It’s no secret that the Holy Grail of roster construction is cheap, controllable talent. Skilled players in the prime of their careers, and at below-market prices, are generally the best on-field asset a team can have. It produces tremendous amounts of surplus value and frees up budget room for a splashy, “final piece” free agent signing or trade.
It’s also no secret that the Yankees have tried to replicate other teams driven by cheap, controllable talent. To that end, they’ve seen success with the careers to date of the Baby Bombers, notably Aaron Judge, Gary Sanchez, Greg Bird and Luis Severino. None of these players have more than 1.1 years of MLB service, and yet they have accrued 9.9 fWAR between them.
To this end, it would behoove the Yankees to begin discussing contract extensions with their budding stars, and sooner rather than later. Doing so provides short and long-term benefits, while also hedging against a team meltdown performance-wise.
Contract extensions while a player is still in his pre-arbitration years are not exactly common, but they are becoming more routine. Extending a player in his initial years of service to buy out the first couple of seasons of free agency are growing in frequency as well. Teams are attempting to keep a player under contract for his most valuable seasons before letting him go at an age where decline is probable.
Contracts with players who have as little service time as the Baby Bombers are relatively simple. A team can choose to re-up a contract at the league minimum as long as players have fewer than three years of MLB service time and aren’t Super Twos. Although this may make short-term financial sense, it’s generally better to attempt to extend players before they hit arbitration if they have the talent of a Judge or Sanchez.
Pre-arbitration contract decisions and the arbitration process can be adversarial (see Dellin Betances), or expensive (see Bryce Harper and Dallas Keuchel). Plus, long-term extensions early in a career generally come in at below market-value over the entirety of the contract. Later extensions, as a player inches closer to free agency, can become expensive and approach albatross levels. For example, a short list of recent extensions signed with pre-arbitration and arbitration-eligible players around baseball:
The bottom five extensions were all negotiated before the signee reached arbitration. The resulting contract totals are below-market rate and considered terrifically valuable by MLB as a whole. This is especially true when compared to contracts like Matt Kemp’s, Ryan Howard’s and Joey Votto’s, which have become tremendous obstacles for the signing team.
There’s a quantifiable incentive to signing pre-arbitration players to extensions, but I also believe there’s a qualitative value. First, reaching an agreement with a player is almost always a good idea, as the players have to be happy with the contract terms to sign an extension. This prevents the adversarial approach of arbitration, where players or their agents have to hear teams justify why the player isn’t very good and should be paid less.
In the context of the Yankees, we’ve seen that we cannot trust the team’s administration to carry out the arbitration process in an impersonal, professional manner. If Betances was turned off the team by his experience this winter, it’s concerning to think what a more valuable, everyday position player or starter would feel if the kerfuffle was repeated.
Extensions now also hedge against the Baby Bombers performing so well that they price themselves out of the extension market. The Reds could have extended Votto after his Rookie of the Year runner-up year, but they chose to wait until he had made multiple All-Star teams and won the National League MVP. That gave him much more leverage and bargaining power, thus making him much more expensive. As well as Judge or Sanchez have performed so far, the Yankees still hold most of the leverage and can therefore secure a team-friendly deal.
There’s also a hedging aspect of contract extensions. I’m generally conservative when it comes to roster construction. I think teams should strive for versatile, high-floor rosters while preparing for the worst possible outcome, or at least undesirable ones. Giving contracts to valuable young players opens two contingencies: budget room and trade possibilities. Keeping payroll below market value allows a team to be more active in free agency, as they’re better able to project future payrolls and therefore have a better grasp on what they can offer a player.
Finally, a young player with a valuable contract becomes a terrific piece of trade bait, especially if everything goes wrong for the Yankees down the line. A great comparison is the Chicago White Sox, who did everything they thought would make them legitimate contenders. They built solid-to-great pitching staffs, and put together what looked like a good offensive team with the likes of Adam Eaton, Jose Abreu and Todd Frazier.
As we know, just about everything that could go wrong did with the White Sox. Given the haul they received for Chris Sale, thanks to his contract, and the expected return for Jose Quintana should he be traded, it’s easy to see that the Sox could rebuild faster than a lot of other teams. You never want to expect that everything will go wrong, but front offices who don’t ask “What if?” are being derelict in their duty.
Most teams and players prefer not to discuss extensions during the season, believing it takes focus away from the “one game at a time” mentality. That’s been standard for the Yankees in particular, but whenever this season ends, the team — and the Baby Bombers — would both benefit from working out extensions to keep players happy, the team solvent, and surplus value high.