What Does a Jake Arrieta Contract Extension Look Like?
There’s been a lot of talk (like, a lot a lot) about what the Cubs plan to do this offseason, much of it centered around starting pitching. And that makes sense, right? Theo Epstein stated pretty plainly that they need to improve in that area and it’s been thought for the last year or more than the Cubs would look to harvest some of what promises to be a bumper crop of free agent starters. But somewhat lost in the shuffle is the idea that they may have to pony up for pitching they already have, namely the guy who just put up the best 2nd half in baseball history.
Jake Arrieta made only $3.63 million in 2015, making him the best value in pitching since Scott Feldman netted a return of Pedro Strop and…Jake Arrieta. The bearded workout fiend comes across as a pretty laid-back, easygoing guy (and without the annoying dude-bro tendencies evident in other players of this ilk) off the mound, so much so that I think it’s fair to call him LL Cool Jake. But if all you pay attention to is the chill demeanor, you’ll miss the fact that he’s walking with a panther (probably 3 people will get this).
That’s to say Arrieta is represented by Scott Boras, a man known for his ferocity and cunning. He’s a necessary evil when dealing with the top talent in baseball, and it may well be time for the Cubs to step into the ring with him again. I’m not sure he’ll spout anything about ersatz baseball and the apogee of wrongs (you may remember those from the Kris Bryant promotion kerfuffle) when it comes to pleading Arrieta’s case, (big ole) but you can bet he’ll be working to get his client more money than what arbitration alone will bring.
Here’s the thing though: Arrieta will turn 30 about a month before the 2016 season and he only has two more arb years remaining. That’s really weird timing-wise when it comes to an extension for a couple reasons. First, most extensions are inked specifically to buy out arbitration but not cost the player any years of free agency, but they also generally run more than two years. Second, anything shy of a mega-deal would put Arrieta back in free agency in the back half of his 30’s, thus making it unlikely he’d receive another big contract.
There’s also the matter of his insane second half, coupled with Theo Epstein’s oft-stated desire not to pay premium dollars for past performance. I think it’s pretty obvious that no one, not even Arrieta himself, expects him to duplicate exactly what he did down the stretch, but we’re talking about a guy without a great deal of innings on his arm who still has prime years available. So where do the Cubs go in terms of an extension offer and what does Arrieta look for?
That said, I wanted to take a look at the potential scenarios, providing my thoughts on each. As a point of order, I’m using a baseline of $20-25 million(ish)/season for these deals.
Remain status quo
Since Arrieta still has two more years of arbitration eligibility before becoming a full-fledged free agent, the Cubs could simply opt to do nothing with his deal. Based on the arbitration salary projection model developed by Matt Swartz and MLB Trade Rumors, Arrieta is expected to earn $10.6 million in 2016. That’s an increase of nearly 300% over this year, but still very reasonable when compared to other elite pitchers.
Even with a return to mortal production next season, it can be assumed that the Cubs’ ace will be in line for another — probably more modest — raise for 2017. That could still mean a salary of $12-15 million, which would still be a tremendous value…for the Cubs. Arrieta has said that he doesn’t need an “astronomical amount of money,” but I can’t believe he’s really happy with being the biggest bargain in baseball. It should also be noted that he said that last season and, well, he’s sort of in a better position now.
Buying out arbitration years
When it comes to extensions for pitchers, the general precedent is that they’re done to buy out arbitration years. But when you’re only talking about two years, it doesn’t really seem like much benefit to either the Cubs or Arrieta. Well, Jake gets maybe another $20 million or so over that time, so that’s a benefit. I can’t see the Cubs buying the cow when they’re getting the milk for free though, so the only reason to pursue this would be as a reward for underpaying for Cy-Young-level performance this season.
5- or 6-year tweener deal
Okay, ready for things to get a little complicated? In a vacuum, a deal of 5 or 6 years and $115-130 million seems very reasonable. That would take his age 34 or 35 season, at which point the Cubs should have gotten the whole of his prime and Arrieta could still cash in on at least a moderate contract to (presumably) close out his career. Everybody’s happy, right? Well, maybe not so much.
Consider that a 5-year deal would be on the books through 2020, which is when Jon Lester’s base contract runs out. Assuming the Cubs sign a big-money arm this offseason, you have to think that deal will be for at least 5 years as well. So now you’re talking about somewhere in the neighborhood of $60 million tied up in just three players. And unless Anthony Rizzo falls off a cliff, the Cubs won’t think twice about invoking their $14.5 million club option.
And if $74.5 million doesn’t seem like too big a deal, consider that it’s about 62% of the current payroll. For just 4 players. And they can’t really hope to balance that out with a bunch of league-minimum rookie deals since the current group of rookies will be reaching the end of their arbitration years at that point. Of course, you have to figure on at least a couple of the kids scoring extensions of their own in that same time, which means a significantly higher bottom line than we see today.
