5:51pm ET: The Yankees have announced the deal, so it is official. Officially official. The Yankees never announce financial terms but they say it’s a four-year deal covering 2019-22 with a fifth year club option.
11:41am ET: Four years ago Luis Severino arrived as the first homegrown member of the Yankees’ youth movement and now he’s the first core player to sign a long-term contract extension. According to multiple reports, the Yankees and Severino have agreed to a multi-year deal and avoided today’s scheduled arbitration hearing. The Yankees have not yet announced the deal.
The contract is reportedly worth $40M guaranteed across four years with a fifth year club option that could push the total value to $52.25M. The contract covers Severino’s four years of arbitration-eligibility as a Super Two with a club option for one free agent year. Here’s the salary breakdown:
- 2019: $4M plus $2M signing bonus
- 2020: $10M
- 2021: $10.25M
- 2022: $11M
- 2023: $15M club option with $2.75M buyout
Severino sought $5.25M through arbitration while the Yankees countered with $4.4M. Earlier this week I looked at his potential arbitration salaries using an 80% annual raise, which is approximately what Trevor Bauer and Gerrit Cole received through their arbitration years. With that raise, Severino’s four arbitration years could’ve max out at $62.3M had he won his arbitration and $52.2M had he lost.
Obviously, Severino traded his maximum earning potential through arbitration for the guaranteed payday. He doesn’t have to worry about his future earnings should he get hurt or his performance decline or anything like that. That money is locked in. Severino was a small bonus player ($225,000) as an amateur out of the Dominican Republic and he made close to the MLB minimum the last few years. This is his first big payday. Good for him.
It’s worth noting Severino will receive $24.25M of the $40M guarantee before the 2022 season. That is significant because the current Collective Bargaining Agreement ends in December 2021, and while I wouldn’t call a work stoppage likely at this point in time, it certainly feels more possible now than at any point in the last 20 years or so. Severino is getting most of his money before a work stoppage could wipe away part of the guarantee.
Anyway, Severino gets the guaranteed millions and the Yankees get what sure looks like a sweetheart deal for their ace. Arbitration could’ve pushed Severino’s salary to $10M as soon as 2020. Now the Yankees pay him annually from 2019-22 what would’ve roughly been his 2020 salary. Severino’s luxury tax hit will be $10M annually from 2019-22 and $12.25M in 2023 if the option is exercised (the buyout is taxed during the four guaranteed years).
Given the team-friendly terms, I can’t imagine the MLBPA s happy about this, especially given the relatively small raises from 2020-22. That said, the union has spent the last few years negotiating away the rights of amateur players and giving owners reasons to reduce payroll, so they can’t be upset when a player jumps at financial security. With free agents getting hung out to dry, we could see more team-friendly deals like this in the coming weeks.
The Yankees have been stingy with contract extensions over the last two decades or so. Severino is the first player they’ve signed long-term several years away from free agency since giving Robinson Cano four years and $28M (and two options) in January 2008, when he was four years away from free agency. Others like Brett Gardner, Javy Vazquez, Derek Jeter, and Andy Pettitte also signed multi-year deals one year out from free agency this century.
It’s easy to forget Severino is only 24. He’s one year and two months younger than Jordan Montgomery. Severino will turn 25 next week and, according to the great Roster Resource, he will be the second youngest starter in an AL East Opening Day rotation this year. (Toronto’s Ryan Borucki is about six weeks younger.) As great as he’s been to date, it is possible the best is still to come with Severino. This contract could cover the best years of his career.
Last year Severino threw 191.1 innings with a 3.39 ERA (2.95 FIP) and 220 strikeouts, and that’s despite a second half slump that is said to be the result of pitch-tipping, fatigue, and probably other things as well. Since the start of 2017, Severino is ninth among all pitchers with +10.1 WAR. He was an All-Star the last two years and finished third in the 2017 Cy Young voting. He was ninth in the voting last year.
With Severino locked up, the Yankees could look to sign other core young players long-term as well, specifically Aaron Judge, Gary Sanchez, Gleyber Torres, or Miguel Andujar. Aaron Hicks, Didi Gregorius, and Dellin Betances will all become free agents following the 2019 season and they might be the extension priorities now. Does Severino’s deal happen if the two sides agree to a salary before the arbitration salary filing deadline last month? Maybe not.
Last week Hal Steinbrenner cited the team’s homegrown players and having to sign them long-term as a reason to steer clear of Manny Machado and Bryce Harper. Will the Yankees circle back around to Machado or Harper now that Severino’s locked up? My guess is no. There are still other young players to sign and it’s always easy to come up with another reason not to spend. At least Severino’s signed.