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Zack Greinke and the Future of Pitching Contracts

Spending money is an interesting avenue to build a pitching staff. Many of the deals are conventional; a superstar pitcher around 30 years old gets a contract in the neighborhood of at least 7/$175M. But something unconventional is the nature of the contract that Zack Greinke signed with Arizona; 6/$206M. We have seen pitching contracts at or exceeding $175M several times in recent years; they have all been at least seven years in length. Never before has a contract in Major League Baseball history paid so much money in so little time. In fact, Greinke’s $34.5M take-home in 2016 was the highest single-season pay in Major League Baseball history. Now, with stricter luxury taxes in place, the higher average annual value (AAV) is certainly a unique burden on Arizona, but what about the burden of the seventh, eighth, or even ninth year of a deal for every other team? Arizona’s braintrust decided that, rather than having Greinke hamstring their payroll for seven or eight years, he will only do so for six, albeit at a slightly higher rate. I think they are onto something.

Here’s a look at every major pitching contract signed from the 2000-2011 seasons worth at least five years. Compare the values produced in the first four years of those deals to the value of the whole contract, and look at the following years as well.

Pitching Contracts and Subsequent Performance in $, 2000-2011 Seasons

Player Contract Value in Yrs 1-4 Value in Yr 5 Value in Yr 6 Value in Yr 7 Value in Yr 8 Value in Yr 9
Mike Hampton 8/121M 28M 4.6M 2.3M 5.3M .7M
Mike Mussina 6/87M 84M 12.2M 24.9M
Roy Oswalt 5/73M 99.5M 20.5M
Daisuke Matsuzaka 6/52M 46.2M .6M -2.2M
Chris Carpenter 5/63.5M 58M 36.5M
Barry Zito 7/126M 41.1M -4.1M 5.8M -3.4M
Carlos Zambrano 5/91.5M 57.6M 3.1M
Johan Santana 6/137.5M 74.4M 10.7M INJ
A.J. Burnett 5/82.5M 54.4M 31M
C.C. Sabathia 9/211M 147.4M 18.9M .9M 9.5M 21.2M N/A**
John Lackey 5/82.5M 44.7M 17.9M
Cliff Lee 5/120M 138.8M INJ
Jered Weaver 5/85M 53.1M -1.2M
C.J. Wilson 5/77.5M 54.4M INJ
John Danks 5/65M 20M -.8M
Gio Gonzalez 5/42M 109.8M 22.9M
Yu Darvish 6/60M 91.1M 21.6M N/A**

*all contract data via Baseball Reference, all valuations via FanGraphs by conversion of (fWar)($/fWAR)

** these seasons will be played out in 2017

Of course, there are some contracts in here that went south from the start. Mike Hampton, Barry Zito, and John Danks are the culprits here. You probably notice that in most cases, years one through four go completely according to plan! Some of the exceptions are due to injury, and those are Johan Santana and John Lackey. But even other injury victims, such as Yu Darvish and Chris Carpenter, were so valuable in two or three years that they held up their end of the bargain.

However, the second thing you’ll notice is how quickly values go down on this list after year four. Of the 17 samples we have here, there are only seven success stories in year five (Oswalt, Carpenter, Burnett, Sabathia, Lackey, Gonzalez, and Darvish). Two of those cases are unique, as A.J. Burnett experienced a career revitalization in Pittsburgh under Ray Searage, and Darvish was a young international free agent. Overall, the success rate isn’t encouraging. The real black marks are the years following that. We have 11 samples on hand, and aside from modest renaissances from Mike Mussina and C.C. Sabathia, you get some really ugly numbers.

With this chart now in context, it brings us to wonder why any pitcher is even offered a deal in excess of four years. It is just not worth having so much dead payroll for one to five years. In fact, looking at how successful the first four years are, the values already come pretty close to the original contract anyways. Did the Phillies or Cliff Lee ever consider a four-year contract in that same $120M range? Probably not, but Lee would have taken it, and the Phillies would have been better off. I’m sure C.C. Sabathia never received a 4/$120M offer from the Yankees, but it would have let him hit the market again to potentially cash in one more time, and New York would have still recouped 75% of the value they ultimately got from him in nine years.

