Giants Ink Cain To Lucrative Five-Year Extension

The San Francisco Giants reached an agreement today with right-handed starter Matt Cain that will keep Cain in orange and black at least through the 2017 season. Cain was entering the last year of his contract and had set an Opening Day-deadline for a contract extension with the Giants. That deal is now official.

The Giants will pay Cain $15 million for 2012 (the salary under his old contract), and $100 million for next five seasons (2013-2017). San Francisco has a club option for 2018 for $21 million but that becomes a player option if Cain reaches a certain number of innings pitched. If the Giants decline the option, Cain is guaranteed $7.5 million. If it becomes a player option, Cain can decline and still receive the $7.5 million. There is also a $5 million signing bonus. The contract includes a full no-trade clause.

With the signing bonus, and assuming the Giants pick up the option for 2018, the total price for the extension is $126 million over six years for an AAV of $21 million. If the Giants don’t pick up the extension, and buy out the option for $7.5 million, then the AAV goes up to $22.4 million.

Only CC Sabathia, Cliff Lee and Johan Santana have higher AAVs under their current contracts. All are lefties. Cain is the first right-handed pitcher to sign a multi-year deal with an AAV of $21 million or higher. (In 2007, Roger Clemens signed a one-year deal with the Houston Astros for $28 million).

As I wrote a few weeks ago, a deal in the range of five years/$100 million made sense for both Cain and the Giants. First, on Cain’s value:

Cain is (affectionately) known as the sabermatrician’s nightmare because he’s held batters to a lower-than-expected BABIP year after year and has a career home run/fly ball ratio that even Roy Halladay envies. But his other peripherals have been strong and, most importantly, moving in the right direction.

Cain’s strikeout-to-walk ratio hovered around 2.0 his first five years but has steadily climbed, averaging 2.7 the last two seasons, mostly attributable to a sharply declining walk rate. That’s led to a drop in WHIP, which sat at 1.08 in 2010 and 2011. But perhaps the most encouraging development for Cain has been his transition from an extreme fly-ball pitcher to a more balanced ground-ball/fly-ball one.

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What kind of contract makes sense for the Giants and Cain? Over the last six seasons, Cain’s been worth, on average, $16.5 million. Last season his value shot up to $23.4 million. His peripherals are improving every year and he’s been healthy and durable since putting on a Giants uniform. He’s big and strong (6-3, 230) and has the frame to pitch 200-plus inning every season without breaking down.

Cain’s made it clear that he won’t give the Giants a “hometown discount” like Jered Weaver gave the Angels in signing his new 5-year/$85 million contract last season and, given his numbers, health and durability, I can see why. A five-year/$100 million deal makes more sense for Cain.

As for why a long-term deal with Cain in the $100 million range made sense for the Giants:

The Giants payroll will hit $130 million this season and there’s no reason to think the team can’t sustain that level going forward. For 2013, San Francisco is locked into $59.2 million, comprised largely of salary for Lincecum and Zito, but also includes raises given to Pablo Sandoval, Ryan Vogelsong and reliever Javier Lopez. Buster Posey will be in his first arbitration year, but his salary won’t break the bank (at least not next season).

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The only commitments the Giants have for 2014 are $8.25 million to Sandoval, a $7 million buyout of Zito, and the increasing costs of Posey and Bumgarner. By then, prospects Gary Brown will be roaming center field and Joe Panik will be handling the keystone, all for the league minimum. Adding in $25 million for Lincecum doesn’t preclude $20 million for Cain, given the other cost-controlled players.

This is a good deal for both Cain and the Giants. Cain has financial security, a pitching coach with whom he works incredibly well, and a fan base in San Francisco that adores him. The Giants have locked-up one of the best right-handed starters in the game for the next five, maybe six, seasons. Sure, $21 million AAV is a lot of money. But the Giants were looking at a lot of payroll flexibility after the 2014 season and a farm system light on starting pitching prospects.