Starting 9 – Extensions
For a new segment that I’d like to make a weekly thing, I’ll take a look at the top issues around the game with a 9-point format. If you have an idea for a topic, feel free to comment below!
Starting 9: MLB Extension talk
Our topic of the day is going to be extensions in Major League Baseball. MLB organizations have dished out 32 extensions to notable players (not counting settling arbitration) since the end of the GM meetings in November. Those 32 deals have totaled 141 years of contract and $2.179 billion in guarantees with a potential outlay of 166 years and over $2.5 billion when options and award bonuses are figured in. This coming at the same time that Bryce Harper and Manny Machado, two of the premier free agents that have hit the free agent market since Alex Rodriguez nearly 20 years ago, had to wait until after teams had reported for spring training to sign.
The extension “rush” was primarily dominated by pitchers, who gobbled up 14 of the 32 extensions, though “only” $755 million of the total outlay of the contracts. The big money went to outfielders, as 7 grass-dwellers raked in just over $682 million. The Cardinals were the team with the most extensions, though with just 4, it gives a good idea just how spread out around the league the whole system was, as 19 teams have signed at least one player to an extension since leaving those November meetings.
With all those numbers in mind, the question has been raised many times: why exactly would a player sign one of these extensions? It seems as if the team always gets a cheaper deal than free agency in an extension, so why on earth would they take less money than they could make if they waited?
That’s what we’ll explore with our Starting 9 this week…
1. They know it could all end
Seeing something like that Tony Saunders injury absolutely haunts a fan, but imagine being a player and seeing that. Saunders wasn’t an All-Star, but he was no scrub either, coming off a season where he threw 192 1/3 innings for the 1998 expansion team in Tampa Bay from the left side. However, he was also in his second full year, never making it back to the majors after that injury. In all, a promising career as a back-end lefty starter that likely could have been a 7-10 year career that made him 8 figures easily barely crossed over the $1 million career earnings mark.
Not that you should feel bad for a guy who earned $1 million in his career by age 26, but when these players see that they could have potential career earnings in the upper 8-figure range (and possibly more) and the team wants to guarantee at least half of that, there are few players who wouldn’t at least listen.
A guy with similar major league time at the same ages as Saunders, Aaron Nola, just leveraged an elite 2018 into $45 million guaranteed. If he has a similar incident happen and is never again able to pitch in the major leagues, he has that money guaranteed to him. While MLB minimum salaries are roughly double what they were in Saunders’ time, Nola still had just earned ~$1.6 million before the 2019 season, so this sets him up well for life.
2. They’ve experienced serious injury
One of the contracts that received the most critique was the deal that Ozzie Albies signed with the Atlanta Braves. Many felt that he could have received much more after making the All-Star game in 2018 in his first full season while hitting 24 home runs as a very good defensive second baseman.
What many in the national media seemed to miss (and many who don’t cover Braves minor leagues likely missed as well) was that Ozzie ended both of his first two full seasons injured due to freak injuries that could have been much worse. In 2015, Albies was dominating the low-A South Atlantic League, and against their typical development at the time, they were considering promoting Albies up to high-A at just 18 before he injured his thumb in a freak play, ending his season.
After acquiring Dansby Swanson over that following offseason, the talk was about who would end up at shortstop, and who would be at second base. The Braves saw little of them together, but it was clear that Swanson was making some big strides defensively and had the future at short. He made the trip up to the big leagues, and Albies was honing his craft at second base with a playoff-bound Mississippi team before a routine swing led to a broken elbow (roughly 1:35 in the above video), ending his season, and leading to some significant question about his long-term future.
Other players have experienced similar issues. Ronald Acuna had an injury that many were worried would be “catastrophic” to his knee against the Boston Red Sox last summer, but he got lucky and suffered just a sprain. While these things may seem trivial to you and I, when the difference between a month away from the game and a career over is a matter of less than an inch on a particular play, these players understand how fragile the game can be!
