Matt Carpenter, Cardinals Agree to 6-year, $52 Million Extension

For the past week, smoke has been billowing out of Jupiter, Florida regarding the St. Louis Cardinals signing third baseman Matt Carpenter to a contract extension. Now there's fire. The Cardinals announced at a press conference Saturday morning that they've agreed to an extension with their leadoff man.

Ken Rosenthal of FOX Sports tweeted the contract's particulars:

• 6 years guaranteed
• $52 million guaranteed (including a $1.5 million signing bonus)
• 2014:  $1 million
• 2015:  $3.5 million
• 2016:  $6.25 million
• 2017:  $9.75 million
• 2018:  $13.5 million
• 2019:  $14.5 million
• 2020:  Club option for $18.5 million or $2 million buyout

Pre-Arbtration Buyout

As we discussed yesterday, 2014 would've been the final year of Carpenter's pre-arbtration service time as a big-leaguer. He would've likely made somewhere between $500,000 and $600,000. Instead, the Cardinals are giving Carpenter a $1 million salary (which they could've done anyway) along with a $1.5 million signing bonus. He will effectively earn $2.5 million this year – far more than he was guaranteed under the CBA or what the Cards would've paid him without an extension.

Arbitration Buyout

The Cardinals and Carpenter could've gone year to year via the arbitration process for years four through six of his MLB service time (2015-2017). During a player's three years of arbitration eligibility, he makes a fraction of what he would make if he were a free agent on the open market. In year one, a player typically earns about 40% of the going free agent salary rate for similar players. In year two, that goes up to approximately 60%. In a player's third and final year of arbitration eligibility, he typically brings in 80% of what veteran free agents with similar production are earning.

Instead of going year to year and through arbitration after 2014, the Cardinals are guaranteeing Carpenter $19.5 million. By guaranteeing Carpenter's salary, the club is shouldering all of the injury risk. Taking this into consideration, the salaries for Carpenter's arbitration-eligible season seem pretty fair. If he continues to produce at 2013 levels, they could prove a bargain.

Carpenter is an interesting player who led the league in hits and doubles last year while earning Most Valuable Player votes as a second baseman. This year, he has moved to third. If the parties had chosen to test the waters of arbitration eligibility and Carpenter had put up another season of 2013's high quality, he would've been in the upper tier of player salaries with the likes of David Wright (who will earn $20 million in 2014) and Adrian Beltre ($17 million) with perhaps even Robinson Cano's name being thrown around. The $19.5 million guarantee has the potential to represent savings for the club, but could also prove a loss if Carpenter gets injured or his production falls off a cliff.

The structure of the $19.5 million the Cards have guaranteed Carpenter over his arbitration-eligibile seasons tracks fairly closely to what departed third baseman David Freese has earned via year-to-year contracts. In 2013, the Cardinals paid their third baseman a $3.15 million salary in his first year of arbitration eligibility. After hitting .262/.340/.381 last year, Freese will earn $5.05 million with the Angels for his second arbitration-eligible season. While Freese is a World Series legend, he has never led his league in hits, doubles, or received an MVP vote. So $3.5 million and $6.25 million for Carpenter's first two arbitration-eligible seasons seems pretty fair.

Free Agency Buyout

Typically, the way these contracts work out is: The club gives the player financial security in the form of guaranteed salary over his cost-controlled years in exchange for buying out two or three years of his free-agent eligibility at a club-friendly salary. Under the CBA, players are able to reach free agency after six seasons of MLB service. Upon doing so, they are free to seek a contract with any team for as much money and as many years as the parties are willing to agree to. That is, unless a player signs away that right in contract extension like Carpenter has done.

Given the recent increase in spending on free agents and cost-controlled players alike, the Cardinals appear to be getting a fairly good deal for Carpenter's first two free-agent years. The third baseman will be 32 in 2017 and 33 in 2018. St. Louis has guaranteed him $13.5 million in 2017 and $14.5 million in 2018. For comparison, the Mets will pay Wright $20 million for each of his age 32 and 33 seasons. (To be sure, Wright has a longer track record of elite production than Carpenter and represents the ceiling of what Redbirds fans can hope from their new $52-million third baseman.) With the game awash in cash, it will be interesting to see what happens with player salaries between now and 2017, the first of what was a potential free-agent year for Carpenter before this deal was struck.

Projecting Potential Value

Yesterday, we used Russell Carleton's Baseball Prospectus article on the cost of cost-controlled wins ($) to get an idea of what MLB clubs pay on average for one Win Above Replacement (rWAR) at each level of the MLB salary structure. We then took these averages and applied them to the WAR production that Oliver projects Carpenter to have over the first five years of his contract extension with the Cardinals. For Carpenter's free-agent years, we used Dave Cameron's calculation at Fangraphs of one WAR being worth $6 million on the open free-agent market nowadays. This analysis uses the present value of one WAR in salary and does not take into account that the cost of one WAR has been rising for years and will likely continue to do so. The following chart looks at Carpenter's year-by-year salary and Oliver-projected WAR production through the prism of the current cost per WAR for pre-arbtration, arbitration-eligible, and free-agent players.

This chart rests on assumptions, just as the parties' calculations did in entering into this extension. Will Carpenter be worth nearly five wins in each of the next two seasons and more than four wins through 2018? He could be worth less; he could be worth more. Will clubs still be paying $6 million per WAR for free agents in 2018 and 2019? Almost assuredly not.

Nonetheless, this chart gives us a rough approximation of how to judge the Cardinals-Carpenter extension. The Redbirds are overpaying this year and appear likely to be overpaying in 2017. But they are poised to receive good value in 2015, 2016, 2018, and 2019. Even if Carpenter's production is below Oliver's projected WAR totals, the club still stands to reap surplus value.