The Brewers finally won another series on Thursday, downing the Giants 3-1 behind 6 2/3 strong innings from starter Wily Peralta. The big right hander was in command most of the day, striking out nine against only one walk. Perhaps even more impressively, all of the 10 balls put in play against him that resulted in outs were ground balls. About the only thing the Giants were able to get off of Peralta on Thursday was occasionally lucky.
Peralta’s 2014 season has been a consolidation of the progress he made over the last few months of 2013. Early last year, he was often a victim of the big inning and he had a 5.58 ERA heading into the month of July. From that point on, though, Peralta posted a 3.15 ERA and started to show some of the promise that made him a nearly universal top 70 prospect heading into the season.
So far in 2014, he’s done pretty much everything that can be asked of a young pitcher trying to improve. He’s striking out more batters and walking fewer. His 3.42 ERA isn’t particularly outstanding, but it it going a long way towards demonstrating that he’s steadily improving as a pitcher and that Brewers quite possibly have a valuable asset going forward with him. In today’s game, when teams have good young assets, they very often like to use the fact that they have a ways to go before reaching free agency to lock them into a deal that provides the player some security and gives the team some cost certainty and a few free agent years at a discount.
Deals for young pitchers can be especially important for both sides for completely different reasons. Due to the riskiness of the mere act of pitching and the fact that the rate of attrition is so high, there is quite a bit of incentive for young pitchers still years away from being able to cash in on the free agent market to get what guaranteed money they can while they can, just in case. On the team side, while there is always the threat of major injury hanging over every pitcher, the cost of buying a good one on the open market just continues to go up and up. If a team does allow a talented arm to start to get close to free agency without locking them into a deal ahead of time, it can become really difficult to get them to stay with all that money beckoning them to the open market.
So the question before us today is just what sort of deal might it take to get Wily Peralta some security while the team locks down a bit of cost certainty and some free agent years?
When trying to figure something like this out, the place to start is always to look at deals made at comparable times in the cost control process for players with comparable ability as recently as possible. Exact comps can be hard to find, but if you get a few deals to look at, patterns start to emerge and you can sort of eyeball the year-by-year structure of the deals and take an educated guess where a guy might fit if both the team and the player are interested in making something happen.
In Peralta’s case, there are four deals that have been signed in the last 28 months or so that stand out as being relevant to his situation, though obviously far from perfect comps. The Giants Madison Bumgarner and Rangers Derek Holland both signed 5 year extensions in 2012, followed by the White Sox Chris Sale in 2013. In 2014, the Braves Julio Teheran inked a 6 year deal. The guaranteed money in each one of these cases was for between $28.5 million and $35 million.
Now, I know what you’re probably thinking. Three of those guys are either already bonafide young aces or quickly approaching that level while Peralta is just sort of establishing himself as a good middle of the rotation starter at this point. While that is true, it doesn’t mean that we can’t at least look at those deals as a guide that can then be adjusted on based on the relative ability of the players. What’s important here is that we understand how these deals are structured, so we can figure out what it might take on a year-by-year basis to buy out control seasons.
For those that don’t know, baseball has a basic contract structure that guides these situations. Players in their first few big league seasons have few choices when it comes to salary and have to just accept something close to the big league minimum (currently around $500,000) until they have achieved enough service time to be eligible for salary arbitration. That generally happens after the player has played three full big league seasons, though exceptions are made for players who are close to three full years in a given off season. These players are called “super two’s” and they get an extra year of salary arbitration.
After three, four and five years of service, players are entitled to seek salary arbitration, where a professional arbitrator picks between salaries presented both by the team and the players agents. Salaries in these years are usually determined by negotiation between agents and teams, with an actual hearing before the arbitrator being the threat that keeps the sides talking. Arbitration generally results in steady improvement in a player’s salary, even if a given player might have a down year. While this might be frustrating for fans to watch, it’s important to remember that any dollar figure arrived at in the arbitration process is going to represent at least some discount on what a players true market value is. That’s just how the system is set up, because if a player truly isn’t going to represent a discount at that point, the team will simply non-tender the player and let him hit the free agent market early.
Ok, now that we’ve got that out of the way, back to the specifics of this potential deal. The main reason I chose Bumgarner, Sale and Teheran was that they all got deals well before they were even eligible for salary arbitration. Two years ahead in the case of both Bumgarner and Teheran and one year ahead for Sale. Holland was selected because he most closely matches Peralta performance wise, with a very bad first season dragging down his overall ERA. Like Peralta, he then showed marked improvement after his first year and thus was in line for some serious money not based solely on his straight career numbers.
The table below shows a few different things. First off, we have the total innings pitched and each pitcher’s ERA+ (definition here) for their whole career up to the time that they signed the deal. In the next columns, we have the total contract extension received in both years and dollars, followed by the year the contract was signed. Finally, and this is really important, we have a year-by-year breakdown of how each deal was structured. For simplicity I have omitted the signing bonus (generally a million or two) as well as the option year buyouts, which accounts for the discrepancy between the total dollar value of the contract and what you get if you add up all the years individually.
Finally, down at the bottom, I took my best guess at what a contract for Peralta might look like based on these precedents, of course adjusting for inflation and the differences in the quality of the pitchers. For our purposes, I’m assuming any deal would be done sometime this off season, in advance of Peralta’s final season before becoming eligible for salary arbitration.
|IP||ERA+||Total (yr/$$)||Signed||Arb -2||Arb -1||Arb 1||Arb 2||Arb 3||FA 1||FA 2||FA 3||FA 4|
All figures are in millions of dollars
* signifies an team option year
So, what I came up with in this case was a deal that guarantees $26.4 million over five years with an option for a sixth year at 11 million. The year by year total is actually $24.6 million, but I added a one million dollar bonus to the front of the deal and had to include a million dollar buyout for the option year, because that’s just how things are done. The deal would buyout all of Peralta’s arbitration years and guarantee the team at least one free agent year, with a reasonable club option for a second free agent year. The deal would lock up Peralta’s age 26-30 seasons, with the option year putting him back on the market no later than for his age 32 season.
Hopefully the logic of the year-by-year figures is somewhat obvious. Basically, I tried to put him a bit lower than the three young aces in each year because he simply hasn’t attained that level of success, but higher than what Holland got because that deal is now almost three years old and was signed a bit later in the process than Peralta’s would be if he signed this off season.
Obviously, this is just a best guess at the sort of deal that could be worked out if both sides were interested in coming to the table. It’s quite possible that one side or the other actually has reservations about doing a deal at this time for one reason or another and would come to the table with drastically different ideas of what a deal should look like, which is totally their right. The point wasn’t to be exact, but rather to try and come up with the sort of deal that could interest both sides. Any deal would entail quite a bit of risk for the Brewers, but that is the price you have to pay in this day and age to get young pitchers locked up, because when they hit the market, things get pricey in a hurry.