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A Look at a Possible Carlos Martinez Extension

Carlos Martinez Cardinals

There has been a little bit of talk about whether or not the Cardinals will extend Carlos Martinez this Winter. If it happens, here is how they should do it.

Great. Here it comes. The part where I try to play the role of General Manager and at some point John Mozeliak just shows me how much better he is at his job than I am at pretending to have his job. Yes, I will be trying to come up with an ideal extension offer for Carlos Martinez in this article. Undoubtedly, whatever I choose will likely be far off from what really happens. Actually, I don’t even think an extension will get done. My guess is that Martinez will want more than the Cardinals will give him and no deal occurs.

Let’s start here: Martinez has no reason to accept a team friendly deal. Arbitration is getting very expensive for pitchers and the price will only increase. Martinez is entering his first year of salary arbitration, so he does have some leverage. If he is willing to accept the arbitration outcomes for three seasons, then he can wait until he hits the market for free agency.

It is true that players get less in their first year of arbitration than they do in the second and third years, but less does not mean a little. Sorry to bring up his name here, but Trevor Rosenthal got $5.6 million in his first year of salary arbitration. Topping that was Zach Britton, who got $6.75 million. The strange thing is, though, that starters don’t do much better than relievers in arbitration. At least not the top tiers. Dallas Keuchel was fresh off of a Cy Young Award and “only” got $7.25 million. Among others, Matt Harvey, Shelby Miller, Hector Rondon, and Cody Allen were each between $4 and $4.5 million.

Those were all players in their first year of arbitration, though. In his third year of arbitration, Aroldis Chapman landed $11.325 million. Perhaps a better comparison is Stephen Strasburg, who got $10.4 million after five years of service (and then a $200 million extension). So what does this all mean? Well, getting an extension done first means we must project all of the arbitration years.

The Arbitration Years

Assuming that Martinez plays out all three seasons under the arbitration rules, then he will likely stay between $4 and $9 million all three seasons. My best guess would be roughly $4, $6, and $8.5 million. Those are very rough estimates but it should be in that ballpark. The average of that comes out to a little more than $6 million per year. If the Cardinals get an extension done, they will want to retain Martinez for one or two years after the arbitration period. On the other hand, Martinez will want to earn more than what he could have over the arbitration time frame if that happens.

Of course, Martinez will likely provide more value than $6 million per year as well. Fangraphs has a free agency value system that translates WAR into a dollar amount that a player would make in free agency. No statistic is ever perfect (even if you created it) and there are certainly limitations. WAR does not always capture everything. Sometimes a player adds more value because of what he means to a fanbase. Regardless, Fangraphs’ valuation should give us a rough idea of what we are dealing with.

Fangraphs had Martinez valued at $27.4 and $26.8 million in 2015 and 2016, respectively. Now, my guess is that Fangraphs is taking all the money spent on players and redistributing it based on WAR. I couldn’t find a description of how they calculate it, but that is the general guideline for what most valuation systems do. If that is the case, I have no doubt that Martinez was worth that much. However, it doesn’t take much to make $10 million anymore. Ian Kennedy received five years and $75 million just last year. Take out all of those contracts that are barely above replacement, and the valuation goes down.

So what should Martinez have earned? Well, it’s probably closer to $18 million. He has been really good. He ranked 19th among all pitchers in FIP this year and that is nothing to scoff at. Martinez just isn’t dominant. At least not yet. Could he make a leap? Yes, and he could start by getting his strikeout rate back to where it was in 2015. However, he has recorded an FIP in the mid-to-low 3s each year of his career. A leap isn’t likely to happen. Martinez is a top tier number two starter and should be worth $18-20 million annually over the next three or four seasons.

Carlos Martinez is the Unquestioned Cardinals Ace

The Full Contract

The way I see this from the Cardinals perspective is that they must answer two questions:

  1. How long do they see Martinez sustaining his current level of production?
  2. How much of a surplus do they want from this contract?

For the purposes of this argument, let’s assume that they pay him at a rate that gets him exactly what he is worth over the entire length of the deal. The first question is much harder to answer. I am not a projection guru, but forecasting success more than three years out is a very risky proposition. However, given his age (25), I think the Cardinals should play this one as though he will perform at a number two starter’s level for the next five seasons. That isn’t based on any data, but pitchers do peak in their late 20s, and the big drop usually kicks in around the early 30s.

In that sense, the Cardinals will be getting $90-100 million of value from Martinez over the length of this imaginary five-year extension. But without the extension, the Cardinals would only have to pay Martinez $6 million per year over the next three seasons. That must be taken into account too. They will be paying him above what they should. Instead of using $18-20 million, we need to calculate this as though the Cardinals could pay $6 million now and $18-20 million later.

With that methodology, the Cardinals should be paying roughly $56 million for Martinez over five seasons. Would he accept that? Probably not. So should the Cardinals go up to, say, $75 million just to ensure that they keep Martinez for all five seasons? I don’t know if that’s smart, either. They can enjoy a much greater surplus now if they don’t spend that much on him. A four year deal is more reasonable. Using the same methodology described earlier, the Cardinals should pay $37 million for those four seasons. Martinez is a bit more likely to accept that, as he will at least come close to that $20 million mark in free agency.

Number two pitchers often get paid like aces (see Strasburg, Stephen among a list of many others). I would probably reach the $40 million mark for him, too. It makes sense to adjust a little for baseball’s free agency and arbitration inflation. Also, he will be worth much more than that in arbitration, so there is still a large surplus for the Cardinals. Martinez also makes slightly more than he would by going through arbitration without an extension.

If the Cardinals are going to extend Martinez, they can’t give him all of what he is worth. Otherwise, it is smarter to just wait out arbitration. Giving him a fourth year makes sense at the right price, but much more than $40 million over four years is a mistake. I think a hard cap of $45 million makes a lot of sense for the Cardinals. We all know Martinez is better than that, but it’s a business, too. You can’t just give away free money when you don’t have to. Use that surplus to sign a different pitcher or an outfielder. Don’t spend it in a place where you are already covered.

Photo Credit: Dennis Wierzbicki-USA TODAY Sports

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