Orioles Must Extend Wieters and Davis

Luke Jackson is currently freelancing for us at Camden Depot.  Previously, you could find his work over at Baltimore Sports and Life.

Note: All contract information comes via Cot’s Contracts.

Matt Wieters and Chris Davis | Photo by Keith Allison

The obvious extension candidates who the Orioles will try to get a gauge on this off-season are first baseman Chris Davis and catcher Matt Wieters, both of whom have two years of team control remaining. Scott Boras represents each player. Typically, Boras’s clients have hit the free agent market, although there have been some exceptions lately, including Elvis Andrus and Jered Weaver. The Orioles’ recent track record suggests they will try hard to lock up Davis and Wieters. Over the last five years, the O’s have locked up Adam Jones, Nick Markakis and Brian Roberts and J.J. Hardy to lucrative multi-year extensions.

Regardless of Scott Boras, the decision about whether to sign long-term falls on the player. It is all about choices. What does the player value most? Is staying in Baltimore near the top of his priority list? Is it a big deal to him to gain the security of signing a contract now, thus protecting himself against a career altering injury over the next two years? Does he want to avoid the potential distraction of free agency looming over him? If so, the player would probably be more open to an extension before hitting free agency. But if the player’s top priority to maximize his value, his best bet is probably to go through arbitration for three or four years (depending on if he’s a super-two guy), test the open market and sign with the highest bidder.* Again, it’s about choices. Wieters and Davis minimize the risk they take on by signing a contract now. They possibly maximize the potential reward by signing a contract as a free agent. While Davis and Wieters have spoken favorably of playing in Baltimore, it’s anyone’s guess what their true goals are at this time.

*Think about it – Jose Abreu just signed a six-year, $68 million deal with the White Sox based on his power potential. Davis hit 86 home runs the past two years and figures to at least come close to doubling that mark over the next two years. Davis’s potential payday is massive and very likely exceeds what he’d get from the Orioles this winter.

On Chris Davis. As recently as two years ago, Davis was not a good enough hitter to tap into his power. That is obviously changed, but is he closer to the .270/.326/.501 hitter he was in 2012 or the .286/.370/.634 hitter he was this past year? Aside from better plate discipline, one of the big changes I found from last year to this year was Davis’s fly ball rate. In 2012, 37.5 percent of Davis’s batted balls were fly balls, which was similar to his previous two seasons. In 2013, his fly ball rate took a significant jump up to 45.7 percent. This may indicate some change in approach as to take advantage of his power. That might have helped Davis in 2013.

It is fair to believe that Davis made some fundamental improvements to his game over the past year that made him an elite hitter. It is also fair to concede that 53-homer seasons are a little bit too much to expect moving forward. Still, I do not think it is unreasonable to expect him to be 40-homer guy throughout his prime. This would easily make him a first-division first baseman. That’s a player worth betting on with an extension. Jon Shepherd had a terrific piece on a potential Davis extension, comparing Davis’s breakout to Jose Bautista’s. Bautista landed a five-year, $65 million deal after his breakout in 2010. The key difference is that Bautista signed his deal as he was set to become a free agent. Davis has two years of team control left. This gives the Orioles some leverage because they don’t need to commit to Davis at this time. However, for the sake of argument, let’s look at Bautista’s contract breakdown.

2011: $8M

2012: $14M

2013: $14M

2014: $14M

2015: $14M

2016: $14M club option with a $1 million buyout

This is a very club friendly deal for the Jays given Bautista’s production. Despite his problems staying on the field the past two years, he has provided plenty of surplus value. The Orioles will not find the same kind of surplus value with a Davis deal. Here is the kind of contract I would expect the Orioles to put forth to the Davis camp, starting with the approximately $10 million he is due next year.

2014: $10M

2015: $15M

2016: $15M

2017: $17M

2018: $17M

2019: $19M club option

In this scenario, the Orioles would be guaranteeing Davis five years and $74 million. That would make Davis an Oriole through age 32, which is likely what the O’s will aim for in any extension talks. Davis’s camp would likely fight for a six-year guarantee and a total value north of what Adam Jones received ($85.5M). If the Orioles were to guarantee the club option outlined above, it’d be a six-year, $93 million contract, probably with an option year attached. My guess is that any Davis extension this off-season would land closer to 6/93 than 5/74. If Davis is comfortably a first division first baseman, as I think he is, he’d be worth either. The O’s would be paying Davis to be a three- to four-win player with the idea that he is likely to be worth surplus value. That’s a good bet to make.

