Every Year Is A Contract Year

Ben Nicholson-Smith is a staff writer for MLBTradeRumors.com. This is part of a series of guests posts he’s writing here on the site. You can check out his work regularly over at MLBTR.

Cliff Lee, Carl Crawford and Jayson Werth know all about the importance of contract years. Those three players and dozens of others played well in 2010 and went on to sign lucrative contracts in free agency this offseason.

Free agents enter their walk years with the expectation that a big season will lead to a big contract, but they aren’t the only ones who can cash in on a productive year. Let’s take Rickie Weeks and Jose Bautista, two players who signed extensions worth a combined $102.5 million last week. Neither player had performed at an elite level in the major leagues before 2010 and neither player was in a “contract” year, but both broke the bank after breakout seasons.

Bautista and Weeks did know that productive showings would lead to considerable raises. Both players started last season with the knowledge that the arbitration process would reward them for successful campaigns. But even players who could not have reasonably expected a new contract or a raise through arbitration turned productive 2010 seasons into contracts worth $30 million-plus.

Troy Tulowitzki was already under team control through 2014 before he re-worked his current contract into a ten-year, $157.5 million deal that should keep him in Denver for at least another decade. What changed? Tulo returned from a left wrist fracture – an injury that often saps players of their power – and hit like never before. He out-homered the Orioles (yes, the entire team) after September 1st thanks to a white-hot stretch from September 3rd-18th when he hit 14 homers in 15 games. The results: a .315/.381/.568 season line, multiple postseason awards and the eighth-biggest deal in the history of the game, even though Tulowitzki had no reason to expect a new contract.

For lots of pre-arbitration eligible players, a breakout season means a raise from the major league minimum to $500,000 or so. For Carlos Gonzalez, it meant an $80 million extension. Unlike his teammate Tulowitzki, who entered the 2010 season as an established star, Gonzalez had a true breakout season last year.

He led the National League in hits (197), batting average (.336) and total bases (351), while hitting 34 homers and stealing 26 bases. The results impressed Rockies ownership and, even though CarGo wouldn’t have been arbitration eligible until the 2011-12 offseason, he landed an $80 million deal.

Alexei Ramirez entered the 2010 season knowing that he wasn’t going to earn more than $2.75 million in 2011 (the shortstop’s contract stipulated that the White Sox could lock him in at $2.75 million instead of going to arbitration). Ramirez’s .282/.313/.431 line pales in comparison to Tulo’s 2010 numbers, but few shortstops hit as much as Ramirez, last year’s American League Silver Slugger winner. The White Sox rewarded him with a $32.5 million deal, though he was under contract for 2011 and wasn’t eligible for free agency until after 2013.

Position players weren’t the only ones to cash in. Bronson Arroyo entered the 2010 season with the understanding that a poor showing would cause the Reds to decline their club option. But Arroyo had no reason to expect that a strong season would set him up for a $35 million payday. If Arroyo pitched well, the Reds would simply exercise his $11.5 million option for 2011.

Arroyo pitched well enough to win 15 games for a third consecutive season and log 200-plus innings for a sixth consecutive season. Buoyed by a career-low BABIP, Arroyo kept his ERA under 4.00 (3.88) despite peripherals (4.60 xFIP, 4.61 FIP, 5.0 K/9, 2.5 BB/9, 7.8 H/9, 1.2 HR/9, 43.4 GB%) that suggest he’s due to regress. Though Arroyo could not have expected a multiyear contract heading into the season, he ended up signing a three-year, $35 million extension thanks to a durable season and GM Walt Jocketty’s enthusiasm for offseason extensions.

This year is not exceptional, either. Since the beginning of the 2009-10 offseason, Ricky Romero, Kurt Suzuki, Brett Anderson, Adam Lind, Denard Span and Justin Upton have also cashed in on big years before becoming arbitration eligible.

