I’ve written in the last few weeks about the cost of Super Two status, which can amount to an extra $10-15 M for a potential impact player like Gregory Polanco. This additional cost is a big factor in why pretty much every team, including the Pirates, will hold back a top prospect until the Super Two deadline passes. No team wants to pay an additional $10-15 M over the long-run, just for an extra six weeks of performance in the short-term.
One of the counter-arguments I’ve been receiving is that the cost of Super Two status can be neutralized by signing a player to an extension. The idea is that the cost of Super Two would be much lower, and thus would make more sense in the balance between short-term production and long-term cost. I wanted to get an idea of what that cost would be, so I looked at a few of the recent extensions signed around baseball. There weren’t many players who were projected to be Super Two players, or who had Super Two clauses in their deals. The three players below are the examples I found.
Chris Archer – His extension with the Rays was a guaranteed $25.5 M, and was based on him being a Super Two player. If he isn’t a Super Two player, the value of the deal drops to $20 M. COST OF SUPER TWO: $5.5 M.
Sean Doolittle – The Athletics extended Doolittle to a five-year, $10.5 M deal. The deal includes potential increases if Doolittle is a Super Two player at the end of the year. The total cost of the increases is $3.25 M over four years. COST OF SUPER TWO: $3.25 M.
Jose Quintana – He signed a five-year, $21 M deal, and just like Doolittle, his salary increases over the span of four years if he is Super Two eligible. In this case, the increases amount to $5.5 M, which is the same as Archer. COST OF SUPER TWO: $5.5 M.
It’s a small sample of deals. Then again, when you’re talking about guys who have signed an extension with less than two years of service time, who could be eligible for Super Two status, then a small sample is expected.
I think a mistake here is focusing on the actual dollar amounts. You can’t say that the cost of Super Two in an extension is $5.5 M, just because that’s the cost for Archer and Quintana. That would be the same as saying the cost of a five-year extension (before Super Two) is $20-21 M, because that’s what those two players received. The $10-15 M price for Super Two, when factoring year-to-year costs, is based on impact players, not every player who could be a Super Two player. Thus, we need to find a way to make the above numbers applicable for all types of players.
One thing that stands out is the percentage increase for each player. Super Two status increases the deal for Archer by 27.5%. The increase for Quintana is 26.2%. The increase for Doolittle is 31%. The average increase is 27.7%. With this percentage, we can get an idea of what Super Two would cost for any player, just by projecting their extension without Super Two.
Of course, predicting what a player could receive in an extension can be difficult. You have to know when that extension takes place, and the performance of a player at the time of the extension.
Ideally, you’d like to see Polanco sign an Evan Longoria type deal right after he comes up. However, the list of players who have signed an extension that early in their careers is limited to Longoria. Only three other players since 2008 have signed an extension with less than one year of service time. All of those extensions came either during the off-season, or during the season after the player arrived. The fact that so few players have signed extensions that early means that you probably shouldn’t expect the Pirates and Polanco to reach a deal. That’s not saying they won’t reach a deal that early, or that they can’t reach a deal that early. But if your justification for calling Polanco up is that the team could immediately sign him to an extension, then that justification is based on something that only one player has done.
If Polanco does come up right away, have immediate success, and get an immediate extension, I’d estimate the guaranteed cost to be about $23 M. That’s based on the money that Andrew McCutchen received for his 0-6 years. That might be a little high, but then again, Longoria got $17.5 M for six years back in 2008, so it’s not absurd that Polanco could see a $5.5 M increase six years later. That $23 M price tag, when we use the 27.7% rate for Super Two, means that the cost of Super Two for Polanco would be $6.4 M.
That’s much less than the $10-15 M range that is estimate for year-to-year players. There’s a reason for this, and the reason is that the team is taking on a huge amount of risk, signing a player with no experience, with his future value based entirely on projection and very little proof that he can handle the majors. This is probably a big part of why a lot of teams don’t sign these deals so early. From the player side, you probably don’t see deals this early, because the player will want some time to raise his value and get a bigger payday.
You can see how one extra year can make a big impact. Most of the recent players who have signed an extension with service time between one and two years have signed for $30-35 M. That includes Starling Marte, who signed a six-year, $31 M deal. If Polanco signed right away, then an optimistic projection has him receiving $23 M guaranteed. If he signs after one and a half years in the majors, then the standard projection has him getting an extra $10 M guaranteed. As we saw with Jedd Gyorko, players are even getting that amount if their value is still based more on projection than results.
I don’t want to compare Polanco’s potential deal to Marte, because I think Polanco could have more value than Marte. Instead, I’ll use Paul Goldschmidt, who received $35 M guaranteed. At that price, the 27.7% Super Two increase would be $9.7 M. That’s still a discount if you project the Super Two increase to be closer to $15 M, but it’s not a big discount if you project Super Two to be closer to $10 M.
If the Pirates called Polanco up early, with the intention of extending him early to reduce the costs, they wouldn’t see much of a savings. They’d see bigger savings if they extended Polanco with less than one year of service time, but that’s not something they can really bank on, since very few extensions happen during this time period. The normal period for an extension takes place with more than one year of service time, and less than two years. Realistically, that’s what the Pirates can hope for, and if Polanco works out as expected, then the cost of Super Two in an extension will probably come out to be a little less than $10 M. That’s not a huge discount over the year-to-year price, and is still a high cost for one extra month of Polanco in the short-term.
Links and Notes
**Prospect Watch: Tyler Glasnow Strikes Out Six in Five Shutout Innings in Debut
**Minor League Schedule: Jeff Locke Takes Mound In Indianapolis
**Draft Prospect Watch: Injuries Hit Two Big College Arms
**Jason Grilli Placed on the Disabled List
**Kyle McPherson Suffers Setback, Out Until 2015
**Prospect Links: Polanco the Next Big Thing, McGuire Scouting Report
**Prospect Highlights: Home Runs From Tony Sanchez and Stetson Allie
