The Jay Bruce Extension

Late last night (or very early this morning), Jerry Crasnick reported that the Cincinnati Reds signed emerging star Jay Bruce to a six-year, $51 million dollar contract with a club option for a seventh year. While many casual fans first may have noticed Bruce due to a memorable defensive gaffe in the playoffs, the 24 year-old outfielder had the great season in 2010 that Reds fans had expected from him for a while. Deals like these with young, cost-controlled players almost always look good for the team, so let’s see just how good.

[Note: Since posting this, readers have pointed out that Bruce is eligible for Super Two arbitration. When writing this up late last night, I was going off of Cot’s payroll obligations spreadsheet for the Reds (now changed to reflect Bruce’s new contract) which had him eligible for arbitration after 2011. This makes the contract an even better deal for the Reds since they would have had to go to arbitration this offseason instead of paying Bruce the minimum, so it doesn’t significantly change my overall analysis. Thanks for reading.]

What are the Reds paying for? Since Bruce is still pre-arbitration, we can’t just treat this deal like any other free agent deal (we’ll just deal with the reported guaranteed portion). The three arbitration years are typically treated as 40/60/80 percent of what the player would get on the open market, so we’ll alter the length of the deal by that amount — those three year will be treated as 1.8 years total. Bruce isn’t eligible for arbitration until after 2011 [Note: As per the note above, Super Two status makes him eligible for arbitration after this season, so this makes the deal even better for the Reds than analyzed here.] so that season gets truncated for purposes of contract valuation, too. So rather than comparing it to a six year free agent contract, it should be compared to a 3.8 (rounded to four) year contract [Later Note: What research I’ve read on Super Two players suggests they follow a 20/40/60/80 arbitration patter. If true, this means that the analysis is pretty much exactly the same — since the “virtual length” of the contract turns out to be 4 years, which is what we rounded to from 3.8]. That means a much higher annual value. Assuming a five million dollars per marginal win, a conservative seven percent annual increase in the cost of a marginal win, and a free agent’s typical decline curve (I will address this with respect to Bruce specifically below), the Reds are going to be paying Bruce as if we were a 3 win player.

Bruce didn’t set the world ablaze at the plate in 2008 or 2009, but he did hold his own at a young age. In 2010, the hits started to fall in and his with his already impressive power. We can’t just ignore 2008 and 2009 in favor of 2010, but even so, my simple projection (basically a tweaked Marcel) for Bruce in 2011 is for a .352 wOBA (.266/.342/.481), or 18 runs above average over 700 plate appearances. Bruce also had a monster 2010 season in the field according to most statistics, and after taking all three seasons into account and regressing to the mean, Bruce grades out somewhere between 10 and 15 runs above average in right field. Adding it all together and adjusting for playing time, Bruce comes out at right around a four wins “true talent,” which is a a fair bit more than what the Reds are paying for.

When I originally started working on this piece, I thought that Cincinnati had gotten a much bigger discount. But once I broke it down more carefully [Note: and got mixed up and had to change this piece again…] , it turned out to be closer than I thought given the situation, with the Reds getting at least a slight bargain. Sure, if Bruce was a free agent, he’d be getting at least $100 million dollars. However, teams have almost all of the leverage when dealing with pre-arbitration players, so it is understandable that Bruce doesn’t want to turn down $51 million dollars guaranteed when he’s four years away from free agency — a lot can happen in that time (I’m guessing Adam Lind is pretty happy he signed his extension last April).

If one feels compelled to pick a “winner” here, it is definitely the Reds. They are probably paying Bruce below what he would get his talent and situation. More significantly, as mentioned earlier, the “salary chart” I use is optimized for free agency, that is, players typically usually in their late 20s and older and thus typically subject to decline. Bruce will only turn 24 next April, so he probably has at least a couple more seasons of his true talent increasing, which could reasonably be thought to add at least another $10 to $20 million dollars (or more, depending on what aging curves are employed) of value to the Reds side of the ledger. Finally, some would argue that the defensive rating for Bruce used here is far too conservative.

I do wonder how the negotiations went if Bruce and his representatives felt they needed to give the team control over his first three years of free agency (once the club option is taken into account). Still, $51 million dollars is $51 million dollars, so I won’t fault Bruce for taking the deal. As for the Reds, there is no doubt they have to be thrilled to be paying an emerging young star less annually (on average) for what will likely be the best seasons of his career. If things go badly for the team, they now have a massive trade chip comparable to Justin Upton. If things continue to go well, they have allowed themselves the payroll flexibility to subsidize more deals like the one recently given to Brandon Bronson Arroyo. Make of that what you will.