After a quiet few days at the winter meeting, the Tampa Bay Rays made big headlines on Friday, agreeing to a five-year extension with phenom left-hander Matt Moore worth a guaranteed $14 million. The deal was first reported by ESPN’s Jerry Crasnick. In addition to the guaranteed portion, the team holds three options that could max the deal out at $39.75 million over eight years.
Extending a pitcher with two weeks of major-league service is unprecedented and risky; however, a risk that a franchise with a payroll structure like Tampa Bay must consider. In 2008, the club took a similar risk on third baseman Evan Longoria (nine years, $44 million) after a week in the major leagues. Starters James Shields and Wade Davis each signed long-term contracts with about a year of service time under their belts. Although the risk is inherently greater with a starting pitcher than it is with a position player, the pre-arbitration extension it is one of the only ways the organization can guarantee cost certainty and the ability to retain a player’s services after his six-year service time commitment is fulfilled.
Without an extension, the Rays still controlled Matt Moore service for the next six years. What they did not control was how much those six years would cost. If Moore developed into the ace many project him to be, he could have made record-setting salaries through his arbitration years. In signing him before he gets there, the Rays are giving up guaranteed millions up front for cost control and additional service time on the back end.
Had Matt Moore made the opening day roster in 2012 and remained in the big leagues without an extension, Tampa Bay would have paid him near the league minimum for the first three years of his career. Without a deal in place, he would have went to arbitration in the three seasons after that. As an example of what a player of Moore’s projected caliber could make in arbitration we can look to another Rays’ lefty in David Price. Price, in his first year of arbitration eligibility, projects to make between $6 and $8 million. With a solid season in 2012, he could easily command an eight-figure salary in his second arbitration year.
Moore will make $3 million over the first three years of the deal or about double what he would have without one. Where Price could make close to $20 million for his first two arbitration years, Moore will be paid $8 million total in his first two. The club holds a $7 million option over his third and final year of eligibility, paying him $15 million total for his arbitration seasons. Under these terms, the team is “overpaying” him or the first three years of service. For that, they will receive a significant discount for the arbitration period. On top of that, they hold club options for his first two years of free agency.
Simply put, the club just locked up a projected ace until he turns 30 years old for less than $40 million dollars. Even with Moore’s silky smooth delievery and effortless ability to hit the upper 90s on the radar gun, there is risk of injury or ineffectiveness, but the guaranteed portion of the contract is not enough to cripple a franchise; not even for a team with small revenue streams.
“Matt is one of the most talented young players in baseball and exactly the type of person we look to build around,” said Rays Executive Vice President of Baseball Operations Andrew Friedman. “For us, making a long-term commitment to a player is not only a question of his ability, but also his work ethic, competitive drive and character. Matt excels in each of those aspects and we’re thrilled that he’ll be part of our core for many years.”
Like Evan Longoria, many will question Moore and his advisers for signing such a team-friendly deal so early in his career. Meanwhile, unlike Longoria, Moore was not a top pick and did not receive much of a signing bonus. An eight-round pick in the 2007 draft, Moore signed for $115,000 out of high school. As mentioned, without an extension, he would have made the league minimum for the first three years of his big league career. Moore could have passed on the Rays offer and took his chances on future millions by going year-to-year. At the same time, it only takes one injury to derail a projected promising career. By banking $14 million as a 22-year-old, Moore stabilizes his future long after his playing days. Should he max out his contract, he will have made nearly $40 million and be a free agent at the age of 30. Just this week C.J. Wilson and Mark Buehrle signed huge contracts; both on the wrong side of 30.
While Moore’s extension locks him in as the projected ace of the Rays for nearly a decade, it also has immediate consequences on the construction 2012 club. With service time no longer a question, the lefty is almost undoubtedly assured of a spot in the rotation on opening day. Andrew Friedman left the option of starting in the minors open, but that seems to be more posturing as the team gains nothing in letting their true intentions be known. If Moore does indeed start the season in St. Pete, it almost certainly means one of the current starters will not. Although that was likely the scenario anyway, Moore’s cost-controlled contract makes it easier for the franchise to part with a Wade Davis or Jeff Niemann.
In summation, the risk of signing a young pitcher is always real regardless of projections. Meanwhile, for a small-revenue franchise, being creative and taking calculated risks is a must in order to sustain success. The Rays will happily “lose” money in the first three years of Moore’s contract as a trade off for huge gains during the final five. If things go wrong somewhere along the way, they will take a modest hit on the guaranteed portion, but nothing that would leave significant damage. For Moore, he gains immediate financial security in favor of hedging his bets on millions that may never come. At the same time, he leaves himself in position to cash in with enough time for another significant payday.
The system is not always fair, but sound processes – like the Matt Moore extension – help ensure that system alone does not dictate results.