Thinking in present times, here’s a chart in a similar vein, but examining pitching contracts in the length of at least more than four years signed from just the 2012 season alone. Remember, these players have pitched the first four years of these contracts…

Pitching Contracts and Subsequent Performance in $, 2012-Present Seasons

Player Contract Value in Yrs 1-4 Value in Yr 5 Value in Yr 6 Value in Yr 7 Value in Yr 8
Matt Cain 5/112.5M 7M N/A N/A
Cole Hamels 6/144M 122.7M N/A
Hyun-Jin Ryu 6/36M 55.5M N/A N/A
Anibal Sanchez 5/80M 82.7M N/A
Matt Harrison 5/55M -1.1M INJ
Felix Hernandez 7/175M 120M N/A N/A N/A
Adam Wainwright 5/97.5M 116.7M N/A
Justin Verlander 5/140M 122.5M N/A N/A N/A N/A

*all contract data via Baseball Reference, all valuations via FanGraphs by conversion of (fWar)($/fWAR)

…and we see more of the same. Year five for these eight pitchers is 2017, and how many are a good bet to produce? Verlander, Hamels, most likely Hernandez, and…possibly Wainwright? Matt Harrison’s career is already over due to injury. Lengthy DL stints have ruined Ryu and Cain. Wainwright and Hernandez have also dealt with injury woes. Anibal Sanchez hasn’t been an effective pitcher since 2014. And yet, years one through four look beautiful for everybody but our two outliers.  

The same unorthodox contracts could apply to these guys. Anibal Sanchez is on the 2017 payroll for $16.8M, but what if Detroit had signed him for 4/$80M? Equal value would have been produced, and he wouldn’t be an albatross in 2017. 4/$100M for Adam Wainwright? That is similar to our previous Cliff Lee scenario. If Seattle had offered King Felix 4/$120M, he would have taken it in the hopes of cashing in one more time, and the Mariners would have received good value, similar to the Yankees and Sabathia.

Let’s condense all of the data from both charts and see what averages we get.

Sample Size Average Length Average Value Average Value (Yrs 1-4) Average Annual Value (AAV) Average Annual Value (AAV) – 4/73.14M
25 5.68 Yrs 96.68M 73.14M 17.02M 18.29M


Examining the averages, what if the average pitching contract shifted from nearly 6/$96.68M to 4/$73.14? The players would lose $23.54M on average over the length of the contract, but gain close to two free-agency years. Presumably, two free-agent years would be worth more than that, making for a worthy trade-off. As for the teams, they would pay $1.27M more per year in AAV, but eliminate two years of dead payroll (for those of you calculating that at home, that’s [17.02×1.68] – [1.27×4] for an average gain of $23.51M). That is a worthy trade-off for them as well. In other words, teams save millions, and players make more millions.

These condensed contracts have virtually no true precedent, but the 6/$206M deal that Greinke signed is closer to them than the current industry standard. Of course, pitching deals signed around the same time as Greinke are completely in tradition with this century (Max Scherzer, Jordan Zimmermann, David Price, Jeff Samardzija, Johnny Cueto, Mike Leake, Wei-Yin Chen, Ian Kennedy, and Stephen Strasburg), but that makes this one contract so potentially revolutionary among its contemporaries.

If you are thinking of the player and team who may follow these footsteps, I would imagine the perfect test case to be Matt Harvey. The Mets pitcher proved that he is an All-Star-level hurler in his comeback 2015 season from Tommy John surgery, but was hampered again in 2016 and diagnosed with thoracic outlet syndrome. All of this speculation is for naught if Harvey’s career is going to fizzle out or if he will need to be relegated to the bullpen, but let’s say the next two years are a comeback for him in the mold of 2015. After 2018, he would hit free agency going into his age-29 season. He would theoretically be in line for a five- to seven-year deal, but I don’t think someone with “Tommy John surgery” and “thoracic outlet syndrome” on his resume is a wise investment for that long. What if instead of something in the 6/$150M range, it’s a deal for 3/$100M? 4/$130M? If his production is equal to that type of contract, he would still hit free agency at age 33 or 34 and be in demand; it’s quid pro quo.             

Only time will tell if front offices of the future will adopt this strategy, and the harsher luxury-tax penalties surely dampen the idea. However, a team with cash to spend is always a team in need of pitching; perhaps we will see their contracts truly begin to condense.