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Explaining the Jose Fernandez contract extension offer

The Marlins offered a fair contract extension to Jose Fernandez given the circumstances surrounding his spectacular rise and elbow injury.

Steve Mitchell-USA TODAY Sports

The Miami Marlins apparently were not joking when they said they were interested in offering contract extensions to some of their best young players. Just a few weeks after completing a record-breaking 13-year, $325 million contract with Giancarlo Stanton, the Marlins have begun working on securing a core around him. The team started with its best player besides Stanton, Jose Fernandez, by offering him a six-year deal worth approximately $40 million, apparently with seventh- and eight-year club options.

The initial reaction is that this deal may not go through, and that may still happen. Fernandez is represented by Scott Boras, who is not inclined to have his clients agree to early extensions, especially ones that are team-friendly like this one. But is the actual monetary amount fair? Ken Rosenthal of Fox Sports did not seem to think so.

Sure, this is true. Fernandez's age-20 season was one of the best in history, and it certainly was better than Chris Sale's age-23 and Madison Bumgarner's age-21 campaigns, though not by as much as you might think.

Plasyer IP ERA FIP Avg WAR
Jose Fernandez, age 20 172 2/3 2.19 2.73 5.3
Chris Sale, age 23 192 3.05 3.27 5.3
Madison Bumgarner, age 21 204 2/3 3.21 2.67 3.5

*Avg WAR is the average of FanGraphs' and Baseball-Reference's numbers

The reason the comparison comes up is because both Sale and Bumgarner signed mirrored contract extensions that covered their third arbitration season through one free agent year, with both offering club options for two more free agent years. But Rosenthal argues that Fernandez's Rookie of the Year campaign surpassed both players' first starter seasons. As you can see, however, that is not 100 percent accurate, as Sale pitched almost as well as Fernandez according to win-based metrics. This likely has some to do with him pitching in the harder league and in a hitter-friendly ballpark, but a good deal of it also has to do with the 20 extra innings he threw that season.

But the biggest factor affecting Fernandez, who was still the better pitcher in his season than the other two, is that their following seasons were completely different. Both Sale and Bumgarner surpassed 200 innings again and topped four-win campaigns in 2013 and 2012 respectively. Meanwhile, Fernandez started hot, but then got hurt early and missed the rest of the season with Tommy John surgery.

This makes comparing those two recent contracts to a potential offer to Fernandez a dicey proposition. Miami clearly modeled their deal similarly, in line with what we would expect. But it turns out Fernandez should be compared to guys who missed significant time in their second pre-arbitration year, and those players are harder to find as comparison points. Two names that immediately come to mind, however, began their careers further back and may offer some suggestion: Josh Johnson and Zack Greinke.

Neither was as good as Fernandez in his first two seasons, but at least Johnson's circumstances were very similar. After a successful rookie campaign in which Johnson finished fourth in the 2006 Rookie of the Year voting, he made just four ugly starts the next season before succumbing to an elbow injury and Tommy John surgery. He came back the following year to make 14 starts starting in July of 2008. In those first few seasons, Johnson posted an ERA- 81, signifying he was 19 percent better than the league average, and a FIP- of 86, meaning he was 14 percent better than average. But Johnson only threw 260 innings in those seasons thanks to the injury he suffered.

Fernandez is likely to make it to 300 career innings by the end of the 2015 season, but the Marlins are garnering significant risk in betting on him before seeing him throw Major League pitches after such a serious injury. Johnson did not turn into an ace until 2009, but there was always the risk he would flame out. The same could be said for Greinke, who put up an ace-level season in 2008 before breaking out the following year, but only after two seasons of uncertainty with his battle with depression.

With that much uncertainty surrounding those pitchers, neither earned much in their first arbitration season. Both Greinke in 2008 and Johnson in 2009 got just $1.4 million in those first seasons, and both earned four-year extensions that paid them nearly $4 million then $7 million in their second and third arbitration seasons. In total, those players earned about $12 million in arbitration seasons following injury.

Again, Fernandez has been better than both of them, but the Marlins would be signing him before seeing him pitch in big-league games, whereas the other two earned their deals after a season and a half of return. Meanwhile, the contracts given to more comparably-skilled pitchers like Sale and Bumgarner earned them between $18 million and $20 million during arbitration years. If you inflate the value of Johnson and Greinke's situations to the current market value of wins, you might expect that pitchers of lesser quality with injury would earn $16 million in arbitration now. Thus, the middle ground between those figures should be $18 million in arbitration.

How might that break down? Fernandez might earn $3 million in his first arbitration season, followed by $6 million and $9 million figures the following two years. This is slightly less per season than what Sale and Bumgarner earned, and rightfully so, because Miami is undergoing more risk due to the injury. One could argue for even a $16 million arbitration figure, with a structure closer to $2 million in the first year and $5 million and $9 million in subsequent seasons.

How about those free agent years? Again, the model here appears to be Sale and Bumgarner. Here are what those deals likely look like next to each other (salaries in $million)

Player Pre-Arb Arb 1 Arb 2 Arb 3 FA 1 FA 2 FA 3 FA 4
Jose Fernandez 0.75 3 6 9 11.5 11.5 13* 13*
Chris Sale 0.85 3.5 6 9.15 12 12.5* 13* --
Madison Bumgarner 0.75 3.75 6.75 9.75 11.5 12* 12* --

*Club option years

The payouts would be extremely similar in each of the contracts offered, except Miami's deal would cover an extra season. In fact, that extra season may be the return for Miami committing before Fernandez throws a big-league pitch. Rather than getting a price reduction from Fernandez, the team is paying him like his elite (if not slightly worse) counterparts, but asking to get an extra year of commitment from him in return for the guessing game post-Tommy John surgery.

Looked at it in this light, this is actually a perfectly fair deal for the Marlins to offer. It does not mean that Fernandez should take it or that he would. He does seem to love the city of Miami, having grown up here as a local high school kid, but those ties may not be strong enough to forgo free agent money or Boras's influence. But Miami is making the right move to offer a contract that is on par with what others have received, and they are doing it at the right time, before the cost would be prohibitive.