Rockies and Arenado Approach the Summit of a Long-Term Deal

Nolan Arenado has ranked among the game’s elite third basemen for the past four seasons, and he’s already made headlines this winter. Last week, he and the Rockies averted an arbitration hearing when he agreed to a $26 million salary for 2019, a record for an arbitration-eligible player. Now, there’s optimism in Denver that the team could reach a longer-term deal that would keep Arenado in purple. It’s a move that not only would be in character for a franchise that has made a concerted attempt to keep its iconic players, but could also impact this winter’s frigid free agent market.

Arenado, who will turn 28 on April 16, is coming off a .297/.374/.561 showing with 38 homers, a 132 wRC+, and 5.7 WAR in 2018. He led the NL in home runs for the third year out of the past four, and while that feat owes much to Coors Field (he has an 87-71 home/road home run split in that span), improved plate discipline has helped him increase both his wRC+ and WAR every year since his 2013 rookie season. Last year’s incremental steps forward owe much to Arenado’s career-best 10.8% walk rate, more than double his 2013-15 mark (5.0%); that increase has keyed a 52-point rise in on-base percentage from his first three years (.318) to his last three (.370).

And then there’s the leather. Arenado has won a Gold Glove in each of his six seasons, and has won the Platinum Glove as the NL’s top overall defender, in each of the past two years; he also took home the Fielding Bible Award as the majors’ top third baseman annually from 2015-17. While UZR doesn’t value his defense nearly as highly as DRS (career totals of 37.6 and 109, respectively), the two marks converged last year (5.8 and 5, respectively). Beyond the numbers, his highlight clips are appointment viewing. Here is the MLB Network compilation of his dives, spins, barehanded grabs, and seemingly impossible throws that accompanied Arenado’s 2018 award wins:

And here’s perhaps his most famous play, his April 14, 2015 over-the-shoulder-and-over-the-tarp-roll catch of a foul ball:

This is an excellent, entertaining player, a franchise cornerstone who has helped take the Rockies to back-to-back playoff appearances for the first time in club history.

After making $17.75 million last year as part of a two-year, $29.5 million extension signed in January 2017, Arenado sought $30 million in arbitration, with the Rockies countering at $24 million. Even if he’d lost a hearing, he would have surpassed Josh Donaldson’s $23 million salary from last year with the highest one-year salary for an arbitration-eligible player. According to The Athletic’s Ken Rosenthal, Arenado and the Rockies settled at $26 million after a face-to-face meeting:

Since then, Monfort has publicly expressed hope for the possibility of a long-term deal. On Monday, he told the Denver Post’s Patrick Saunders, “I’m optimistic that we are close enough that something will come about. It’s in Nolan’s hands, but my last impression with him is that this is something he wants to do.” While stressing that there was no timetable to complete a longer deal, Monfort added, “[W]hat I took out of [the meeting] was a good, sincere [attitude] of, ‘Let’s get this behind us, then let’s go on to the next step and see if we can work something out there.'”

Per to Saunders, Arenado recently said, “I think the future is much brighter in Colorado than it’s been in the past. That excites me and makes me very aware of what’s going on here.” Indeed, an impressive nucleus of young, affordable starting pitching (Kyle Freeland, Jon Gray, German Marquez, Tyler Anderson, and Antonio Senzatela) and the development of shortstop Trevor Story have been key elements of the Rockies’ recent success; that core is under club control through 2021 and ’22. What’s more, the team’s TV revenue situation is better than has been previously reported; the Rockies are making $40 million per year now, not $20 million, which was tied for last among the 29 US teams in Craig Edwards’ 2016 roundup. The team’s current deal runs through 2020, and negotiations for a new one are expected to get underway this summer.

With such a revenue stream, Monfort seems to feel that the Rockies can support a payroll that includes a major commitment to Arenado on a long-term deal. While Cot’s Contracts projects the team to set a franchise record with an Opening Day payroll just over $143 million — up from around $137 million in 2018 (14th in the majors) and $127.8 million in 2017 (15th) — the Rockies have only $40 million committed for 2021, and $23 million for ’22, though of course, the salary increases of their many arb-eligible players will increase those figures.

