What a Giancarlo Stanton Extension Might Look Like

With the Marlins hanging around the periphery of the Wild Card race, there’s a strong chance that Giancarlo Stanton is going to win the NL MVP award. He’s the classic traditional candidate, leading the league in home runs and runs batted in, and the Marlins small gap from the Wild Card leaders will allow people to talk themselves into his performance having come in games that mattered. With all of the other top candidates requiring the rejection of some long held ideal, Stanton looks like a pretty easy choice for someone who likes the way that MVPs have traditionally been selected.

This may actually be bad news for the Marlins, however. An MVP trophy would be nice recognition for the franchise’s best player, but it would also increase his asking price in arbitration, and Stanton is already in a position where he has significant leverage. The Marlins have thus far eschewed trade requests for their right fielder, hopeful that they can convince him to sign a long-term deal to stay in Miami, but an MVP trophy might make a tough road even more difficult. Let’s look at the kinds of numbers Stanton may very well ask for to pass up the chance to hit free agency after the 2016 season.

The first thing to keep in mind is that Stanton is well past the point at which one could argue he should take a significant discount on his market value in order to accumulate the most-valuable first few millions of dollars and set himself up for life. Stanton made $6.5 million in salary this year, and his 2014 performance has already guaranteed him a significant raise for next year.

A reasonable estimate of his arbitration award is probably around $12 million — for comparison, Chris Davis got a $7 million raise after his 2013 season, which came at the same serivce time level — with a bump to maybe $15M if he wins the MVP trophy. Before even sitting down at the negotiating table, Stanton’s already going to have a minimum guarantee in the tens of millions for next year, and he simply doesn’t need to exchange risk for short-term financial security. He already has that.

We can roughly assume Stanton’s in line for about $30 million in arbitration payouts over the next two seasons, maybe $35 million if he wins the MVP this year. So, the question is how many additional years he would require to be bought to out to skip the free agent bidding war that he’s very likely in line for, and what kind of price he’d require for those years.

If Stanton doesn’t sign an extension, he’ll hit free agency heading into his age-27 season, so this is going to be his best shot to land a massive contract, but it also doesn’t need to be his only one. He probably won’t do the Mike Trout thing and sign away just three free agent years, but he also doesn’t need to sign a contract that locks him up for the rest of his career. If he signed an eight year deal this winter — selling six free agent years in the process — he could still hit free agency again at age-33. Or he could choose a Joey Votto-style deal that doesn’t even kick in until after his arbitration years, essentially locking up as many years as possible in advance.

Let’s evaluate both options, starting with the shorter deal. We’ll assume that the structure of the two arbitration years will remain roughly the same, so he’ll get something like $30 million in 2015 and 2016 regardless, so a short-term extension would just buy out six free agent years in advance, covering ages 27 to 32. This deal would be almost perfectly ideal for a team, as it would cover his peak years and very little of his decline phase, combining elite reward with only moderate risk for a contract of this size. Which is why Stanton almost certainly wouldn’t have to give much of a discount in order to get a team on board for signing a deal like this.

While Stanton is going to put up a +6 WAR season this year, and he’s young enough that he could get a little bit better, we should be somewhat conservative with his playing time estimates going forward, given that this is only the second year in his career in which he’s topped 600 plate appearances. Given his size and history of knee problems, a +5 WAR projection going forward is probably fair, though if you want to be a little more aggressive with the forecast, there’s certainly a case to be made that Peak Stanton could be a +6 WAR player. But we’ll stick with the somewhat conservative +5 WAR estimate for now, and you can always adjust these estimates up if you prefer a more aggressive projection. Here’s a very basic forecast for Stanton’s value in those six free agent years, if we assume that he’s a +5 WAR player through his prime.

In two years, the price of a win in free agency is going to be much higher than $7 million apiece — roughly what it was at last winter — but the recent trend in long-term extensions has been to use something close to the current price of a win as a stand-in for the discount the player is taking for getting a big deal before reaching free agency. In other words, they sell their risk for the expected future inflation, so while Stanton would get more than this in free agency, we’re trying to estimate Stanton’s extension price, which is more likely to use something closer to $7 million per win as a starting point.

But even at $7 million per win with only five percent inflation, and with a potentially conservative +5 WAR estimate for his peak years, we’re still looking at $212 million in expected value over those six free agent years. Toss in the two arbitration years and roughly $30 million he’ll get for those years, and a total extension on these assumptions would be $240 million over eight years.

That deal would almost exactly match what Miguel Cabrera got from the Tigers — $248 million over eight years — this spring, when he also two years away from free agency, and Cabrera is certainly a viable comparison for Stanton as a player. But then again, the Tigers were buying Cabrera’s age 33-40 seasons, while Stanton would be selling 27-32, and even though Stanton might not have Cabrera’s resume (yet), the difference in their placements on the aging curves are significant enough where its difficult to see Stanton taking less than what Cabrera got a few months ago. Cabrera’s deal feels like a floor, and Stanton has plenty of leverage to demand a deal above that mark.

So let’s look at the longer deal, and say Stanton knows he can get a 10 year contract in free agency, so he won’t settle for anything less than that now. These longer deals come with a break on annual average value, so he wouldn’t get the same annual salary, but if he’s just concerned with maxing out guaranteed years and dollars, Votto did set a precedent for this kind of extension at the same level of service time as Stanton has now. We’ll look at the same chart as above, only extending our four additional years, and also adding a final column that incorporates a 10% discount on the AAV to make up for the extra guaranteed years.

The full current-market rate for those 10 years comes out to $302 million, with the 10% discount knocking it down to $270 million. But remember, these numbers don’t include the two arbitration years, which add another ~$30 million to the total, so even with the 10% discount assumption on a super-long deal, we’d be looking at a total contract worth $300 million over 12 years.

The Votto deal is the natural comparison here, as his deal was 10/$225M that started after the existing 2/$26M ended, so at the point the Reds signed his deal, they had $251 guaranteed him $251 million over 12 seasons. Votto had a better track record than Stanton when he signed his contract, but he was also four years older, and baseball contracts have only gotten more expensive since that deal was signed. If Stanton decides he wants to max it years and dollars, he’s going to be able to beat the mark Votto set two years ago with relative ease.

The $300 million figure isn’t some kind of crazy ask; it’s actually based on several conservative estimates. My $/WAR estimates are lower than Matt Swartz’s, for instance, so if you went with his calculations, you’d start at around $8 million per win, not $7 million. And I didn’t include any potential improvement from Stanton during his prime, maxing out his estimated value at a mark below what he’s already accomplished twice in the last three years. Not only could you argue for a higher price-per-win, but you could realistically suggest that even these performance estimates might be too low. If you used a +6 WAR projection and $8 million per win, his 10 year valuation — not including the two arbitration years — comes out to $401 million.

I don’t think there’s any chance Stanton asks for $400 million, nor do I think any team would seriously entertain that figure. We’ll have to see the league crack $300 million before anyone even thinks about a deal starting with a four, and that’s the barrier that Stanton can try to break through if he wants. If he decides to go shorter term and set himself up for two big free agent contracts in his career, maybe he settles for something just north of what Cabrera got in March: 8/$250M, perhaps. But if he wants to max out years and dollars, there’s nothing wrong with asking for 12/$300M. If he stays healthy, he could easily be a good value even at that price.