larry Stone: Contract Extension Fever grips major league baseball
Saturday , April 21, 2012 - 5:59 PM
SEATTLE -- It's hard not to notice a hot new trend in baseball this season, and no, I'm not talking about offense being down (though it is again) or managers saying dumb things (though one, in particular, has again).
I'm referring to Contract Extension Fever, which has been sweeping MLB, impacting rising stars as well as established players just one step away from the free-agent market.
Since Feb. 1, a whopping 27 players have received extensions of two or more years. Sixteen of those deals were for four or more years, topped by the whopper of them all: the 10-year, $225 million extension given Cincinnati's Joey Votto earlier this month.
Every day, it seems, another player is getting locked up long term, from Matt Cain (five years, $112.5 million) to Brandon Phillips (six years, $72.5 million) to Alex Gordon (four years, $37.5 million) to Derek Holland (five years, $28.5 million) to Andrew McCutchen (six years, $51.5 million) to Cameron Maybin (five years, $25 million) to Yadier Molina (five years, $75 million).
Obviously, this is not an entirely new phenomenon. Teams have always wanted to keep their star players from hitting free agency, and the strategy of locking up young players to long-term deals early in their careers was pioneered by John Hart with the Cleveland powerhouse of the mid-1990s.
But it seems to be gaining renewed vigor, for numerous reasons. For one thing, the industry, as a whole, is flourishing, with both revenue and franchise value at an all-time high, as indicated by the Dodgers' sale for a whopping $2.15 billion.
With the advent of blockbuster new television packages (which many teams have reason to believe are waiting for them down the road), a growing number of ballclubs have the wherewithal to grit their teeth and pay the going superstar rate (which grew exponentially this offseason with the deals received by free agents Albert Pujols and Prince Fielder).
And for those small-market teams that don't, well, the calculated gamble of identifying core players and giving them a long-term deal early in their tenure is increasingly enticing. They know they can't compete financially on the back end, so they feel it is worthwhile to take some risk on the front end.
The Rays have taken this approach to the next level, dating back to the nine-year contract (actually, six years plus three club options in 2014, '15 and '16) they gave Evan Longoria after he had played just six games in the big leagues. They have done something similar with pitching prospect Matt Moore, who signed a five-year deal this offseason on the strength of five games in the big leagues.
The Longoria deal has worked out beautifully for them, with the third baseman developing into a superstar and no doubt leaving tens of millions on the table. Longoria would have been eligible for free agency after the 2015 season, set up to be a $20 million-a-year player. But his club option calls for him to make $11 million that year, and $11.5 million in 2016.
In other words, the Rays choose wisely, as did the Mariners when they locked up Felix Hernandez to a five-year, $78 million deal after the 2009 season, and the Cardinals with their first Pujols extension. But not all teams employing this strategy have identified the right players to invest in, which is where the risk comes in (and why they usually insist on putting club options at the tail end of the deal).
Travis Hafner hasn't lived up to his four-year, $57 million extension, and Kerry Wood battled injuries after the Cubs gave him three years and $32.5 million. Those are just two of many examples.
Grady Sizemore is an instructive case. He signed a six-year, $23.45 million extension with the Indians in 2006 after playing 211 games in the majors. When Sizemore developed into an All-Star player, it looked like he had sold himself short. But when injuries short-circuited his career, suddenly the deal was beneficial to him.
Agent Brian Goldberg, who represents San Diego's Maybin, says a lot of factors goes into a decision to sign a long-term deal that buys out not only a player's arbitration years, but potentially his first two years of free agency. But one is essential.
"You have to have a player, aside from his talent level, with the right mentality to be comfortable with the fact that there's an overwhelming likelihood the contract will not be exactly reflective at the end," said Goldberg, who represented Ken Griffey Jr.
"Just like the team has to be comfortable if the player is injured and underperforms, the player has to be comfortable that if he outperforms the contract, he'll probably be underpaid the last couple of years."
For the sake of security, many players are willing to do it, with the understanding they'll still have a chance to cash in with their next contract. For the sake of cost certainty, many teams are willing to make that gamble as well. And thus are trends born.