The Colorado Rockies should offer Nolan Arenado a contract extension to which he cannot say no, and they should do it yesterday. Here’s why and what it could look like.
Arenado, as we’ve talked about quite a bit this season, has established himself as one of the true stars of the game. He’s an elite defender, and he has improved his one weakness at the plate, his walk rate. Now, Arenado’s the best defensive third baseman in the majors, and he also has outstanding contact ability, power, and enough patience at the plate to make each segment of his triple slash shine. He’s a self-actualized baseball player.
To put the most prominent bow on it possible, Arenado’s on a Hall of Fame trajectory. Right now, Arenado is in his fourth season. Through Wednesday, he’s played 500 games and has had 2078 plate appearances. In that time, he’s accrued 17.9 Baseball Reference Wins Above Replacement (rWAR). This is the eighth most rWAR in a third baseman’s first four seasons since 1901—more than players Scott Rolen, George Brett, and Chipper Jones. In fact, Arenado has the chance to have more rWAR in his first four seasons than Mike Schmidt, who is possibly the best third baseman of all time. Though Schmidt posted 19.3 rWAR in fewer games (465) and a year younger than Arenado, Schmidt debuted at 21 instead of 22, in his first four seasons. Nevertheless, by the end of the season, Arenado has the chance to have more rWAR in his first four seasons than all third baseman other than Evan Longoria (27.4), Wade Boggs (27.0), Eddie Mathews (25.8), and Dick Allen (22.7). He’s worth keeping around.
One might say, however, that he’s already going to be around for a while. The Rockies have control of Arenado through his age 28 season in 2019. By that time, we’ll know for sure whether or not the window of contention that sure looks like it’s opening is real. This would mean that the Rockies would pay Arenado arbitration salaries for the next three seasons. Arenado is making $5 million in his Super 2 season. He’s almost surely going to add another Gold Glove Award to his résumé, and he might even siphon some MVP votes. These are things that will really work for him when negotiating arbitration salaries.
If Arenado stays healthy and productive, we can conservatively estimate that his salaries for the next three seasons might go up $5 million per year: $10 million in 2017, $15 million in 2018, and $20 million in 2019. That amounts to a commitment of $45 million. If the Rockies are good and Arenado does something like win an MVP award, it could be much higher. In other words, Arenado is going to be earning what he deserves very, very soon—and he deserves a lot. The Rockies would save money by keeping Arenado off the books past 2019, but sticking to arbitration salaries isn’t going to be cheap. He’ll by the highest paid Rockies player by 2018, extension or not.
An extension for Arenado would do a few things. First, it would provide cost certainty for the remainder of Arenado’s arbitration seasons and beyond. The Rockies are going to pay him a whole lot of money, but they’ve demonstrated that they can manage a few big contracts at a time while keeping the payroll around $100 million. Knowing Arenado’s salary will help facilitate that. It’s also looking more and more like the Rockies are going to be legitimate contenders very soon—perhaps as soon as next year. An extension would remove the possibility of Arenado leaving via free agency off the table for some time. It would also eliminate discussion of an extension, which he and the Rockies are likely to get asked about if they don’t agree on one.
Let’s look at a couple comparisons. Kyle Seager is an excellent positional comparison. The Mariners signed Seager to a 7-year, $100 million dollar contract prior to the 2015 season, after Seager’s fourth year and age-26 season. 13.2 rWAR in 527 games and 2201 plate appearances. The contract secures Seager through his age 33 season, and the Mariners have a $15-20 million option for an eighth year. Seager’s extension demonstrates a rough precedent for a young third baseman, although Arenado will demand more money.
Another reasonable comparison is closer to home: Troy Tulowitzki. The Rockies signed Tulowitzki to a 10-year extension after his age-25 season in 2010 (with an option for an eleventh year). The deal was worth $158 million. It’s useful to think of a potential Arenado extension through the lens of Tulo’s. The reason is straightforward: The extension worked out marvelously for the Rockies. Tulo only played four and a half of the ten season commitment, but he was excellent in those four years. He was prolific at the plate, played excellent defense, and posted 20.1 rWAR. The Rockies got the player they expected when they extended him.