In marked contrast to the White Sox, whose history under Jerry Reinsdorf I examined on Monday, the Rockies haven’t shied away from sizable long-term commitments. Granted, Monfort and his brother Charlie were merely minority partners until December 2005, when they bought out Jerry McMorris, the team’s principal owner since 1993 (before that, oy, there’s a story). During the McMorris era, the Rockies signed free agents Larry Walker (six years, $75 million in April 1995), Mike Hampton (eight years, $121 million in December 2000), and Denny Neagle (five years, $51 million, also in December 2000) — of which only the first deal went well, the last two disastrously — and extended franchise icon Todd Helton (nine years, $141.5 million, covering 2003-11). The Monforts were the principal owners when the Rockies extended Troy Tulowitzki (10 years, $157.75 million deal in 2010), as well as Charlie Blackmon (six years, $108 million last April), and when they added free agents Ian Desmond (five years, $70 million in December 2016) and Wade Davis (three years, $52 million in December 2017). In terms of guaranteed money, all of those deals besides those of Neagle and Davis exceed the largest guaranteed contract ever signed by the White Sox, Jose Abreu’s six-year, $68 million pact from October 2013.

Whether on the watch of McMorris or the Monforts, not all of the Rockies’ big contracts have unfolded for the better. Some of that has to do with the particularities of playing at altitude — pitches don’t break as much, and athletes’ bodies don’t hold up as well — and some of it has to do with flawed evaluations of the players in question. At a time when so many teams are wringing their hands about spending money, it’s still noteworthy that the Rockies have stepped up to keep their top players. Extending Arenado, and assuming the risks that come with it, would be more in keeping with their style than (to return to my previous example) the White Sox signing Bryce Harper or Manny Machado.

Of course, Arenado has to agree to a deal for this all to come to fruition, and it’s a bit ominous to think of how the relatively grim landscapes of the past two winters might be helping to fulfill the vision that the owners colluded in the mid-1980s to make happen: star players staying with their teams instead of testing the market and creating bidding wars. Still, free agency isn’t an obligation that every star has to fulfill; the combination of comfort and a record-setting salary in a competitive situation isn’t something to be taken lightly.

On that note, if an Arenado extension is completed before Machado signs, it would likely set a new baseline for third basemen (by topping Alex Rodriguez‘s $27.5 million average annual value) and perhaps for all position players (by topping Miguel Cabrera’s $31 million AAV). That, as Rosenthal pointed out, will make it harder for any team in pursuit of Harper or Machado to argue that those younger, higher-profile players should be paid less money.

After the past two winters of slow (or even negative) growth, it’s difficult to put too much faith in long-term estimates, but using the FanGraphs Contract estimation tool with very conservative parameters — $8.0 million per WAR, and just 3% average annual inflation, as opposed to $9 million or more and 5% — suggests a valuation approach $300 million:

Nolan Arenado’s Contract Estimate — 8 yr / $293.9 M
Year Age WAR $/WAR Est. Contract
2019 28 5.2 $8.0 M $41.6 M
2020 29 5.2 $8.2 M $42.8 M
2021 30 5.2 $8.5 M $44.1 M
2022 31 4.7 $8.7 M $41.1 M
2023 32 4.2 $9.0 M $37.8 M
2024 33 3.7 $9.0 M $33.3 M
2025 34 3.2 $9.0 M $28.8 M
2026 35 2.7 $9.0 M $24.3 M
Totals 34.1 $293.9 M

Assumptions

Value: $8M/WAR with 3.0% inflation (for first 5 years)
Aging Curve: +0.25 WAR/yr (18-24), 0 WAR/yr (25-30),-0.5 WAR/yr (31-37),-0.75 WAR/yr (> 37)

Dialing the inflation back even further, to 1%, yields a $279.7 million valuation, and cutting the dollars per WAR figure to a retrograde $7.0 million with that minimal inflation in place still yields $244.7 million. In other words, even using extremely modest assumptions, an eight-year deal for Arenado (presumably incorporating this year’s salary) should bypass Cabrera’s eight-year, $248 million extension.

Another byproduct of an Arenado extension might be a change in the Yankees’ current approach. Circa late November, Rosenthal suggested that their lukewarm pursuits of Harper and Machado — due to a logjam of outfielders in the former case and the infamous “Johnny Hustle” comments in the latter — was because they were more interested in pursuing Arenado (who’s about 18 months older than Harper and 15 months older than Machado) once he reached free agency. In January, SNY.tv’s Andy Martino wrote that Yankees might be working on an even more immediate timeline, “[P]eople briefed on the Yankees thinking say that GM Brian Cashman — who did not respond to a request for comment — has internally discussed the possibility of trying to trade for Arenado either now or during the season. One source said that the teams have likely talked already, but neither Cashman nor Rockies GM Jeff Bridich have confirmed this.”

