Yankees General Manager Brian Cashman has previously said he would prioritize securing contract extensions with the team’s three stars who were set to hit free agency for the first time next winter, Aaron Hicks, Didi Gregorius, and Dellin Betances. But as he was about to walk into a potentially contentious arbitration hearing with another young star, Cashman pivoted, and instead inked Luis Severino to a four-year, $40 million extension.
The news was surprising, considering this is just Severino’s first of four arbitration years. Surprising, but certainly not unwelcome. Josh wrote an excellent post last week about how the deal is a win-win for the team and player, but I feel the biggest winners here are Yankees fans.
For years, the Yankees have desperately needed starting pitching, yet they have continually missed opportunities to acquire top talent on the free agent market. (Yes, I have written about this ad nauseum.) The trend continued this winter, when the Yankees showed tepid interest in consensus top free agent starter Patrick Corbin, then allowed him to sign elsewhere without even making a formal offer.
Unfortunately, with the way the Yankees have been operating in recent years, it’s easy to envision this trend continuing ad infinitum. As the old saying goes, you can never have enough pitching, which is why it’s such a welcome relief that the club decided to lock up a talent like Severino.
Buying out his four arbitration years is nice, as it ensures that we don’t have to brace ourselves for someone in the front office (ahem, Randy Levine) saying insulting things about one of our favorite players to the press after a hearing. The best part of Severino’s contract extension is the fifth option year, however. The Yankees hold a $15 million option for 2023, which comes with a $2.75M buyout.
The $15 million is a bargain for a pitcher of Severino’s ilk. He produced 5.3 WAR in 2017, en route to a third-place finish in the American League Cy Young Award voting. He was in pole position for the award before the All-Star break last season, before backsliding amidst a pitch-tipping issue. Despite this, he still managed to finish the campaign with 4.8 WAR.
How much is that worth in terms of dollars? Well, according to Forbes, the 30 MLB teams combined to spend $4.548 billion on payroll last season. Baseball Reference, in consultation with FanGraphs and others, set the total WAR for the 30 teams at 1,000 back in 2013, and it has remained so ever since. That means 1.0 WAR cost teams $4.55 million in 2018. So Sevy produced nearly $22 million in value for the Yankees last season. Wow.
It used to be a safe assumption that baseball salaries would go up every year, but that is no longer the case. According to Forbes, combined MLB salaries actually dropped by $115 million in 2018. So if total salaries remain the same (and therefore the cost per WAR does as well), and Severino performs in 2023 exactly as he did last season, then he will generate $6.83 million in surplus value for the team five years down the road. Of course, this doesn’t even take into account the possibility that the cost of a win on the market actually begins rising again in the interim.
Let’s not forget that Severino is entering his age-25 campaign. Players typically enter their prime years of production in their later twenties. So is it reasonable that Sevy might actually pitch better in 2023, which will be his age-29 season? You bet it is.
Let’s anticipate that Severino kicks it up a notch over his 2017 career pinnacle. What exactly would that be worth? The AL Cy Young Award winner from last year, Blake Snell, produced 7.5 WAR for the Rays. National League winner Jacob deGrom produced 9.6 WAR for the Mets.
If Severino does take that next step up the ladder, he would be in line to command big bucks when he hits free agency. Based on what we’ve seen from the Yankees of late, I have no confidence that they will offer any of their young stars what they are likely to fetch on the open market. And that’s why Yankees fans are the big winners in the Severino extension. With so much uncertainty, it’s nice to know our ace is under contract for the next half-decade. For that reason, Severino’s extension might prove to be the best news coming out of the organization all winter.