Article: Diving Into The Offseason: A Berrios Extension?

[Seth Stohs]

First we dove into what an extension for Brian Dozier. He’s had his first long-term contract, and now he’s one year from free agency. Last week, we contemplated long-term deals for the Twins two mammoth stars, Byron Buxton and Miguel Sano. They are one year away from arbitration, so now could be the time to get each extended.

 

Today, I’m going to write about another type of potential long-term contract. This one is about a pitcher instead of a hitter, and this one is for a guy who has only a bit over one year of service time, meaning he won’t even be eligible for arbitration until after the 2019 season. Today, I’ll try to come up with a logical, fair long-term deal for RHP Jose Berrios.The case for Jose Berrios is similar to that of Byron Buxton and Miguel Sano. The hope of the last four years has been in Buxton and Sano, but also in Berrios because obviously, pitching wins. As much as we need to continue to see big offense, to get to where they all (and we all) want to get, they’ll need pitching.

 

Berrios had a rough debut season in 2016, but when he came up in 2017, he pitched very well, at least for the first two months. But he was so much better and we really started to see what he could become.

 

It’s obviously much more difficult to find long-term contracts for players such as Jose Berrios. He’s two seasons from arbitration and five years from free agency. There just aren’t a lot of examples of this for pitchers.

 

In fact, of American League pitchers, I found just two such examples, Chris Archer and Martin Perez. Both came up, like Berrios, as top prospects. Archer pretty much immediately became an ace-level pitcher in Tampa. Perez was with the Rangers (with Thad Levine involved) and was exciting, but he was hurt some and struggled some. But he has become pretty good.

 

 

They each had two pre-arbitration seasons, three arbitration season and then there were options to cover some free agent seasons.

 

There are several more players who signed with one season before free agency. That’s obviously more ‘normal.’

 

Part of the reason for signing players early is for some cost certainty. But also, for teams to provide life-long financial security to the players, the players need to accept the risk that they could be underpaid in arbitration years or free agent years. It’s a trade off.

 

Here is a group of players who chose to go year-to-year with arbitration.

 

 

Because of the risk, these numbers should be the top of the spectrum, and yet they vary a bit. And, of course, we also have to account for the inflation in the game the last several years.

 

To try to help with that, here is a listing of some pitchers who went through the arbitration cycle for the first time in 2017.

 

 

Again, I only went through the American League. This is already a bunch, and frankly, you don’t want to go through a list double this size, but it gives us a good range for what the Twins could expect to have to pay.

 

So, with all that as background, here is the contract that I would offer to Jose Berrios this offseason, at least as a starting point for discussion.

 

 

This works out to a seven year, $46 million contract, and with the option, it would be eight years, $60 million. (I put a $2 million buyout to the option in there.)

 

Seven years and $46 million sure doesn’t sound like a lot, does it? And yet, $46 million for a guy with just over a year of experience is a lot of money. Consider that four years ago around this time, Chris Archer signed a contract for six years and $25.5 million with two option years. That's $20 million additional dollars four years later. If I were to guess, I think that the Berrios side would want it to be a year or two shorter so that he can become a free agent at 29 or 30.

 

 

In that context, does this deal seem to make some sense for the Twins? For Berrios’s camp? What do you think?

 

 

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[tvagle]

Love the Series Seth!

 

I was a little more optimistic in my Keeping the Band Together Model for Berrios

 

18 • $0.750M

19 • $1.500M

20 • $4.000M

21 • $8.000M

22 • $12.000M

23 • $20.000M (would add option years at $20M at the end if that's what it took)

 

My accelerated salaries are due to the Mach-a-Harper affect everyone is predicting in 2019

 

Would love to buy more free agent years if possible...and we'd only be Dollars away from that

 

We both came up with the nearly the same package...just a few years shorter

 

Seth • 7/$46M - Twins Payroll Tool • 6/$46.25M

 

 

 

Edited October 24, 2017 by tvagle

[Brandon]

I actually fully agree with your numbers. Maybe do the year before as an option too. But thats nitpicking here.

[tvagle]

The challenge for Falvine moving forward will not only be in predicting which one (hopefully all) of the young core will become cornerstones of the club. But, more importantly, structuring future extensions that don't hinder the ability to move some of them should the need arise

 

That will be their legacy or the anchor that sinks their ship!

[Shaitan]

I generally wouldn't extend anyone until they enter arbitration, but I think a starting pitcher could be a wise exception. 

[Seth Stohs]

 

 

Love the Series Seth!

 

I was a little more optimistic in my Keeping the Band Together Model for Berrios

 

18 • $0.750M

19 • $1.500M

20 • $4.000M

21 • $8.000M

22 • $12.000M

23 • $20.000M (would add option years at $20M at the end if that's what it took)

 

My accelerated salaries are due to the Mach-a-Harper affect everyone is predicting in 2019

 

Would love to buy more free agent years if possible...and we'd only be Dollars away from that

 

We both came up with the nearly the same package...just a few years shorter

 

Seth • 7/$46M - Twins Payroll Tool • 6/$46.25M

 

 

 

 

I just think that if they're going to pay over 'typical' arbitration values for his arbitration years and only get one year of free agency, then they might as well just go year to year for now. The reason to sign an extension this early is to get good deals, below projected market value by a little bit at least, in the long run. 

