This year's Hot Stove is slowing to a close this year, though there's still enough remaining free agents that baseball will probably have its highest spending post-January period ever. But unless Mozeliak changes his mind, the heavy lifting is probably over. After the free agent market dries up, teams typically turn their attention to extending their own players.
This article presupposes the reader has an understanding of MLB Service Time and how that affects pre-free agent players' pay. For reference, check out this article by Purple Row, the SBN home for Colorado Rockies fans.
The Cardinals have a lot of history with extending players prior to reaching their free agent years. In recent years, they have extended Allen Craig, Matt Carpenter, and Jordan Walden. In mid-2011 they extended Jaime Garcia. They've extended Wainwright and Molina twice.
Generally, the goal of these extensions are to buy-out free agent years, but there are still deals where the team doesn't get any extra years of control. The goal here is just locking in the price of those years, and saving some time and trouble arguing in arbitration. Jason Motte, Lance Lynn, and Jon Jay's recent deals are all examples of these. Those deals however are not the subject of today's post, which will concern deals that extend the team's control of the player passed when he would have normally reached free agency.
However, those three deals are an example of why it can be difficult to buy-out free agent years from players already in arbitration. Players make much more money on the open market than in arbitration hearings, and once a player has received a life-changing sum in arbitration, there is less incentive to the player to delay free agency. All three of these players had already reached arbitration by the time of these new extensions, and were close enough to free agency that they were willing to bet on themselves to capture a much larger guarantee in free agency.
Allen Craig and Matt Carpenter's deals represent the polar opposite case. Both were extended a full season before reaching arbitration, and a full four years before they were able to get free agent level money.
Of course, both players enjoyed salaries you and me can only dream of for the two prior years (the Major League minimum has been around $500,000), so it's not like Craig and Carpenter were hurting to pay their bills prior to their extensions. Simply that, after years of grinding, and four more to go before free agency, they decided it was worth it to get a significant payday now, even if it lowered the chances of a bigger eventual payday on the free agent market.
As Craig's deal shows, these agreements don't always work in the team's favor. But even if the Cardinals didn't find a team to deal Craig and his contract to, Craig's deal pales in comparison to the deficit value that say, Albert Pujols will leave the Angels with. These deals involve risk just like any baseball transaction, but it comes at a much lower price-tag than a big free agent signing.
Anyways, when looking for candidates to extend, I think it is much more fruitful to look at those players who are still in their pre-arb years and far away from free agency. It also helps that the player is young enough that he still has prime seasons to play by the time he accrues that sixth year of service time. Two players that very much meet that description: Michael Wacha and Carlos Martinez.
Some might balk at the idea of extending either of these pitchers. With Carlos, there have been concerns that he wouldn't be able to handle a starter's workload, and at the tail end of a brilliant season he went down with shoulder problems. For Michael, we have a pitcher with an injury so rare that there's only one player in the majors with a similar injury, and that pitcher has only one 200 inning year in his nine full MLB seasons.
But as we see, even with the Jaime Garcia extension, the worst case scenario is never that bad. Jaime has only thrown 350 innings in the four years since signing his extension prior to the 2012 season, but he's still accumulated nearly 7 WAR over that time frame. Jaime's deal guaranteed him a salary for 2015, his first free agent eligible year for just $9.25M, as well as next year for just $11.5M, and possibly 2017 for $12M. Despite Jaime being as fragile as you could possibly imagine, the deal still hasn't exactly hampered the team, and the team ended up realizing a benefit from it: at least one extra year of control.
That is how the team should approach Wacha and Martinez's situation. The important thing is properly evaluating the talent level. Even though Wacha had trouble striking hitters out at the start of the year and then had new problems down the stretch, he still managed a 2.3 WAR year and an above-average FIP and xFIP for the year. That, to me, raises Wacha's floor. While he may have injury risk going forward he's solidified himself as a strong pitcher even if he's doesn't return to 2013/first half of 2014 levels.
Carlos does have the shoulder injury, but his talent at this point is more apparent than Wacha's. In his first full season as a starter El Gallo had the 18th best FIP and the 15th best xFIP among qualified starting pitchers. Those types of players cost gobs of money on the free agent or trade market, and they'll be getting paid even more due to inflation four years from now.
Both pitchers are one year away from arbitration. We'll look at previous extensions for Starting Pitchers who are not Super two eligible and are one year away from arbitration. Among that group of players, there seems to be a developing trend for how to structure the contract. Here's the last four extensions among that subsection of players:
The WAR columns gives you the amount of career WAR accumulated before the extension, with the year representing the first year of the deal and age being the age he is during the first year of the extension. Not shown here is that Kluber also received a $1M signing bonus, and Niese recieved $250,000, also in the form of a bonus. Sale and Holland received no bonus. Wacha and Martinez have produced 5.5 and 5 wins, respectively, better than Holland and Niese but not as good as Sale.
