Escalating Salaries, the Merit of Extensions, and a Suggested Offseason Strategy

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Escalating Salaries, the Merit of Extensions, and a Suggested Offseason Strategy

Chicago Cubs

wallet cashI was thinking quite a bit about that Tim Lincecum deal last night (because that’s what I do with my spare time – think about relatively minor baseball contracts for players who have no connection whatsoever to the Cubs).

Let’s imagine that two years, $35 million, and a no-trade clause for Lincecum (who was about to become a free agent) isn’t really an overpay in the current, cash-flush baseball market. That’s at least as plausible as Brian Sabean, long a successful GM, completely and horribly misreading the market. In a world where guys like Lincecum can command $17.5 million per year, I wonder about the long-term ramifications of that shift in the market. Yes, it would mean that teams would be even more aggressively hoarding prospects and trying to lock up young stars with long-term deals (the teams might even take on more risk to do so). After all, if acquiring a guy like Lincecum is going to cost you so much money, those cost-controlled players become even more valuable.

On the other hand, at what point does the pendulum swing so far in that direction that players begin to push back against it? Which is to say, at what point do players who are a couple years out from free agency – or even three or four – simply refuse to discuss extensions, knowing that the possible payoff in free agency has become absurdly huge?

A pre-arbitration extension (i.e., an extension that comes within the first three years of a player’s service, and covers some or all of his arbitration years plus a year or two of free agency) makes sense for both the player and the team, since it provides cost certainty for the team, and the first big, guaranteed payday for the player. But the Matt Cain/Cole Hamels/Justin Verlander/Felix Hernandez-type extensions? The ones that come just a year or two before free agency? Teams wouldn’t be doing them if they didn’t project a benefit. And as the dollars skew the pay scale further and further north, those players will start to wonder whether they’re not maximizing their value, especially when they’re so close to free agency.

Perhaps within a couple years, we won’t see in-house extensions for players a year or two away from free agency anymore, unless those extensions are clearly at or above market rate (as we just saw with Lincecum).

In any event, that player-driven pendulum isn’t going to swing in the offseason, and we’re left to wonder how this emerging, ebullient market is going to affect a team like the Cubs, who have indicated that they don’t presently have huge dollars available to commit. I have two thoughts.

First: You know what might be the savviest long-term move for the Cubs this offseason? Grab a couple mid/lower-tier free agents early in the offseason (the guys the Cubs really want as complementary pieces), jumping them with an aggressive, short-term offer (think $1.5 million for Dioner Navarro last year or $6 million for Scott Feldman). From there, you wait. Do nothing. Sit out the market (which is relatively thin anyway), and let the enormous chips fall where they may. Come late January, the big spenders will be spent out, and the few remaining upper tier free agents – there are always at least a couple – will be left with fewer and fewer options (especially guys who are tied to draft pick compensation). Then, perhaps, the Cubs can pounce and find actual value in a market that will have very little of it for the foreseeable future.

When salaries exploded the last time around in the mid-to-late-2000s, this was a strategy employed by savvy small market teams to compete at the margins. If that’s what the Cubs are right now, then why not embrace the strategy until the new TV deal kicks in and the meat of the Wrigley renovations are underway? Maybe it’s another year or two, but at least it gives the Cubs a chance of fielding a competitive team, even as they aren’t spending the biggest of bucks. (And, if the team isn’t competitive, this kind of strategy has the side benefit of accumulating players on contracts that are very likely to be flippable.)

Then, when the Cubs are ready to spend big, maybe that pendulum has swung back, and more players are reaching free agency. That’d be a good time to have a lot of cash ready to be deployed, yes?

Second thought: In the meantime, might I suggest that those pre-arbitration extensions should become even more of a focus than they already were. If it means extending guys earlier and earlier, and taking on the risk of guaranteeing millions of dollars to unproven players, I say go for it. In 2008, when player salaries were exploding the last time around, the Tampa Bay Rays – one of those savvy, small market teams to which I referred – signed Evan Longoria to a six-year, $17.5 million contract (with three option years that took it up to $44 million) after he’d played exactly six days in the big leagues. It turned out to be what may have been the best contract in baseball history.

Sure, Longoria could have broken a leg or forgotten how to hit a fastball. But, in the era of $35 million Tim Lincecums, is a Longoria contract for a Kris Bryant or a Javier Baez really that significant of a risk?

Author: Brett Taylor

Brett Taylor is the Editor and Lead Cubs Writer at Bleacher Nation, and you can find him on Twitter at @BleacherNation and @Brett_A_Taylor.