Wait to Extend Cano

Scott Boras wants the Yankees to extend Robinson Cano before he hits free agency. The Yankees hold two easy-to-exercise options on Robinson Cano for the next two seasons for $14 and $15 million. The status quo has him reaching free agency at the age of 31. He’s proven to be one of the best hitters in baseball, while playing a strong 2nd base. At this point, he’s a perennial MVP candidate who is due for a huge payday, to the tune of $120+ million, if not much more.

Boras would theoretically offer a reduced rate – to cover some of his and Cano’s risk – to entice the Yankees to renew early. The Yankees would lock up their star before he hits free agency, potentially saving themselves millions and minimizing the risk of a Canoxplosion in the next two years that makes him that much more valuable.

I love Robinson Cano. I want him to retire in Pinstripes just a few years before casually walking into the Hall of Fame. I know that in order for that reality to come to pass, the Yankees will have to give him a large payday when he hits free agency. I just don’t want them to give it to him now, for two reasons.

The first is controlling risk. This is pretty simple: the Yankees have Cano for cheap for 2 years, and they’d be on the hook for a monster salary in the long run even if Cano came down with a debilitating injury, or just started to suck. Boras’ discount would theoretically take this into account, but it wouldn’t account for the other huge liabilities that the Yankees have on their balance sheets right now. Alex Rodriguez, Mark Teixeira, Derek Jeter, and (soon enough) C.C. Sabathia have big money coming to them. Adding additional risk could eliminate future options. But you knew that already.

The second reason I think is more important: price discovery. That’s a term that economists use to describe a very useful function of markets. Without a lot of people who want Cano’s services bidding in a mostly-transparent process, the Yankees don’t know what he’s worth. If they don’t know what he’s worth, they risk overpaying him. This is further complicated when you consider that Cano will be a free agent two years from now. The next two years will see a number of big free agents come to market, and during that time we’ll gain a lot of information about what they are worth. I wouldn’t be surprised if Scott Boras knows more about the ‘proper’ price than most baseball organizations do. The Yankees should wait, because they don’t know what he’s worth. Obviously, Boras can turn around and offer them an amazing deal, but he’s not going to do that. The Yankees are going to have to guess at Cano’s market price, and that guess could turn out being pretty high: sure, he’s worth $20 million or so a year, but for how many years?

Wait on Cano. We’ve got the luxury of a team friendly deal. Boras is going to have to offer a very low price to beat that luxury, and he won’t. I have trouble imagining why he’s even trying.

10 thoughts on “Wait to Extend Cano

  1. Interesting article EJ, though I’m not sure if the “price discovery” advantage is really worth the potential difference (in dollars and years) between a below-market extension this year (hypothetically speaking) and a market value contract where all teams in MLB are theoretically in the bidding.

    Plus, Cano would be two years older in 2013, which could decrease his value somewhat, but also increase the risk inherent in a new mega-contract.

    I think the Yankees have a pretty good idea of what Cano and other top-tier free agents are worth, and the free agent contracts that guys like Pujols, Fielder, and Kemp are likely to get could easily inflate the market for top tier free agents in 2013.

  2. Professor Longnose

    Someone at Hardball Talk had a guess as to the “why”: Boras wasn’t Cano’s agent when his current deal was negotiated, and Boras doesn’t get a cut. But he would if there was a new deal.

    Boras always waits for free agency for his client. He’s not doing it this time, and that’s curious.

    • There are exceptions to the “Boras clients always to go free agency” rule, such as Jered Weaver inking an extension with the Angels this season. If Cano really wants to stay with the Yankees rather than seeking out the biggest contract he might sign an extension like Weaver did, but I can’t imagine that happening (since the Yankees would also presumably be the highest bidder on the free agent market).

      • Professor Longnose

        Now Boras is walking it back, saying it was a joke. Not sure what’s going on here.

  3. Tom Swift

    Doesn’t price discovery have the potential to work for the benefit of Cano? When he hits the open market, there may be more demand for his services than anticipated. There may also be less. And how he plays the next 2 years, as well as his health, also matter.

  4. Joe G

    I’m not completely against extending him now, even if it means more money up front. I just don’t see Cano aging gracefully, as his low OBP and high power skills generally don’t carry well into a players mid-late 30s. And if he’s a free agent at 31, you’re going to be paying him a lot of money past his prime. Better to extend him now, and have him be a free agent around 34-35, when it’s easier to let him go.

    Idk, its tricky, as I can see both sides of the argument, and am not really sure which is right.

  5. CY

    Here are 2 hypothetical deals: 1). 2012~2017, $100M/6yrs, $16.6M/yr, 2). 2012 $14M + 2015 $15M + 2014~2019, $120M/6yrs (an assuming FA price). From a GM’s point of view, which one would you rather take?

    • Mark

      i was going to say pretty much the same thing. if we know they are going to eventually extend cano why not do it now when at the end of the contract he’s only in his mid-30s instead of waiting and being in his late-30s the last years of the big contract. they can afford an extra 6 mil a year if thats the type of contract he gets, but they cant afford another 20mil for a 36 yo who isnt producing.

  6. OldYanksFan

    I believe Robbie will already be, by far, the highest paid 2nd baseman. Utley, with better numbers, got 7/$85 ($12m AAV) 4 years ago. Teams don’t pay $20m for a 120 OPS+ 2nd baseman.

    Robbie is a GREAT player, but his inability to Walk, with a career OBP ONLY 40 pt above his BA, is a blemish. Swisher had a quasi-sucky year and STILL lead the Yank in OBP. Guys who don’t walk don’t age well.

    Don’t get me wrong… I love Robbie, but people talk about $20m/yr like it was nothing. I’d wait 2 years. He needs to be a 140 OPS+ 2nd baseman to merit anywhere near $20m.

  7. T.O. Chris

    Waiting also gives you the very unlikely, but still available option, of picking up both options and trading Cano after next season. For all the reasons mentioned Cano an early decline risk, so going year by year with these two options allows for more time to evaluate Robbies long-term ability. If you think he might fall off quickly after he gets into his 30′s, ride out one more year, pick up the 2013 option and then flip him for a top of the rotation starter. It’s not a likely scenario, it just seems like everyone either looks at it like extension now, or re-sign him on two years, with no 3rd option. Trading him at the top of his value should be something at minimum discussed.

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