The first two weeks of Spring Training have been busier than usual for the Yankees. Two weeks ago they signed ace Luis Severino to a four-year contract with a fifth year club option that buys out one free agent season. Then, earlier this week, they gave center fielder Aaron Hicks a seven-year contract. That deal covers six free agent years with an option for a seventh. Extension season is in full swing.
Following the Hicks extension Brian Cashman confirmed the Yankees are discussing deals with several other core players without naming names — “We’ve been very vocal that we’ve engaged with a lot of players,” he said — though Dellin Betances, Didi Gregorius, and Aaron Judge are obvious extension candidates. Dellin and Didi are impending free agents and Judge is the face of the franchise.
Another extension candidate: Gleyber Torres. Torres is six years away from free agency, so there’s not that same level of urgency as there is with Betances and Didi. That said, Gleyber is really good, and the sooner the Yankees lock him up, the more long-term savings. Oddly enough, the extension market for middle infielders with less than one full year of service time is pretty well established. Look:
- Scott Kingery, Phillies: Six years, $24M with two club options.
- Paul DeJong, Cardinals: Six years, $26M with two club options.
- Tim Anderson, White Sox: Six years, $25M with two club options.
All three contracts were signed within the last two years. Kingery signed his extension before he even made his MLB debut. DeJong and Anderson signed their extensions following their partial rookie years. DeJong was called up in late-May and Anderson in early-June. The Yankee brought Torres up in late-April. Their rookie season performances are quite similar:
|Age||AVG/OBP/SLG||wRC+||HR||WAR||Service Time at Deal|
Want to sign your standout middle infielder with less than one full year of service time long-term? You have to buy out his six years of team control for $25M or so, and you get two club options. That is the established rate. There are two key differences between Torres and the other guys though. One, Gleyber has an All-Star Game selection to his credit, which increases his earning potential. He and his agent won’t forget about that.
And two, Torres will undoubtedly qualify as a Super Two, meaning he’d go through arbitration four times instead of the usual three. That equals more money. There is no set Super Two date each year but the cutoff usually falls around two years and 125 days or so of service time. DeJong was right on the bubble and Anderson likely would’ve been just short. Torres will be well over whatever the cutoff is in two years. That’s another consideration.
Shockingly few infielders went through arbitration as a Super Two in recent years. I mean go year-to-year and not sign a long-term extension or get non-tendered. Few guys went straight through. Here’s how much those recent Super Two infielders* banked during their years of team control:
- Josh Donaldson: $57.4M
- Didi Gregorius: $29.1M
- Neil Walker: $28.5M
- Luis Valbuena: $14.3M
* I’m excluding Anthony Rendon ($49.4M) because he signed a Major League contract out of the draft back when that was still allowed, which meant his early career salaries were higher than usual, thus inflating his arbitration numbers.
There are three distinct tiers. Donaldson is the everything goes right scenario. Perennial All-Star, an MVP award with several other high finishes in the voting, the works. Gregorius and Walker are the above-average but not truly elite middle tier. Valbuena’s the useful role player who is good enough to hang around and not get non-tendered. Guys who are less productive than Valbuena usually don’t stick around through four years of arbitration.
Torres was a deserving All-Star as a 21-year-old rookie last year — he wasn’t voted in by the fans, he was voted in on the players’ ballot — and he was a very highly regarded prospect. Things don’t always work out as hoped, but, watching Torres play last year, it sure looked like he was only scratching the surface. The potential for greatness is real, and even if he’s merely very good rather than great, Walker and Gregorius show an extension would be worth it.
For argument’s sake, let’s say the Yankees give Torres six years and $28M guaranteed. That’s a tad more than DeJong and Anderson because Gleyber has that All-Star Game selection and will be a no doubt Super Two. Six years and $28M equals a $4.67M luxury tax hit. Let’s compare that luxury tax hit to Sir Didi’s and Walker’s year-to-year salaries (hypothetical luxury tax savings in parenthesis):
|Pre-Arb||$4.67M||$0.5065M (-$4.1635M)||$0.437M (-$4.223M)|
|Pre-Arb||$4.67M||$0.5539M (-$4.1161M)||$0.5M (-$4.177M)|
|Arb1||$4.67M||$2.425M (-$2.245M)||$3.3M (-$1.37M)|
|Arb2||$4.67M||$5.1M (+$0.43M)||$5.75M (+$1.08M)|
|Arb3||$4.67M||$8.25M (+$3.58M)||$8M (+$3.33M)|
|Arb4||$4.67M||$11.75M (+$7.08M)||$10.55M (+$5.88M)|
As far as the luxury tax payroll is concerned, our hypothetical Gleyber extension would put the Yankees in the red the next three years. His luxury tax hit during his two upcoming pre-arbitration years would be much higher than it normally would. Once you get to year four though, the Yankees would start saving money, and by the fifth year the luxury tax savings would be significant.
And remember, this is assuming Torres follows the Gregorius/Walker career path and becomes a very good player but doesn’t really break out as a star. Walker’s first arbitration year was 2013 and Didi’s was 2016. Gleyber’s first arbitration year will be 2021. Even with teams clamping down on spending, that’s quite a bit of inflation to consider. Six years and $28M puts Torres right at what Gregorius and Walker made during their team control years. Factor in inflation and the savings are even greater.
The other thing to remember is these extensions come with option years. DeJong, Anderson, and Kingery all agreed to two clubs options and those potentially have huge value. DeJong’s two options are worth $12.5M and $15M. Anderson’s are worth $12.5M and $14M. That sounds like a lot in this free agent climate, but remember, Gleyber’s free agency is six years away, so the market can (and will) change. Also, Torres is due to become a free agent at 27. He free agent payday could be significant.
Signing Torres now seems like an obvious move for the Yankees. The increased upfront luxury tax hit stinks, but, if Gleyber becomes the player the Yankees believe he can become, the potential savings down the line are enormous. Even if Torres doesn’t become that bona fide star and is merely very good, there’s a good chance the Yankees will come out ahead financially, or at least break even. And, if he busts, carrying the $4.67M luxury tax hit for a few years won’t bog down payroll.
Torres was a big bonus international signing ($1.7M), so maybe he’s not all that desperate to sign now and secure that first huge payday. He might be willing to go year-to-year and try to get that Donaldson money. Still, the Yankees should put the DeJong and Anderson contract in front of him and see what happens. Make him say no to 20-something-million, you know? As long as they’re willing to stomach the short-term luxury tax increase, the Yankees stand to gain a lot down the line. And hey, getting that 20-something-million ain’t so bad for Gleyber either.