A reasonable contract extension for Starlin Castro

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The news last night that the Cubs are working on a contract extension for Starlin Castro actually gives us something Cubs-related to discuss. Finding such topics has been difficult lately so it's nice to have this to entertain us. My back of the napkin calculations came up with 6 years and $58 million. I'm going to look at the multi-year PECOTA forecasts to get a better idea. First, I'm just going to post the table that I've come up with and then I'll explain it.

The WARP is Baseball Prospectus' version of WAR and those are the projections that were done prior to the season. BPro has Castro being worth 2.6 WARP to this point and they're projecting an additional 1 WARP the rest of the way. That will give 3.6 on the year. Since he's have a better season in terms of WARP than previous years, the mb21-adjusted column is my estimates of what those forecasts will look like when they're published prior to next season. The difference over 6 years is just a little more than 2 wins so I haven't adjusted it too much in his favor because one season is still just one season of data.

The Per Win column is the value per win. I got these values by increasing the current $5 million per win by 7.5% each year. This could be too high. It might even be too low, but it's reasonable and in line with what some others are expecting. As you can see, the value of the win in 2018 is going to be $7.7 million.

$WAR is how much the players is worth based on his projected WARP and the value of the win. Multiply WARP by Per win and you get $WAR.

Since Castro isn't yet a free agent, he'll be paid much less than he's worth. Arbitration eligible players make a fraction of their free agent value. To estimate Salary I've multiplied the first two years of arbitration by 40% and then 60% for his third year and 80% for the final year of arbitration. The final two years are free agent years so he'd be worth that much.

The final column, risk adjusted, is just that. I've adjusted the salary downward because the Cubs are taking on a lot of risk. There's no reason for the Cubs to sign Castro to a contract for the amount he might get over the next 6 years because he could get injured or he could just decline. To calculate the risk-adjusted salary I decided to take year 1 (2013) and pay him 90% of his estimated Salary. It seems the Cubs are looking to lock Castro up prior to the end of the season so the Cubs are even taking a small risk when it comes to 2013. For years after that, I increased the discount by 10% each year. In year two (2014) the Cubs are paying 80% and by 2018 they're paying 40%.

This isn't meant to be how a contract would be structured. It's sole purpose is to provide a total value that he might be paid over the life of the contract. Don't pay too much attention to the yearly totals in the last column. Since I'm increasing the risk discount the annual figures are almost certainly wrong and won't match any contract he signs even though it might be how the Cubs come up with a contract offer themselves. There's more risk in year six than in year two.

Interestingly enough, you get 6 years and $58 million this way too. Trust me, I did not set this up to get the same value as I got last night. As I was thinking about this I realized that there's more risk the further away the year is so while an overall discount of X% is reasonable, it make more sense for me increase it incrementally. I've used the same dollars per win figures I have most of the time (starting at $5 million this year and increasing by 7.5%). I used PECOTA's 10-year forecast. It just worked out that we got the same $58 million.

However, we're still going to add in the 10% discount teams receive when signing players to longer than three years. That brings it down to $52.9 million.

Another way to look at this might be to look at what kind of contracts similar players received. MLBTR mentioned Hanley Ramirez, Troy Tulowitzki and Jose Reyes. Since there has been little to no inflation in baseball since 2007 we can actually look at these contracts and compare them to the one Castro may get without an inflation adjustment.

Following the 2007 season Tulo signed a 6-year, $31 million contract. He had just over a year of service time so the contract bought out all the remaining years of club control (2 league minimum, 3 arbitration) plus a year of free agency. The contract has since been extended further, but we don't care about that one. This isn't entirely similar to Castro who has 4 years of arbitration and the 6-year pact would be buying out his first two years of free agency. Tulo's contract actually works out to a 4-year deal for $41.5 million if we use the same time frame as Castro. It buys only one year of free agency, but includes the arbitration years. It's roughly $10 million per year. It's close enough. These are similar player; not identical players.

Fangraphs doesn't seem to be showing their WAR on the player pages so I'll use rWAR and WARP. Tulo was coming off a 6.5 rWAR and 6.7 WARP season in 2007. Castro hasn't approached numbers like this and Tulo plays the same position. Castro currently has 2.7 rWAR and 2.6 WARP so he won't come close to producing what Tulo did.

