Two weeks ago we heard vague rumors regarding the Diamondbacks and Justin Upton working on an extension. As it turns out, those rumors had some legs. Yesterday we learned that the two sides have agreed to a six-year, $51.25 million contract that buys out all of Upton’s arbitration years, plus two years of free agency. This is a year longer and $10 million cheaper than the projection I offered, though that was based on an extension following the 2010 season. As with many deals of this nature, it represents a win for both sides.
By signing Upton now, the Diamondbacks ensure that their most promising young player stays with the team for the forseeable future. They also might have saved money. Even if Upton repeats his 2009 numbers this season, he’d be due a large raise in his first pass through the arbitration process. The Diamondbacks could approach him about an extension then, but at that point Upton would have more leverage. Perhaps at that point Upton wouldn’t agree to anything less than five years and $58 million.
In exchange for this presumed discount, Upton gains the security of a guaranteed contract. Even if he sustains a major injury next year the Diamondbacks will still pay him that $51.25 million. If he stays healthy he will likely make less than he would by going through the arbitration process and then hitting free agency after the 2013 season. But Upton’s age helps mitigate the underpayment. The contract runs through his age-27 season, meaning he could still be in line for a big payday. Depending on the economic conditions at the time, that could be a considerable deal, perhaps comparable to Mark Teixeira‘s $180 million contract.
Even at a discount this deal pays Upton a healthy sum. Assuming $1.25 million for the 2010 season, and further assuming that Upton will make 40, 60, and 80 percent of his free agency value through his arbitration years, the deal will look like this:
2010: $1.25 MM
2011: $5.26 MM
2012: $7.9 MM
2013: $10.5 MM
2014: $13.17 MM
2015: $13.17 MM
For comparison, Ryan Braun will earn $4, $6, and $8.5 million for his arbitration years, followed by $10 and $12 million for his first two free agent years. Hanley Ramirez‘s deal paid him $5.5 for his first arbitration year and will pay him $7 million for the second this year. In the third he’ll make $11 million, followed by $15, $15.5, and $16 million in free agent equivalent salaries.
The most comparable could be David Wright, who earned $1 million in his final reserve clause season, followed by arbitration salaries of $5, $7.5, and $10 million. The Mets then have his first two free agency years at $14 and $15 million, with a $16 million club option for a third. Upton and Wright signed their extensions with the same amount of service time, so it makes sense that they received comparable deals. Wright, however, put up better numbers during his first two seasons, and also plays a more valuable defensive position.
After posting a .388 wOBA and producing 4.6 WAR as a 21-year-old, Upton figures to improve over the next few years. The Diamondbacks wanted to make sure they had him under contract, as to avoid the threat of arbitration. Upton, like most players, wanted the security of a long-term contract. Both sides will get what they want, while Upton can still find his big payday in free agency at age 28. It’s hard to not like this deal from both sides.