On extensions and Phil Hughes

One of the reasons Rays fans were happy (read: smug) to see Matt Garza dealt to the Cubs last week was because they expected the money saved on Garza to go towards other pursuits.  One option bandied about was signing a right-handed bat like Manny Ramirez or Andruw Jones. Another was attempting to lock up some of their young talent, particularly David Price, to a long-term deal. It’s doubtful they expected that money to go to Kyle Farnsworth, but hey, that’s life.

Regardless, getting Price to agree to a club-friendly long-term deal would be another coup for a Rays management team who set the gold standard for long-term deals with Evan Longoria.  The Longoria deal is perhaps the most team-friendly contract in all of baseball: a six year, $17.5M contract with three club options of $7.5M, $11M and $11.5M.  In all likelihood they’ll control Longoria for nine years and pay him $44.5 million dollars.  If you buy into the UZR-component of fWAR, his production value exceeded the total cost of his contract at the end of the 2009 season, after only two years.

It seems as if there’s been a rash of these kinds of deals in recent years. Players who have gone this route recently include Troy Tulowitzki, Carlos Gonzalez, Justin Upton, Adam Lind, Ryan Braun, Adam Wainwright, Josh Johnson, Felix Hernandez and Justin Verlander.  Other players have elected to forgo the extension and attempt to reach free agency as quickly as possible.  These players, often clients of Scott Boras, assume the risk of going year to year in exchange for the potential of higher annual paydays. Prince Fielder is a good example of this. After making under a million a year in his first three years with the Brewers, he’s netted $7M and $11M in his past two years and is eligible for a higher payday in his final trip through arbitration again this offseason.

There are pretty simple cost/benefit calculations being made by both the player and the organization. When a player signs an extension, he hedges his risk and gets decent (by MLB standards) guaranteed money early in his career.  This ensures lifetime financial security in the event that the player is unable to net another big payday due to injury or decline in performance.  It also allows him to hit the free agent market while still in his prime. For instance, Justin Upton will enter the free agent market after the 2015 season as a 27 year old after having made $51.5 million.  It’s likely that he could have netted more going year to year in arbitration and then hitting free agency two years earlier, but that’s part of the tradeoff.

The organizations are performing a similar calculation. On one hand, the club can save money by avoiding the arbitration process, which can quickly escalate compensation levels from year to year.  The club also gets cost certainty, and is often able to gain control over some of the player’s free agent years.  For their part, the clubs are wagering that the players will by and large stay healthy and give expected levels of production.  This article from MLBTR explains the rationales even further.  The downside to these deals is that the player could get injured or decline, making the contract a burden.  Scott Kazmir was a tough case for the small-budget Tampa Bay Rays.  The anchor of the rotation for years, Kazmir received $3.785M in his first arbitration-eligible season.  Shortly into the 2008 season, the Rays signed him to a three year deal for $28.5M, buying out a year of free agency, with a club option of $13.5M for the final  year.  Yet one year later Kazmir had struggled with elbow problems and performed terribly.  The Rays decided to cut their losses and were lucky to get someone to take on his contract, unloading Kazmir to the Angels.  It was a misfire for Tampa.

The Yankees have a slightly bigger budget than Tampa, but they must at least be considering what they should do about their young, cost-controlled starter Phil Hughes.  Hughes has just over two years of MLB service time, and becomes eligible for arbitration for the first time this offseason.  The Yankees will control Hughes for just three more years, through the 2013 season, before he becomes a free agent.  Hughes pulled in a little under $500K in 2010, and should be due for a decent sized pay day in 2011.  His traditional stats, favored by arbitrators, were solid: 18-10 record with a 4.19 ERA in his first full season as a starter in the American League East.

Interestingly, the Boston Red Sox were in a similar situation two years ago.  Jon Lester had just completed his first full year as a starter in the major leagues, throwing 210.1 innings with a 3.21 ERA.  His strikeout rate (6.5 K/9) and walk rate (2.8 BB/9) were decent, leaving him with a respectable 2.30 K/BB ratio.  The Red Sox clearly anticipated that Lester’s season was a harbinger of things to come, no surprise given his talent and pedigree, and signed him to a 5 year, $30M extension with a $13M club option for 2014.  The contract is backloaded, paying Lester $1M in 2009, $3.75M in 2010, $5.75M in 2011, $7.625 in 2012 and $11.625 in 2013.  All told, the Red Sox will pay Lester $43M for his 6 years of service, two of which would have been free agent years.  Lester has been dominant in the two years since signing the contract, averaging a 3.14 FIP and a strikeout rate over 9.

By way of comparison, in Phil Hughes’ first full season as a starter he threw 176 innings of 4.19 ERA ball, with a 7.5 K/9, 3.0 BB/9 and a K/BB ratio of 2.50.  The ERA (and FIP) are higher than Lester’s, but the strikeout rate and K/BB ratio are better.  While no one expects Hughes to replicate Lester’s 2009 season this year, hopes are high that he can build on his performance.  So given what we know about performance and injury risk, should the Yankees extend Hughes now, should they extend him after the 2011 season or should they continue to go year-to-year until he reaches free agency?

