The Miami Marlins have rarely gotten into the game of signing their best players before arbitration. In fact, their either unwillingness, reluctance, or inability to do such a thing is why they had to commit to a 13-year contract for Giancarlo Stanton now when other teams like the Milwaukee Brewers and Colorado Rockies have gotten much cheaper deals for their lifetime extensions. Signing players earlier in their career allows you to save more money on those coveted free agent years at the tail end.
The Marlins have only once really pursued a contract like this, one that occurs early enough to garner significant free agent savings. When Hanley Ramirez looked like a superstar MVP candidate after the 2007 season, Jeffrey Loria rightly targeted him for a contract. The following year, Miami signed him to a very team-friendly six-year, $70 million contract that only paid him $45.5 million over three free agent seasons. In the free agent market, we would have expected Ramirez to make at least $25 million a year in those campaigns given his trajectory. Even as he has trailed off slightly in his career since then, he still earned $22 million a year in his latest free agent contract with the Boston Red Sox.
Those type of free agent year savings are the benefits to pre-arbitration deals, and the small-market teams with the most success seem to lock up their young talent in this fashion. The Pittsburgh Pirates locked up superstar Andrew McCutchen for four free agent seasons in their six-year deal with a seventh year option, and he promptly turned into an MVP candidate. They signed young outfielder Starling Marte to a long-term deal heading into his second pre-arbitration year as well. You can bet they will be trying to lock up Gregory Polanco in a similar fashion as well.
The Tampa Bay Rays are notorious for making such deals, having signed Carl Crawford, James Shields, Matt Moore, Ben Zobrist, and famously Evan Longoria to very team-friendly deals early in their careers so as to garner as much in terms of savings as possible. Each of these contracts allowed them to compete on a lower budget, and as a result the Rays posted a winning record from 2008 to 2013 and recorded 90 wins in five of those six seasons.
The defending American League champions, the Kansas City Royals, also have examples of these types of contracts. Famously, they signed starting catcher Salvador Perez to a five-year deal with three team options for just $15.75 million total, all a mere 200 plate appearances into his career. Alcides Escobar also signed an early extension as well. Once the team finds some more consistent young talent, you can bet they will attempt these early contracts again,.
All of these examples are encouraging for the Marlins, who just offered Jose Fernandez a six-year contract and also sent offers to Christian Yelich and Adeiny Hechavarria. The Fish are now looking at four potential contract offers (including Marcell Ozuna) to young talent whom they would want locked up. The fact that they are pursuing these deals early means a windfall of savings in the long run. Each of these long-term deals would likely provide some salary relief in arbitration seasons and hold club options at reduced prices for the free agent years.
Look at the potential Fernandez contract as an example. This deal was modeled after Chris Sale's and Madison Bumgarner's contracts, and it offers some great savings. Fernandez may earn less in his first arbitration season, but if he continues his Cy Young trajectory, you can bet he would make more money in the second and third arbitration seasons. By signing an early extension, however, Miami guarantees him a reasonable increase in salary, but probably garners $5 million over two years in savings in arbitration, However, that trajectory makes the free agent years extremely lucrative. If Fernandez hit the open market, he may expect a $25 million a year deal if he is an ace. Zack Greinke earned almost that much in his deal with the Dodgers, and Kershaw is earning a lot more. But Fernandez would make just above $12 million a season for four years under our proposed contract. That is a savings of $51 million over four years!
That kind of surplus value is the key to sustainable success for small market teams. The Marlins had to sign Giancarlo Stanton to a huge contract because they waited as long as they did. The deal to which he agreed was extremely team-friendly to start in order to help build payroll flexibility, but that might all get paid back on the back end. Miami still committed a lot of money to keep a star talent at close to market value. If the Fish need to continue to support lower payrolls, they need to find savings on young talent, and the easiest way to do it is to identify and secure them early. Signing guys like Yelich and Fernandez to deals that buy out free agent years bring in huge savings over signing similarly talented players in free agency.
The next step is to utilize those savings. Surplus value from cheap contracts like these is not actual value until the team invests that money. Part of that investment is to pay off Stanton's long-term deal, but Miami should be able to garner savings for the future in order to pursue the right free agent if the price is right. The team will still be a small-market club, but such small-market teams can extend their windows of opportunity by keeping their young talent around and extending their savings beyond arbitration. For once, the Marlins are trying the right thing after years of ignoring this avenue to contention.