As Opening Day approaches—and high-profile free agents Dallas Keuchel and Craig Kimbrel remain unsigned—MLB has been swept by both a wave of contract extensions and competing interpretations of what those extensions signify.
The latest agreements range from as short as two years to as long as 12 and from as little as $14.75 million to as large as a record $426.5 million. They run the gamut of notable players, from GOAT-in-the-making Mike Trout to experienced stars who were one year away from free agency (Chris Sale, Paul Goldschmidt, Justin Verlander) to mid-20s talents on the verge of arbitration eligibility (Alex Bregman, Blake Snell) to top prospects who’ve only recently sniffed the majors (Brandon Lowe) or haven’t yet topped Triple-A (Eloy Jimenez). That selection of standouts joins a group of prominent players who agreed to terms in February, which included Nolan Arenado, Aaron Hicks, Aaron Nola, and Luis Severino. More may be on the way.
In the wake of a second consecutive slow offseason, could this extension onslaught be a symptom of an impending economic apocalypse—the death rattle of traditional free agency and a precursor to a work stoppage? Or might it be a more compressed version of the extension sprees we see every spring? Ringer staff writers Michael Baumann and Ben Lindbergh discuss what the moves might mean and why their implications are difficult to discern.
Baumann: Roughly a billion of baseball’s best and highest-profile players have signed contract extensions in the past couple months, and you’d think there’d be a pattern here. But what stands out to me is the sheer diversity of these deals. Position players, starters, relievers, young players, old players, short players, tall players, at every stage of development. Brandon Lowe, who’s not a household name unless your household is full of Maryland Terrapins fans, signed an extension, but so did Trout, who is the literal best player in the game. Goldschmidt and Sale signing takes the wind out of next winter’s free-agent class, but Lowe, Jimenez, and Bregman weren’t going to hit free agency until the mid-2020s.
Taken individually, we could talk about Chicago’s sudden about-face on Jimenez’s readiness, or how Arenado and Goldschmidt essentially got a jump on the deals they would’ve signed next year, but the big pattern is that there is no pattern to these extensions apart from the fact that there seem to be a lot of them all at once. So I ask you, as the most rational person in this conversation, is there something going on here or does it just seem like it because of fluky timing?
Lindbergh: I don’t want to dismiss the idea that this has something to do with players not wanting to test free agency. It would be strange if the stagnation in spending we’ve seen—particularly on non-stars and the over-30 crowd—weren’t weighing on some players and making them more willing to avoid the open market. But before we declare the case closed, let’s look at some data (in graphical form). I’m sorry to spoil the illusion that we’re just casually chatting by bringing research into this thing, but sometimes a good graph goes a long way.
Using the MLB Trade Rumors Extension Tracker, I’ve compiled some stats on extensions, as Jeff Sullivan did for FanGraphs last month (and many extensions ago). This first graph shows the number of extensions per year (from November through the following October) that bought out at least one free-agent year. The blue bars represent extensions for players with fewer than six years of service—that is, those who haven’t played long enough to qualify for free agency—and the red bars represent extensions for players with six or more years of service.
The past week was a busy one, but if we zoom out a bit, the quantity of recent extensions pales in comparison to some previous years. Remember Braun, Rizzo, Kershaw, Kemp, Cabrera, CarGo, Freeman, Yelich, Tulo, Votto, Posey, Andrus, Strasburg, Seager, Stanton, and many more: This type of deal is not new. Of course, there’s still time for that 2018-19 bar to get bigger, although most extensions tend to be signed during the offseason window that’s about to be closed.
What if we add up all of the free-agent years (including option years) that the extended players signed away?
Now we’re sort of seeing something. The free-agent years surrendered by players who’ve signed extensions since November are the most in any year-long period since 2013-14, albeit not nearly the most over the past 12 years. Essentially, extensions hit a lull for a few years, and now they’ve bounced back a bit, at least among older players. That might not be a coincidence, although this isn’t exactly a baseball bank run. There are still fewer free-agent years being bought out now than there were before anyone was worried about free agency malfunctioning.
