Giants Extend Madison Bumgarner

The trend of giving out long term deals to premium young players continued today, as the Giants locked up Madison Bumgarner through at least 2017, and the deal gives them team options for both 2018 and 2019. In exchange for long term control over Bumgarner’s future, the Giants guaranteed him $35 million over the next five years, with an additional $5 million possible if it turns out he would have qualified as a Super Two after this season.

As the very useful Transaction Tracker at MLBTradeRumors shows, the five year extension for quality young pitchers has been quite popular in recent years, but in general, teams have waited until they’ve had two years of strong performance before giving them this kind of contract. This deal looks very similar to the ones signed by Jon Niese, Derek Holland, Gio Gonzalez, Trevor Cahill, Yovani Gallardo, and Jon Lester, but in each case, those pitchers had already accrued 2+ years of service time.

Bumgarner’s deal tops Ricky Romero’s as the largest contract ever given to a pitcher with just 1+ year of service time under his belt, and reflects the fact that Bumgarner has been excellent at a young age and that prices for talent in Major League Baseball look to be going up. With the recent extensions signed by Joey Votto, Matt Cain, and Ryan Zimmerman – each of whom got over $100 million in guaranteed money despite not being free agents – teams are beginning to take steps to get cost certainty through the best years of their core players.

The dramatic escalation in salary once a player reaches arbitration can make it prohibitive to keep players on board beyond their first six years, as the Giants are experiencing right now with Tim Lincecum. Bumgarner wasn’t going to break arbitration in the same way that Lincecum did, but with continued health and strong performance, he likely could have landed a significantly larger contract in several years. However, he was willing to take the security of a guaranteed $35 million now in exchange for divesting himself of the risks associated with being a big league pitcher.

This is the kind of win-win deal that is growing so quickly in popularity that is becoming rare to not see a team and a premium young player not pursue this kind of path. By signing these deals early, the player ensures that he’ll get at least one really significant contract in his career, and also maintains the ability to reach free agency at an early enough age to get a second long-term contract if they stay healthy and perform well. Even if the Giants exercise both options and keep him under contract through 2019, he’ll still be eligible for free agency headed into his age 30 season. For Bumgarner, this doesn’t preclude another big payday at some point in the future if his career goes as well as he hopes.

The Giants potentially save significant dollars and get to keep one of their best young players in the organization through most of his expected prime. Bumgarner becomes a very wealthy man and sets himself up for a potential bite at free agency at an age when he could still command another large contract. These deals make so much sense for both sides that the growth in popularity of the early career extension is only going to continue.

The Giants had to pay a small premium to Bumgarner over what other comparable pitchers have received, but the extra cost is not so high that the team should have balked at the price and gone year-to-year instead. This is a wise move for their franchise, and with the escalating price of extensions, this deal may very well look like a relative bargain by the time next year’s round of long term deals are completed. Bumgarner gets the security that young pitchers should be seeking, and the Giants get to keep a talented young arm in the fold for the next five to seven years. It’s a win for everyone involved, and another sign of the increasing understanding of risk and reward in both the front offices and among representatives of Major League players.