On Matt Wieters. He has become a lightning rod of sorts for Orioles fans. One side him as an ultra-durable backstop and superb defensive catcher whose value is masked by the unrealistic expectations he did not ask for. The other side sees a career .255/.319/.420 hitter. The truth, of course, is probably somewhere in the middle.

At this point, it seems Wieters is what he is. How the organization values him moving forward is an interesting question to ponder. Assuming he’s a better hitter than what he showed in 2013 – which I believe is a safe bet – then he’s clearly a championship-caliber catcher. And if his results at the plate this past year portend the future, he’s still good enough to catch on a World Series contender. In terms of what he would be worth in an extension, let’s look at the contract recently signed by Miguel Montero, who signed a five-year, $60 million contract that kicked in this past season. It’s not a perfect comparison, as Montero’s contract was signed just months before he was eligible to hit free agency. The contract takes him through age 34:

2013: $10M

2014: $10M

2015: $12M

2016: $14M

2017: $14M

I’d expect a similar set-up to a potential Wieters deal. A five-year deal would take him through age 32. Let’s start with the approximately $8 million he’d be due via arbitration.

2014: $8M

2015: $13M

2016: $13M

2017: $15M

2018: $15M

2019: $17M club option

This is a five-year, $64 million guaranteed package. Again, Boras would likely fight for a sixth year to take Wieters through age 33. If we guarantee the 2019 club option above, the package becomes six years guaranteed and worth $81 million. In either scenario, the O’s would be paying Wieters to be about a three-win player behind the dish until age 32 or 33 with expectation that he could provide surplus value. Given his history, that is a good bet to make unless he breaks down physically due to the amount of innings he logs and his atypical body for catching. If he were to break down, the only position he could move to would be first base, which would likely sap all of his value and could create a log-jam if the O’s were to also sign Davis. This likely a longer-term issue. Wieters is just 27 years old and he has not shown any issues relating to his durability at this stage. Let’s move on to talk about the…

Broad implications of signing Davis and Wieters. The Orioles would obviously be betting that both players will be healthy and productive throughout the life of new contracts. With both Davis and Wieters, I believe those would be solid bets to make, but that is in a vacuum. In other words, the Orioles have to figure out how these extensions would fit into future payrolls and how much money they would have to pay for more talent in the future.

The list below shows how much guaranteed money they would have committed to 2015 and beyond if the club were to extend Davis and Wieters with the contracts I outlined. In 2015, the only guaranteed cash they have to shell out is to Adam Jones along with option years and/or buyouts to Nick Markakis, Wei-Yin Chen and Darren O’Day. The only commitment from 2015 to 2018 is Jones. In 2019, Jones is no longer on the payroll and would be the sixth year of the deals for Davis and Wieters if the contracts got to that point.

2015: $45.35M

2016: $44.33M

2017: $48.33M

2018: $49.33M

2019: $36M

The Orioles’ opening day payroll in 2013 was about $92 million. They added payroll throughout the season via trade, meaning they probably committed about $100 million to the 2013 squad by the end of the season. There’s no way of knowing where the Orioles will stand in terms of their payroll in the future, but the opening day payrolls in the near-term figure to rise as long as the big league club keeps winning.

In 2014 and beyond, payrolls across baseball generally figure to rise due in part to new national television money entering the game starting in 2014. It nets each team an extra $26 million to $27 million per season. (On the local television front, MASN’s battle with the Nationals continues, and the solution to that issue has vast implications to the future of both the Nationals and Orioles.) Television deals allow major league teams to essentially print money; the ability to do so will only increase in future years.

Therefore, there will be more money spent in the free agent market than in previous years. The contracts that San Francisco doled out recently are precursors to what is to come in the free agent market this year and in future years. Good players like Hunter Pence will get great money, great players (think Shin-Soo Choo and Jacoby Ellsbury) will get elite money and elite players (think Mike Trout and Clayton Kershaw) will break records. Not only that, but most of these types of players will cost a draft pick, too.

This means teams will have two ways to spend a lot of money – on their own players and in the international market. We have seen both so far this year with the Giants’ signings and the deals for Jose Abreu and Alexander Guerrero. If the Orioles do not want to play in the increasingly expensive top end of the free agent market – and they have not since signing Miguel Tejada before the 2005 season – then they have to keep their own.

The Orioles have an opportunity to keep Davis and Wieters and they have every reason to do so. They will very likely make a hard push to extend both between now and the middle of next year. The Orioles will want to lock them up before they hit arbitration for a final time because players who are that close to free agency typically become free agents.

