Upon signing an eight-year, $135 million contract, Freddie Freeman became the face of the Atlanta Braves franchise. He also became the symbol of why teams—for better or worse—will be forced to make major payroll-altering decisions with future pre-arbitration cases.
The concept of buying out arbitration and free-agent years isn’t new. In the early ’90s, Cleveland Indians executive John Hart, now known to a younger generation as a contributor on MLB Network programming, was blessed with an abundance of young, impact talent.
From Jim Thome to Charles Nagy to Manny Ramirez, the mid-market Indians couldn’t possibly keep all of their stars when arbitration cases began to arise. Forget re-signing a future Hall of Fame hitter like Thome when free agency arrived; the Indians couldn’t afford his second or third trip to the arbitration table.
Thus, a plan was born out of necessity: Re-sign the best young talent in the organization to long-term deals before arbitration years arrive.
While the concept is now commonplace, it wasn’t always. Hart’s forward-thinking mentality changed baseball. In each of these cases, the team and player take on risk. If the player is injured, flames out or was improperly evaluated, millions could be lost. If a player excels and dominates the sport, his agent likely lost out on huge gains in yearly arbitration cases.
All of this brings us to Freeman and the contract he signed this winter.
From the time Hart began this now commonplace practice, the outcome of deals usually led to middle ground for both team and player: When free-agent years arrived, players would be compensated. However, they would make far less than what would likely be available on the open market.
The following chart represents five recent contract extensions. The sixth, Freeman, changed the game.
In most cases, the first few free-agent years would net a young player a healthy raise but leave them short of the top salaries in the game. Due to Freddie Freeman emerging at such a young age, the Braves gave him his big free-agent deal now.
As general managers around the sport study these numbers, questions must be emerging in front offices around the sport: What is the going rate for a future superstar? How much would Mike Trout, the best pre-arbitration player in recent memory, cost to sign right now? Would any owner be willing to award $100 million deals to players barely out of the minors?
The job of a general manager is becoming harder by the day, folks.
Let’s start with the first question.
The going rate for a future superstar is changing because value is looked at in a different way than in the past. Batting average, home runs and RBI aren’t just old school. They are completely out of touch with how agents, executives and owners now view the game. Joey Votto may have caused a stir, per ESPN 1530 in Cincinnati, when he cited wRC+ as his favorite stat, but it’s likely a big part of the reason he was awarded a contract in excess of $200 million.
According to Fangraphs, which uses its WAR calculations to determine value, Freddie Freeman was worth $23.9 million last season. For the Braves, that puts a five-year, $106.5 million (the amount Atlanta is paying for five free-agent years) in perspective.
When the Rays gambled on Evan Longoria, they were rewarded with the best value in baseball for four straight years, per Jonah Keri of Grantland. Furthermore, those types of calculations validated Seattle’s $240 million outlay to Robinson Cano this winter. In a game flush with revenue and cash, true stars are worth major salaries.
When Freeman signed his deal, this was the first thought I had: If he’s worth $135 million, what would Mike Trout be able to garner right now?
A side-by-side look at their numbers over the last two years—Trout’s first two in the big leagues, nonetheless—paints a sobering picture: At a younger age, Trout is twice the player.
While that doesn’t necessarily mean he could ask for a contract of $270 million tomorrow, the Angels have to be considering what the market will look like as the years go on and if their player will become the first $400 million-man in baseball history.
From the moment John Hart started a trend, risk has been associated with the team. With Trout, the risk of not signing him immediately is even greater. Assuming another 10 bWAR season from Trout in 2014 would put him on a path no one has ever been on in baseball history. When his agent reaches the negotiating table for arbitration, the sky will be the limit.
Clearly, cases like Freeman and Trout are rare. The idea of a 24-year-old first baseman, three years from free agency, hitting the $135 million jackpot isn’t likely to happen again soon. If a general manager tries to save his owner money by suggesting a $90 or $100 million deal for a 20-year-old call-up, a tirade might ensue.
Yet if a player like Trout or Bryce Harper or Jose Fernandez emerges, it’s not ridiculous to think about risking millions to save millions.
Freddie Freeman changed game for future baseball executives. If players on the path to stardom can garner star-level money, perhaps the next John Hart will offer a $100 million deal to a 20-year-old phenom.
Agree? Disagree?
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*Additional salary details courtesy of Troy Renck of the Denver Post, Dan Hayes of Comcast SportsNet Chicago, Michael Sanserino of the Pittsburgh Post-Gazette and Cliff Corcoran of Sports Illustrated.
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