Martin Perez is just the latest.
On Thursday, the Texas Rangers gave the 22-year-old left-hander—who has all of 26 starts in the majors—a contract extension worth $12.5 million over the next four years, according to Jeff Wilson of the Fort Worth Star-Telegram.
As is standard operating procedure when locking up young starting pitchers long term, the deal includes option years—in this case, three of them. If all of those are exercised, the deal would cover the first two years of Perez’s free agency and push the total value to $36 million over seven seasons all told, per Tim Dierkes of MLB Trade Rumors.
We’re seeing this sort of thing—teams going out of their way to make sure their pitchers remain their pitchers—all the time now in baseball. The length and dollars involved in these deals vary widely, depending on all sorts of factors, including the hurler’s age, service time, proximity to free agency and, of course, performance. But it’s no secret that the top pitchers are sticking with their teams more and more, which means they’re reaching free agency less and less.
To wit, here are starters who have inked multi-year extensions over the past three offseasons, in chronological order, with an assist from the handy dandy extension tracker tool at MLB Trade Rumors:
All in all, that’s 35 pitchers who have signed extensions with their teams since November 2010. Put another way: On average, more than 10 starters have done so in each of the past three years.
Now, some of these were deals done to lock up youngsters with limited service time (a la Perez or the Tampa Bay Rays’ Matt Moore), which helped teams secure cost certainty going forward as opposed to enduring the unsettling arbitration years.
Others pacts were done a little later in the process, and thus cost the teams tens of millions more because success comes with a higher price tag (think: Gio Gonzalez of the Washington Nationals and Chad Billingsley of the Los Angeles Dodgers). And still other extensions—the biggest ones listed above—came when the pitchers were four or five years in and nearing free agency, like Matt Cain with the San Francisco Giants, Cole Hamels with the Philadelphia Phillies and Felix Hernandez with the Seattle Mariners.
Those variables explain why the numbers are so different from deal to deal. It also proves that the gamble on youth and upside can be a beautiful thing for the team when a pitcher’s talent and stuff all come together.
Because, really, to have Madison Bumgarner at a guaranteed $34 million for the next four years—and potentially at $58 million through 2019—is the sort of thing that would make any general manager feel all warm and fuzzy inside.
For GMs, the point to this strategy, of course, is to keep what’s yours when you think it’s worthwhile. Not every extension above has turned out to be a good decision (cough, John Danks, cough), but the lesson is that it’s often much, much more financially beneficial to go all-in early enough if you like and believe in the product on the mound.
Otherwise, prices escalate rapidly and exponentially, and most clubs just can’t afford to pay such a premium. That’s where the other option comes into play—trades.
Yes, in addition to all of those contracts pointed out, there have been plenty of starting pitchers who have been traded dating back to three offseasons ago. Here’s a look at some of the biggest names to change teams via trade over the same time period (since November 2010), again courtesy of MLB Trade Rumor’s transaction tracker tool:
This second list isn’t comprehensive like the first, but it provides a pretty full picture of some of the better arms that have been dealt.
Many of these starters were swapped for one of two reasons: Either they were never locked up and eventually started to become too pricey for their teams via arbitration and the inevitability of free agency (read: Anibal Sanchez and Matt Garza), which meant they needed to be moved before it was too late; or they still had plenty of years remaining of team control at a reasonable price and were moved because of that value, like Trevor Cahill, Mat Latos and James Shields.
The flip side, obviously, is that teams are less likely to even consider trading their stud starters when they’re already signed to team-friendly contracts that will carry them through a portion of their free-agent years.
To bring both transaction types together—that is, extensions and trades—a club that acquires such a pitcher in a deal always has the option to—that’s right—sign him to an extension, thus ensuring that he won’t be made available to the other 29 teams until that club so chooses. That happened, for instance, with Gonzalez, who signed on after he was traded to the Nationals.
This particular trade-then-extend approach is the subject of rampant rumors and speculation surrounding top arms Max Scherzer and David Price, both of whom have been mentioned as potential chips for the Rays and Tigers to play, at some point. Undoubtedly, if either one is traded, the acquiring club will be aiming to ink a multi-year extension to prevent them from becoming free agents after 2014 and 2015, respectively.
So why has this lock-em-up strategy become so trendy?
Simply put: Pitching is always in high demand, whether via free agency or trade, so teams have recognized the benefits to hanging on to their top arms, especially early on.
If a pitcher becomes too pricey or gets overtaken by better and/or cheaper hurlers on the depth chart, the worst-case scenario is that the team can still trade him for a nice return, health provided, because that market never goes away.
This whole concept is not unlike the comparison between renting property and buying property. When you rent year to year, you may well be in flux and looking around for the next place, hoping it’s affordable and livable. But then, other renters are doing the same thing, so it becomes a struggle to try to time things just right and find a place you like. That’s what can happen when a team doesn’t sign a worthy starter for the long haul.
Buying a place, though, at least offers some security, some equity—some value. There’s no rush to move or shop around, but if something better comes along, well, you can certainly always consider it. There’s also more cost certainty, because you know how much you’re paying each month, as opposed to renting, where prices can jump from year to year or from location to location. And most importantly, the property has value to others, meaning you can expect a return if you put it out on the market, which isn’t applicable when renting.
That might not be a perfect metaphor, but it fits in some ways.
The point of all this? It’s become much more difficult for all but the very richest clubs to rely on free agency to add even one big-name, big-money starter, let alone build a rotation by adding two or three in one fell swoop.
The supply just isn’t there like it was five or 10 years ago, before this started becoming a widespread trend. That, of course, makes the demand even higher, which in turn, drives the price up on the handful of mid- or top-of-the-rotation pitchers who actually do reach the open market in a given offseason.
And that makes it all the more important for teams not to whiff when they do fork over $50 million or $100 million or $150 million, depending on their budget, to land a top-of-the-line starter or even an innings-eating type.
The gamble at that point isn’t only financial, either. Pitchers that are getting to free agency are often a big risk from a performance and health standpoint, too. That’s because they’ve already accumulated hundreds and hundreds of innings while pitching through what in all likelihood are their prime seasons.
To bring this back full circle to the 2014 free-agent class, consider the names out there who fit the bill this winter. Aside from Garza, there’s Ubaldo Jimenez, Ervin Santana, Ricky Nolasco, and that’s about it as far as above-average arms that should have a handful of seasons left.
Now, here are a few names that could have been available this offseason or last, had they not re-upped with their teams along the way: Cole Hamels, Jered Weaver, Jon Lester, Johnny Cueto, James Shields and Yovani Gallardo. A strong case could be made that each of those starting pitchers would be the top option on the market, but that’s a free-agent class we’ll never get to see.
When it comes to locking up pitchers long term, there are always going to be hits and misses, especially given the volatile nature and injury issues that come with throwing baseballs thousands of times a year at uncanny velocity. But this is a trend that is proving to be worth it more often than not, and it’s not going away. Expecting to be able to turn to free agency to build or augment a rotation is expecting an approach from the past.
Martin Perez is just the latest example of the present and future. And he’s certainly not going to be the last.
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