Teams are constantly trying to sign young players to contract extensions, buying out both the remainder of the player’s cost-controlled seasons and then years of free agency after that. Doing so provides great benefits to the team, chiefly by allowing them to avoid the expenses of the free-agent market.
Not every player is offered or signs that type of extension, however. Some players choose to avoid extensions altogether, hoping for the big free-agent payoff as soon as possible. Other players might develop later and miss the window for an extension. Still others might lack the requisite talent to attract a deal. In every case, the player in question moves on, and that’s the end of it.
There’s a final scenario, however — one in which the club and player both possess an interest in reaching an extension but, for whatever reason, are unable to agree on the terms until the player’s final season of team control. In this case, a team isn’t buying out team-control years, only free-agent ones. And that changes the calculus a little bit. Because, while it’s possible the team might be receiving something of a discount from free agency, the odds of these deals working out for the team are not great.
Contracts for pending free agents (how I’ll refer to these players in their last year of team control) aren’t common. Players who’ve reached the brink of free agency have a major incentive to play out the year and see what the market provides. Having been unable to reach a deal for years, the odds that a player and his club will have a change of heart are low. This is particularly true for players who have never signed a contract extension and are heading into their sixth (or, because of service-time manipulation, seventh) year in the majors, and are now faced with their first chance at free agency.
Despite their rarity, there are a few examples of these contracts for pending free agents every season. Last year, for example, Rick Porcello signed a five-year deal with the Red Sox, while Clayton Kershaw and Brett Gardner have also signed similar contracts in the past couple years.
Looking at contracts from late-2007 through 2013, we can see how those deals have worked out for the teams that have signed them. Using MLB Trade Rumors’ extension tracker I looked for players with between five and six years of service time who were pending free agents and then signed contracts buying out at least two years of free agency. Those deals needed to be at least half-completed by this season to provide a decent idea on the deal’s outcome. In all, I found 26 such contracts. To determine value, I used $8 million per win for this season, and to approximate past and future years, adjusted by $250,000 per season. For contracts still active in 2016, I used the FanGraphs Depth Charts projection for the player, and if there were any years after 2016, I decreased the 2016 projection by half a win per year.
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