Kinda scary, huh? Well, maybe not. Some of you may recall Brett Taylor’s exhaustive (and I say that with love, or at least strong affection) examination of the Cubs’ finances on Bleacher Nation back in March of 2014. Shining forth from that epic piece was this shining beacon of hope:
To the extent the debt service payments and/or other restrictions related to the debt artificially limit the Cubs’ ability to spend revenue on the baseball side, those limitations may gradually ease over the course of the next five years. Understanding that there is $30 to $35 million in debt service currently paid annually, you can consider that figure extra revenue at some point in the near-term future, or perhaps by 2020 [emphasis mine], if the bulk of the debt is not paid down until 2019.
Hmmm, that sounds quite interesting. While it’s probably not responsible to base things entirely on Brett’s (very well researched) projections, we’re basically looking at the equivalent of two really nice contracts suddenly opening up for the Cubs. An extra $30-35 million would go a long way toward giving them room to accommodate contracts both new and existing. It also means the front office can feel relatively secure in locking Arrieta up for another 5-6 years.
I think a 4-year deal might actually be a bit more of a sweet spot for the Cubs, as it would help them to avoid some of the contractual logjam issues presented above. But that kind of pact wouldn’t make much sense for Arrieta, who would be heading into his age 34 season and unlikely to command a deal significantly better than what he’d be able to score at 35 or 36. I can’t imagine Boras being amenable to a deal that provides his client less money up front while still limiting him on the back end.
Likelihood: not not high
The big one
The Holy Grail for Boras — and Arrieta too, I guess — would be a 7-year megadeal worth $150 million or more. That might not seem like much more that those mentioned above, but an extra $20+ million for that 7th year is likely double what a 36-year-old pitcher is going to score on the open market. I suppose inflation could drive things a little higher, but more security is always a good thing.
I just don’t see this happening though, for many of the reasons mentioned above as arguments for a 5-6 year deal. One or two years of a really pricey aging ace is one thing, but a third year is another. The Cubs need/want to limit their exposure to that kind of burden, so I think a 7th year is just too much financial commitment given the inevitable outlay for all the other talent on the roster. I suppose there could be a 7th year built in as an option, which might work if it came in at a lower cost than the previous seasons.
Likelihood: prolly not
All things considered, I think there’s really only one direction the Cubs can take here, which is to extend Arrieta for 5 years (maybe 6). And me typing that out basically guarantees they’ll go in a different direction, so your guess is as good as mine there. I still believe the team will be aggressive in the pursuit of another big arm, but whether something gets done on an Arrieta deal might dictate the course of that pursuit.
Think about it: if the Cubs pony up $20 million/year this offseason to lock up their current ace, they might have to be more judicious in targeting another starter (or starters). Then again, maybe they won’t. Maybe they’ll see two big contracts as a wise investment, which could very well be true. I also think who Arrieta is as a person may factor into this as much as who he is as a ballplayer.
Listen, he’s not just going (back to Cali) to give the Cubs some crazy hometown discount, but I do believe he’s both intelligent and practical enough to understand that he can become a very rich man while still leaving some room on the payroll for lots of other very rich men. That may sound a little trite, but I’m just saying Arrieta doesn’t strike me as the type of guy who’s going to let hubris drive his actions.
Boras, on the other hand…
Despite the super-agent’s tendency to push the envelope, I believe an offer of $100-115 million for 5 years gets it done, though I could also see various escalators and incentives built in. Perhaps even a 6th year with a vesting option, similar to what Jon Lester received in his big free-agent deal. Speaking of Lester, I’m sure many of you are looking at the figures and wondering how Arrieta would not command significantly more.
I know I’m running long on this already, but I do want to lay this out a bit before signing off. While Lester’s about a year and a half older than his counterpart, he was only about 9 months older that Arrieta would be if he were to sign a new deal this offseason. Lester also had the added leverage of being on the open market and playing several teams against one another. And the Cubs were a team in need of a statement signing, which necessitated a bit of a premium in order to lure the big lefty.
Arrieta’s situation is entirely different, since he’s already with the team and has no competition to play up. Not only that, but an extension now would buy out those two arb years, thus increasing his salary a great deal during that time. Finally, the Cubs are no longer a hopeful group of kids, but a legitimate contender that guys are going to want to play for. So, in kind of a convoluted way, Arrieta’s dominance is actually part of what could make his deal smaller than Lester’s.
I’d like to see the Cubs get something done on this front this offseason in order to further solidify the future of the team, but I also know that the parties involved are all professionals and will do what they feel is best for themselves and the team. I think a deal gets done but it won’t surprise me a bit if Arrieta goes into 2016 without one.
I welcome your thoughts on what an extension for Arrieta should/will look like, if you think the Cubs will try to do one at all.