control over their players. This creates pros and cons for both sides.
Early Extension Pros (for Team)
Extra years of control, often through a player's career peak.
Early Extension Pros (for Players)
Guaranteed money in the event of injury or flameout.
The mentality of being "set for life" financially at a young age.
Less overall pressure to perform.
Early Extension Cons (for Team)
Playing more money early
Not always getting a team discount for FA years
Early Extension Cons (for Players)
Extensions typically span into their 30s, essentially reducing the chance of a major FA bidding war
In the Cubs case, we've recently seen a bit of both situations.
Starlin Castro: Signed a 7 year $60m contract in August 2012. His salary went from $.5m to $5 million per year, essentially a 10x raise. As a 23 year old, that's a lot of money. Even though he was in the big leagues for a few years already.
Anthony Rizzo: Signed a 7 year $41m contract in May of 2013. As a guy who made half a million the year before, he got a modest bump in 2015, before making $5, $5m, $7m, $7m, and $11m the last few full seasons. At $5.85m AAV, he got a similar nearly 11x multiplier raise.
We haven't seen that with Kris Bryant and Javy Baez. in those player's cases, the cubs went year to year, avoiding arbitration.
Kris Bryant: With Scott Boras as his client, it's long been talked that he would be going to free agency to seek a mega deal. The Cubs have signed him to annual deals to avoid arbitration, and he's about to make $52m in 7 big league seasons ($7.42m AAV). There is speculation that he was going to seek 10/$300+ in free agency. What he gets now after a few injury plagued uneven years... I'm not sure.
Javy Baez: Another player there were rumors of locking him up to an extension. So far he's made $22.5m over 7 seasons ($3.2m AAV). I'm surprised the Cubs didn't lock him up on a similar deal to what Castro got. With Javy's slump tendencies, I can see why they didn't want to risk signing him to a long term deal. That chance was likely before his breakout in 2018, when he nearly won the MVP. Since then, I'm sure the numbers have gone up, even though he hasn't quite duplicated that 2018 performance.
All of this lends to a question: are extensions worth it? What started with Rizzo and Castro in the early 2010s has exploded into a major trend the last couple of seasons. A lot of star players have been locked up, and there's a certain amount of data we can analyze to determine why teams are going this route.
A big part of it is tied into one player: Albert Pujols. A guy who had a hall of fame career during his 10 years in St. Louis, was signed by the Angels at age 31 to a massive 10 year deal. Since then? His OPS went from 1.037 to .760. He's had a couple decent years in California, but way short of what the hope was. He'll still be a first ballot hall of famer, but that deal really backfired on the Angels. That deal (and among others) have scared teams off from overpaying for players past their prime. Now they are trying to lock players up early, either by signing their homegrown stars or trade then extension.
I have a spreadsheet (you knew it was coming). It is still a bit early to determine how some of these deals will play out, but I'm going to try. This chart calculates the value a team has received in a player's contract, assuming that 1 WAR is worth $8 million on a free agent market. I have 16 players who signed extensions, as well as 4 free agents who signed deals around the same age most players get extended. Finally, there's two projections for Bryant and Baez.
A couple of notes/disclaimers on my chart:
I adjusted players WAR totals over a full 162 game 2020 season, essentially taking the players WAR and giving them all 162 games played. That was easier than trying to calculate pro rated salaries. It might give certain players a certain advantage if hurt during 2020, but I found the difference fairly negligible.
WAR averages are based off WAR accumulated during a players contract. For the four players who haven't played during their deal yes (Lindo, Tatis, Bryant, Baez), I just did average WAR for their career.
There are no adjustments for inflation. This can be a bigger factor for deals like Tatis, as the value of a dollar will be different 14 years from now.
WAR pace is going to be a bit off, as players age. Since it's an an annual average of WAR based of their contract years so far, it's going to be higher for guys like Mookie Betts, who put up 3 WAR in the 60 game 2020 season. He's not going to be putting up the same 8 WAR at age 35+, during the last years of his deal. So it will look like a great deal for now. It's just too soon to project how much WAR some of these players will be worth 5-10 years from now with any kind of accuracy. I'll likely update this chart on an annual basis.
WAR/Contract shows you how a current players WAR pacing compares to if they will outperform their contract or not.
Kris Bryant and Javy Baez's deals are based off spottrac estimates. This will obviously change depending on what kind of 2021 they have.
So onto my observations:
Good for the Braves. Acuna and Freeman's deals both look fantastic for the team.
Yellich's deal looks bad for the Brewers. Granted, he had a bad 2020. However, teams usually sign these deal hoping to get value early on.
A lot of these deals do appear to be worth it. At least so far. Out of the nearly 20 players I looked at, I assumed it would be 50/50. I wasn't even close.
Kris Bryant is a tale of two players. His first 3 years: 6.9 WAR average. Last 3 years? 2.56. Yes, he's been hurt. But this is a critical year for him. If he goes back to being a 6 win player, he's basically the best player on the free agent market. If he is dinged up and doesn't perform, I'm not sure he gets the 10/$300 that spotrac is projecting. A bad year could literally cost him $100 million.
Javy Baez is projected to get 6 years and $113m. I can see him getting that. He was basically a 2 win player before becoming a 5 win player in 2018. Last year: 0 WAR. He's projected to be worth about 2.5 this year. If he puts up 4+. I think he gets the projected deal. If he struggles and puts up just over 2, I think that teams look at the soon to be 29 year old and get worried about how his defense might erode into his 30s. He's just a career 101 RC+ player. Average hitters won't get big contracts. Javy is a guy I'm surprised didn't sign an extension before 2018. Kind of a missed opportunity on both sides, in my opinion.
I talked about what Anthony Rizzo deserves last week. I don't consider the 5/$70 offer bad for the team. $100 over 5 years is probably a bit much considering probably decline. I'd settle on 5/$80.
Looking over the entire list, it seems like early extensions are typically worth it. At least so fan. The only player on the list who's completed his contract was Castro.