Should the Cubs sign Starlin Castro to an extension?

I haven’t heard any rumors about the Cubs being willing to throw Starlin Castro a multi-year extension, but thought it might be interesting to consider it. The point of signing him to the extension would to be to buy out all or at least some of his arbitration years in order to keep the cost down. Obviously Castro would have to agree to it and he may simply be happy to play it year by year and maximize his value. He may also realize that he’s a serious injury away from unemployment.

In March of 2009, Theo Epstein and the Boston Red Sox signed Jon Lester to 5-year, $30 million contract with a club option for $13 million or a $0.25 million buyout. The club option in 2014 is voided if Lester is traded or finishes first or seconds in the Cy Young voting in any year of the contract. Lester had just over 3 years of service time and was arbitration eligible for the first time. He’d have the 2009 arbitration year followed by two additional years before reaching free agency. He had 3 years of club control left, but the Red Sox decided to buy out his arbitration years and at least 2 more.

Entering the 2009 season, Lester’s projected WAR was probably about 3 to 4. He was much better than than and has remained significantly better. Even at a projected 3 to 4 WAR, the Red Sox saved a ton of money by signing him to the extension. They took the risk that he may get injured or perform much worse than expected, but the reward was that he’d become as good as they hoped, stay healthy and cost them next to nothing. There is more risk in signing pitchers to long-term contracts than players, but there is always risk.

Castro has another year of league minimum before becoming arbitration eligible. He’ll almost certainly arbitration eligible for 4 years so the Cubs have 5 more years of club control. If Castro continues to improve, he could become expensive.

CAIRO projects about 3 WAR (not including defense) and he’ll only be 22 years old. The FSR’s have Castro as a bit above average defensively so we’re going to keep it at 3 WAR next year. He’ll continue to improve for a few years. It’s not unreasonable to expect something the following from Castro:

2012: 3 WAR
2013: 3.5 WAR
2014: 4 WAR
2015: 4.5 WAR
2016: 5 WAR
Free agency

At league minimum in 2012, he’s worth exactly league minimum. In his first year of arbitration, players get about 40% of market value. Since he’s a super two, we’ll keep years 1 and 2 at 40% and then increase to 60% and then 80% in 2016. Add it all up and you get about $54 million in value over the next 5 years.

No way are you going to re-sign him for that long and pay the full cost of the value. That would be silly. Plus, there’s the 10% bonus teams get for contracts 3 years or longer. So his value is down to $50 million. Still not going to sign him for that. Still silly. There aren’t many first year arbitration eligible players that get paid about $8 million and that’s what we’ve come up with. I’d say the odds of that are slim to none.

How much should the Cubs offer? If you’re going to buy out the remaining years of club control, you may as well buy out a year or two of free agency years at a much cheaper price too. I don’t know the answer to this. I don’t know that there is only one answer.

Since Lester signed for 5/30, I’d be hesitant to give him more than $6 million per year. I don’t want to sign him for 5 years though. I’d rather go 6 or 7. Can he stay at SS? That’s huge. If he has to move away from SS, he has a lot less value. He’s still a very valuable player; he’s just not as valuable as he’d be at SS. I’d also like the 6th and 7th years to be club options.

That same offseason, the Red Sox also extended Dustin Pedroia. He got 6 years and $40.5 million with a 7th year club option for $11 million or a $0.5 million buyout. The club option was voided if he won the MVP and he did that in 2008. As good as Castro may be, he’s not as good as Pedroia when he signed that extension. Pedroia had a little more service time than Castro, but was still a year away from arbitration like Castro. I think Pedroia’s contract is fairly similar to what the Cubs should consider, but a bit less. Here’s Pedroia’s contract:

6 years/$40.5M (2009-14), plus 2015 club option

signed extension with Boston 12/3/08
$1.5M signing bonus
09:$1.5M, 10:$3.5M, 11:$5.5M, 12:$8M, 13:$10M, 14:$10M, 15:$11M club option ($0.5M buyout)
escalators based on MVP vote:
MVP in 2009-13 increases 2014 and 2015 salaries by $2M each
2nd or 3rd place in 2009-13 MVP votes increases 2014 and 2015 salaries by $1M each (up to maximum of twice, for $2M increase)
2015 club option and buyout are voided if Pedroia wins MVP in 2008 (met) and is traded
award bonuses: $50,000 each for All Star, Gold Glove, Silver Slugger, LCS MVP; $0.1M for WS MVP; $0.1M for MVP ($75,000 for 2nd in vote, $50,000 for 3rd)
perks: suite on road

So what about a 6-year, $35.5 million contract with a club option in 2018 for $15 million or a $1 million buyout. The option could be voided if he wins the MVP in any of those years. We could include some escalators similar to the ones Pedroia got. If he finishes first or second in the MVP voting in any year, the club option is voided and his salary the following years is increased by $1.5 million. So if he won the MVP next year, he’d earn $1.5 million more each of the remaining years of the contract.

2012: 1
2013: 2
2014: 4.5
2015: 7.5
2016: 10
2017: 10.5
2018: 11

I’d be more than happy to see that kind of contract. I don’t want Castro paid more than Lester or Pedroia. He’s just not as good as either of them, but if they can buy out his remaining club controlled years and a free agency year at slightly less than Pedroia, I’m all for it.

What about you guys? What’s a reasonable extension for Castro? Or should they not even bother with one? Wait a year or two?