What About Signing Starting Pitchers to Extensions?

Two things here:

First, I missed two multi-year, free agent starting pitcher contracts in yesterday’s post and have found them since. They are:

  • Hiroki Kuroda, Dodgers, three years (2008-2010), $35.3 million
    4.9 WAR, $7.2 million per win.
  • Colby Lewis, Rangers, two years (2010-2011), $5 million
    5.6 WAR, $0.89 million per win

Both players signed after pitching in the Japanese leagues. Kuroda is a decent free agent signing — an overpay, but he was effective when healthy. I’m not sure what to do with Lewis’ contract. It’s a multi-year deal for a free agent, technically, but Lewis didn’t have enough big league service time to be a true free agent, which caps how much the Rangers were going to pay him. They could have signed him to a one-year deal for 2010 and still controlled him through 2012, going to arbitration for 2011 and 2012. That limits how much they’d be willing to pay him, and it’s more like they were buying out his arbitration years than actually signing him at the market rate. It’s a unique case.

But if we want to count it, Lewis’ deal is the second-best contract behind Derek Lowe’s deal with the Dodgers, and the best in terms of dollars per win. Lewis, all by himself, actually brings the dollars per win for the entire free agent class up to $11.5 million per win from $12.2 million per win.

The second, and more important, thing: A few commentors on yesterday’s post made good points about pitchers signing extensions that covered their free agency years, like Johan Santana’s deal with the Mets or Roy Halladay’s extensions with the Phillies. I looked up extensions that covered multiple free agency years, from 2005 to the present, and here’s what I found. In order of best to worst, and just the years that cover free agency:

  • Roy Halladay, Blue Jays, three years (2005-07), $36 mil, 14.4 WAR, $2.5 per win
  • Tim Hudson, Braves, two years* (2010-11), $18 mil, 9 WAR, $2 per win
  • Roy Halladay, Blue Jays, three years (2008-10), $40 mil, 13.3 WAR, $3.01 per win
  • Mark Buerhle, White Sox, four years (2008-11), $56 mil, 16.5 WAR, $3.39 per win
  • Javier Vazquez, Yankees, three years (2005-08), $34.5 mil, 10.5 WAR, $3.29 per win
  • Josh Beckett, Red Sox, two years (2008-09), $22 mil, 7.5 WAR, $2.93 per win
  • Chris Carpenter, Cardinals, two years (2006-07), $13 mil, 4.9 WAR, $2.65 per win
  • Livan Hernandez, Expos, three years (2005-07), $21 mil, 5.9 WAR, $3.56 per win
  • Freddy Garcia, White Sox, three years (2005-07), $27 mil, 7.2 WAR, $3.75 per win
  • Javier Vazquez, White Sox, three years (2008-10), $34.5 mil, 8.3 WAR, $4.16 per win
  • Roy Oswalt, Astros, five years (2007-11), $73 mil, 16.4 WAR, $4.45 per win
  • Jon Garland, White Sox, two years (2007-08), $22 mil, 4.8 WAR, $4.58 per win
  • Chris Carpenter, Cardinals, five years (2007-11), $63.5 mil, 13.2 WAR, $4.81 per win
  • Bronson Arroyo, Reds, two years (2009-10), $25 mil, 4.3 WAR, $5.81 per win
  • Tim Hudson, Braves, four years (2006-09), $47 mil, 9.1 WAR, $5.16 per win
  • Joel Piniero, Cardinals, two years (2008-09), $13 mil, 1.3 WAR, $10 per win
  • Tim Wakefield, Red Sox, two years (2010-11), $5 mil, -1.9 WAR, -($2.63) per win
  • Johan Santana, Mets, four years* (2008-11), $82.5 mil, 14.4 WAR, $5.73 per win
  • Jake Peavy, White Sox, two years* (2010-11), $31 mil, 2.5 WAR, $12.4 per win
  • Jake Westbrook, Indians, three years (2008-10), $33 mil, 2.4 WAR, $13.75 per win
  • Carlos Zambrano, Cubs, four years* (2008-11), $73.5 mil, 9.3 WAR, $7.9 per win
  • Kyle Loshe, Cardinals, three years* (2009-11), $29.1 mil, -1 WAR, -($29.1) per win