The last graph I’ll inflict on you shows the total dollars committed via extensions that bought out at least one free-agent year.
Aha. The present period has seen by far the most (inflation-unadjusted) dollars committed via extensions since 2013-14. And the amount spent on players with six or more years of service is the second-largest in the sample, trailing only 2012-13, when David Wright, Félix Hernández, Adam Wainwright, Verlander, Dustin Pedroia, and Hunter Pence all re-upped for five years or more. Even though we aren’t seeing that many more extensions, we are seeing more money spent, which could be because of inflation or because better players are signing extensions but might also suggest that more players are getting good deals.
So, knowing the numbers, what say you? Recency bias? Real trend? Some combination of both?
Baumann: I think you’ve hit on something with the years-vs.-money idea, because—at the risk of inviting you to make more graphs—I don’t think just looking at “contract extensions” or “buying out arbitration or free-agency years” is a narrow enough scope to capture why these deals feel significant. It’s pretty standard procedure for teams to buy out arbitration years two or three at a time, or at least it was before more clubs embraced a file-and-trial approach this offseason. Now, because we spent all winter talking about service-time manipulation and the death of free agency, we’re more primed to pay attention to these contracts and their terms than we might have been four or five years ago. It wasn’t a big deal when the Braves bought out the last two years of Jason Heyward’s arbitration eligibility in 2014, or when the Diamondbacks gave A.J. Pollock a two-year deal to avoid arbitration in 2016.
It’s also worth mentioning that these are extremely, extremely high-end players we’re talking about here. Three of the top four finishers in last year’s AL Cy Young race have re-signed in the past week, as have four of the top 10 finishers in the AL MVP voting, and it’s not like the other players on those lists were primed for an extension: José Ramírez is just two years into his own extension, and J.D. Martinez got his big deal last year. Corey Kluber is still on the pre-arbitration extension he signed before the 2015 season, and it’s newsworthy that Gerrit Cole and Trevor Bauer aren’t signing extensions.
Cole and Bauer are both making principled stands against signing extensions, but in most cases, it’s hard not to at least suspect that most of baseball’s biggest stars have looked at the past couple offseasons and just don’t want to bother with the hassle. From the team’s perspective, I think the past month’s activity reflects the idea that you don’t get in trouble paying top dollar for top talent, you get in trouble paying top dollar for second-tier talent. Where this gets tricky is teams are no longer paying second-tier prices for second-tier players, and they are using that to drive down prices across the board. Which brings me to another question: If you get to do charts and graphs, I get to do yelling about labor ethics and the intersection of power and money, so do you want me to do the yelling now or should I hold off and do the yelling later?
Lindbergh: I’m surprised we’ve gotten this far without any yelling yet. I don’t want to make more graphs, so yes, please start to set up your soapbox.
Before I hand you the megaphone, I’ll make a couple of points. First, I think there’s sometimes a tendency to overstate how team-friendly certain extensions are, because it’s tempting to compare the terms to those of free-agent contracts even though that isn’t apples-to-apples. For less experienced players, extensions buy out pre-arb and arb years, when players can’t pick their employers and their salary ceilings are limited. When veterans are involved, extensions often price in some risk that the player will get hurt or decline before his current contract ends. One would hope that Verlander, for instance, would do better than two years and $66 million were he a free agent today, but the Astros are signing up for his age-37 and age-38 seasons without knowing whether he’ll survive his age-36 season with his skills and arm intact.
That said, extensions are team-friendly on the whole, because they’re subject to an inherent power imbalance. Teams can absorb the risk of any one player flaming out, but players—especially pre-arb players who haven’t had a big payday—can’t. That imbalance is exacerbated by the current, collectively bargained system, which limits players’ earnings well into their careers. As long as it takes three years for players to make more than the league minimum and six (or sometimes seven) to get full value, some players will sign for less than they would have earned had they gambled and gone year to year.
