SOUTH HILLS – Since the beginning of the New Year, the Braves have locked up five of their core pieces in Freddie Freeman, Craig Kimbrel, Julio Teheran, Andrelton Simmons and Jason Heyward, buying out all of their remaining arbitration years and some free agency years. They contracts cover 27 player seasons and cost $280 million dollars.
That’s an annual average value of $10.3 million per season per player, or $51.5 million per year for the group. Those five players are all in their early-to-mid 20s, so they should improve (Well, Kimbrel might have peaked but should remain elite). They combine for 17.5 WAR in 2013. In the market, that’s worth $87.5 million.
Now, these contracts increase over time and are typically back-loaded, but clearly the Braves have an outstanding chance to create significant surplus value (real compensation compared to market costs) over the life of these contracts. The Braves have locked up the majority of their core and have also locked in cost certainty at a time when amateur market restrictions and an influx of television cash are hyper-inflating the free agency market. Note: the Braves have an awful local TV deal like the Pirate (something like $20M per year through 2026 … but they are moving into a new stadium).
And we shouldn’t be surprised.
John Hart pioneered this strategy with the Cleveland Indians beginning in the early 1990s and he joined the Braves as an adviser in November. (Also, an interesting side note, Hart was greatly influenced in Cleveland while watching the break up of the early 1990s Pirates.)
Now, this trend of buying out arbitration years and free agency contracts is no longer a novelty. As I wrote about back in November, clubs had combined to sign 108 players to extension that bought out a combined 406 seasons of free agency. That explains in part why players’ share of revenues have been on the decline. That’s a lot of players and a lot of years.
This isn’t new, but what is new is just how aggressive the Braves have been in locking up their core this offseason. I can’t think of a club locking up this many core players in one winter. I believe the Braves had not extended a homegrown player since locking up Brian McCann in 2007.
I spoke with Hart back in January for a several stories I’m working on this spring. I asked Hart with the free agency dollars in the game if there is less incentive for players to agree to such deals going forward. Just look at how undervalued Andrew McCutchen is. Hart said teams have target players even earlier, in some cases like with Teheran and Simmons, just after their first seasons.
“If anything, it tells you you need to do it earlier,” Hart said of the trend. “It takes two to tango. Neal (Huntington) understands that and the dynamic behind wanting to do it. But you have to have the player and agent amenable to wanting to do a deal. You have to be prepared to take a risk with pitching because there is more volatility. I think with all that being said, it does make absolute sense to jump out in front on some of these guys. It’s a different world. A different era. There are some agents who absolutely have no interest in doing that.”
Like Scott Boras, which complicates things for the Pirates.
But the Braves and Hart have proven such a comprehensive, cost-controlling strategy is still possible … even with $20-plus million per year awaiting stars in free agency. Tampa Bay also did this with Matt Moore and Evan Longoria. They signed Longoria nine days into his MLB career and Moore after just one season. If the Pirates are going to sign Gerrit Cole to an extension that buys out free agency years, now is the time. Cole might not be willing to do this. His agent is certainly against it. But the Braves proved this is still possible.
Hart in an interview with Baseball Prospectus this week (free article) :
BL: You once said that one of the things you had learned as a GM was that “Stability leads to flexibility.” You mean that once you have your core locked up, you can count on that amount of money being assigned to that amount of production, and then you can work around that?
JH: It really does. Every organization has a different mindset. I had to be a little more nimble in Cleveland. We maybe traded a few of our guys to gather payroll flexibility in certain points, but the idea of going in is that we can manage this payroll and this roster, and that will also allow us the ability to be creative if we find a free agent that we like. They’re our core players, they’re our better players and we know what we’re paying them. And that does lead to stability.
And I think in this case, every guy that’s been signed here, these are players that you’re looking to be stable with and build around them. That gives you the ability to do it, and quite frankly, I think that was a little bit of the mindset as to why these players wanted to sign here. I think Frank did a great job. His strategy was Freeman one, along with Heyward. I think Kimbrel, you read some of his quotes, it was like, ‘This makes sense to me because I know who I’m going to be with. This is showing me, number one that the Braves believe in me, and number two we’re going to have a core of good players that are going to grow together.’
Hart believes young players are still often looking for security so this approach of buying out arbitration years and free agency years is still relevant.
BL: This was initially sort of a small-market club’s strategy to keep costs down, but it’s been embraced by larger-market clubs in recent years. Do you find that the discount has decreased?
JH: You go back to what I was just saying. I don’t think you’re catching people by surprise. You’re finding players that have interest in stability. The general feeling that I’ve always had—and I think some of this is my field background—is that young players recognize and are interested in a level of security because of just the general toughness, the risk associated within the game as it is. There are a lot of good players in the major leagues. It’s very difficult to establish yourself as an everyday regular, much less an all-star. With every success story comes with five or six crash and burns, and the players are aware of that. If you present opportunities for these guys at a younger age, you are going to have a willing ear. Not that you’re always going to get a deal done.
Hart indicates there is something of a domino effect …The Pirates have already knocked down the first domino with McCutchen, who is signed to perhaps the most club-friendly deal in baseball. Now would be the ideal time to approach other core pieces …before it’s too late.