Speaking of extensions…

Yankee policy is to discuss contract extensions only before free agency, but it hasn’t stopped us from bringing up possible extensions for Russell Martin, Curtis Granderson, and Robinson Cano over the last week. Extensions, especially to young players, have been a big talking point this offseason. Matt Moore and Salvador Perez received long term extensions before they could even finish a full year in the majors, something of a growing habit for small market teams. William took a look at extensions given to young players recently, and found that while position players traditionally receive early extensions, the price of pitching should cause teams to reconsider extending starters.

What the hell is an extension? (AP Photo/Matt Slocum)

With the failure to find a number two starter over the last few years, the price of pitchers on the free agent and trade market, and a budget to maintain in the upcoming years, Cashman should begin to consider extending two of his young pitchers. Yes, a team with a small budget may not have considered extending a young pitching prospect in the past based on the general health inconsistencies at the position, but the Yankees have enough money to absorb the few million guaranteed in extensions. Assuming Michael Pineda and Ivan Nova continue the success they saw last year into the 2012 season, a Moore-like extension of 5 years at $14m with 3 team options could keep the players under team control until 2020. Pineda and Nova appear to be the future #2 and #3 pitchers for the team, and if even one ends up fulfilling their ceiling, an extension could save the Yankees a lot of money and headache.

The team will end up spending around $53m on the starting rotation this year, about the same total salary of the Rays. Despite this, the Rays are projected to have a better rotation, so it’s clear who has managed their money smarter. Taking a page from the small market team, the Yankees could solve some big problems by ending their policy of anti-extensions. For one, if Nova and Pineda reach their ceilings, they’ll be looking at some hefty arbitration numbers in 2015-2016, when the 35 year old Sabathia will be making $25m. Also, the 2017 season could see all three pitchers becoming free agent market, forcing the Yankees to replace the front end of their rotation in one season. But why not solve these problems with a relatively low risk?

The total guaranteed money in an extension to Pineda or Nova would be less than the total money they’re paying to have AJ Burnett pitch on the Pirates. My opinion is that early extensions are relatively low risk when you view their upside, a low risk with high reward. If Pineda and Nova show another year of success, wrapping them up makes the most sense to me. The stubborn policy of waiting until free agency hits is becoming a relic of the past, extensions are the new way for teams to save money, and the Yankees will be left in dust if they don’t change their ways. Using this small market tactic should begin with their young pitchers.

Mike is the co-Editor-in-Chief of It's About The Money. Outside of blogging baseball, Mike is also a musician, a runner, and a beer lover.

5 thoughts on “Speaking of extensions…

  1. TheOneWhoKnocks

    Now these are the players it makes sense to extend. Extending Cano or Granderson to get their 32-37 seasons at a rate close to free market value? Makes no sense at all. Nova and Pineda are the 2 guys the yanks should set their sights on. Cano and Granderson are just as important to our success(probably more so). I just think you sign extensions to potentially save yourself a lot of money on a player that has a high probability f maintaining his performance throughout his contract. I doubt Granderson or cano will perform as well in a couple years, and I also doubt we’d see much savings over what we’d have to pay them through free agency

  2. BigGuy

    I don’t disagree with your premise, but chances are if the Yankees do sign these guys to extensions it will be after the 2014 season since they want to get under that 189 mil mark.

    • TheOneWhoKnocks

      the austerity budget is all the more reason why they should extend Pineda and Nova immediately
      give yourself cost certainty and get a bigger discount. If you wait until 2014 you risk that they have 2 big years, if that’s the case 1)they will be tempted to test free agency 2)their demands will double/triple 3)they will be potentially making more through arbitration than they would have gotten if you extend them now.

  3. Michael P.

    Nova and Pineda have only 1 year of starting under their belt, the Yankees do not have to assume the risk of signing them to extensions until they throw for another year or two. Then sign them to extensions if they prove that they are indeed the future ace and 3 starter we hope they will become.

    We have Granderson under control for this and next season, which will most likely end up being his best years. After his contract expires I really really hope the Yankees let him walk. Signing a 33 year old CF to a long term contract for megabucks is just bad business. He is reliant entirely on bat speed to generate power, and foot speed to make up for his poor routes in the field. Can’t see him sustaining this into his mid and late 30s.

    The Yankees did the right thing with Martin by trying to get him to sign to a team friendly deal before he was a free agent. If they couldn’t get him to agree to a deal on the teams terms then there is no need to give in just yet. The Yankees only have Martin because he was an injury risk, so let him prove he can stay healthy another year before committing to him.

    Swisher is most likely going to want a lot of money, as he is a better player than Jason Werth. I don’t think he will get that much money, but he will require a sizeable contract to keep him here. I know small sample size and all that but really if he doesn’t hit in the playoffs this year, I would let him walk. He has never hit well in the playoffs his entire career, so unless he is willing to take a very team friendly deal then I would let him go.

    Despite the fact that he is under team control this and next year cheaply, Cano should absolutely be extended now. I believe they have extended his contract before he was a free agent earlier in his career, so it isn’t like they wouldn’t bend the rules again. The Yankees would be buying at a premium, but at 29 he still has a good window of still being one of the premier players in the game. If they plan on offering him a 6 or 7 year contract, it should be done now as second baseman have a tendency to fall off a cliff. Better to give a 7 year deal to a 29 year old than a 31 year old.

  4. fuster

    —-”The team will end up spending around $53m on the starting rotation this year, about the same total salary of the Rays. Despite this, the Rays are projected to have a better rotation, so it’s clear who has managed their money smarter.”—-

    WHAAAA?

    The Rays will have a better rotation because they’ve managed to continually finish with a pathetic record and got to draft David Price with the top pick.

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