24 March 2015

What a Chris Tillman Extension Would Look Like

After finally breaking through in 2012, Chris Tillman continued to excel and has been the Orioles’ ace for the past two years. And the fact that Wei-Yin Chen and Bud Norris can both become free agents after this year only increases Chris Tillman’s importance to this franchise. So, it should come as no surprise that Joel Sherman of the New York Post claims that the Orioles and Chris Tillman are trying to see if they can reach a long-term agreement. The only question is what a long-term extension for Tillman might look like and whether it makes sense for the club.

Generally speaking, the closer a pitcher is to arbitration the more money he’ll receive for his arbitration-eligible years. For example, Chris Archer is only expected to earn $13.75 million for his second, third, and fourth year of arbitration (I’m excluding his Super Two year in order to use three years of arbitration for everyone) while Jose Quintana is expected to earn over $18 million for his three years of arbitration.  This makes sense because pitchers do get hurt and the further away a pitcher is to being arbitration eligible the less likely he’ll actually get there. That means when comparing what Tillman might sign to other pitchers it’s important to keep service time in mind.

Fortunately, earlier this year both Lance Lynn and Wade Miley signed extensions. Like Tillman, both starters had just become arbitration eligible and will become free agents after three years. Lance Lynn signed a three-year, $22 million dollar contract while Wade Miley signed a three-year, $19.25 million dollar contract with a $12 million dollar club option for a fourth year. 

Chris Tillman has a worse FIP and lower WAR since 2011 than the other two. However, he’s had a similar ERA and about as many wins as the other two pitchers with considerably fewer losses. Many people argue that Chris Tillman is able to outperform his FIP due to his ability to hold runners as well as pitch differently when men are on base. If you believe that his FIP doesn’t tell the full story then one can argue that he’s nearly as good as Lynn and even better than Miley especially given that Tillman pitched in the AL East. It certainly helps Tillman’s case that he’s shown significant improvement lately while Miley has begun to regress. Given that Tillman and the Orioles agreed that Tillman should earn $4.35 million this year, it certainly seems that the Orioles believe that he’s better than his FIP. He's certainly being paid like it.

I think most people would agree that Lance Lynn has been better than Tillman both over their entire careers and in 2014. Therefore, I doubt that Tillman could earn as much as Lynn will over the next three years. But I do think it’s possible to argue that Tillman has been better than Wade Miley. If so, this suggests that Tillman should earn about $20 million for his three years of arbitration and that a potential deal could consist of his three years of arbitration as well as a possible club option for about $12.5 to $13 million dollars. 

What if the Orioles decide that a three-year extension that primarily covers Tillman’s arbitration years simply isn’t good enough? The Orioles may feel that such an extension might save them a few million dollars but simply isn’t worth the risk unless they can sign a deal that keeps Tillman under control for a few extra free agent years. How might a longer deal look?

It’s important to note that Chris Tillman will turn 27 years old at the beginning of the 2015 season which means he won’t be eligible for free agency until he’s 30 even if he doesn’t sign away any of his free agent years. It also means he probably won’t be interested in a long-term extension that considerably delays when he can become a free agent. James Shields became a free agent this year at 33 and found it hard to find a suitable contract because teams were nervous about his age. It makes sense that Chris Tillman wouldn’t want to put himself into the same position and therefore would probably be unwilling to sign a deal any longer than four guaranteed years with one club option.

That may determine the length but how much money should he receive? Julio Teheran received $16.6 million for his three arbitration years plus $11 million for one free agent year and a club option for $12 million. Chris Sale earned $18.6 million for his three arbitration years plus $12 million for one free agent year and club options for $12.5 and $13.5 million. Gio Gonzalez received $18 million for his three arbitration years plus $23 million for two free agent years and a club option for $12 million. Based on those numbers, it would be reasonable to expect Tillman to earn about $20 million for his three arbitration years, $12.5 million for a free agent year and $13.5 million for a club option. It's important to realize that the other deals listed happened in previous years and therefore we should expect some inflation.
If history is any guide, I would expect an extension for Tillman to range for anywhere between three years and $20 million to four years and $32.5 million with a club option for $13.5 million. 

Tillman has been the Orioles’ ace for the past two years. Since the Orioles probably aren’t going to be signing any top free agent starters in the near future, it makes sense to try to keep their homegrown products for as long as possible without paying full price. So, I think that any extension would require Tillman to give the Orioles an extra year of control. 

I wouldn't recommend a three-year extension that doesn't cover any free agent years because I think that would at most save the Orioles a few million. Such an extension has limited benefits and therefore isn't really worth the risk. If the Orioles are going to extend Tillman then they need to gain a year or two of control. That's why if Tillman would be willing to sign a contract that contains a free agent year as well as give the Orioles a club option then I think I’d have to recommend it. Otherwise, I'd pass. 


OrioleGo said...

I think I do not understand. Tillman has two more years of arbitration left, so that looks like a payout of about 15 million total in those two years. On top of that we are probably seeing a fair market value cost of about 10-15 million for that third season. SO we are talking about 3/25-30 not 3/20. Are you including this season in the numbers? Why? This contract is already in place, right? So, an extension would be beyond this upcoming year.

Matt Perez said...

I'm including this year in the numbers. The Dozier extension announced today also included this year despite both sides agreeing on a contract. Generally speaking, most long-term contracts signed before the season starts usually result in ripping up previous agreed upon amounts (see Kipnis and Gyorko). Then again, others like Aybar who signed an extension around this point decided not to include the upcoming year in an extension.

It is reasonable to not include this season in the numbers. If so, then the length of any extension should be reduced by 1 year and the amount should be reduced by about $4.5 million so that we'd be talking 2/15.5 instead of 3/20.