It would be impossible to try to predict which pre-arbitration players (Trevor Cahill? Clay Buchholz?) will turn strong seasons into guaranteed money or which established stars will re-work contracts after standout performances. But know this: owners are willing to spend and GMs don’t like losing star players, so regardless of service time or contract status, every year is a contract year.

Print This Post

19 Responses to “Every Year Is A Contract Year”

You can follow any responses to this entry through the RSS 2.0 feed.
  1. Alex Walsh says:

    Great article. You’re on the nose here; any player could get extended at any time…

    …although, I would say there is one year in particular that is a bit of an exception: the season right after a multi-year deal is signed. No chance Tulo gets a new deal after this season, right? Even if he plays out of his mind?

    I suppose I’m being pretty nitpicky here, but basically just wanted to see if you had anything to add on that subject.

    (I also hope Alfonso Soriano is never again considered eligible for an extension from the Cubs… Egads…)

    Vote -1 Vote +1

  2. You’re right that there are limits. Tulo isn’t going to sign a new contract after the season, neither will A-Rod, neither will Longoria.

    But generally speaking, players can turn big time seasons into new deals, even when it’s unexpected.

    Vote -1 Vote +1

  3. B N says:

    Firstly, welcome to guest-authoring. I love MLB Trade Rumors, it’s by far the best site to monitor the transactions and goings-on around the league.

    Secondly, ehhh…. These seem awful lot like the exceptions that prove the rule. By and large, a contract year is a contract year. The exceptions seem to be:

    1. Arb and pre-arb players. Clearly, these guys could get extended at any time- if they’re open to it (i.e. non-Boras clients). Typically, they seem more likely to get extended when the arbitration figures significantly differ.

    2. Younger/Prime players following a breakout year. By breakout year, we mean something qualitatively different than their prior years.

    3. A player approaching their contract year (i.e. the season before, offseason before, or season of their contract year).

    Almost any major non-contract year extension follows that formula. In fact, when they DON’T follow that formula- people look at them weird (ex. Ryan Howard). Almost every player to get a premature extension will typically have not one, but two or all three of these qualities.

    Let’s look at the players specifically mentioned:
    Weeks – All 3? (Arb, breakout,1 year to FA)
    Bautista – 2 (Breakout, 1 year to FA)
    Tulo – 2 (Arb, breakout)
    Cargo – 2 (Arb, breakout)
    Ramirez – 2 (Sort of Arb, Breakout)
    Arroyo – 1 (1 year to FA)

    To me, this hardly states that “any year is a contract year.” The only guy who doesn’t have at least two of these qualities is Arroyo, and many people would consider that deal to be a head-scratcher (is somebody really going to extend him for much more than 23.5m/2yrs after this season?).

    This states that “arb and sometimes pre-arb players with a star season are often offered extensions.” Moreover, though I didn’t want to do all the research, I think most of these guys were also at one point in time top prospects. So overall track record seems to have something to with it too.

    Moreover, it’s not like these extensions are necessarily great for the player’s expected income- arb and pre-arb extensions are about players exchanging projected income to reduce risk. In other words, the team typically wins on these. With that in mind, one COULD say that all these years are contract years- but that if a team is offering you a contract in them, it’s to their advantage. Why do you think Boras almost never extends his players in these situations? I mean, if you’re willing to take a lowball offer- sure. Every year is a contract year.

    Free Agent contracts are the opposite. Typically, teams end up having to pay more than the expected production of the player. The team assumes the risk on these. I think this is what we typically imply when we’re talking about contract years, right? Where people can have competitive bidding? Where your contract can match or exceed your expected production? Needless to say, not every year is one of these.

    So, I would counter that not every year is a contract year. Clearly, your performance matters every year as it is part of your track record, the major factor on your payout. But contract years are the years when multiple teams can bid on you. The fact that players often get extended a year prior to their contract year simply shows the impact of the additional leverage a player gets by reaching free agency. As such, one should never expect a player to be extended earlier in a long contract- only late in it. Which is what we typically see. And which is why none of the players noted in the article are in “contract years” now, which would be one implication of the article title and conclusion.

