Has the Extension Market Eclipsed the Free Agent Market?

Just as the regular season is really upon us, an “Extension Fever” of sorts has swept through MLB.  In the past week alone, four nine-figure contracts have been awarded to players who, in decades past, might have been best served holding out until free agency for their big payday.  

Over the past decade-plus, it has become increasingly routine for teams to lock-up young players with what appear to be relatively modest, “win-win”, contract extensions.  These contracts often buy out one or two years of oncoming player free agency while eliminating the possibility of acrimonious arbitration hearings along the way.

For a young player who has yet to make life-changing money, these deals offer just that, while teams can secure the services of elite players at a potentially significant discount.  Most often though, these deals were made in the past by smaller market teams, whose chances of retaining their stars after their rookie service time was up were disproportionately low.

This practice is widespread today though.  Even the Yankees take part.  Even the Yankees take part, again.  

Part of the rise of these deals is due to the changing landscape of free agency.  Last offseason’s free agent market developed incredibly slow.  This offseason’s market has been really slow too. 

This is not breaking news; Free Agency’s glacial pace has been a significant storyline in MLB for a couple years now.  Yet, in the last week, the slow free agent market has become of secondary interest given the chain of significant contract extensions being agreed upon.  

As such, here is a quick juxtaposition of the largest extensions of this offseason and the largest free agent deals.  

First, the 2018/19 Free Agents.

Above is a list of the five largest contracts (in guaranteed dollars) signed by Free Agents this offseason.  The mean value of those five contracts above is 178.8 million, a very healthy number, even considering it’s buoyed by the Bryce Harper and Manny Machado contracts. The average age of those five players, at the time they signed their contracts, is 27.4 years old.  Again, that total is a product of the relative youth of both Machado and Harper.

Given the players who remain unsigned, this current Top 5 list is not likely to change, depending maybe on how you feel about Craig Kimbrel’s outlook.

For all the rumors and deliberations, both Bryce Harper and Manny Machado got their 300+ million dollar contracts.  But, deep down, we always really figured that they would. More concerning of course are those still productive, yet “non-generational talents” still looking for work.  For now though, we focus on these elite, and fortunate, few.

After a record breaking week it looks as though, for at least this offseason, extensions reign supreme:

Here, the average age of extension-signees (at the time of signing) is slightly older even: 27.6 years.  And that number would be appreciably higher if not for Chris Sale and Alex Bregman, who 30 and 25, respectively, on March 30th.  Despite being a slightly more aged cohort, these extensions nearly 7 million dollars more in average annual value opposed to those signed as free agents.  

Comparisons are unfair though.  Those five aforementioned free agents are all incredible players.  And the quintet who signed extensions are undoubtedly a phenomenal group.  Apples and Oranges.  

So without getting lost in comparisons, it still remains of note the lopsided amount of money presented via extensions this offseason.  Not in the top five extension group are those 90+ million deals for Clayton Kershaw and Justin Verlander.  It is also worth noting that Miles Mikolas signed an identical 68 million dollar extension as Nathan Eovaldi earned on the open market.  Eloy Jimenez now holds an extension record even before making his first MLB plate appearance.

These contract phenomena have not developed overnight, but a frantic week goes a long way in highlighting the dynamic nature of player/team contract negotiations these days. In the ever-evolving world of contract negotiations, these deals offer a template; they offer precedent.