Club option on Aramis Ramirez ***UPDATED***

Since Aramis Ramirez has started hitting again and hitting it quite well, it seems more likely than not that the Cubs will keep him around next season. However, I don’t think we can be certain the Cubs will just exercise the option and move on to other business. The Cubs are currently at about $100 million in payroll, which includes guaranteed contracts, estimated salaries for arbitration eligible players, league minimum players that fill out the roster and the 15 who are on the 40-man roster, but not on the 25-man. 

Ramirez’s option is for $16 million or there’s a $2 million buyout. He’s not worth $16 million anymore so I don’t know that the Cubs will want to exercise that option. If they do want to keep Ramirez, I’m guessing they work out a new contract extension. We know Ramirez will be on board with this. He loves Chicago and he loves playing for the Cubs. He’s twice taken less money than he’d have gotten on the free agent market. I’m betting Jim Hendry tries to make it three times. The question is, if they go this direction of course, what kind of extension are we talking about and how much money will it be worth?

Baseball Prospectus updated their position player projections yesterday. They have Ramirez being worth 0.8 WARP the rest of the season on 169 plate appearances. If we increase that to 550 next year we get 2.6. Let’s subtract a little because of age and go with 2.5. That seems more than reasonable. With a win value expected to be about $4.8 million, that makes Ramirez worth $12 million next season. Here’s roughly what we’d expect from Ramirez over the next few seasons: 2.5 WAR, 2.0, 1.5. 

We’ll say the win value goes from $4.8 million in 2012 to $5.1 million to $5.4 million in 2014. That’s $10.1 million in 2013 and $8.1 million in 2014. Add in the 10% discount that teams get for signing players to 3 years or more and we get a total contract value of $27.2 million over 3 years. Let’s assume that Ramirez would again give the Cubs a discount as he has in the past and we’ll say 3 years and $24 million. 

Ramirez doesn’t have a player option so it’s not like he’s ripping up the $16 million. He’s not going to get $16 million in free agency next season. He’s worth about $27 million over 3 years on the free agent market. The next question is whether or not it would be wise for the Cubs to do this. Remember, they do have a lot of money coming off the books, but they don’t have unlimited funds. 

We’ve already talked about how a platoon of Jeff Baker and some cheap lefty could potentially produce a similar amount of value. However, there’s still a lot of uncertainty in that platoon whereas you basically know what you’re getting with Ramirez. The Cubs will have to structure Ramirez’s new contract in a way that benefits them more in the near term since they want to contend. Paying him $6 million in 2012, $8 million in 2013 and $10 million 2014 would seem to be a reasonable schedule. The Cubs are already on the hook for a $2 million buyout so they’re only paying their 3rd baseman an additional $4 million next season. 

There’s a big question mark to all of this, though. It was mentioned here several times when we debated whether or not the Cubs should even offer him arbitration if they did not trade him, some pointed to scarcity and leverage as a reason why they should. Jack did the same thing on his blog in a very good article. There aren’t any good 3rd basemen available this offseason on the free agent market. It’s difficult to even call Ramirez a good player at this point in his career. He’s a little better than average so if that’s your measure of good then so be it. Regardless of whether he’s good, average or whatever, he’s easily the best 3rd baseman available. I don’t think you could find anyone who would argue that point.

Does that give him additional value? It makes sense that it would, but are we really sure that’s how things have played out on the free agent market over the years? I’m not certain. If someone wanted to look at the best free agents available at each position and calculate their expected salary using Marcels, we’d get an idea if there’s any truth to that. I might be more willing to believe it if the player was the best player available in a thin free agent market. Even then I’m not sure I would. We’ve often heard GMs talk about how trading is going to important when the free agent market is thin. They seem to recognize the value for what it is and not for its scarcity. I can only guess because I haven’t done the work and honestly have no desire to do so. What I do know is that there are several hitters better than Ramirez available this offseason. 

At first base alone you have Albert Pujols, Prince Fielder, Lance Berkman and maybe even Carlos Pena. At shortstop is Jose Reyes and you could add Jimmy Rollins and Rafael Furcal in because they’re more valuable than Ramirez when you factor in position, defense and baserunning. I’m too lazy to look through all the outfielders, but Carlos Beltran is available. Aramis Ramirez may not even be in the top 10 among position players for expected 2012 value. Add in the guys who emerge as trade candidates and I have a hard time believing that teams are going to grossly overpay for someone like that. Ramirez may be the best 3rd baseman available, but he’s not an elite talent these days and he’s not close to the best free agent position player available this offseason.

I can’t possibly know what kind of contract Aramis Ramirez and his agent would be looking for or what kind of extension they’d be willing to accept. What I know is that his projected value over the next 3 years is about $30 million. Teams pay 10% less for long-term contracts. I also know the Cubs can use every penny next year if they want to contend so paying Ramirez $16 million would not help in that effort unless payroll will be increased greatly. If the Cubs want to keep Ramirez, I think it’s because they want to extend him for lesser money in 2012 than he’d get if they exercised the option. 

UPDATE: fivetoolmike on twitter suggested Ramirez is more likely to get a 2/24 deal than a 3/24 deal. That may be true at which point I don’t want the Cubs to re-sign him. Anyway, I immediately thought of Scott Rolen who I think is a pretty good comp for Ramirez at the plate. After Rolen’s 8-year deal ended in 2010, he signed a 2-year, $13 million contract with the Reds. While two years older than Ramirez will be at the end of the year, Rolen hit .295/.363/.476 over the previous two seasons (most of which were in the American League for what it’s worth). His OPS+ was 120. He was worth 8.3 rWAR over the preceding two seasons. Rolen had 1072 plate appearances.

Aramis Ramirez has hit .262/.311/.472 (105 OPS+). Ramirez, so far, has had 957 plate appearances. He’ll finish the season with about the same amount of playing time that Scott Rolen had the two years combined before free agency. Ramirez has been worth .9 rWAR.

Scott Rolen was the considerably better player entering free agency. Even if you just look at batting runs, Rolen’s 33 beats Ramirez’s 3 by a huge amount. Rolen was not only the better hitter, but also the better fielder and better baserunner. He was paid $6.5 million in 2011 and $6.5 million in 2012.

Looking at this, the most recent comparable, Aramis Ramirez should not be paid more than Rolen was. After looking at this again, I think a 3/24 contract may be a bit high based on the most recent comparable who signed a free agent contract.