There are two caveats to that though. First, Tulo was often injured. He played only about 73 percent of the Rockies’ total games between 2011 and the time he was traded in 2015. While the team got the productivity they desired when they extended Tulo, they didn’t quite get the playing time they imagined. Still, there’s no way to look at what Tulo did when he was on the field in those years and argue that he wasn’t worth the money and keeping around. The other caveat is that the team turned bad almost immediately after the extension. While Tulo was great, he was on some terrible teams, so the productivity was all for naught. Due to this, the "will they let him walk or extend him distractions" just turned into diverting questions such as "will and should they trade him." If the Rockies extend Arenado and the rebuild doesn’t pan out, there would be trade speculation very soon.
The Rockies ultimately traded Tulowitzki because the team remained bad and it became apparent that trading him and his contract would do more to help the long-term health of the team than keeping him. That doesn’t mean the extension was a failure. On the contrary, the terms of Tulowitzki’s deal and the timeliness of the trade might have ended up the final gift of the extension. A lot still rides on what happens with Jeff Hoffman, Miguel Castro, and Jesus Tinoco, but at the moment the trade appears to be a success for both sides.
This, of course, is an undesirable outcome for an Arenado extension. The Rockies should not extend Arenado with the intent on trading him at any point of it, but if the farm busts and the Rockies end up where they were in 2012-2013 (when Tulo trade rumors started to regularly surface), then it could happen. It’s a break glass in case of emergency safety—a salvaging last resort that can still yield positive results.
And now, the details. When the Rockies extended Tulo, they were on the vanguard of what became a league-wide trend of securing young talent to long-term deals that, while expensive at first blush, turn into team friendly contracts as salaries continue to rise. Salaries have risen, which means that an Arenado extension would be worth more money than Tulo’s, and for fewer years. The Rockies’ deal with Tulo also provided the team with control through his age-36 season. There’s a lot of risk involved in that, so a deal for fewer years for Arenado would have the mutual benefit of mitigating the risk of age-related decline for the Rockies while also making it possible for Arenado to secure another contract.
One thing that didn’t really exist at the time of Tulowitzki’s extension was the player opt-out clause. Just about every extension, and many free agent signings, in the past three years has included an opt-out. In brief, the opt-out is hugely beneficial to the player. For instance, Jason Heyward’s eight-year contract with the Cubs allows him to opt out after his third year. If he’s good, he’ll opt out because it will almost certainly guarantee a bigger paycheck and more years. If he’s bad, he’ll stick around and continue collecting paychecks through 2023 (he also has a conditional opt-out after the fourth year). The question is not whether the Rockies should include an opt-out in an Arenado extension; rather, it’s whether they would have to include one to get an extension at all.
The Rockies will more than likely have to concede to an opt-out if they intend to extend Arenado. But they can work to choose when it should become available. Right now, the Rockies control Arenado through 2019, his age-28 season. If I’m Arenado, I’d like an opt-out after 2020, the fourth year of the contract. That would mean an extension that buys out one free agent season, and he could test free agency at the ripe age of 30. If I’m the Rockies, I don’t want an opt-out at all, but I’d concede one after 2021, Arenado’s age-31 season. That would mean Arenado could opt out for free agency at the same age Robinson Canó pulled in a contract for 10 years and $240 million. If Arenado were a free agent right now, he’d easily get a contract worth more than Canó’s—maybe a lot more. From the team’s perspective, the point of an extension is to get him below market value.
An extension for eight years worth $200 million with an opt-out after the fifth year should be something that could satisfy both the Rockies and Arenado. It averages out to $25 million per season, but structuring the contract to escalate—perhaps starting at $10 million in 2017 before reaching the 30s by 2021—would approximate what they’d be paying him for his arbitration seasons anyhow. They’d pay a lot for the free-agent seasons, but it would still be under market value. The extension would also keep Arenado a member of the team throughout what looks like an imminent window of contention and buy out two free-agent seasons. In return, Arenado would receive a big contract and prime himself for an even bigger one later.
Get it done.