[drjim]

I actually fully agree with your numbers. Maybe do the year before as an option too. But thats nitpicking here.

This seems correct. Twins should be able to get at least two option years. But I also agree the numbers are about right.

[diehardtwinsfan]

not a fan with year to year with any of these guys. You will likely lose one, if not several. You'll also end up shortening the window as these guys will become FAs and demand the big cash. Lock them up now. It lengthens the window and adds some cost certainty. It gives us the ability to add pieces around them if needed. If you wait, some will be gone, and it's usually the best players.

[gunnarthor]

Lock up the bats, go year to year with the arms. I wouldn't worry about a longterm thing for Berrios until he's much closer to free agency due to the injury risk for pitchers. 

 

(Unless he gives us a crazy good deal, of course).

Edited October 24, 2017 by gunnarthor

[Deduno Abides]

Berrios takes great care of himself, so he may be at lower risk for injury and, if he does get injured, may be more likely to return with some value. He will improve with smart coaching and experience. Locking him up with the numbers Seth proposes would be a good bet.

[Mike Sixel]

 

Lock up the bats, go year to year with the arms. I wouldn't worry about a longterm thing for Berrios until he's much closer to free agency due to the injury risk for pitchers. 

 

(Unless he gives us a crazy good deal, of course).

 

Concur. It would have to be a really good deal.

[nicksaviking]

Lock up the bats, go year to year with the arms. I wouldn't worry about a longterm thing for Berrios until he's much closer to free agency due to the injury risk for pitchers. 

 

(Unless he gives us a crazy good deal, of course).

If you wait and he improves next year as much as he improved this year it's going to be more than double the projected cost.

 

Seth's two free agent years are basically 2/$20M. That's what you pay #4 starters these days, the Twins are already used to eating money for far inferior pitchers.

[kab21]

 

I just think that if they're going to pay over 'typical' arbitration values for his arbitration years and only get one year of free agency, then they might as well just go year to year for now. The reason to sign an extension this early is to get good deals, below projected market value by a little bit at least, in the long run. 

Yes, but how do the the arb values of the pitchers that you selected compare to arb values of similar pitchers from 6 years before? I wouldn't be surprised if there was a 50% of greater increase which is what Berrios will be looking for over your comparables.

 

In an ideal world the Twins could buy out one year of FA and get one option but negotiating extensions is difficult with some agents and/or players. I am guessing that Sano will be the most difficult to buy out FA years but I would still approach all 3 with a fair amount of money this offseason.

[Mike Sixel]

I think the argument can be made either way on this one, btw. 

[USAFChief]

I would probably try to lock up Berrios, but there's compelling reasons not to, as well.

 

Tough call, IMO.

[huhguy]

Im not yet sold on Berrios, he had a disturbing let down  one game out of two, is that good enough?

[tvagle]

 

I just think that if they're going to pay over 'typical' arbitration values for his arbitration years and only get one year of free agency, then they might as well just go year to year for now. The reason to sign an extension this early is to get good deals, below projected market value by a little bit at least, in the long run. 

 

I agree...it would be nice to lock up more FA years and looking at Berrios alone a longer term contract is more achievable...when you look at the whole team and future needs for locking up the core, do you gamble longer on a position player or a pitcher?

 

I just think Berrios will produce at a level that will warrant the accelerated figures I'm using here...production and I believe market inflation will take salaries much higher than current arbitration numbers and cost of a #1-2 starter will be $20M by 2023

 

[Mike Sixel]

 

I agree...it would be nice to lock up more FA years and looking at Berrios alone a longer term contract is more achievable...when you look at the whole team and future needs for locking up the core, do you gamble longer on a position player or a pitcher?

 

I just think Berrios will produce at a level that will warrant the accelerated figures I'm using here...production and I believe market inflation will take salaries much higher than current arbitration numbers and cost of a #1-2 starter will be $20M by 2023

 

cost of a 1-2 starter will be more like $25MM per year by this year......if you mean FA. If you mean arbitration, that sounds about right.

[tvagle]

 

cost of a 1-2 starter will be more like $25MM per year by this year......if you mean FA. If you mean arbitration, that sounds about right.

 

Right Mike...the hope is Berrios would give up one year of FA @ $20M in 2023 with club option on 2024 @$20M

[Doomtints]

Fix the pitching before extending anyone, especially players who are not free agents until 2023.  Berrios doesn't even have 1 year of service time yet.

Edited October 24, 2017 by Doomtints

[Deduno Abides]

If you wait and he improves next year as much as he improved this year it's going to be more than double the projected cost.

Seth's two free agent years are basically 2/$20M. That's what you pay #4 starters these days, the Twins are already used to eating money for far inferior pitchers.

