Extension parade continues, should the Yankees claim a spot?

On the other hand, there aren’t a ton of extension candidates on the current roster, as several core players are already signed to long term deals, or deals that will take them into their forties, while the rest are, by and large, not obviously good bets to extend. Martin appears to prefer testing free agency, and at this point it’s hard to blame him, especially after Yadier Molina got the kind of contract he did without even reaching the open market. Nick Swisher‘s contract expires after this year, but he seems likely to be playing elsewhere in 2013, unless he signs a one year deal or accepts a fairly large pay cut. Curtis Granderson is a tougher case, but as I’ve said before, giving Grandy a new contract now probably wouldn’t be the best approach. He’d be 33 years old in the first year of a new contract, meaning the new deal would be comprised almost entirely of decline years, and the Yankees have multiple potential centerfielders in the lower levels of their minor league system. Those guys are a good distance from the majors, but we should have a better sense of just how far away they are by the end of 2013. On the pitching side, Phil Hughes and Joba Chamberlain will be eligible for free agency after next year, but their futures are obviously far too uncertain to merit new commitments now.

That leaves just a few possibilities. The first is Cano, with whom the Yankees are looking at the unenviable possibility of having hit the open market as an elite player in the game at a premium, middle-of-the-field position just as they’re trying to cut payroll. Frankly, I don’t expect Cano to be interested in taking any discounts at this point in his career. He’s already signed one pre-free agency deal with the team, and he’ll be 31 years old in 2014, so this is likely his only chance to cash in on a mega-contract. Oh yeah, his agent is Scott Boras these days as well, a guy who a) always advises his clients to get to free agency ASAP and b) knows how to get them top dollar once they get there.

However, even if the Yankees could sign Cano to a market value contract now instead of next winter, there’s a couple of ways this benefits them even if they aren’t saving any money. First of all, they could, perhaps, start the new deal one year earlier, exchanging a year of having Cano on the wrong side of 35 years old for his 30 year old season. Secondly, because Cano is already under the Yankees’ control for 2013 via a $15 million team option, if a new contract can be agreed upon before next season, that $15 million option can be converted into a guaranteed year and counted towards the new contract. That’s important because a player’s luxury tax number is calculated by using the average annual value of a multi-year contract, in order to keep teams from playing accounting game with the tax by dispersing salary unevenly over the course of a contract. Since $15 million would almost certainly be lower than the salary Cano will be paid by a new deal, that one year at the front-end of the deal would pull the AAV of the total contract downward, helping the team get undre the $189 million mark in 2014. It won’t be a huge savings by any means, but it should be enough to help them find the money to sign another bench player or bullpen specialist if they need one.

The other, trickier, cases involve young pitchers Ivan Nova and Michael Pineda. Both will be in their first year of arbitration in 2014, which means that, while they won’t be making a ton of money by major league standards, they won’t be making anywhere near the minimum salary either. Additionally, it also means that the Yankees won’t know how much of their remaining budget will be absorbed by those players beforehand, which could make it tricky to make roster moves that would impact 2014 over the next two years. Signing these two to new contracts now could, at the least, give the Yankees budget stability by locking in their arbitration year salaries now and, depending on how good one or both of them go on to be, could present the Yankees with a huge bargain on their performance over the life of the contract. Neither Nova nor Pineda have any real security in their jobs now as they’re in their reserve clause period, so any sort of major injury could more or less spell the end of their ability to earn big bucks by playing baseball. Other teams have used that lack of security to leverage their talented youngsters into long term deals that create opportunities for huge windfalls for the clubs, while the Yankees have preferred to use their financial might to avoid the risk entailed in this strategy by allowing their players to get close to free agency, unless a great deal (like Cano’s) lands in their laps.

That strategy may be reaching the end of its usefulness. Putting aside the fact that Brian Cashman will be working with much more limited resources than he has in the past between now and 2014, the influx of television money to MLB and its franchises, as well as the effects of revenue sharing, are fundamentally changing the market everyone is working in. If even teams like Cincinnati and Milwaukee can afford to give the Vottos and Ryan Brauns of the world big dollars to stay with the franchise for the entirety of their careers, the cost of the players that do get to free agency, or even within a year of the open market, is going to continue to increase, while the overall quality and depth of talent on the market decreases. That figures to make an already inefficient market even more wasteful, and make it harder and/or more expensive for teams to round out their rosters or acquire core players on the free agent market. If the Steinbrenner brothers are going to continue to be budget conscientious for the foreseeable future, the Yankees probably can’t afford to waste their resources by refusing to adapt to the market the rest of MLB is playing in.

Born in Southwestern Ohio and currently residing on the Chesapeake Bay, Brien is a former editor-in-chief of IIATMS who now spends most of his time sitting on his deck watching his tomatoes ripen and consuming far more MLB Network programming than is safe for one's health or sanity.

3 thoughts on “Extension parade continues, should the Yankees claim a spot?

  1. not Montero's dad

    I still need to be convinced about Nova, and I agree with the notion that there aren't too many extendable players on the roster, due to age or other factors.

    That said, I like this recent trend of signing young guys with potential to comparatively tame contracts. I'm thinking more Salvador Perez, Andrew McCutchen, Jay Bruce, and Juston Upton than Joe Votto, Matt Cain, and Ryan Braun.

    Spreading one's bets around is the way to go. If a team is strategic about it, they probably only have to be correct on half their contracts in order to make it financially worthwhile.

  2. williamjtasker

    A perfectly stated case for ending this "we don't negotiate during the season" thing. I agree completely. Excellent post.

  3. Kevin S.

    Signing Nova and Pineda to extensions might provide some cost certainty, but there's also a very good chance that a 5-6 year deal for either would come with an AAV higher than what they'd earn in 2014 arb. Let's say the offers for each are five-year extensions starting in 2013, buying out all three arb years and one FA year. Let's also assume that teams buying out arb years follow the 40/60/80 model as Fangraphs claims. Whatever number the Yankees and Nova/Pineda agree is their fair-market value, they'd be getting (basically) 0% of that in 2013, 40% in 2014, 60% in 2015, 80% in 2016, and 100% in 2017. That's, on average, 56% AAV, more than what they'd be making in 2014. For that kind of extension to help the Yanks in 2014, they'd have to be betting that either one saw a big jump in value between signing the extension and when they would be going before an arbitration board in 2014. My guess is that a better strategy would be to get each player to accept a lower salary in 2014 with a negotiated extension in place that makes the money up, to be announced shortly after Opening Day.

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