Look at Luis Severino, who was by some measures a top-five pitcher in baseball from 2017-18. He made less than $1.2 million for those two seasons combined, although he was poised to make more in his first trip to arbitration. Severino signed a four-year, $40 million extension with a club option for 2023 in mid-February—not a ton compared to what he would have gotten had he stayed healthy and productive for a few more years, but nonetheless life-changing money. By early March he was sidelined with a rotator-cuff problem. Maybe that won’t turn out to be serious, but it’s understandable that pitchers in particular would be scared into pursuing security.
Trout’s apparent preference for bypassing the fuss of free agency makes him something of a special case, but in a post-Pujols-contract world where teams are adept at projecting player performance, I can see why Goldschmidt, who’ll turn 32 in September and whose still-strong bat has slipped a little relative to his mid-20s peak, might decide that securing $130 million from 2020 to 2024 was an appealing proposition. I can also see why Sale, who’s about to turn 30 and is coming off a shoulder-problem-plagued stretch run, might like the look of $145 million over the same five future seasons (with an opt-out, escalators, and a vesting option). And while it’s despicable that service-time manipulation may have motivated Jimenez to sign, there is some chance that he’ll join a few other recent White Sox prospects (not to mention Jon Singleton and Scott Kingery) in making a less-than-smooth transition to the majors, and the terms of his contract weren’t quite as exploitative as, say, Evan Longoria’s notorious first extension.
Still, I won’t tell you you’re wrong if you argue that this new crop of contracts is the final phase in the owners’ successful scheme to suppress payrolls: Put pressure on (already underpaid) prospects by pretending they aren’t ready, remove the brass ring for more experienced players by holding the line in free agency, and then reap further rewards when stars size up the market and settle for less than they’re worth.
Baumann: Jeez, I might not even need the megaphone back. And it is important to note that players don’t sign these deals because they’re stupid, they sign them because it’s important to get paid earlier or hedge against aging or injury. That makes sense—very few workers in the real world take on high-risk, high-reward careers where they pursue the greatest financial gain with no regard for stability, comfort, or long-term financial security.
But I do want to add something to the point you made. The reason I view these extensions, writ large, with a healthy dose of cynicism is the list of structural disadvantages players have that you described. Players have just one body and one career, and sometimes just the one big contract, with which to earn generational wealth for themselves and their families. Teams not only have more money to start, but they can afford to make mistakes like the Singleton and (so far) Kingery deals, which allows them to drive a hard bargain. Service-time manipulation hurts players more than it hurts teams. Minor leaguers make less than minimum wage. Amateur bonuses are capped and the arbitration process suppresses salaries.
And the 30 MLB franchises have all made the conscious choice to use these structural inequalities in power—some of their own making—as leverage. As pressure points in negotiations so that they can exert maximum control over their employees for the absolute minimum financial risk. Now, I don’t really give a damn about whether Chris Sale makes $150 million or $200 million, but these deals make me uncomfortable because out here in the real world, employers use similar tactics to squeeze maximum productivity out of their workers for minimum financial outlay.
A pre-arbitration extension might involve more money than permalancing or unpaid internships or demanding round-the-clock responsiveness for a 40-hour-per-week salary, but all these practices are born from the same directive under capitalism to maximize profits before doing right by one’s employees or society at large. Hell, MLB teams do it to their off-field workers too, from scouts and analysts to the PR staff to beer vendors. And if your (not you, Ben—I know you were just waving the red flag and singing “The Internationale,” I’m talking to the readers here) first reaction is to say “that’s how businesses operate,” then maybe we ought to take a long, hard look at what we expect from private enterprise in society.
OK, I guess I did need that megaphone back. I know I go on and on about this, but economic concerns are so central to team-building in baseball in 2019 that you’d have to be ignorant to ignore the broader currents of history that brought us here.
With that said, I want to talk at least briefly about how the past month’s activities have changed expectations for star players reaching free agency. Like, if Trout and Arenado signed extensions, is it going to be viewed as a failure for the Red Sox if Mookie Betts doesn’t? The same for Verlander and Sale versus Jacob deGrom and Cole. I’m curious about whether we’re headed for almost a neo-reserve-clause era, or something like what exists in soccer, where players sign contract extensions over and over and only change teams via trade (or transfer, in soccer’s case) rather than letting their contracts run down and testing free agency. Is that where we’re going, or am I overreacting to an unusual couple of weeks and we’ll all forget this ever happened by the trade deadline?