3. They have more to consider than themselves
It is telling that of the 12 players who signed an extension who were originally brought into the league as an international signing, 4 of those are from Venezuela and one is from Curacao, a small island just off the coast of Venezuela.
With the political unrest that is going on in various parts of the world, many of these players are thinking of far more than just themselves when signing these contracts, often utilizing that money to get their parents, siblings, grandparents, and more family out of their home country and away from political instability and violence. Over the winter, many players chose not to participate in the Venezuelan Winter League, something that many players from Venezuela have done each winter, simply due to the dangers of that country.
Creating a safe haven for generations with one signing of a pen is a pretty incredible thing for a 21-28 year-old person to do.
4. It may be their one shot at the money
We discussed earlier the potential injury concerns that are real for players, but many saw names like Trout, Nola, Bregman, and Sale and recalled that these were blue bloods, first-round talents from the MLB draft that got a nice chunk of change before they even started their professional career.
While it’s true that former first rounders did dominate the drafted players that received extensions (9 of 20), the second most popular round was not the 2nd round. It was a tie among the 7th, 8th, and 9th rounds, respectively, each with 2 players apiece from those rounds receiving an extension. Those six players accounted for $424 million in guaranteed money, a pretty nice haul for guys who likely didn’t get much if anything as a draft bonus.
Even the international players weren’t “big money” signees when they were originally signed, outside of two who received seven-figure signing bonuses. The other 10 combined for roughly $3.5 million total in signing bonuses, so this was really their first chance to make “big” money.
5. They like where they are
One big thing mentioned with Mike Trout‘s new contract is how little the Angels have done to put a team around him. This apparently misses that the Angels currently have arguably the greatest right-handed hitter of the last 20 years in their lineup, even if on a contract beyond his current playing abilities. They have a 4-time All-Star slugger with 12 years in the majors who is still just 31. They have the best defensive player in the league.
What Jerry Dipoto failed to do was to put together a solid farm system to support the quality arms that he brought in, because pitching does get hurt, and when the Angels arms went down, they had nothing to support them. That’s changed under new Angels GM Billy Eppler. Trout certainly can see that the team has soared up farm system rankings, sitting just outside the top 10 in my own system rankings coming into the season.
That influx of talent along with the sure number of what their superstar will make will allow the Angels to plan to put a top-notch team around Trout each year as payroll space begins to open up. Roughly $45 million will come off the books this offseason, opening up things significantly for the team to make a run at pitching or other needs as the team sees fit to help get Trout what he needs.
Of course, more than anything, Trout is a recently married man who is planning out a life for he and his wife, and a home in the greater Los Angeles area as the best player in the game certainly is a good life to lead!
6. They want to play with their current teammates
One thing heard over and over with the Acuna and Albies signings as well as the Verlander and Bregman signings was how much they valued being part of the organizations they were with. If anyone has had a chance to catch Collin McHugh‘s podcast, find the one with Bregman, and you can easily hear that in the discussion that the two of them have.
As baseball fans, we don’t want the game to be all about money, but yet, since free agency became part of the national pasttime in 1975, we’ve become more and more accustomed to seeing our favorite players for our hometown team not just finish their careers elsewhere, but play significant parts of their careers elsewhere. Twins fans had to watch Johan Santana with the Mets. Cardinals fans saw Albert Pujols go Hollywood. Orioles and Royals fans are watching players that were once key young players in their organization now be (still young) veterans on an up-and-coming Padres team.
That isn’t every player, though. Players often make friends and make bonds that they badly want to keep together, and before they hit free agency is the time when they can really control that. Having Acuna and Albies for a combined $20 million or so in their prime years will allow the Braves to surround them with excellent players to have the team be successful while also allowing those two friends to play together.
7. Free agency just isn’t what it used to be
Sure, the big two still got paid plenty of money, but if you asked even two offseasons ago what the contracts for Bryce Harper and Manny Machado would look like, estimates of $400 million or more would not have been absurd.
