MLB NY Yankees

MLB: New Route to the Bank is by Extensions

Over the past couple of offseason, we’ve seen a scary trend start to emerge in Major League Baseball. The players at the top of the MLB depth charts are sitting as free agents until late February or early March. So a new trend has begun taking shape. Young players facing their first or second year of arbitration are now turning to their organizations and looking for a long term extension. Thus “team-friendly” extensions are the new route to the bank.

Growing Trend

If the last two offseasons are any indication, free agency is going to falter as a means to securing a prosperous long-term contract. When two 26-year-old MLB superstars are still sitting on the open market on February 19th there is a problem. Free agency was once looked at as the best opportunity for a player to gain the advantage in negotiations and secure their financial futures. But sadly, the growing realization is that unless something changes from a CBA perspective to ensure money must be spent on free agents it will become less beneficial for a player to wait until then.

And that brings us to the new market correction and that is long-term extensions for young players still under contract. As we have seen recently the trend is to lock up players early in their arbitration process. The first benefit is to avoid all negativity that must be placed on a player in order to keep the dollars down and not set a new precedent going forward. Secondly, and maybe more importantly for the team, you avoid a huge pay increase due to a breakout performance. We chronicled a piece about Dellin Betances last week that brought back into focus the ways that an arbitration hearing can negatively affect a player. Locking young players in before heading to an independent arbitrator serve the best possible outcome for both the team and the player.

Controlling the Narrative

By jumping out early and locking a player in long-term, again, there are two key benefits. Firstly, for the team, you protect yourself against a breakout season, as was previously stated. For example, if Luis Severino who would have made, let’s say $5 million this season, goes off in a huge way and has a 1978 Ron Guidry-esque type of a season with a record of 25-3 and has an ERA of 1.74 while striking out, say 300. That $5 million could have added on another $10-15 million more the following season to his salary figure. But by locking Sevvy up early, the Yankees are paying Severino just $10 million for next season. Regardless of how good Severino season turns out.

And secondly, for the young players, they are offered stability. The lifespan of a ballplayer’s “earning” career can be really short lived. And the goal then becomes to make as much as you can. So with free agency playing out the way it has the past few seasons. Thus when the opportunity to make a much larger guaranteed contract comes up, it’s wise to take it. So unless something changes in the CBA, the extension trend will continue. And if you don’t believe that just look at last week. Bryce Harper, Manny Machado, Craig Kimbrel, Dallas Keuchel, Marwin Gonzalez, and many more remain free agents. While four young players were offered contracts. Severino, Max Kepler, Jorge Polanco, and Aaron Nola saw the writing on the proverbial wall. So they signed on the dotted line and took the new “Route to the Bank.”

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