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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8 COMMENTS

  1. If Heyman is to be believed, and that seems to be a fair assumption since he was linked above, then it is *not* the guaranteed money that is holding up talks.

    It is the salary in his option years(free agent years); the years in which these deals swing in the club’s favor.

    Maybe increasing the guaranteed amount by turning an option year into a guaranteed contract year gets him to budge, but otherwise, I don’t see a deal happening. The one thing the Pirates have not done with *any* of their extensions is give the player *both* security *and* close to free agent value in their option years. Sounds like that is what Polanco wants.

  2. I guess from the players side its a win all the way around. If he has a good year he can cash in, if he doesn’t have a good year this year he can suspend talks till after the 2016 season.

    • Not exactly. If he has another year like last year, he’ll be lucky to get an extension next year or even the year after. Most teams are willing to look past a bad year, especiallly a rookie year. But 2 bad years makes a trend. Fan frustration will set in. Management patience will start running thin. You’ll start hearing comparisons to Chad Hermansen, Brandon Moss, etc.

      I’m not saying he has to be a superstar this year. But he does need to take a noticable step forward. He needs to go from a 0 WAR player to a 1.5 WAR player at a minimum in order to have an extension discussion next year. Anything less, and the Pirates will probably decide to go year to year with him.

      • Going year to year with a kid with his skill set after 1.25 average years in his first big league stint could easily cost the team a buttload in dollars. Not saying sign him not matter what, but there is almost no way he isnt a 1-2 WAR player unless he his .220. His speed and defense over the course of a year make .250 for him a 1.5 WAR season. Its why teams want to sign him, his offense is only a part of how he brings value….and it profiles to be plus. Might take him more than 400 at bats to be a plus bat, and that isnt unusual.

  3. I think from his perspective, doing the deal now wouldn’t be the worst idea. It would give you guaranteed money, financial stability for the rest of your life, and if you do excel you still get one more big contract around your age 30 season. Success in the majors isn’t guaranteed, and if I were him I would take the money when it was offered. At least it speaks to his confidence that he thinks his play on the field can increase his value

  4. The kid has all of the physical tools, and, if yesterday’s performance is any indication, he will have the type of year in 2015 that will increase the value of a long term contract. The Pirates will continue to pursue a deal with him as they should, but they have the ability to wait, especially when you consider that Gregory will be under team control for at least the next 6 years.

    For me, I hope he is worth much more at the end of 2015 because that will mean that he has had the type of year that the Pirates know he is capable of having at the plate and in the field.

  5. I was surprised his camp was still in talks, seems his value is still rather low thanks to a lack of time in the majors. Waiting a year can really boost his value, and middling play doesnt really ruin the value all that greatly. Seems Polanco stands to gain much from waiting a year, or waiting for a rather sizable offer.

    • Agreed. If he even has an ok year his leverage in contract negotiations will increase just by being a year closer to free agency. If he has a big year, it will increase substantially.

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