    Vote -1 Vote +1

  4. MHead81 says:

    “But know this: owners are willing to spend and GMs don’t like losing star players.”

    I, for one, was unaware that owners are willing to spend, as well as the idea that GMs don’t like losing star players. But I’m glad to have come here, to a site driven by advanced stats, to find out these revolutionary concepts.

    So, “regardless of service time or contract status, every year is a contract year”? Tell that to A-Rod, Mark Teixeira and the Yankees. I doubt Cashman is willing to add another 4 years x $25M+ if they both perform well this season. I wouldn’t have even bothered mentioning that if you didn’t specifically imply that any player’s current contract situation was basically irrelevant.

    Seriously Ben, this isn’t a site for strictly **reporting** baseball news, and that’s all your article did. There is no information stated in it that anyone on here didn’t have access to, thanks to the Internet. This is a site for taking ideas to the next level. Expand on a recent hot topic, don’t just summarize it in a report a couple months after its topics are even relevant.

    The only hope you had at redeeming yourself with the premise was by showing us the players who we might expect to be the next to sign lucrative pre-FA deals by making comparisons to players, using WAR, trends, projections, etc., who have recently done so with similar service time and situations. But, as you said, “it would be impossible to try to predict which pre-arbitration players will turn strong seasons into guaranteed money.” God forbid you try to, though. (More breaking news: predicting the future is impossible.)

    -21 Vote -1 Vote +1

  5. MHead81 – I believe there’s value in making observations about trends around the game, even if they aren’t accompanied by projections or predictions. All the best – Ben.

    +11 Vote -1 Vote +1

  6. Mark says:

    Good read, particularly enjoyed the analysis of the tulo/cargo deals, one having a true breakout season and the other building from an established platform but both getting the payday. Ben, out of the 2 rox who do you see having the best season in 2011?

    Vote -1 Vote +1

  7. Hey Mark – I’ll go with Tulo. He’s a well-rounded player who’s been phenomenal for three of the past four seasons. One of the best in the game, if you ask me!

    Vote -1 Vote +1

  8. Mark says:

    Agree with you, massive fan of tulo, especially given the position he plays. That said I am excited to see if Cargo’s 2010 was nearer his true talent level or something of an anomoly. Keep up the good work!!!

    Vote -1 Vote +1

  9. Buckcub says:

    So is 2011 a contract year for Tulowitzki? How about Jason Werth? Carl Crawford?

    Arguments like; “Contracts years aren’t only at the ends of deals”, or “Any year can impact a player’s next contract” are viable. Smart people will laugh at what you’ve done here. You simply cannot use words like “every”. If there is a single exception it renders your entire point invalid.

    Vote -1 Vote +1

    • Ivdown says:

      People like you are why people hate online posters. My first reaction would be to get a life, but my second reaction is to not nitpick at stupid things like you have picked to nitpick; obviously once they get the huge contract they aren’t playing for another big payday the year after, but that’s not the point he was making genius.

      Vote -1 Vote +1

  10. Mark says:

    I find Mr. Nicholson-Smith’s theories rather weak, his statistical analysis quite poor, and his overriding thesis severely limited. I certainly would love to have Mr. Nicholson-Smith on the opposite end of a few trades, though, in the markets financial.

    The hyphen, though, is a nice touch.

    Vote -1 Vote +1

  11. pft says:

    The season before an option year is a contract year in most cases. So ther Arroyo example is a poor one since that option would have paid him nicely for 1 more year. David Ortiz had an option as well and had a pretty good year, but did not get extended. Thats ok, because the market for DH is weak. If Papi had a poor year, his option would not have got picked up, and he would be playing for 6-8 million this year instead of 12.5 milliosn

    Also, if you were to use PED’s in a contract year, you want some certainty you will benefit financially after that year, since there is a finite probablity of getting caught, not to mention health risks. Having a hope and a prayer for an extension is not eneough to justify the risk. Getting an option year picked up may be, and certainly being a FA after the season is enough. Arb raises may not be enough since they are still below market dollars.