Hudson, Santana, Peavy, Zambrano and Lohse still have one or more years left on their extensions, but we’re only counting how they’ve performed thus far. There are also an enormous number of extensions that have been signed over the past few years, covering free agency seasons, that either haven’t kicked in yet or have only kicked in for a single season thus far. Off the top of my head — Roy Halladay, Justin Verlander, Felix Hernandez, Jered Weaver, Chris Carpenter, Dan Haren, Zack Greinke, Josh Beckett, Joe Blanton, and Ted Lilly were all locked up for 2011 and beyond. So we’ll know a lot more about how these extensions work out in a few years. The Santana, Zambrano, Peavy and Lohse deals, all relatively recent, don’t look so hot right now, so perhaps the market is mutating.

But the overall result for the contracts thus far is 66 years of extensions buying out free agency years at the cost of $800 million dollars. Those pitchers have been worth 172.3 wins above replacement, or about $4.64 million dollars per win. Free agent pitchers ran at about $12 million dollars per win over the same time period. So for the price of one win on the free agent market, a team could buy between two and three through an extension.

So for whatever reasons, pitchers signed to extensions covering their free agency years have been much, much better investments than pitchers signed on the open market. The bidding nature of free agency tends to drive the price of players up, to the point that the team that signs a pitcher is almost guaranteed to overpay. That probably has a lot to do with it. It’s also possible that the sort of starting pitcher signed to an extension is the type a team makes a serious effort to retain (that is, a better pitcher, or one deemed more likely to sustain his success). Extensions also tend to be shorter term deals, which limits the number and size of the disaster contracts.

Or maybe it’s just that Roy Halladay keeps signing below-market extensions.

But if you’re a team trying not to throw away globs of money, signing good starting pitchers to extensions and letting the free agents walk doesn’t seem like a bad plan.

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7 Comments

Filed under Columns, Mets, Words

7 responses to “What About Signing Starting Pitchers to Extensions?

  1. Really interesting stuff. I suspect the vast difference in cost per WAR is due more to your point about the quality of pitcher who tends to sign an extension than to your point about bidding wars and the winner’s curse. But then again, I also suspected that FA-eligible extensions wouldn’t look much different than actual FAs, so what do I know.

    Also, I wonder if you broke down both datasets into Boras clients and non-Boras clients if anything noteworthy would emerge. Regardless, I enjoyed this series of articles and hope you’ll continue investigating similar ideas.

    • Patrick Flood

      My guess is that the quality of the pitcher is the most important factor as well.

      I can’t imagine many Boras clients sign extensions — he basically disowned the Jered Weaver extension after Weaver signed. I think Lohse is the only one he’s responsible for here, actually, and that’s the most free-agent looking extension.

      • Fair point about Boras clients and extensions. I guess my real question was whether there’s a significant difference in cost per WAR for non-Boras FA pitchers signing multi-year deals vs. Boras guys. Like, perhaps FA pitchers signed to multi-year deals cost something like $6M per WAR if their agent isn’t Scott Boras and $20M per WAR if their agent is Boras. Or maybe not. I guess if there’s no easily accessible agency rep database, it’s probably prohibitively research-intensive to test. And maybe sample size breaks down too much to make it matter, or maybe Boras is just a proxy for overall contract size, or maybe there just isn’t actually a difference. I dunno, just piqued my interest is all.

      • Patrick Flood

        MLB trade rumors has a list of Scott Boras clients, actually. http://www.mlbtraderumors.com/2008/10/scott-boras-cli.html

  2. “Or maybe it’s just that Roy Halladay keeps signing below-market extensions.”

    This seems pretty key, considering he’s 2 of the top 3 excess value contracts. If you take him out of the calcs, what do you end up with?

  3. The only other factor that stats can’t really analyze is these signings is the value of the rest and mindset a Halladay, Sabathia, Santana (when healthy) gives to a whole team. When you consider Halladay and Sabathia are lock to go 7-8 innings, that is a pretty powerful benefit for a manager and bullpen.

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