With a full year of service time under his belt, Zach Davies established himself in the Brewers rotation with a strong year in 2016. In 34 career starts, he has posted a 3.92 ERA, 7.4 K/9, 2.1 BB/9, and 108 ERA+. The Brewers have several players who will be hitting arbitration around the same time, as well as several players hitting arbitration this year. Though payroll isn’t a concern now, it likely will be once all of these players hit their later years. Considering that, would it make sense to lock up Davies now?
The Case For an Extension
Starting pitchers are one commodity that is always in demand in baseball. A good starting pitcher can easily demand tens of millions of dollars from a team. Even in today’s environment, average pitchers can get eight-figure deals (see Matt Garza). As a result, there’s a lot of risk in waiting to lock up a pitcher, as their value could skyrocket and the team could be stuck with having to dedicate a massive figure now to extend the player.
Also, as I mentioned at the start, the Brewers have a lot of farm talent coming up through the system. If even half of that talent pans out, the Brewers will have to figure out ways to pay all of these players. By working out extensions on good players now to help control costs, they can keep their costs down should players continue to develop.
The Case Against an Extension
Of course, there’s also a risk to early extensions. There’s no guarantee that the players will continue to develop following their deals. The Brewers have seen this with two of their own pitchers. Though they haven’t received extensions yet, both Wily Peralta and Jimmy Nelson have regressed in the past year or more. While Peralta is showing signs of a bounceback, Nelson is entering 2017 at a tipping point in his career, and we don’t know how he’s going to respond. The same risk exists with Davies. Will he show regression in his second full year, or will the numbers continue to be there?
There’s also the injury risk for a pitcher at this age. While injuries are a risk for any pitcher, the Brewers can’t afford to lose too much value from anyone. One of the cases that I found while researching for this article is Cory Luebke. He signed a 4-year, $12 million extension before the 2012 season. It was a good extension for the Padres at the time, as he was a promising pitcher for the team. However, he made a grand total of 5 major league starts under that extension. That’s it. He then underwent Tommy John surgery that cost him the rest of 2012, and his never recovered enough to pitch in 2013. He then needed a second Tommy John surgery in 2014, and his recovery took him through all of 2015 as well. He did finally pitch again for the Pirates last season, but was released in June and signed a minor-league contract with the Marlins, where he made just a few appearances.
The other factor working against a Davies extension is the infamous Scott Boras effect. As a client of Boras, getting any kind of early extension will be very difficult, as Boras wants to maximize his clients’ value. In addition, Boras is already not happy with the Brewers after they demoted Davies right before the All-Star Break. While it didn’t cost Davies a year of free agency, it put him in a position where another demotion could cost him a year. It will make Boras less likely to consider an extension, though in the end, it’s up to the client to determine what’s important to them.
If the Brewers decide to pursue an extension, what would it look like? There’s two recent extensions to consider that would provide a very good base for what an extension for Davies would look like.
The first case is Julio Teheran. He signed after his first full year of service in 2013, where he posted a 3.20 ERA (117 ERA+) and finished fifth in the NL Rookie of the Year vote. He also had 34 starts in his career to that point, with a few relief appearances as well. Prior to the 2014 season, he signed a six-year, $32 million contract. Here is how that ended up breaking down:
- 2014 (Pre-Arb 2): $800,000
- 2015 (Pre-Arb 3): $1 million
- 2016 (Arb 1): $3.3 million
- 2017 (Arb 2): $6.3 million
- 2018 (Arb 3): $8 million
- 2019 (FA 1): $11 million
- 2020 (FA 2): $12 million option, $1 million buyout
So far, that extension has worked out well for the Braves. He has been an all-star in 2 of the past 3 years, and even in his one down year, he was still an average pitcher.