Each of the four contracts guaranteed the pitcher a salary for his remaining four years of control and one free agent year. Each contract also gives the team two options at a relatively cheap price compared to what a player of a similar caliber would earn on the free agent market. The number in parentheses in the option years represent the buy-out that year.
Except for Kluber, all these pitchers were relatively young. Wacha and Martinez will both be entering their age 24 season, same as Sale was and a year younger than Holland and Niese. Sale was better pre-extension than Michael or Carlos, but there's also been three additional years of inflation. So a deal similar to Sale seems like a good comp for what Wacha and Martinez should get.
But, there's also the matter that these deals keep looking like steals for the team. For instance in Dave Cameron's most recent annual Top 50 Trade Value series, Sale was ranked as the 6th best value in baseball. Sure, some of that is because Sale has only gotten better since the extension, but part if it is also just that the White Sox got bargain basement prices on his first three free agent years even if we consider only the level of talent he displayed pre-extension.
So when taking these comps into consideration, as well as the fact that these deals have generally been very team-friendly, how much should the Cardinals be willing to guarantee their two young starters? Let's start with Carlos. I'd definitely give him Kluber's deal for instance, or a few million more.
Here's an idea: I'd even be amendable to the Cardinals giving Carlos a 6th guaranteed year, provided they still get two option years. That's something that's never been given to a pitcher with Carlos' service time, but that's a reflection of both his talent and the fact that up until now, these deals have been plenty lopsided for the team (technically, when Madison Bumgarner was extended, he was guaranteed five years, though that deal started in 2013 and was signed in April 2012. So Bumgarner would be the only other pitcher with the same or less service time that was guaranteed a salary six years from the time it was signed).
So let's start with Kluber's deal, shave off a half a million for each arb year, then add on another guaranteed year at $13M, that's puts it square at $50M over six years, plus the two option years that could make it a total of 76.5M over eight years. That's gaining control of Carlos up through possibly his age 31 season. No pitcher with the same or less service time has gotten a guarantee that large, so Carlos and his agent would definitely have reason to sign such a deal.
At the same time, the deal gives the Cardinals plenty of upside. In exchange for guaranteeing Carlos his arbitration years and his first two free agent years, they get the right to his free agent years at prices that are not only cheap now, but will be absurdly cheap four years from now. The price of a win in free agency this year was about $8M, so factoring in 5% inflation puts us at a cost per win of $9.7M, so $13M should just buy 1.3 wins.
If the Cardinals exercised both options, it would lead to them paying just $53M for Carlos' age 28 through age 31 years (his first four free agent years), which when controlled for inflation would only be the going rate for about 5 wins by the time 2020 rolls around. But count me in the camp that thinks Carlos could very well be worth more like 15 wins during that time frame. A lot can happen between now and then, but the Cardinals would still only be guaranteeing him around half that sum for those years right now anyways.
And while it seems risky to guarantee a pitcher like Carlos 6 years, if he's simply an average pitcher, the deal is a success. Being average through his remaining years of control would mean the Cardinals overpaid in arbitration by a few million, but ended up getting a discounted price on his free agent years. By 2020 the Mike Leakes of the world will be getting $100M guarantees!
As for Wacha, even with the injury problems, I'd be comfortable with the Cardinals offering him the Sale deal. That would involve the Cardinals guaranteeing Wacha $19M through arbitration. For comparison, last off-season they guaranteed Lynn $22M for his arbitration years. Wacha probably won't be considered as good as Lynn was when he entered arbitration, but Wacha also has two additional years of inflation on his side, so $19M is probably pretty close to his projected arbitration earnings at this point.
So in exchange for guaranteeing him those arbitration earnings now, they get the right to pay Wacha $13M ($12M for 2020 plus the $1M buy-out for 2021) for at least one free agent year. In total, the Cardinals could control his first three free agent years (his age 28-30 seasons) for a total of just $38M. That's J.A. Happ money now. By 2020, when adjusting for inflation its more like John Lackey money but spread out over three years instead of two.
That's a really good deal for the Cardinals that should also entice Wacha, given his rare injury. But it's also such a discount that I could see offering a handful of millions more. Getting all the way to Kluber's deal doesn't seem prudent, but I could be comfortable with getting close to it, if it came to that.
For good reason, the Cardinals have balked at spending a lot of money in free agency. The return just isn't that great. But, they have extra money left over that should be spent on keeping the team competitive. There's only so much you can spend on draft picks, international amateurs, and pre-arb and arbitration salaries. Early extensions like these are great way to spend additional money in a way that is more effective than investing in free agents.
This is the year to extend Martinez and Wacha if they're going to. We're just now entering the time of the year when these extensions are en vogue. The next few months will say a whole lot over how long these two young arms will stay part of the Cardinals. I for one hope they will both wear the Birds on the Bat for many years to come.