Last month, our Josh Diemert gave us an interesting analysis of the state of The Gerrit Cole Contract two years in. He concluded that Cole has been worth every penny that the Yankees have paid him and then some, but that that was to be expected in the front half of this marriage. Whether Cole could continue to meet, or even exceed, expectations over the next couple seasons would probably determine how well the entire deal looked in hindsight.
That discussion quickly put me to thinking about an aspect of Cole’s contract that hasn’t been considered all that much to this point in his Yankee career: that of his opt-out. Cole is guaranteed $36 million annually for nine years with the Yankees, but he can forgo the final four years and $144 million after the fifth year and instead opt for free agency. However, should Cole exercise his opt-out, the Yankees have the option to override it, by tacking on an additional year at $36 million, bringing the total outlay for Cole to $360 million over ten years.
It’s a fascinating little contractual quirk, one that could have both sides considering all sorts of projections and game theory in three years time. 2024 is still a ways away, but after watching a couple seasons of Cole in pinstripes, and after finally getting to see him perform across a full year, now seems like a good time to start thinking about the chances Cole opts for free agency after a half-decade in the Bronx.
This is obviously a difficult question to model with so many uncertainties ahead, particularly with a lockout leaving us without a CBA. The new CBA, Cole’s performance and health, the state of the labor market for players, and the state of the Yankees themselves, all will influence Cole’s decision, among countless other factors.
As complex as the question is, though, it can ultimately be summed up neatly: how good does Cole have to be to leave four years and $144 million on the table?
There are infinite ways Cole’s next few seasons could progress, but I think it’s useful to simplify things and think of three rather concrete ways things could go. It’s pretty easy to envision Cole A) hitting his projections the next few years, hovering around 5 WAR, or B) starting a slow decline through his 30s, and looking more like a 3.5-4 WAR pitcher by 2024, or C) modestly defying aging, and remaining one of the five best starters in baseball through years three-to-five of his contract.
Scenario B is the most straightforward to address; if Cole sees his performance degrade slightly in his age-32 and age-33 seasons, or if he begins to miss a little more time with injury in his 30’s, he’s unlikely to opt out. There’s no shame in reaching the age of 34 and projecting for close to 4 WAR, a figure that puts one within the top 20 starting pitchers. But should Cole reach his opt-out point in the midst of a gentle decline, from ace to quality starter, the smart money says he takes the $144MM to stick around.
Scenario C also seems relatively simple to me. As Josh noted in his piece, Cole looked like a safe bet to exceed 6 WAR before injuring his hamstring last year. He actually gained velocity last year at age-30, lending credence to the idea that Cole can maintain that level of performance even as he gets a little older. Should Cole put together a couple 6 or 7 WAR seasons, he looks likely to opt out. Something about baseball’s economic structure would have to drastically change to keep Cole from beating $36MM across four years should he look like the AL Cy Young for the better part of the next three seasons.
That means that the most probable scenario is also the toughest one to gauge. Right now, Steamer projects Cole for 5.4 fWAR in 2022. Should he come close to that mark, he’ll probably project for something like 4.5-5 WAR in the next couple seasons. That’s where things get interesting.
What would the market for a 34-year-old Cole, coming off a series of 5ish-WAR seasons, look like? It’s hard to say for sure without seeing how the free agent market plays out the next couple years, but there’s some reason to be bullish for Cole. Most recently, Max Scherzer, an old but proven ace, secured $130 million over three years from the Mets. This could be a one-off born of a Steve Cohen fever dream, but if Scherzer can pull down a $43MM AAV for three years at age-38, it stands to reason a younger Cole could do similarly well a few years down the line.
I think we can sketch a decent outline of the likeliest scenarios here. If Cole begins to decline, he takes the money and is a Yankee until 2028. If he overperforms, he opts out, the Yankees happily tack on the tenth guaranteed year, and Cole gets to round out his mega deal. The gray middle ground is murkier, as Cole could go either way, as could the Yankees.
At the end of the day, the Yankees’ ability to nullify the opt out is a real saving grace here. Many of the timelines where Cole is good enough to opt out are timelines where the Yankees would have no problem adding on another year, minimizing the risk that they’ll lose their ace after five years. In all likelihood, it should leave both player and team in a good spot. With luck, Cole will contend for year-end awards the next three seasons, and give the Yankees every reason to lock him in for a full ten years.