Baseball is a very difficult sport. Whether it’s hitting a ball that’s moving 103 miles per hour or being able to throw that, baseball is a sport where very few people are competent and even fewer are truly very good at the sport. The next issue becomes producing at a high level throughout an entire career. Some players are average or maybe below average for the start of their career and suddenly become one of the best players in baseball. Take the career of outfielder Christian Yelich of the Milwaukee Brewers as an interesting example. Yelich started his career with the Miami Marlins. He was a solid player for five years before he was traded to the Brewers. While on the Marlins he was an above-average hitter and decent fielder but was not definitely in the conversation to be one of the best in all of baseball. Then when he got traded to the Brewers all of the sudden, he became one of the best players in baseball. He won the Most Valuable Player award in 2018 and came in second place for the award in 2019. Then, just as quickly as he ascended to the top, he fell back to being average. Since 2020, Yelich has been a slightly above-average hitter and definitely the worst he’s been for his entire career. So, as you can see, baseball is a sport that has a lot of variation. Another example of this is the Major League Baseball (MLB) draft. In the draft, there are 620 players drafted. According to an article by Bob Howdeshell, the percentage of high school players that are drafted and end up making the major leagues is 0.5 percent. Only 10.5 percent of college players drafted make it to the majors. The big takeaway here is that baseball is hard and it’s difficult to take risks on players because there are so many variables to the sport. Even with this in mind, some teams are starting to break this mold and take risks on young players by giving them large contracts. For some reason, this strategy is working, and now more and more teams are starting to make this the norm.
In April 2019, the Atlanta Braves signed outfielder Ronald Acuna Jr. to an eight-year $100 million extension. This extension would end up making his yearly salary close to $17 million and a free agent in 2029 at age 31 years old. Acuna had just come off a season where he won the Rookie of the Year award and displayed a style of baseball that people dream of. He stole bases, hit home runs and played elite defense. The extension made him the youngest player in baseball history to sign a contract worth at least 100 million dollars. When asked about the extension, Acuna said, “No, I have no regrets. No one can see the future. No one knows what’s going to happen tomorrow, so I’m extremely happy with the decision we’ve all made and I’m just excited to be here.” The Braves were not done there. They also gave a seven-year $35 million extension to their young second baseman Ozzie Albies. At the time it seemed like a win-win situation for everyone. Acuna and Albies got financial security with the extensions and the Braves locked up their young core for the long term. However, now it seems like the Braves got an absolute bargain. Since signing the extension, Acuna has been an All-Star three times and has won two Silver Slugger awards. Albies may be even more of a bargain considering he is getting paid just $7 million a year while being one of the top second basemen in all of baseball. Obviously, both players had no idea how things would turn out. If they didn’t sign the extensions, they very easily could have gotten injured and their career could have been over. We can compare this situation with a different player. San Diego Padres outfielder Juan Soto has been in the headlines for a variety of reasons over the past few years. Since getting to the major leagues with the Washington Nationals, Soto has been one of the best hitters in all of baseball. His plate discipline and power to all parts of the field is nearly unmatched. He was a key player for the Nationals when they won the World Series in 2019. Similarly to Acuna, Soto also was a rookie in 2018 and came in second place for the Rookie of the Year award, right behind Acuna. So, when the Braves gave Acuna the extension, some fans wondered if the Nationals would do the same. However, Soto’s agent controls baseball. His agent is Scott Boras. Boras is the agent for some of the best players in all of baseball and he is very good at making sure his clients get absurd amounts of money. For them to do that, they need to reach free agency, so most of his clients do not sign extensions before their contract is up. He knows that his client will make more money when every team can bid for him. In the end, the Nationals traded him because they knew that he wouldn’t sign an extension and they did not want to lose him for nothing. Soto reportedly rejected a 15-year $440 million extension with the Nationals. This blows Acuna’s extension out of the water and fans are now realizing how big of a bargain the Braves got when Acuna agreed to the deal.
After seeing the success the Braves had, we began to see more and more teams trying to lock up their star young players for long-term deals. So far these deals also seem like they are solid bargains. In 2021, the Marlins signed their ace starting pitcher Sandy Alcantara to a five-year $56 million extension. That deal immediately paid off for the Marlins considering Alcantara immediately emerged as one of the best pitchers in baseball. This year, Alcantara has been 90 percent better than the average pitcher and is on track to win the Cy Young award. He’s getting paid just $3.5 million this year and his salary will max out at a yearly salary of $17 million. During this season, the Houston Astros signed designated hitter Yordan Alvarez to a six-year $115 million extension. Alvarez has consistently been one of the best hitters in all of baseball since his debut in 2019. For his career, he has been 59 percent better than the average hitter and this season he has been even better and up to 81 percent better. He will be making around $26 million a year. Once again, a great bargain for one of the best players in baseball. Even the Tampa Bay Rays, an organization that tends to not spend a lot of money, signed shortstop Wander Franco to an 11-year $182 million extension before the 2022 season. In his first season, he showed why he was the best prospect in all of baseball as he was electric from the start of his career to even his first career postseason. There are many more players that got similar extensions. Braves third baseman Austin Riley and Padres shortstop Fernando Tatis Jr. are two big ones. So, it is no longer uncommon to see teams take a chance on their young players and give them big contracts.
There are a lot of successes in this aspect of baseball, but once again, baseball is a game of huge fluctuations. At first, the Tatis extension also seemed like a bargain, but recently he got injured in a motorcycle accident and was suspended for using performance-enhancing drugs. The question of character has brought his future into question. When he’s on the field, he’s one of the most electric players in baseball. Similar to Acuna, he hits for power and steals bases, while having a cannon of an arm at shortstop. But maybe the Padres gave the extension too soon. If these off-the-field issues continue to arise, it’s going to be difficult to figure out what to do next. Franco is somewhat similar as he has been injured for a big chunk of the 2022 season and when he has been healthy, he hasn’t been incredible. When you look at Yelich again, he got a seven-year $200 million extension in 2020. He followed that by having two of the worst seasons of his career. So as you can see, there are some risks to these extensions, but also it is still early.
Baseball isn’t like other sports. You don’t see Lebron James signing a 10-year contract. Most contracts in professional football and basketball are two to three years in duration, with some being a little longer. Also, due to the difficulty of the sport, there is much more variation in baseball compared to football and basketball, and therefore you rarely see a football player just suddenly become completely below average. The contracts in baseball are especially unique because of this. These massive extensions are changing baseball for the better. Fans get to see their favorite players stay with the same team for most of their career, young players get financial security and teams can spend more money on other players and make their team better. Although these contracts have their risks, teams are definitely going to find ways to keep their young talent for as long as possible and for a low cost. Take the Seattle Mariners as a prime example. They recently signed outfielder Julio Rodriguez to an absolutely mind-blowing extension in just his first year of major league baseball. The team is committed to making him the face of their franchise, so they signed him to a contract extension that increases in value depending on how he performs. So, over the next decade, if Rodriguez continues to perform at a high level, he will get even more money. The team found a way to keep him under contract while also reducing their financial risk. Rodriguez gets great financial security and the motivation to play better to get more money. His contract was extremely complex because of all of the incentives the team added. Who knows what new strategies teams will come up with to keep their young players for their full career.
