So I was thinking what would be reasonable to sign Jose.
There is a nearly unique confluence of positive trends that actually make this possible, and some likely limitations to getting it done. But the fact that it is possible at all for the Guardians to consider re-signing a top-tier home-grown talent is remarkable in and of itself, and deserves a closer look.
- Owner revenues seem to continue to grow quickly (including MLB Advanced Media and BAM Tech). National TV rights are looking like $60M+ per team (https://dodgerblue.com/mlb-teams-receive-at-least-100-million-annually-from-tv-rights-contracts/2022/02/12/). MLB AM last reported yearly revenues at $600M in 2012 (!), or about $20M per team. This was before its revenues exploded and the BAM Tech spinoff alone recruited $2.6B in investment from Disney etc... so the yearly revenues now are probably exponentially higher. And of course Guardians local TV revenues bring in another $40M-$50M per year. In terms of ticket sales: attendance could range from last year's pandemic nadir of 1.11M to the 2017 post-WS run of 2.05M; and at $31 per ticket, that could track to $34.4M - $63.6M in ticket sales. And this is all before revenue sharing. And that is not counting merchandising, concessions, etc. etc. We are already at $165M-$195M in yearly revenues, which is likely a gross underestimate given where MLBAM/BAMTech revenues etc. have gone. I estimate that the Guardians are considering $70M-$100M as a long-term sustainable payroll.
- Meanwhile, player salaries have stagnated or actually gone down the last 3+ years. Player salaries have decreased 6.4% during the course of the current CBA. Median salary decreased from $1.65M in 2015 to $1.15M in 2021 (https://www.blessyouboys.com/2021/12/16/22831008/mlbs-revenue-sharing-problem-and-how-to-solve-it). This was supposed to be a blockbuster FA offseason, and top-tier talent is still getting $23-$27M per year which is the same or less than they were in years past.
- The Guardians had already allocated funds for FA acquisitions and/or trades, and have done... squat. So there is an unexpected little pot of money that is unspent (nearly unheard of for the Guards).
These 3 trends are aligning to create a unique opportunity for the Guardians.
- I think it would be unfair to expect Jose Ramirez to take a huge hometown discount. Otoh, extending him while he is still 2 years from FA counts for something. The team is taking injury/performance risks etc. He will also be a little older in the FA years than other current top-tier FAs. My estimate: it is important that Jose be able to show in a contract extension a per-year average higher than the other current crop of top-tier FAs receiving $23M-$27M per year. Let's call this $28M per year.
- the Guardians hate the idea of tying up an enormous percentage of their payroll in any one player. They also have never given more than $20M per year to a player (Edwin Encarnacion 3 years/$60M starting in 2017). Jose might be an exception, but there is still probably a cap. Let's call it $20M per year. At $20M per year, the long-term projections don't look as bad. On a $70M-$100M payroll, this would be 28.6% decreasing to 20% for one player. And let's be honest - Jose's value in every measure is an order of magnitude past EE's.
- Number of years: this could be sticky. Most players this offseason are looking for at least 6 years. Jose deserves a top-tier contract, but still has 2 years on his current contract. The Guardians would probably love to extend for only 4 years (taking him through his age 34 season) in addition to his current 2. Jose's team might want 6 additional years. My estimate: they compromise on 5 additional years past the current 2. The final season would be his age 35 season. (I view this as conservative; I think it is possible they both agree on 4 additional years if the per-year is high enough)
My idea would be to utilize two things: 1) pull some of the money forward into 2022 and 2023. This adds value to the contract money, raises his current salaries, and utilizes a likely current dearth of required spending, before arbitration and free agency really boosts payrolls in coming years. 2) Push some money out into deferrals; this minimizes any given year's payroll hit, and spreads the overall money over many additional years. The time value of money also kicks in, as $2M in 2040 for example (hopefully) shouldn't be a big deal to the Guardians payroll at the time.
So here is the proposal:
- (Note that I am going by Spotrac's report that 2022 and 2023 are currently $12M and $14M option years, not $11M/$13M as reported elsewhere) (https://www.spotrac.com/mlb/cleveland-guardians/jose-ramirez-14106/)
- New money: 5 years, $140M. $28M/year average value of the contract, and extends Jose through the 2028 season. However, if one were to include the 2022/2023 years, it would be a total contract of 7 years/$166M - a large guarantee of money that again is appropriate for a player of Jose's caliber.
- Structure: pull $14M forward into 2022/2023, and defer $26M during the deal into $2M/year over 13 years. Keep every year's payroll hit at no more than $20M.
2022: $20M (increased from $12M)
2023: $20M (increased from $14M)
2024: $25M (but $5M deferred)
2025: $25M (but $5M deferred)
2026: $25M (but $5M deferred)
2027: $25M (but $5M deferred)
2028: $26M ( but $6M deferred)
2029-2041: 13 years of deferred payments, $2M/year
Total: 5 year $140M extension. 7 years $166M total including 2022/2023.
I think this deal single-handedly increases the Guardians current window of contention from 1 year (2022) to 3-6 years. Regardless of whether Shane Bieber gets extended or traded (I'm betting the latter), the Guards have shown an ability to grow waves of arms and continue to field competitive pitching. The same is not true of hitting. Keeping Jose as the anchor of the offense keeps the window open for several years for promising young talent (both hitting and pitching) to mature and arrive on the MLB stage. Jose has single-handedly delivered 4 to 8 WAR every year for 6 years. His ability to consistently add a huge number of wins is almost preposterous.
Without this deal, I think the most likely scenario is:
- Jose gets traded at this year's deadline or this offseason to ensure a prospect return prior to him leaving in 2023.
- Shane Bieber gets traded summer 2023 or 2023 offseason prior to his last year of control. (This may still happen, but I think is more survivable with Jose on the team.)
- The team is in rebuild mode by 2023/2024 (which might eventually be successful; too soon to say).
With this deal, I think it is much more likely that the current Guardians team has a competitive base of players that lasts long enough for the youngsters to actually grow into useful additive parts. There is also something to be said about the secondary impact on the team when they know their best player has been committed to and is going to be around a long time. An interesting contending team from 2022-2026++ is eminently possible.
Thoughts? Opinions? This is my first FanPost - open to suggestions and feedback!