Derek Holland, Rangers Talking Extension

Early Thursday afternoon, Evan Grant of the Dallas Morning News reported that the Texas Rangers were working on a long-term deal with starter Derek Holland. As an unabashed fan of Derek Holland (yes, despite his performance against the Rays in the playoffs) and a loather of all things having to do with the Rangers (the playoffs may have something to do with this), this news caused conflicting emotions to simultaneously flit across my mind. Sweet, great move locking him up! Arg, but why does it have to be the Rangers?

I’m getting ahead of myself, though. Why is locking up Holland a great move? If you take a cursory glance over his statistics, you’ll notice he had an impressive 2011 season: 3.95 ERA, 3.86 SIERA, 3.6 WAR. It was a breakout year for Holland, but it’s not exactly an unexpected development. He has dominant stuff — a 94 MPH fastball with plus movement, a hard slider that destroys lefties, and a changeup and curveball for attacking righties — and he was a top ranked prospect when coming up through the minors. He’s durable, throwing 198 innings last season, and he’s a mere 25 years old.

Also, it’s worth considering that Holland improved dramatically over the second half of 2011. As I noted during the playoffs:

He started off the year posting a 6.7 K/9 and 3.4 BB/9, but over his final 14 starts, he posted a 3.06 ERA while increasing his strikeout rate (8.2 per nine) and dropping his walk rate (2.7 per nine).

It’s difficult to say how much of those improvements Holland will carry over into 2012, but over the tail end of last season, he was arguably as good or better than C.J. Wilson. The Rangers have resigned themselves to losing Wilson in free agency, but they just might have the next Wilson already on their roster.

But since the terms of the agreement haven’t been released yet, what should we expect? How much will Holland get in this deal? That question is a lot easier to answer than you’d imagine.

 When you look at the extensions that other young pitchers have signed in recent year, it’s easy to notice a common theme:

*Blue squares represent club options.

This isn’t a comprehensive list of every extension signed over the last few seasons — I tried to pick pitchers that compare well with Holland, so you’ll notice the disproportionate amount of lefties — but it should hopefully be enough to get the picture. Almost every extension followed the exact same template. After posting a 3.5-4.0 WAR season, the young starter signed an extension that gave them a raise over their remaining cost-controlled years (if they had any), and paid them close to $3m, $5.5m, and $7.5m over their arbitration years. There were also one or two team options tacked on at the end of the deal.

And if you look even closer, you’ll notice that the template gets even more precise depending on when the pitcher signed their contract. The three pitchers that signed before their final year of cost control (like Holland’s situation right now) all received a $30 million payout over five guaranteed years, with a $13 million team option tacked on the end. Considering Holland has been roughly similar to those pitchers through this stage of his career, I’d imagine that his deal will approximate those contracts.

Whenever a team signs a young pitcher to a long-term extension like this, the common refrain is almost always, “That’s such a good deal, so why don’t more teams do this with their players?” I think the above chart does a good job illustrating why. If you’re an above average pitcher (~4.0 WAR) early in your major league career, you know exactly what sort of a long-term deal you can get from your team if you want it. The big question is, do you want to take that guaranteed money now, or do you take a gamble and think you can get a Jered Weaver or Tim Lincecum type deal in a few more seasons?

Unless the pitcher is an injury risk or there are reasons to believe they won’t repeat their performance, a team will almost always sign a young, above average starter to an extension like above. The trick is finding the right match, and there probably aren’t as many of those out there as we’d think.

The Rangers seem to have found a match in Derek Holland, and if so, good for them. They would be locking up a potential front of the rotation starter for the next five to six seasons, all for less money than C.J. Wilson will make in two seasons. And heck, good for Derek Holland as well. It’s not every day that you get offered $30 million and a chance to end you financial worries for life.