The largest factor to consider is Hughes’ health.  Hughes has never thrown 200 innings in his entire career, and prior to the 2010 season had a reputation as being injury-prone.  He tore his hamstring in Texas in 2007, and then sprained his ankle rehabbing the hamstring tear.  The following year he injured his ribs and missed most of the season.  In 2009 he stayed healthy in the bullpen, and then followed that up with another healthy year in 2010.  The injury history isn’t great, but there was never a major shoulder or elbow injury for Hughes.  Another factor to consider is his performance.  Simply put, what do the Yankees expect him to become?  Is he going to take a huge step forward in 2011 like Lester did in 2009, improving his peripherals and expanding his pitch repetoire?  Or will he replicate his 2010 season?  Finally, how much will it cost the Yankees to wait on an extension?  Obviously a five year deal is going to be cheaper for the Yankees now than it would be if Hughes has a great year in 2011.  Is it worth it to wait?

All told it may be prudent to delay talks of an extension with Hughes until after the 2011 season.  He may go out and hurl 200 innings of sub-4.00 FIP ball with solid strikeout and walk rates this year.  It’s true that the price of an extension would be higher next winter, but the Yankees will have gained greater insight into what to expect from Hughes in the next half-decade.  Fortunately, increased price of an extension is hardly going to bust the budget for the Yankees, so they may be more interested in trading money for certainty.  Their money is a great asset, and it allows them a certain amount of patience that other clubs don’t have.  Yet just because they have this leeway doesn’t mean they should look past the potential benefit of an extension, and if Hughes blossoms in 2011 the Yankees should try to lock him up.  This will allow them to control his cost and keep him on the roster for longer, giving them more money available to put in the piggy bank with Justin Upton’s name on it.

Open Thread: Cut those sideburns!

What the ... ?

What the hell is that, Robbie? That facial hair makes him look like a skinnier David Ortiz, and I don’t like that at all. Well, unless he hits like 2004-2007 David Ortiz, of course. I’m cool with it if that happens. Robinson needs to learn a lesson from Don Mattingly and Mr. Burns and cut those sideburns! (h/t ‘Duk)

On a more serious note, here’s the video of Jack Curry’s trip to the Dominican Republic, where he followed Robbie around during his offseason workouts. It’s not long (about four minutes), and I suggest you give it a watch. Once you’ve done that, use this as your open thread. The Devils, Knicks, and Nets are all playing at different times, but talk about whatever you want. Treat the thread as you see fit.

Olney: Soriano deal was ownership-driven

Via Buster Olney, there was a difference of opinion among the Yankees decision makers regarding Rafael Soriano, and the decision to sign him was one driven by ownership. Bob Klapisch backed up Olney’s report, and Peter Gammons specifically mentions team president Randy Levine as the culprit.

This is generally bad news, because you want the baseball people making the baseball decisions while ownership worries about making money and doing whatever else baseball team owners do. Brian Cashman was given autonomy after the 2005 season, but since then the higher-ups have gone over his head for Alex Rodriguez‘s latest contract and now Soriano. This is not a good trend, and if it continues to happen the Yankees will be right back where they were in the mid-aughts.

The RAB Radio Show: January 14, 2011

With the Rafael Soriano signing in the books, Mike and I examine the move from both the near and far perspectives. There are plenty of aspects to consider, so we’re not short on words.

This deal has implications that stretch further than the bullpen. We go over those, which, as you might imagine, include Joba.

Podcast run time 27:17

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Olney: Yankees tried a sign-and-trade for Balfour

Via Buster Olney, the Yankees tried to work out a sign-and-trade scenario with an unknown team that would have netted them Grant Balfour. Joe covered this exact idea back in December, though it was framed around Rafael Soriano. Basically, some team with a protected pick would sign Balfour and them trade him to the Yankees for a prospect that is equal to or greater than the value of the pick they gave up. Balfour would have had to consent to the trade per MLB’s rules since it would have occurred so soon after he signed.

Obviously this all took place before the Yanks agreed to sign Soriano and Balfour went to the A’s. I’m guessing that once they couldn’t get a trade for Balfour worked out, they decided to sign Soriano. If you’re going to give up the pick for the reliever, at least make it the best one available.

RAB Live Chat

Mailbag: Romine, Bush, Gardner, Posada

Time for another edition of the RAB Mailbag, and this one is free of Rafael Soriano/Joba Chamberlain vitriol. We’ve got questions about Dave Bush as a rotation candidate, Austin Romine as the catcher of the future, Brett Gardner‘s long-term outlook, and what happens with Jorge Posada after the upcoming season. Remember to use the Submit A Tip box in the sidebar to send in your questions throughout the week.