Lindbergh: I hesitate to extrapolate too much from one week or one extension season, especially considering we’re not even into unprecedented contract territory here. Five years ago, I speculated that the uptick in extensions might snuff out free agency, but the pace of extensions subsequently slowed. I wonder now, as I wondered then, whether this is to some extent cyclical. If most of the stars sign extensions, then the few who wait for free agency will have more of the offseason spotlight to themselves (although they might also find fewer suitors). Maybe Mookie or someone else takes advantage of that scarcity and lands a deal so envy-inducing it makes more players think twice about forgoing free agency. As I pointed out in my piece about Trout’s extension, though, I worry that the WAR king maxing out at $36 million per MVP-caliber season sets a ceiling for everyone else.
I think you’re right about why we should care about this tussle between billionaires and (mostly) multimillionaires. No, Blake Snell’s salary isn’t one of the world’s most pressing problems. Heck, compared to countless examples of unimaginably more severe suffering, neither is the Rays minor leaguer who’s living out of a school bus. There’s a limit to how many crusades we have time to adopt, and many fans are understandably reluctant for baseball to become one of their problems; they want baseball to bring relief from the problems that impact them personally. But like all forms of mass entertainment, baseball is a mirror that reflects the way we live, and the conversation surrounding it—from beanballs and bat flips to salary structures—helps us sort out how we think the rest of the world should work.
There’s another, nakedly self-interested reason to care about the bank accounts of athletes who make more than we ever will: People who like baseball want there to be baseball, and the likelihood of games going on uninterrupted after the CBA expires in December 2021 hinges on the outcome of this struggle for the sport’s financial future. It would be nice if we could simply be pleased that Red Sox fans get to keep enjoying Sale’s services, that Sale gets to stay where he wants to be, and that some lucky real-estate agent is about to take home an extremely large commission because the southpaw can stop waffling about whether to buy a Boston residence. But because of the tensions embroiling baseball, each of these contracts comes with baggage. And as you said to me before we began this dialogue for public consumption (yes, we do sometimes talk when we aren’t creating content), this sudden splurge on extensions is a Rorschach test we each decipher differently depending on our preconceptions, sympathies, and revolutionary leanings.
With that in mind, I’ll close with this question: Several of the sport’s leading figures and faces just got paid, including some, like Verlander, who’ve been outspoken about baseball’s financial foundation being broken. Will that make them less likely to agitate for change and risk rocking the boat on which they’ve booked passage to prosperity? After all, both Bregman and Snell publicly described themselves as disappointed that the Astros and Rays, respectively, gave them only paltry raises when their teams renewed their contracts earlier this month, but that didn’t dissuade them from staying put when more cash came their way. Or are these extensions a sign that some players foresee or even welcome a work stoppage and are trying to get paid preemptively in case a strike or a lockout costs them a season?
Baumann: I’m not sure anyone welcomes a work stoppage, but Verlander had gotten his well before this extension, and was banging the drum anyway, as had other veterans like Alex Gordon, Evan Longoria, and Jake Arrieta earlier this winter. That consciousness of the game’s larger economic questions won’t go away, either for the players or for us.
Which brings me to a closing answer to your closing question: The one thing I do know about this situation is that it’s another turn on the knot that’s made societal economic analysis inextricable from any intelligent discussion of baseball. Players can’t just say, “Oh, I’m just blessed to be here” unreservedly, and in analyzing the game we can’t either ignore the financial elements of team-building or treat it like a benign puzzle like we did in the 2000s, in which the goal is to assemble X wins or more for Y dollars or less.
That’s both a good thing and a bad thing. It’s good that we know better and are viewing the baseball world in a more considered, more holistic way than we did in the past. But it also represents a loss of innocence, and even as much as I can be a scold about money and power in sports, I think it’s a huge bummer that the three best teams in baseball all locked up their best pitchers long term and all I can think about is the secondary effects those extensions will have on the league’s wage structure. We have truly eaten the fruit of the tree of knowledge of good and evil.