A few years ago, we asked Pittsburgh Pirates president Frank Coonelly if the team could eventually afford a $70-80 M payroll. He answered that the team could afford that payroll after attendance increased. That led to a series of expectations.
1. The Pirates would eventually become competitive.
2. The attendance would increase due to the Pirates winning.
3. The payroll would go up.
Number three on that list has always been the focus of Pirates fans. The Pirates increasing payroll has always been seen as the part where they hold up their end of the bargain. Personally, if I’m looking for one thing out of a team, it’s winning, rather than spending. It seems there is too much focus on the size of the payroll and not the quality of the team, which looks to be a contender once again.
The Pirates have been increasing their spending, but they still have room to add more payroll. They definitely shouldn’t spend just to spend. They need to spend where it makes sense. And the place where spending makes the most sense is on their own young players.
One of the biggest problems with free agency is that the majority of players who enter free agency are over the age of 30. They’re looking for a high-priced deal, and several years, yet they’re entering the downside of their careers. In most cases, you’re paying for past production, and getting much less than that. The first few years of the deal might work out, but often the downfall is steep and costly.
The availability of a lot of top of mid-level free agents is getting scarce, since a lot of teams are extending their best players before they reach free agency. That means you’re not going to see a lot of options, and the options who are available have the above concerns with age. Most of the younger guys who are available have some sort of issue, and are more of a project (Edinson Volquez, Francisco Liriano, Josh Johnson). That’s not to say that you can’t get a good deal through free agency (Russell Martin is a prime example that you can), but deals through free agency seem to be rare these days.
I believe teams are extending their young players more and more because the risk is much lower than what you’d see on the free agent market. Take the recent Freddie Freeman extension, for example. Freeman just got eight years and $135 M from the Atlanta Braves. That covers his three arbitration years, and five free agent years. The deal averages out to $16-17 M per year, which seems like a lot for a guy who is just entering arbitration. But it also seems smart when you consider the alternatives.
Freeman would have originally been a free agent after his age 26 season. He would have been extremely valuable hitting free agency that young, and probably would have gotten at least $16 M per year, if not more. He’d definitely get more if he continues improving his game in the next three years. But even if he maintains this level, he’d be looking at a pretty big deal. That means the Braves are looking at two scenarios. They’re either going to be paying too much for Freeman’s arbitration years, and getting him for market rate in his free agent years, or they’re going to be getting a value over the life of the deal. The best part of the deal is that the risk is lower than most long-term deals. Freeman was extended through his age 31 season. That means he’s less likely to face injuries or decline due to age.
This is a similar approach as the one the Pirates took this off-season with Charlie Morton. They signed him to a three-year, $21 M deal, which could be worth four years and $29.5 M. He got what he was projected to receive through arbitration this year, and his free agent years are pretty close to market rate (two years, $17 M, or three years, $25.5 M). If Morton continues pitching like he did in 2013, then the overall deal could look like a nice value. As for the risk, he’s under team control through his age 33 season, and that final year is an option with a $1 M buyout.
The Pirates also got Andrew McCutchen a few years ago on an extension through his age 31 season. We already know that this deal is a massive value for the team, so pointing out anything beyond the contact value is overkill. But the Pirates got the bulk of McCutchen’s prime years, without having to pay for the bulk of his decline years.
This is the approach the Pirates should take with any of their top guys. That’s unlikely to happen with Gerrit Cole and Pedro Alvarez, since they’re Scott Boras clients and Boras doesn’t usually sign these types of deals. But it could be an option for other players. To get an idea of who should be a candidate, here is a look at the top extension candidates currently under team control, and the age they’re eligible for free agency.
Neil Walker – His first year as a free agent would be his age 31 season. I don’t think he would be a good extension candidate, since he already has some injury red flags in his 20s. I think the future middle infield would be Alen Hanson and Jordy Mercer. However, if one of those two doesn’t work out, or if they need a third base option, a Walker extension would make sense.
Starling Marte – He would be my top extension candidate. He’s currently under team control through his age 29 season. He put up a 4.6 WAR in his first full season in the majors. He draws concerns for his lack of walks, but reaches base more often due to his speed, and has a lot of value due to his base running and defense. He also originally signed for $85,000, so he might be open to a big pay-day.
Jordy Mercer – This is another Neil Walker situation. Mercer’s offense, if he repeats his 2013 numbers over a full season, would be top ten as a shortstop. He also is under team control through his age 31 season. That means the Pirates might want to wait a year or two and see what they’ve got with Mercer before offering him an extension.
Pedro Alvarez – An extension seems unlikely, since he’s already under contract for his first year of arbitration. Right now he’s under team control through his age 29 season. That means he’s looking at a potentially big deal as a free agent. I don’t see Boras taking a deal here, since a 29-year-old third baseman could get a massive deal, and that deal is only three years away.
Gerrit Cole – Any talk of extending Cole is wishful thinking, due to Boras.
Gregory Polanco – If there’s any player who would be great for an Evan Longoria type extension, it would be Polanco. He signed for $150,000, and profiles as an impact player. That means he might be willing to sign a big deal early, and could be very worth that big deal. He is 22 this season, and would be eligible for free agency after his age 28 season. Longoria got a six-year deal right after coming up, with three option years. That bought out two of his free agent years. A similar deal for Polanco would have him under control through his age 30 season.
Jameson Taillon – The Pirates might want to wait a few years to extend Taillon, but he seems like a better candidate than Cole, simply because he’s not represented by Boras.
In most cases, players don’t sign extensions until they’re eligible for arbitration (such as the case with Freeman), or a year before they’re eligible for arbitration (McCutchen as an example). The two guys who could be early extension candidates would be Marte and Polanco, due to the fact that they didn’t receive big bonuses when they originally signed.
The Pirates are unlikely to extend everyone here. It would be great if they could extend Alvarez beyond the 2016 season, giving them more time to figure out the third base situation for the long-term. But they’re unlikely to get Alvarez to a favorable deal (something where he’s not under contract into his mid-30s), and they’re probably going to have to pay market rate, thus assuming all of the risk in such a deal, with a smaller chance for any value.
As for the guys who are candidates for an extension, those could be some of the best deals the Pirates could possibly make. We’re seeing just how good the McCutchen extension is working out. That deal is looking like one of the best bargains in the game, and looks better and better with each extension that is signed. Imagine having two more bargains in Marte and Polanco. Even if the deals end up like Jose Tabata, that’s not a bad thing. Tabata might be slightly over-paid, but he essentially amounts to an expensive fourth outfielder, and his contract is not hurting the Pirates at all. If he repeats his 2013 value each year (1.1 WAR), then he’ll be worth his remaining deal (three years, $12.25 M guaranteed remaining).
Links and Notes
**The 2014 Prospect Guide is now available. You can purchase your copy here, and read about every prospect in the Pirates’ system. The book includes our top 50 prospects, as well as future potential ratings for every player.
**Last week we finished our countdown of the top 20 prospects in the Pirates system. The number one prospect was Gregory Polanco. Click the link to read his scouting report, along with the complete list of top 20 prospects. If you enjoyed all of the reports, you can get more by purchasing the 2014 Prospect Guide.
**Our own James Santelli was Nominated For a SABR Award. The award is based on a vote. Click that link for information on how to vote for James and Pirates Prospects.