Concur. Seth’s deal is $46M. It wouldn’t surprise me if Berrios becomes a 4.5 or 5.0 WAR pitcher sooner than later. If he does, the contract is almost paid for, if it is signed. If it is not signed and he achieves those results, the price will jump, as will his arbitration earnings. The only risk is health, and Berrios may be a better bet than most pitchers. Edited October 24, 2017 by Deduno Abides

[ashbury]

My snap reaction is that $46M/7 is a deal both sides say no to.

 

From the Twins side, it is taking on a lot of risk for not a lot of upside during the FA years that are bought out. From the player's side, the ceiling for earnings during this long window is just too high to sell out at such price.

 

If both sides find fault with the deal, it may mean it's somewhere close to economically "fair", but that doesn't mean an agreement can be struck.

[ashbury]

Concur. Seth’s deal is $46M. It wouldn’t surprise me if Berrios becomes a 4.5 or 5.0 WAR pitcher sooner than later. If he does, the contract is almost paid for, if it is signed.

Except, the opportunity cost of tying up the money this way is high, if he does become that 5.0 WAR pitcher but then gets injured before the FA years would have kicked in. It's money that couldn't be spent, say, acquiring an additional high-end starter.

 

I'm not saying the risk is intolerable. Just that your form of analysis strikes me as very incomplete.

[drjim]

 

Except, the opportunity cost of tying up the money this way is high, if he does become that 5.0 WAR pitcher but then gets injured before the FA years would have kicked in. It's money that couldn't be spent, say, acquiring an additional high-end starter.

 

I'm not saying the risk is intolerable. Just that your form of analysis strikes me as very incomplete.

 

And the majority of that value would be captured just as easily by going year to year.

 

I think you can guarantee a certain amount of money for the right to have some options, that is usually the equation in early pitcher extensions.

[Mr. Brooks]

My snap reaction is that $46M/7 is a deal both sides say no to.

 

From the Twins side, it is taking on a lot of risk for not a lot of upside during the FA years that are bought out. From the player's side, the ceiling for earnings during this long window is just too high to sell out at such price.

 

If both sides find fault with the deal, it may mean it's somewhere close to economically "fair", but that doesn't mean an agreement can be struck.

 

While from a pure $ standpoint, there may not be a ton of upside in the cost of those 2 FA years, there is a huge upside.

Its getting those 2 years, smack in the sweet spot of his prime, without having to overpay for the subsequent down years later.

That is a huge value, IMO.

[tvagle]

 

While from a pure $ standpoint, there may not be a ton of upside in the cost of those 2 FA years, there is a huge upside.
Its getting those 2 years, smack in the sweet spot of his prime, without having to overpay for the subsequent down years later.
That is a huge value, IMO.

 

Exactly why how Falvine manages the Young Core's extensions will be their legacy

 

Watch what happens with Houston in the next few years...their young core much like the local 9 will need to be kept together and will more than likely set the market for negotiations with most Twins

 

Corea - Buxton

Altuve - Dozier

Springer - Rosario/Kepler

Bregman - Sano

Kuechel - Berrios

 

Not saying they are exact matches but the decisions will be mirroring what the Twins might have to do

[kab21]

 

While from a pure $ standpoint, there may not be a ton of upside in the cost of those 2 FA years, there is a huge upside.
Its getting those 2 years, smack in the sweet spot of his prime, without having to overpay for the subsequent down years later.
That is a huge value, IMO.

Yes, this is why you try to do all of these extensions. If you don't then you simply don't have that player for the 1-2 seasons that the team has control over without signing him to a 5-6 yr contract at 20+M/yr. Obviously there is the downside that he gets injured or is only an average pitcher (valued at 15+M/yr anyway).

 

Buying out FA years is all about extending the window of contention.

[Deduno Abides]

Except, the opportunity cost of tying up the money this way is high, if he does become that 5.0 WAR pitcher but then gets injured before the FA years would have kicked in. It's money that couldn't be spent, say, acquiring an additional high-end starter.

 

I'm not saying the risk is intolerable. Just that your form of analysis strikes me as very incomplete.

You omitted the part where I said the bet is on Berrios’s health and that it appears to be a better bet than for most pitchers.

 

Also, regarding your other point, this proposal would not prevent the Twins from signing other high buck pitchers. In fact, not doing the deal and going year to year could be a bigger deterrent to another big deal, if Berrios pitches well. Whether or not he gets signed to a long-term deal, he will still be in the budget. Frankly, if he doesn’t pitch well, there could be other problems, regardless of his contract.

Edited October 25, 2017 by Deduno Abides

[ashbury]

You omitted the part where I said the bet is on Berrios’s health and that it appears to be a better bet than for most pitchers.

You're right, I didn't address it directly, but I guess implicitly don't see it as as big a differentiator as you do. IMO the elbow, shoulder, and labrum are equal-opportunity tormentors.

[Seth Stohs]

 

I think the argument can be made either way on this one, btw. 

 

Which maybe means I'm in the right range. Ha!