    Extensions actually work as much for the team as the player as they usually get the player to give up some FA years and tend to be below market. Longoria is a great example.

    Of course, for some players every year is a contract year, as they may end up in the minors or without a contract with a bad year. These players tend to be marginal players and a contract year for them does not register much.

    This does not mean players do not try to have good years in non-contract years, it just means they some may not work as hard in the off season, or take risks with PED’s. Not everyone is capable of having contract years. And some players may perform poorly in contract years due to the pressure to perform.

    So every year being a contract year is only true so far as every player that plays has a contract in the year he plays.

    Vote -1 Vote +1

    • Coladar says:

      I would bring up two points in reply. First is mention of PED usage and contract years. It’s an interesting idea, using PEDs only when you know you have a contract year and going for the extra performance knowing it will turn into extra cash. That said, I really don’t believe this occurs. PED users are either going to cheat all the time, figuring what they are using is undetectable, or not. I’d be curious if there really are users who only use in contract years to minimize risk and side effects. It seems to me the type of personality to use is going to want the stat and performance increases every season. That, or start using in a contract year, getting away with it, getting noticeable improvements from it, and thus continuing to use. We will never know, but I’d be shocked at a player just using during his contract year, then not taking them again for 3-5+ years.

      The second thing was your comment about the opposite of what is commonly received, and discussed in this article. That a player having an awful season turns a non-contract year into a contract year. Obviously this is only going to occur with young players, or low salaried ones, but it’s an interesting topic nonetheless when you think about it. Non-contract turning into contract years due to great performances get all the attention, but we shouldn’t forget that far, far, far more frequently players fine themselves in unexpected contract years due to poor performances leading to being DFAed. For every one Tulowitzki or Bautista, there are probably ten DFAed players facing unexpected contract years with just the opposite, a massive decrease in salary, to minor leagues, to being out of baseball altogether. I think it’s worth highlighting the point you made to keep in mind that contract years can come about unexpectedly due to poor performances, and it’s far more common.

      That said, ignore all the hate because you didn’t analyze WAR and “advanced stats.” This was an interesting article, and I for one enjoyed it Ben. The entire point to having these MLBTR guest articles was to get some non-FanGraphs opinions and viewpoints on the site, and thus one shouldn’t expect a typical FanGraphs article. That’s the entire point. But for every one person that goes nuts over your articles as they did last week and to a lesser degree this week, there are a hundred that read it, enjoyed it, and remained silent. I look forward to next weeks submission, thanks for doing this.

      Vote -1 Vote +1

  12. I found the article interresting and pretty much right on as a Reds fan the times will be getting harder for Jocketty and he has won on the great previous drafts and efforts of Dave O brien and Wayne Krivsky—Reds will be very interresting this year.

    Vote -1 Vote +1

  13. Michael says:

    I don’t think that Ben Nicholson-Smith is a noted Fan Graphs analyst and I say that with utmost respect for the guy. It specifically says he is writing a “guest-post”, which in theory is really what each one of these comments/responses can be considered.

    I used to subscribe to MLB Trade Rumors. Nothing insightful or groundbreaking from the author, just a lot of links to baseball analysts and beat writers and high-end blogs. In the last year, or so the e-mail has posted a weekly recap of MLBTR Originals, but most of it was “safe” stuff. MLBTR originals consist of a lot of general consensus stuff and far too many player nicknames (i.e. Tulo and CarGo) to lend the staff any real credibility. If one comes across sounding as a homer, even if not, that person instantly lacks credibility in my opinion – it’s just too hard to take the analysis seriously. These are a few of the main reasons I unsubscribed, along with the fact that anyone can simply follow any of the cited analysts and writers on Twitter and get the same information real time rather than a day later.

    In fairness, the package MLBTR does present ties everything together nicely.