The other case is Jose Quintana of the White Sox. His case was a little different, since he had nearly two full years of service at the time of his extension. In 55 starts, he posted a 3.61 ERA (117 ERA+) before signing his contract. His deal, also before the 2014 season, was for 5 years/$21 million, though the contract was boosted to $26.5 million when he qualified for Super 2 status. Here’s how his deal broke down:
- 2014 (Pre-Arb 2): $850,000
- 2015 (Pre-Arb 3/Arb 1): $1 million / $3.4 million
- 2016 (Arb 1/Arb 2): $3.8 million / $5.4 million
- 2017 (Arb 2/Arb 3): $6.0 million / $7 million
- 2018 (Arb 3/Arb 4): $8.35 million / $8.85 million
- 2019 (FA 1): $10.5 million option, $1 million buyout
- 2020 (FA 2): $11.5 million option, $1 million buyout
Quintana’s deal has also worked out well for the White Sox, as he has posted sub 3.50 ERAs in each of the last three seasons, and posted an All-Star appearance in 2016.
We can also look at some other deals for starting pitchers in the 1-2 year of service time area (from MLB Trade Rumors Extension tracker):
- Martin Perez (2013): 4 years, $12 million with 3 options worth an additional $22.5 million
- Madison Bumgarner (2012): 5 years, $35 million with 2 options worth $12 million each
- Cory Luebke (2012): 4 years, $12 million with two options worth a total of $15.75 million
- Wade Davis (2011): 4 years, $12.6 million with three options worth an additional $25 million
- Ricky Romero (2010): 5 years, $30.1 million with a $13 million option
- Brett Anderson (2010): 4 years, $12.5 million with two options worth a total of $20 million
- Ubaldo Jimenez (2009): 4 years, $10 million with two options worth an additional $12.75 million
Looking at all of this, a deal that would make sense for Zach Davies would be in the 5-year, $25 million range, with one or two options to buy out free agency years. Here is what the structure could look like:
- 2017 (Pre-Arb 2): $900,000
- 2018 (Pre-Arb 3): $1.1 million
- 2019 (Arb 1): $4.25 million
- 2020 (Arb 2): $7.5 million
- 2021 (Arb 3): $10 million
- 2022 (FA 1): $12.5 million with $1.25 million buyout
- 2023 (FA 2): $14 million with $1.25 million buyout
It’s a jump in what Teheran and Quintana got, but there’s a few factors to consider here. First, natural inflation means that Davies deal needs to be a little higher than what they got, especially since the stats are comparable. While he won’t be at Bumgarner level, it’s still a step up with inflation. At the same time, the Boras effect means Davies will need a little more to be willing to sign.
Of course, that Boras effect also could mean that Davies won’t sign any kind of extension. That’s what Boras is infamous for, getting his clients maximum money. It’s not that Boras is opposed to pre-FA contracts. However, when his clients have FA years bought out, they are getting massive deals. MLB Trade Rumors Extension Tracker has a few:
- Stephen Strasburg (2016, 5.118 years of service): 7 years, $175 million
- Elvus Andrus (2013, 4.000): 8 years, $120 million
- Jered Weaver (2011, 5.100): 5 years, $85 million
- Carlos Gonzalez (2011, 2.059): 7 years, $80 million
- Ryan Madson (2009, 5.027): 3 years, $12 million
- Carlos Pena (2008, 4.133): 3 years, $24.125 million
A few Boras clients have signed extensions to buy out arbitration years, though:
- Mike Moustakas (2016, 4.111): 2 years, $14.3 million
- Elvus Andrus (2012, 3.000): 3 years, $14.4 million
- Stephen Drew (2011, 4.079): 2 years, $13.755 million with option
- Prince Fielder (2009, 3.068): 2 years, $18 million
What that means is an extension is still possible, but Boras will want to protect those free agency years as much as possible. That could mean cutting the option years, guaranteeing them, or potentially even making the option years mutual options or player options. It also could mean that, if the Brewers want an extension, they’ll have to at least match Madison Bumgarner’s deal. That would be a tough pill to swallow, especially considering that Bumgarner was coming off a year where he received Cy Young votes when he got that deal. However, that could be the price to extend a Boras client.
Zach Davies would be a perfect candidate to extend right now based on the success that he has had in the majors so far. Getting as much talent as possible locked up now will help keep the Brewers costs low as the top prospects from the farm system come up to The Show and salaries increase. However, an extension for Davies carries a good amount of risk, and it also could be difficult with Boras in the conversation.
Statistics courtesy of Baseball-Reference