Rays Extend Wade Davis

Following the blueprint they used to sign a pre-arbitration eligible James Shields prior to the 2008 season, the Tampa Bay Rays signed 25-year-old Wade Davis to a contract extension on the eve of opening day 2011. The guaranteed portion of the deal is four years worth $12.6 million. From there, the team holds three club options that could max the deal out at seven years and $36.1 million.

Anytime you sign a player to a long-term deal there are risks involved. Signing a pitcher is a bit more risky than a position player given the attrition rate of arms. Guaranteeing four years to a starting pitcher with 35 career starts – not to mention five years of team control remaining – is even riskier; however, the Rays are willing to take the risk in exchange for cost certainty. There is also risk on the side of Davis, who could be leaving millions on the table should fulfill his potential as a former top prospect. On the other hand, Davis is hedging his bets by making himself a multi-millionaire at age 25.

The largest concern for the Rays should be health. Should Davis suffer a serious injury, Tampa Bay could lose a nice chunk of change. Any loss on the financial side is significant for the Rays considering their small revenue streams. The hope is the big-framed kid from Lake Wales can handle the workload of 200-plus innings a season.

Davis pitched 168 innings in his rookie season, missing a few weeks in August with some shoulder issues. He returned strong over the final month of the season and edged Jeff Niemann for a spot in the playoff rotation. This spring he was named the team’s number three starter with the hopes of hitting 200 innings. As a minor leaguer, Davis started at least 27 games a year from 2006-2009. Injuries are unpredictable, but given his history, body type, and the blessing of the Rays’ medical staff, Davis seems like a safer bet than say, the aforementioned Niemann.

Looking at the breakdown of the contract, Davis will make $10.1 million in salary over the next four seasons. There is a $2.5 million buyout tacked on to that stretching the guarantee to $12.6 million. Obviously, the Rays are not going into this with the intention of using that buyout, but it serves as a safeguard in case things go horribly wrong for one reason or another.

In terms of production, Davis should easily “earn” the $10.1 million with his play on the field. He was worth $3.1 million last year when he produced 0.8 WAR. That said, we cannot look at this deal through the scope of the open market since the club will have Davis’ services for the next five years had he signed or not.

Instead, the Rays are banking that Davis would have earned at least $10.1 million over the next four years which covers two team-determined salary seasons and two arbitration years. If we subtract $850k for the league minimum years, that would leave around $9.25 million in his first two arbitration years. Perhaps it is because of my fandom, but I’ve always found Matt Garza and Wade Davis similar. The size, right hand, prospect lineage, and similar repertoire always seemed like a fair comparison to me (turns out I wasn’t alone).

We are years away from finding out, but if Davis goes the route of Garza (workhorse with a slightly above-average ERA), the Rays are likely to break even through the first two arb years. Over the past four years (two team-determined and two arbitration eligible) Garza has made approximately $10.1 million by going year to year. At $5.95 million this year, even an average performance will bump him up closer to $8 million next season. Anything better, and he could file for eight-figures next year. Davis’ final arbitration year is covered by the first team option at $7 million. It would be nice if things worked as easily as comparing two players and moving on, but the comp itself isn’t perfect and a lot can happen over four years. Nonetheless, it does show what the Rays’ righty will need to do in order to make up the investment the team made up front.

There is always the chance Davis blows by Garza. But even if he remains parallel or slightly below, the first four years are not likely to be a great deal for the Rays. Instead, the team is hoping to reap the benefits on the back-end of the deal.

The three club options cover the last year of Davis’ arbitration eligibility and two years of free agency. If things go well, we are looking at a three-year deal worth $25 million for his age 29-32 seasons. I hate making so many assumptions, but if Davis is a league-average starter (2 WAR) the deal would be fair. Looking at the projections, most expect him to fall within the 2-3 WAR threshold as of right now. Even if the Rays decide they no longer want to pay Davis, that contract makes him a nifty trade chip.

Obviously, the success of the deal depends on the development of Wade Davis. If he becomes a stud, then consider him as being Friedman’d. If is falters through injury or ineffectiveness, then the deal becomes a rare loss by the Rays’ management team. Most will agree, the contract has a decent chance of becoming a coup for the Rays; however, far from Longoria-type level. It is certainly a risk, but one that Tampa Bay must make in order to keep some of that homegrown talent and remain competitive even with their financial shortcomings.