(AP Photo/J Pat Carter)

Arad asks: What about Dave Bush as a 4th or 5th starter?

Once upon a time, Bush was arguably the most dominant closer in college baseball history. The Blue Jays have done a great job in recent years of turning college relievers into starters (Shaun Marcum and Brett Cecil among them), which is what they did with Bush before trading him to the Brewers in the Lyle Overbay deal. But that is neither here nor there.

Bush’s last three seasons have been pretty damn awful. He had a 4.93 FIP in 2008, a 5.07 FIP in 2009, and a 5.13 FIP in 2010, so he’s bad and getting worse as he enters into his 30’s. Although his walk rate is solid (2.64 uIBB/9 in the last three years), his strikeout rate is below average (5.80 K/9) and so is his ground ball rate (38.9%). Oh, and he’s amazingly homer prone. Over the last three seasons he’s surrendered one homerun for fewer than every 6.1 IP. And this is in the NL Central, stick him in the AL East in Yankee Stadium and we could start taking bets on which sections of the bleachers will get souvenirs on the nights he pitches.

As I always say, there’s nothing wrong with a minor league deal with an invite to Spring Training, but there are enough red flags here to keep me away.

Ashley asks: If the Yankees were to use Jesus Montero as trade bait sometime throughout the season, how much will the drop off be from Jesus to Austin Romine? Is there any benefit to having Romine as the “catcher of the future” or will we trade for a big name catcher (if he exist)? Basically, assess the Yanks catching situation.

Romine was always a much safer bet to remain at catcher long-term, but questions popped up about his catching ability last season. Keith Law didn’t like what he saw out of him blocking balls in the dirt and what not in the Arizona Fall League, though in fairness Romine was probably fatigued after his first full season as an everyday catcher. His bat also dropped off considerably in the second half. Romine is still a quality catching prospect though, a borderline top 100 guy with the tools to catch in the show. He just has to continue developing those tools into baseball skills. It’ll definitely be a big hit though, Montero is going to be a star because of his bat. Romine will just a solid backstop.

The wildcard here is Russell Martin. If he plays well and the Yankees like what they’re getting out of him over the next two years, there’s always a chance they’ll re-sign him when he’s due to become a free agent in two seasons. IF not, and they trade Montero for a starter, I suspect Romine will get the first crack at that vaunted “catcher of the future” job. If he can’t handle it, they’ll either have to go out and get someone or hope Gary Sanchez doesn’t flame out. This isn’t an immediate concern though, we’re at least two seasons away before we have to really worry about who will do the catching long-term.

Anonymous asks: Gardner. Lead off guy? Centerfielder? Big time contributor or eventual fourth outfielder/pinch runner?

That was a pretty awesome catch. (AP Photo/Frank Franklin II)

If he continues to play like he did last year, he’s a legit leadoff hitter that can play center full-time. He’s just masquerading as a leftfielder now because of Curtis Granderson. The wrist injury and subsequent offseason surgery is a bit of a problem and we don’t know if or how it will effect Gardner in the long run, so that’s something we’re just going to have to wait and see about.

Remember, Gardner is already 27, so this is pretty much what he’s going to be going forward. He won’t suddenly develop power, and there’s nothing wrong with that. He absolutely needs to get better at bunting, but the overall skill set is there to be a legit big league leadoff man for a few seasons. I believe in his ability to be at least an average regular a whole lot more now than I did twelve months ago, and at the absolute worst he’s a good reserve outfielder.

Mark asks: How many games will Jorge Posada have to play and what offensive #’s will he have to put up in 2011 to obtain a contract for 2012? Or due to his age and inability to play defense are we simply counting down the time until we say goodbye to yet another of the all-time Yankee greats to wear the pinstripes later this fall?

I’m in the camp that thinks (hopes) Jorge will retire after the season. Even if he doesn’t, any contract he gets for 2012 would absolutely have to be a one-year deal. That’s imperative. But in order for him to get a new deal after the season, Posada would need to a) handle the move to DH with ease, and b) hit at an above average rate for the position. Offense around the league sucked last season, and AL DH’s (not counting NL DH’s in interleague play) hit just .252/.336/.426 in 2010. Posada easily cleared that playing mostly catcher (.248/.357/.454) and over the last three seasons he’s hit .267/.361/.474, so being an above average DH shouldn’t be much of an issue. Moving to the new position can be, since we’ve seen some playing in the past having trouble dealing with all the down time between at-bats. Becoming a full-time DH after playing the field for two decades isn’t as easy as it seems.

To be perfectly honest, I had never even considered the possibility that Posada could be back in 2012. I don’t think that either A-Rod or Jeter will erode so much next summer that they’ll be relegated to full-time DH duties in 2012, so it seems like the opportunity will be there if Jorge wants to come back for another season. But like I said, one-year contract, nothing more. They already gave him his legacy contract.