In theory, if Arenado does cement his desire to stay in Denver long-term, the Yankees could circle back to Machado, whose list of suitors for a long-term deal appear to consist of the White Sox, Padres, Phillies, and a conspicuous lack of other teams. Then again, if Cashman and company have shied away this long, one expects they’ll concoct some other rationale for bypassing Machado and Harper. And it is worth noting that the possibility of signing Harper and Machado was offered as a potential rationale for not signing free agents last winter. While his resume is certainly impressive, it will be interesting to see if Arenado can avoid a similar fate. There’s always another young buck coming, after all, and Mike Trout is only under club control through 2020.

On the other hand, if Arenado and the Rockies don’t get a deal done, it will be very interesting to see how the summer plays out. With the Giants and Diamondbacks both rebuilding, and the Padres possibly looking to spend their way to an earlier competitive window by signing one of the big two free agents, the NL West probably won’t be the three-team race of yesteryear. A Rockies team that’s out of the playoff hunt could conceivably trade Arenado at the July 31 deadline — or even in August, given his huge salary — if he suggests he plans to move on next winter anyway. A Rockies team that’s still in the race for a Wild Card spot or even the NL West flag (something the Rockies have yet to win) as Arenado eyes the horizon would face quite a quandary.

In all of this, we have yet to hear Arenado definitively say that he wants to stick around, but that’s not uncommon. There’s no reason for him to surrender leverage until he’s secured what he wants, and besides, his real talking on that score will be done with a pen and a contract. Until then, this is all just cloud talk, though amid so much cynicism, it’s quaintly refreshing to hear a star and a team at least thinking aloud about sticking together.

We hoped you liked reading Rockies and Arenado Approach the Summit of a Long-Term Deal by Jay Jaffe!

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Brooklyn-based Jay Jaffe is a senior writer for FanGraphs, the author of The Cooperstown Casebook (Thomas Dunne Books, 2017) and the creator of the JAWS (Jaffe WAR Score) metric for Hall of Fame analysis. He founded the Futility Infielder website (2001), was a columnist for Baseball Prospectus (2005-2012) and a contributing writer for Sports Illustrated (2012-2018). He has been a recurring guest on MLB Network and a member of the BBWAA since 2011. Follow him on Twitter @jay_jaffe.

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descender
Member
descender

Does it actually make sense for the Rockies to extend him? They would be bidding against themselves and have to pay full price for his Coors field production. Surely a team outside of Coors would value him lower, making his FA market cheaper than the cost to extend him? It seems to me that they would capitalize on the most of his value by trading it this year.

CC AFC
Member
Member
CC AFC

I believe all teams are aware of how to adjust for park effects these days

descender
Member
descender

Right… so why would the Rockies pay full price for a player that other teams would pay less?

BobbyJohn69
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Member
BobbyJohn69

He has a little more “value” to them as a home-grown superstar who is off to the sort of start that could easily land him in the HoF if he continues at even close to his current pace.

CC AFC
Member
Member
CC AFC

Huh? What I’m saying is the Rockies are equally aware of park adjustments, so they wouldn’t necessarily pay more without factoring it in themselves.

descender
Member
descender

They just gave him $26M in the last year of arbitration and you guys think that the Rockies are going to get a discount on their own player? I’ll take the down votes, I’m confident of how it will play out.

kbn
Member
kbn

He’s worth well over $26M. You make it sound like they’re over-paying for his production.

Richard Bergstrom
Member
Richard Bergstrom

It’s also important to note that he has stayed healthy and succeeded at Coors when other players who came over to the Rockies didn’t. That has value to the Rockies above other teams.

sadtrombone
Member
sadtrombone

It obviously depends on the price. The Rockies paid what I would have expected the actual free agent price would have been for Blackmon. The team is supposed to get a slight discount, if not more, if you’re giving the contract now. If the Rockies hand Arenado a 10 year, $300M deal that starts after the current one then I would say it doesn’t make that much sense. They can probably wait until next offseason and offer that and it will probably be the high offer (not guaranteed, but it’s likely).

But if, say, you proposed an 8 year, $240M deal that started this upcoming year (giving a bump in this year’s salary, plus another 7 years on top of that) I would say it makes a ton of sense for the Rockies to do this. You keep a homegrown star, which one of those things that builds a lot of goodwill with the fans, and he’s likely to return good value on that contract. Whether Arenado would agree to such a contract is another question.

BobbyJohn69
Member
Member
BobbyJohn69

I’ve been thinking 8/240 for a while. Gives him another crack at a late-career contract and values him pretty fairly right now.