Tonight it was announced by Jon Heyman that the Pittsburgh Pirates and Gregory Polanco broke down with their negotiation talks on a contract extension. If the Pirates and Polanco would have come to terms on a contract extension, it would have been a rare event. There have only been five contract extensions in baseball since the start of the 2008 season featuring players who have less than a year of service time. It’s rare to see these deals, and while there is risk on both sides, it seems they tend to end up team friendly.
The Rays have three of the five deals, and two examples of how those deals can turn out to be team-friendly no matter what. Their deal with Evan Longoria, which guaranteed him $17.5 M over six years, with three option years, was one of the most team friendly contracts in recent history. On the other side, their deal with Matt Moore, paying him $14 M over five years, with three options, hasn’t worked out as well. Moore had Tommy John surgery last year, and will miss half of this season. Despite that, the Rays have already gotten a 4.7 WAR out of him in his first two years, which is more than enough to justify the small $14 M guarantee.
The teams are taking on a risk of guaranteeing money to an unknown. They reduce the risk by only offering these types of deals to the very best prospects, increasing their chances of the deal working out. Meanwhile, the player gets guaranteed money that protects him from an injury, but takes a risk of leaving a lot of money on the table.
The five deals mentioned ranged from $7-20 M, and averaged about $14 M each in guaranteed money. Compare that to the deals with players who had between one and two years of service time. Those types of deals have been much more common lately, with ten since the start of last season. The deals have ranged from $10-58 M, and average about $30.6 M in guaranteed money.
A lot of these deals feature guys who had breakout seasons in their first full year. Putting this into perspective with Polanco, if he signed a deal right now, he’d probably be looking at around $20 M, or maybe a bit more in guaranteed money. If he has one big year in 2015, he could demand Christian Yelich money, getting close to $50 M guaranteed.
A player can remove the risk of injuries by signing an extension, but if waiting it out one year means you could double your guaranteed money, then that’s a risk you take. This is probably why we’ve seen so many extensions signed by guys with 1-2 years of service time, compared to extensions for guys with less than a year of service time.
We’ll see if this approach pays off for Polanco…literally. I wouldn’t be surprised if the two sides eventually come to a deal next off-season. But for now, it looks like it won’t be happening, which means Polanco won’t end up being one of the few exceptions in the contract extension game.
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