    That being said, I think everyone is giving the guy too much credit and by setting the bar so high he is bound to not live up to your lofty expectations. Ben Nicholson-Smith is not Rob Neyer or Peter Gammons or even Aaron Gleeman, though his writing style is so similar to the latter it is frightening. At least MLBTR had stopped doing the “As Derek Jeter contemplates whether to accept a new contract from the Yankees or try free agency, let’s look at what is happening in baseball……” or the annoying “more after the jump” followed by five asterisks.

    So take this article for what it is. A safe article of general information designed to stir up a little notoriety for the author. Regular followers of Fan Graphs would never follow the site if this was the regular fare presented to its readers. Does that mean we shouldn’t enjoy it? Absolutely not. For every Scorsese movie we always find time for a little, “Dude, Where’s My Car?”, right? And I mean that in a flattering way.

    And you know what, anyone who contributes information that can give any of us an edge somewhere can’t be all bad. If you are in a keeper league, maybe you’ll feel safer extending Bucholz or Trevor Cahill long-term knowing that trends indicate those players will get extended. I personally prefer guys who miss more bats, but wins are hard to come by and both provided plenty last season

    As far as the Arroyo inclusion – well, it gave the author an excuse to link to an application with great pride, MLBTR’s Transaction Tracker, though I think the correct word would have been “exuberance” rather than “enthusiasm” when describing Walt Jocketty’s propensity to extend his player’s contracts. But that’s nitpicking.

    So give the guy a break. He seems to have built a huge following from a simple e-mail list and he certainly has a large number of fan followers and uber-respect from the authors that he links to and cites on his newsletter and website. I bet all of us wish we had that kind of notoriety. So don’t hate the guy just because he is doing, and getting paid for doing, what we all wish we could do.

    Vote -1 Vote +1

  14. Steve says:

    I don’t know if I would call every year a contract year, but it does make for a catchy title. I do agree that there are more contract years (for multi-year signings) than in the past, but most fall into the following two categories. The first group is the pre-arb long-term deals (Justin Upton, John Lester, Ricky Romero, Evan Longoria, etc). The Tulowitzki deal is a new exception. These types of contracts grew out of necessity as the divide between large and small market teams grew and the small market teams needed to find value to compete. By keeping a player in the minors for a few weeks during their rookie season and then buying out their first year of free agency a team can control a player for eight years rather than six, and those two extra years come in the players’ prime when they are producing their greatest WAR. In terms of $ spent per WAR, it makes sense for small market teams to do these deals and then either trade the player when they are at their peak value or let them walk at the end of the contract. By offering the contract pre-arb, it is riskier but you increase the liklihood that the player will accept it. Free agency is still far enough off, that what is one more year? and for a player making $400K, a $40M to $60M contract is large. You never know what can happen (most players never make it the huge free agency payday) and so giving up one year of free agency for the security of knowing that you are set for life no matter what happens is enticing for most players and at the very least, a nice choice to have for any player who has the opportunity. The second group are the ones entering their contract season. Teams worrying about losing their franchise player are ripe for the picking and agents were quick to learn how to exploit this. Any player with one year left on his contract will now send out hints going into the off-season to see if he can get one of these deals. The advantage is huge and it is entirely with the player. Contrary to the adage that the team is bidding against itself, it is bidding against what they believe the market will be. The perceived market is always greater than what the reality becomes and so in most cases, the team is paying a premium to keep the player from being available to other suitors. If they don’t, the player can wait. Albert Pujos played this out perfectly. The only way he was going to sign was if the Cardinals offered more than what Pujols can get as a free agent. Based on the rumors floating around, it sounds like he was looking for $275M to $300M. He didn’t get it, so he’ll wait for free agency. He could get that much, but I think he is more likely to get something in the $225M to $250M range. The higher price tag is going to scare off any team for a player entering his decline years, even if it is Albert Pujols.

    Vote -1 Vote +1

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>