What would an extension for Masahiro Tanaka look like?

The Yankees have an issue with their rotation. It doesn't look great for 2017, but that isn't even the biggest concern. If Masahiro Tanaka opts out of his current contract after the 2017 season, the starting staff is essentially empty in 2018 and beyond. CC Sabathia and Michael Pineda will be free agents, leaving the Yankees only with a handful of young arms like Luis Severino, Luis Cessa, and others to take the ball every five days.

The combined presence of Tanaka, Sabathia, and Pineda on the roster right now means the Yankees should be able to survive this year without a disastrous rotation, but beyond 2017, all bets are off. In all likelihood, they have to make some sort of move. Heading into the future, into the years where the Yankees theoretically should be opening a new window of contention on the back of a wave of young talent, relying exclusively on questionable arms is untenable.

There is a fairly simple solution: extend Masahiro Tanaka. Brian Cashman has said that there haven't been any extension talks between the team and Tanaka, but as a potential rotation crisis looms, that should change. With a barren starting staff after this year, an extension for the Yankees’ ace has to be at least considered.

Tanaka is owed $22 million this year, and has $67 million coming his way across 2018 to 2020. He has a four-year, $89 million contract in hand, with the last three years coming in the form of what is basically a player option. He is 28 now, with this current contract extending through his age-31 season.

If Tanaka was a free agent now, he would obviously receive much more, as $22 million for a top starter is a steal for the Yankees. Free agents on the market currently earn around $8 million per win, and Tanaka, by rWAR, was worth over five wins last year. From a simple $/WAR perspective, Tanaka is underpaid.

But he is not a free agent now. The fact that Tanaka is still under contract for at least this season and potentially more makes this a complicated scenario for which there are few precedents. A decent parallel is the situation involving the Yankees and Sabathia in late 2011. Sabathia, 30 at the time, had the ability to opt out from the the four years and $92 million remaining on his deal, but the two sides agreed on a five-year, $122 million extension with a vesting option for 2017.

Sabathia's new deal gave him a slight annual raise and an extra guaranteed year, plus an option year that ended up vesting. Tanaka is a younger and slightly less effective pitcher than Sabathia was back then, but the template is still there: an extension which adds a couple years and bumps Tanaka up from his $22 million salary.

A more recent parallel is Stephen Strasburg. The right-hander was set to reach free agency this offseason, but opted to sign a seven-year, $175 million extension with a year of team control still remaining (after accounting for deferrals, his deal is equivalent to about a seven-year, $160 million guarantee). Strasburg also has opt-out clauses after the third and fourth years of his deal, options that have a not-insignificant value to the player.

Strasburg is an interesting comparable, as he is similar to Tanaka by both age and track record. Tanaka is three months younger, and has a career ERA- and FIP- of 77 and 84, respectively, compared to 82 and 75 for the Nationals’ star. Strasburg, however, did undergo Tommy John surgery in 2010, while Tanaka opted not to undergo the procedure on his partially torn UCL.

In negotiating with the Yankees, Tanaka would have a couple pieces of leverage that Strasburg didn't. He has avoided major surgery on his elbow, and he has the fall-back of $67 million guaranteed in 2018 to 2020 if he were to reject any extension offers and simply play this season out. Strasburg was incentivized to get his big-money deal when he could, as he had an injury history and no guarantees beyond 2016. Tanaka has the luxury of plenty of money coming his way even if he were to suffer an unfortunate injury this year.

Even so, an extension in the ballpark of what Strasburg received seems to be about right. Both project to about 4 fWAR by Steamer, are close in age, and both have had at least some injury trouble. We’re probably not going to find a more direct comparison for an extension. If we look to the free agent market, pitchers like David Price and Max Scherzer earned guarantees near $30 million a year over seven years, giving us an idea of what the market pays elite pitchers. Tanaka probably isn’t on the same level as those guys, but the point remains: an excess of $25 million annually is likely what it would take to lock Tanaka down.

So to convince Tanaka to rip up his current contract and re-up with New York, the Yankees probably would have to sign him through at least his age-33 season, for at least $25 million a year. That would mean throwing away the three years and $67 million Tanaka has remaining after 2017 and locking in at five years, $100 million, at the very bare minimum. An actual extension would almost certainly be either longer, more lucrative annually, or both.

Regardless, the idea of an extension is one the Yankees must consider. A rotation crisis is possible as soon as next year, and if they are steadfast in holding on to their top prospects, the only reasonable way to make major upgrades to the staff is with real money (they have some of that, you may have heard). Otherwise, they’ll be resigned to hoping a handful of pitching prospects pan out and signing lackluster free agents. That might not be the best way to usher in the Yankees’ next championship window.