Matt Garza and Cubs extension talks going well

Ken Rosenthal has said that the Cubs and Matt Garza are discussing an extension and the talks are going very well. It's been awhile since we've taken a look at what kind of contract Garza may be looking at so we'll try to do that today. The league ERA is right at 4 over the last 2+ seasons so I'll use that in the calculation. I'll also use Garza's current rest of season ZiPS projection, which is a 3.48 FIP and 150 more innings pitched.

Garza has one more season after this one with the Cubs. He'll be in his final year of arbitration and will be looking at another significant raise from his current $9.5 million salary.

Garza's rest of season projection calculates out to 2.9 additional WAR. That would be 3.7 fWAR on the season. Speaking of WAR, Garza's is different depending on which version you look at. From 2009 through 2011 he had 3.1, 1.6 and 5.0 fWAR. He had 3.3, 1.3, and 2.5 rWAR. He had 2.6, 1.6 and 2.3 gWAR. He had 2.1, 0.6, and 2.7 WARP (BPro WAR).

The totals are 9.7 fWAR, 7.1 rWAR, 6.9 gWAR and 5.4 WARP from 2009 through 2011. Some of this is the resut of using different replacement levels and then how it's calculated. fWAR is based on FIP while the others are based on a runs allowed system. They also use different defensive metrics. Let's just take the average and be done with it. That's 7.1 WAR over the last 3 seasons. If that's all we know about Garza entering this season we might have projected something like 2.5 WAR from him. We know more than that though.

Knowing Garza's rest of season WAR projection is 2.9 over 150 innings we can estimate it over 200 innings for next year. Since Garza is still in his prime we're not even going to factor aging into this yet. That would be 3.8 WAR over a full season meaning we can reasonably expect Garza to produce 6.7 additional WAR before he reaches free agency after the 2013 season.

We're going to ignore this season since any extension would begin next year. We might have a projection like this for Garza.

2013: 3.8 WAR
2014: 3.3
2015: 2.8
2016: 2.3
2017: 1.8
Total: 14.0 WAR

We know the win value right now is about $5 million, but estimating it will be tough due to the new CBA. It's likely to have an impact in that teams will spend more per win, but we don't know that for sure. Since we don't know, we'll increase it by 5% for inflation meaning we get an average win value over those 5 seasons of $5.8 million. Multiply the two and you get a 5-contract for $81 million.

Next year is his final year of arbitration so he's not going to make as much as he would on the free agent market. He'll make roughly 80% of his free agent value. That would be $16 million next year, but it's next to impossible that he'd be given that much of a raise so let's use what we know ($9.5 million) with a reasonable raise. Let's say $13 million. Here's where we are now.

We haven't yet taken into account the discount teams get for contracts 3 years or longer, which is usually about 10%. We can reduce that to a 5-year contract for $66 million. The question is, would the Cubs like more of a discount than 10%? If they're going to sign him a year before he's eligible for free agency, I would assume they would want an additional discount. I don't have any idea how much, but let's just say 5%. Garza should probably expect a contract for 5-years and $63 million.

That's almost identical to the 5-year, $65 million contract John Danks agreed to with the White Sox last season. Danks, like Garza this season, was in his 5th year of service time and would have been eligible for free agency more than a year after the contract was signed. There's one big difference between Garza and Danks. Using the same 4 WAR systems over the previous 3 years prior to signing the extension, Garza's average was 7.1 while Danks was 12.5.

I'm not sure if that matters or not, but Danks had been a much bigger producer than Garza has been at the time they signed their extensions. I'm going to guess that their projections were probably fairly similar though Danks being projected in the AL gives him an advantage over Garza.

It has been a year later so the value of the win has increased and $63 million isn't as much as $65 million so I'll stick with that.