If they do sign them, it’ll continue to be imperative for the Orioles to find surplus value on the free agent market and via their minor league system because they will have invested heavily to retain their core. Dan Duquette’s staff has shown it can find gems like Nate McLouth and Miguel Gonzalez, but the Orioles continue to struggle to churn out productive young talent outside of highly-rated first round picks. That has to improve regardless of Davis and Wieters.

Broad implications of not signing Davis and Wieters. If they cannot sign them between now and the middle of next year, they will be forced to think about dealing them, especially if the major league club is falling further behind in the East than they already are. Trading stars is generally not ideal because it is hard to get equal value in return. The James Shields trade notwithstanding, teams generally miss out on the big league ready, difference-making young talent. The haul that San Diego netted for Adrian Gonzalez three years ago is more typical. It was a nice package, but it was not Wil Myers.

In terms of what the Orioles could replace Davis and Wieters with internally, there is not much. I enlisted Tucker Blair of Orioles Nation to tell me about the long-term potential of what the Orioles have down on the farm:

There are no reasonable replacements for Matt Wieters and Chris Davis within the system.

Potential Fits for First Base: Christian Walker, Trey Mancini

Walker does not project to be an impact bat. While he has a good eye, good approach and knows how to handle the bat (sweet swing, good bat path through zone), he just does not provide impact. I think he probably becomes more of a platoon guy or bench bat that can provide some useful years here and there, but he isn't a guy I look at as someone waiting in the wings. The power is average and at best he is probably in the James Loney mold with the bat. Loney has provided a few good years for MLB clubs, but he is also not considered anything more than a stopgap to scouts and front offices. Good players, but nothing that screams, "this guy needs to have a roster spot now!"

Mancini is the same for me, except he has legitimate raw power and a lesser plate approach. While he is a college guy, he was just drafted and hasn't played above Aberdeen. It’s far too early for any MLB club to consider him a viable option.

Potential Fits for Catcher: Michael Ohlman

Really, that is it. I do not view anyone outside Ohlman as a guy that could potentially take over the position on a full time basis. Ohlman has a solid bat, good approach, swing is short and has brute force power. He is a strong guy with power that you typically love seeing from the catcher position. I really like his plate discipline as well. Scouts have mentioned that the decision making at the plate has really improved over the past two years, which has led to his better results. He has drastically improved his game-calling and footwork behind the plate. Pitchers have noted that they seem to always be in-sync with him. But even so, he still only projects to be average behind the dish. 

Since the minor league system does not offer replacements, the Orioles would look to the free agent market or try to get creative via trade. Considering how hard it is to find Davis’s power and how shallow the catching position is, chances are the Orioles would replace Davis and Wieters with free agents not as good as Davis and Wieters. The performance of the big league team would suffer, ushering in a new set of challenges, like trying to figure out how to acquire high-end players in their prime. Like Chris Davis and Matt Wieters.

Why not just sign one, trade the other and use the savings elsewhere? The preferred route is to build on this core and not subtract from it…but what if this time next year, the Orioles have locked up one but are looking into trading the other? It is not an ideal scenario. Number one, they would have to use the savings to replace the guy they lost because they don’t have a prospect to fill in. Number two, they’re already multiple pieces away from being title contenders. Losing a key cog makes that goal less attainable, unless they were to trade one for multiple immediate contributors.

Why not just go for broke the next two years and let them walk? This actually does not strike me as a terrible idea. The Orioles have a bunch of players set to test free agency within two years beyond just Davis and Wieters and the time to push all-in might be right now. However, it is a risky proposition. The Orioles, in an effort to win a title, would need to load up in free agency over the next two winters. Instead of inking Davis and Wieters, they would ink two big free agents. They would need to commit six or seven years to guys like 30-year-old Jacoby Ellsbury, who’d play left field.

Personally, I would rather pay Davis and Wieters as a part of an effort to be in the playoff hunt for a relatively long period of time. Paying big money to Davis and Wieters will probably look better four years from now than paying big money to Ellsbury or Shin-Soo Choo. If you go for broke in 2014 and ’15 and win a title, all is well…but if you do not, you just have a bunch of bad contracts on the books. Signing younger players keeps your window open longer. Also, the draft pick compensation the team would receive by letting Davis and Wieters walk are inconsequential in this discussion. The impact of compensation picks in 2016 is too small and too far off to worry about.

The bottom line. In Adam Jones, Chris Davis and Matt Wieters, the Orioles have three high-end players relative to their positions. Jones is 28 years old. Davis and Wieters are 27. As the Orioles have found out, finding high-end players in their primes is not easy. Keeping them together for the next five or so years is better than the alternatives unless they can flip one or both for pre-arbitration talents that have a chance to be very productive early on.