In baseball, player salaries are determined by a salary arbitration system. In short, players that meet a certain criteria — length of time on the active roster, generally more than three years less than six — are eligible for arbitration. Once a player becomes arbitration eligible, the player and team submit a yearly contract figure. If the player and team can agree on a yearly contract, arbitration is avoided. (There are certain caveats here — such as you cannot offer less than 80-percent of a player’s previous yearly salary.) If player and team cannot agree on a number, then they go to arbitration. Both player and team will submit a figure, and a arbitrator will pick whichever number they feel is appropriate. You cannot split the difference between the figures.
So, for example, if Buster Posey and the Giants can’t agree on a salary for 2013 and he submits a figure of $6M to the arbitration panel and the Giants submit a figure of $4M, the panel will choose either the $6M figure or the $4M figure. Teams like to avoid arbitration for a whole host of reasons — arguing that your employee should be paid less tends to be an unpleasant experience — and the Giants have tended to avoid the process entirely. The last Giant that went to an arbitration hearing was A.J. Pierzynski in 2004. Oh, and the Giants lost that hearing.
Once figures are exchanged, usually in January, player and team can still negotiate before the arbitration hearing, usually in February. You may remember Tim Lincecum’s contract negotiations prior to the 2012 season. Lincecum was asking for 21.5M and the Giants offered $17M. The Giants and Lincecum avoided the arbitration hearing by agreeing on a two-year, $40.5M deal.
That’s the baseball salary system in a nutshell. If you want to read a more in-depth account of the inner-workings of contracts, I recommend this article on Baseball Prospectus entitled ‘The Arbitration Process.’ The new CBA changes some of the finer points in the article, but it’s largely the same and a very good resource.
Let’s examine the basics of Posey’s current contract with the Giants.
2013 – Arbitration eligible ($5.9M)
2014 – Arbitration eligible
2015 – Arbitration eligible
2016 – Arbitration eligible
2017 – Free agent
By process of arbitration, the Giants will retain rights to Buster Posey from 2013-2016; as his current contract stands, he’ll enter the free agent market in 2017 at age 30. If the Giants decide to go year-to-year with Posey, it’s not hard to imagine Buster making around $20M in 2016.
After winning the NL MVP, a World Series ring, many other minor awards, Buster Posey finds himself in great position to cash in. As I noted in the Posey MVP post, Posey’s 2012 is one of the top-five best seasons from a catcher in the past 30 years. Furthermore, Posey’s ascension has ushered in the one of the most productive eras of Giants baseball and if there was ever was ‘face of the franchise’ player-type, well, it’s Posey. The man can do no wrong. I mean that in the literal sense. He’s probably solving the energy crisis at this very moment while rescuing some kittens. Because Buster Posey.
Recent comparables — young catchers receiving contract extensions — mostly starts and ends with Carlos Santana and Joe Mauer. Previous to the 2012 season, the Indians locked up Carlos Santana — who was coming off a fantastic .351 wOBA 2011 — on a five-year, $21M contract. Santana’s contract purchases four years of arbitration and a single year of free agency. Santana followed up his 2011 with a successful 2012, posting a wOBA of .344. At 27-years-old, he’s one of the best young catchers in baseball.
The granddaddy of all catcher contract extensions is Joe Mauers’ eight-year, $184M that was signed right before the 2010 season. Post-2010 Mauer would have entered the free agent market and the Twins clearly felt the need to keep their homegrown catcher in Minnesota. Mauer proved in 2011 that signing catchers to long-term deals can be risky as he battled knee issues for most of the season, appearing in only 82 games. However, Mauer was healthy in 2012 and had a nice bounce-back year, posting a wOBA of .376 — excellent for any player, and fantastic for an offensively starved position such as catcher. (Though, it’s worth mentioning that Mauer started 72 games at C and 72 at 1B/DH.) Mauer’s monster contract might not be the best comparison to Posey; Mauer’s eight-year extension did not cover any arbitration years. Before 2007 he signed an extension that bought out three remaining arbitration years and a single year of free agency. That deal was for four-years and $33M. Mauer was paid $12.5M for his “first” year of free agency. Carlos Santana will earn $12M for his “first” year of free agency in the form of a $12M team option.
Ideally in any contract extension with a player of Posey’s caliber, you’re buying out portions of his free agent years, too. Spit-balling, I think we can comfortably set the bar around $18M for buying out Posey’s first free agent season in 2017. Baseball is flush with cash and the sport seems more profitable than ever. And for the Giants, coming off two World Series titles in three years, things look bright. The Giants consistently sell out home games at AT&T Park and have shown that they don’t mind locking up their homegrown talent such as Matt Cain and Madison Bumgarner. Posey should, theoretically, be no different.
Thus, Posey’s seven-year, $110M extension would be structured as follows:
*Denotes free agent years; WAR denotes at what level the Giants are paying Posey to perform at
Buying out three FA years seems like wishful thinking, but at $18M for 2017 and $24M for 2018-19 Posey should be earning market value. Maybe a little less if salaries continue to escalate. It’s also worth noting that the Giants purchased three years of Madison Bumgarner’s FA years with his very team friendly contract extension. This contract would keep Posey a Giant until his age 32 season. It’s doubtful that he’ll be a catcher in 2019, but it’s likely that the Giants can extract most of Posey’s value as a sterling defensive catcher that hits like an above-average first baseman for the duration of this deal. The Giants are best configured when Posey is catching. Down the road, if the team needs to, they can move Posey to first base or maybe shortstop
There’s a good bit of risk in paying any player $100M for seven years of work. As we all know, sometimes players get hurt. Or they lose their skills and decline. But Posey’s successful comeback in 2012 should mitigate some of the Giants’ fears about how he might hold up in future seasons. The Giants also place a huge premium on Posey’s leadership qualities. Whether or not you think those exist — or, more appropriately if they matter — the Giants definitely do. I thought Posey looked gassed near the end of the year — and parts of the playoffs — but it’s clear that his 2012 season — MVP award or not — was a rousing success. At 25-years-old, he’ll be expensive to lock up, but I can’t think of a more deserving player.
And, heck, it’s not my money. But there’s something really satisfying about saying “Posey on the Giants in 2019.” Go ahead and mouth those words to yourself a few times. Feels good, right? Feels right. So, a seven-year, $110M deal, the keys to my house, and free reign of my fridge? Deal.
Scientific poll time!