Posted by: Larry Smith Jr. | February 10, 2010

The Verlander Extension: Post-Script

When the Tigers extended Justin Verlander I gave a take on it prior to the official announcement, making a note that I would be revisiting the issue once the signing was announced and the annual values for the contract were known. Now those numbers are known, and this already positive development gets better for the Tigers.

Verlander got a $500k signing bonus with the deal and will earn a salary of $6.75m, in all a $7.25m investment on this season. This represents a raise of roughly three and a half million dollars and a figure very close to what the Tigers submitted to the arbitrator for Verlander’s 2010 case (they submitted $6.9m, against Verlander‘s $9.5 submission). Verlander in effect conceded the money for 2010 in exchange for the long term security. He gets a $5.5m raise for the 2011 season, up to $12.75m, and then another big raise up to $20m in 2012, where he will remain through the duration (2014).

While part of this structure is simply logistics and the business of the game: Generally when players who have not yet reached their free agency years sign extensions that go into their free agency years, they will be paid lower dollar amounts in what would otherwise have been their arbitration seasons. Regardless of whether or not it is conventional, the fact is that the Tigers managed to get it done. By holding Verlander under this contract structure he is costing the team very little comparative to his contribution in 2010 while the team still has a lot of contracts that are loose fat on the team’s payroll (Willis, Robertson – Combined $22m in ‘10). Brandon Inge and Jeremy Bonderman (combined $19.1m in ‘10) are also free agents after this year and Magglio Ordonez ($18m) will be a free agent if he doesn’t either start 135 games or reach 540 plate appearances.

When all of those contracts drop off, Verlander gets a raise. He’ll get a raise again to his maximum pay rate following 2011 when the Carlos Guillen contract expires. Effectively the Tigers have managed to put him into their budget by waiting until the bad contracts expire and then giving him the big bucks. Additionally as I noted in the original post on the matter, the Tigers now have Verlander, Max Scherzer, and Rick Porcello under team control through the 2014 season. Assuming moderate to good health on at least two of these guys at any given time, this will allow the Tigers to pursue low cost and mid cost options in their rotation for the next five years, which could consist of players currently in their minor leagues, mid grade middle-of-the-rotation pitchers, and any players they may draft between now and then.

While there are many question marks swirling around the 2010 season, it seems that the Tigers have taken dramatic steps this season towards good payroll management that hopefully will allow them to have more discretionary income down the road when and if they decide they need the “final piece” to a championship team.

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Responses

  1. I think they’re trying to completely remake their financial structure. It’s not that I think they’re trying to go cheap (though I think lowering payroll a tad is probably an ancillary goal), but I think they’re trying to get the best bang out of their bucks and in the process of doing so they had to make some dramatic moves and cash in on the value of Granderson and E. Jackson while they could.

  2. This all sounds like very good news. It also seems that another reason Curtis may have been traded was to make all this possible. Given what they got in the trade for Curtis, if that was the case (trading Granderson will allow us to secure Verlander), then well, #kanyeshrug.


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