Instead, arguably the best closer since Mariano Rivera is currently still unsigned as Craig Kimbrel cannot find a team. A former Cy Young Award winner is also still looking for work in Dallas Keuchel. It’s not like either struggled in 2018 either. Kimbrel posted a 2.74 ERA, 1.00 WHIP, and a 31/96 BB/K over 62 1/3 relief innings, saving 42, the first time he had saved 40+ since leading the league his first four full seasons.
Keuchel also was solid in 2018, leading the league in games started with 34, tossing 204 2/3 innings, with a 3.74 ERA, 1.31 WHIP, and a 58/153 BB/K ratio. He’s just 31 this season, as is Kimbrel.
The lesson of these players definitely made an impact as 14 of these extensions announced came from players who would have been free agents after the 2019 season. It is certainly feasible that they saw what was coming in free agency and chose to line up security rather than wade into unsure waters.
8. A strike could be coming
Though the whole act of signing their extensions could weaken their union’s position, one of the strong comments coming from the winter was how dissatisfied the MLBPA was with their current agreement due to a change in the percentage of revenue going to players due to significant broadcast contracts signed since the last deal was finalized.
While that may have some merit, more than anything, the big issue is that the MLBPA put together a very poor CBA in their last go-round, really getting taken behind the woodshed simply to get small concessions from the owners. Owners locked down the players on a whole number of things that went in team favor in order to give up some extra amenities on travel.
Even the work the MLBPA did to lessen the value of the qualifying offer (players can only be offered it once, picks given up are significantly reduced) was balanced out by putting in some fairly notable penalties for exceeding the luxury tax, which is now being used by many teams as a way to say they cannot spend more money, regardless of what their profits were in the previous year.
And we won’t even get into minor league pay and the fiasco around that.
9. Baseball may be in a bubble
So, this one is going to be hard for a few to really grasp based on reports about huge profits for major league teams this past season, but we may be coming to a point of a significant financial bubble for the game.
The minimum salary in the game has nearly doubled in a 15-year period, from $300K to $555K. The average salary also nearly doubled in that same time, from $2.37 million to $4.52 million.
Of course, many see the significant increase in baseball revenues from new national television deals as well as the sale of BAMTech to be something that offsets this, but one major thing is looming – what if baseball is too expensive for its own good?
This past season, the Los Angeles market went through a fight with the Dodgers over the cost that the channel broadcasting Dodgers games wanted to charge cable companies locally to carry the channel. This price was really needed to make back the incredible amount originally paid to the Dodgers by Time Warner Cable, now owned by Charter.
The Los Angeles Times had a great piece on the entire issue in Los Angeles, but one big thing that has drastically changed the landscape of much of media is chord-cutting, and this quote was excellent:
“The market has changed,” said Adam Gajo, sports analyst for Kagan, a media research arm within S&P Global Market Intelligence. “Four or five years ago, when SportsNet LA was formed, it was all about getting mass distribution. Executives figured that people wanted their sports and would pay to watch them. There was almost no ceiling to the cost.”
That ceiling has come, and come quickly, for MLB teams and those owning their expensive local broadcast deals due to chord cutting drastically reducing subscribers to cable companies. DirecTV estimated to lose 1.2 million subscribers (mentioned in the article) or more (that I’ve noted elsewhere), and that’s just one major financial aspect to the game, but it’s one of the biggest.
Player agents and players have talked with me this offseason about a concern that the game may be sitting on a bubble the way that the housing industry was in the mid-2000s. That could end up leading to some lean times for contracts in the very near future. Mind you, teams won’t be pinching pennies to get by, but locking in money in a potentially volatile market is smart by any economist’s measure.
That’s our first Starting 9. I hope you enjoyed! Feel free to comment, and if you’d like to see more like this, click on the Patreon button below to help keep things running here!
Benjamin Chase
After 6 years of writing for FanSided on various sites and offering contributions to various other websites, family changes have encouraged me to start this site. I spend a ton of time watching baseball at all levels, but I love watching minor league baseball on milb.tv as I'm hours away from the closest minor league team. This is an effort of all those games I enjoy on a daily basis!
