After much speculation earlier today, the Cincinnati Reds have signed Joey Votto to a ten year extension that will pay the first baseman $225 million beginning in 2014. For the next two seasons, Votto will earn a total of $26.5 million under the terms of a previously signed contract with the Reds. In total, Cincinnati has committed to spending more than a quarter of a billion dollars on Votto through 2023, his age 39 season.
That’s more money than has ever been committed to one player by one team at one time.
While the ten year extension was likely influenced by the $214 million over nine years that the Detroit Tigers gave Prince Fielder and the $240 million over ten years that the Los Angeles Angels of Anaheim will pay Albert Pujols, the Votto extension comes two years prior to his being eligible for free agency.
Last off season, Troy Tulowitzki signed a deal with the Colorado Rockies that essentially replaced the three years plus a club option that he had remaining on his contract and added six more years, but those six additional years was for the comparatively frugal guarantee of $118 million. Likewise, back in late February, the Washington Nationals signed Ryan Zimmerman to a six year extension with two years remaining on his contract for the downright modest price of $100 million.
In both cases, players were signed to a contract that was similar to the going rate for elite free agents at their position, but the extensions were offered multiple years ahead of them actually being eligible to sign such a deal. What makes Votto’s deal different is the size.
One has to wonder if something beyond these previous contracts influenced the Reds front office’s eagerness to make this deal so far in advance for so much money and so many years. Perhaps, the threat of the Los Angeles Dodgers turning into a version of the West Coast Yankees under new ownership and armed with what is likely to be the biggest regional television contract in Major League Baseball was one that Cincinnati deemed credible enough to lock Votto up while they had the chance.
Either way, it’s difficult not to view this deal as one that’s reactive to recent events that may or may not have affected the future market for Votto.
That’s not to say that this automatically makes it a bad deal for the Reds. In the coming days, a lot of criticism of this deal will be focused on the likelihood that Votto’s eventual decline will make the latter half of this deal a bad one in terms of average annual value. We’ve discussed before how looking at long term contracts in this narrow fashion is erroneous. Teams underpay at the beginning of a contract with the concession that they’ll overpay at the end of it. This is the way in which long term deals work in baseball.
So, while the ten year extension doesn’t kick in until Votto’s age 30 season, it will pay him as though he’s a 4.0 WAR player, when in fact, he’ll likely be closer to a 5.5 WAR player. Assuming the standard $5 million/ WAR, 5% inflation, and a 0.5 WAR decline each year, this is how the contract works out for the team in a vacuum:
2014 – $22.5 million salary - $5.51 $/WAR – Paying for 4.1 WAR – Anticipating 5.5 WAR
2015 – $22.5 million salary - $5.79 $/WAR – Paying for 3.8 WAR – Anticipating 5.0 WAR
2016 – $22.5 million salary - $6.08 $/WAR – Paying for 3.7 WAR – Anticipating 4.5 WAR
2017 – $22.5 million salary - $6.31 $/WAR – Paying for 3.6 WAR – Anticipating 4.0 WAR
2018 – $22.5 million salary - $6.63 $/WAR – Paying for 3.4 WAR – Anticipating 3.5 WAR
2019 – $22.5 million salary - $6.96 $/WAR – Paying for 3.2 WAR – Anticipating 3.0 WAR
2020 – $22.5 million salary - $7.31 $/WAR – Paying for 3.1 WAR – Anticipating 2.5 WAR
2021 – $22.5 million salary - $7.67 $/WAR – Paying for 2.9 WAR – Anticipating 2.0 WAR
2022 – $22.5 million salary - $8.05 $/WAR – Paying for 2.8 WAR – Anticipating 1.5 WAR
2023 – $22.5 million salary - $8.46 $/WAR – Paying for 2.7 WAR – Anticipating 1.0 WAR
Of course, no contract exists in a vacuum. In addition to the assumption that the Reds were worried about being outbid for Votto’s services later on down the road, it’s also likely important to the team that they have a homegrown star on their roster if they hope to eventually negotiate a lucrative television contract of their own. However, Cincinnati and Los Angeles represent two very different markets.
While the Dodgers extended Matt Kemp for $160 million over eight years this off season, moving forward, it’s unlikely that such a deal will take up as large of a percentage of the annual payroll as the deal that Votto has made with the Reds. That, more than anything else, makes this a bigger risk for Cincinnati than any other team.
It’s also gives credence to the assumption that the potential future demand for Votto might have played into them making this offer before what seems like they had to make it. Why else would they act now with an offer that the Etobicoke, Ontario native simply could not refuse.