Hanley Ramirez's 6-year, $70 million contract bought out three years of arbitration and three years of free agency. Hanley's 2008 resulted in 6.5 rWAR and 7.8 WARP. He'd been worth 15.3 rWAR and 18.8 WARP over the previous three years prior to signing the extension. Castro has been worth 7.1 rWAR and 7.5 WARP since he reached the big leagues. So again, there really is no comparison in value between these two players. While Hanley's contract bought out an extra year of free agency and one less year of arbitration, it's a similar enough situation to Castro's that we don't have to do much adjusting. If you want, adjust Hanley's down to $10 million per year, which is about equal to what Tulo got over his arbitration years plus the year of free agency.

Jose Reyes was entering his three years of arbitration in 2007 and the Mets signed him to a 4-year, $23.25 million extension. It bought out three arbitration years and one year of free agency. It paid him a little less than Tulo and Hanley per year, but it was also a year earlier when there was still inflation in baseball. Despite that, he'd not have gotten the $10 million per year the others essentially did. Reyes was worth 5.6 rWAR and 5.2 WARP the season before the extension. He'd been worth 9.6 rWAR and 7.8 WARP to that point in his career.

As you can see here, Jose Reyes had been the worst of the three over the previous few years and received the lowest valued contract extension. This is no surprise. Hanley and Tulo were better players. Reyes is actually comparable to Castro. Reyes will probably have an extra rWAR, but Castro will probably have a slight advantage in WARP. If Reyes was to give the Mets a couple more years we'd see the contract jump considerably, but still not equal those that were given to Hanley and Tulo.

We shouldn't see a contract extension for Castro equal those two either. It should be closer to Jose Reyes' extension with a couple more years added on and a small increase in inflation. Say something like 6 years and $48 million. That's below the other two contracts and more overall money than Reyes got, but probably somewhat similar in reality. Castro is similar to Reyes in terms of performance and not at all similar to Hanley and Tulo. So why pay him like he's one of those two?

Justin Upton signed a 6-year, $51.25 million contract prior to the 2010 season. Like Castro, he had 2+ years of service time, but was not going to be super-two eligible. The previous year, 2009, at the age of 21 Upton was worth 4.6 WARP and 3.9 rWAR. Upton had far greater potential than Castro at the time and although he didn't have the success in previous years that Castro has had, the Dbacks recognized that potential and locked him up quickly.

Prior to this season, Andrew McCutchen signed a 6-year, $51.5 million extension with the Pirates. McCutchen had 2.123 years of service time entering 2012. Castro had 1.150 prior to this season and therefore will have 2.150 years of service time following this season. At this point in Castro's career, he has only a dozen or so fewer days of MLB service time than McCutchen did when he signed his pact.

Last year McCutchen was worth 5.6 rWAR and 4.5 WARP. He had been worth 11.1 rWAR and 9.7 WARP prior to signing the extension.

Of all the players we've looked at, only Jose Reyes is really all that comparable to Castro in my opinion. From 2003 through 2006, the years prior to the extension, Reyes played in 436 games, had 1957 PA and had a 95 OPS+. Reyes had 11 DRS and 18 baserunning runs (from Baseball Reference). He was worth 9.6 rWAR.

Castro has played 399 games, had 1716 plate appearances, an OPS+ of 103, a DRS of -4 and -1 baserunning runs. He's been worth 7.1 rWAR.

Reyes was 23 the year prior to the extension and Castro is 22. Castro has been slightly better at the plate, but worse defensively and on the bases. I looked only at one defensive metric (Fangraphs was down earlier). I'm sure if we looked at other defensive metrics we might find a different story. I don't recall Reyes being known as a great fielder, but maybe I have a poor memory. He was an excellent baserunner, which Castro is not.

These two players are similar enough and Reyes didn't sign a contract anywhere near what Tulo and Hanley received. It wasn't as much as McCutchen or Upton either. Tulo and Hanley were basically twice the player Castro has been.

If we look at all these contracts together we're looking at something like 6 years and $50 million. I'd suggest something lower.