Justin Verlander is at the top of the sport right now and still has two years left on his contract, so he wouldn’t appear to be a great candidate for an immediate extension. But with player salary inflation likely headed to Major League Baseball in a big way, the Tigers might be wise to get a deal done sooner rather than later.
Of course, this all depends on the Tigers’ desire to keep Justin Verlander in the organization beyond 2014. He’ll be heading into his age 32 season, which isn’t necessarily old, but any sort of long-term deal would take him well into his mid-30’s which could carry high risk at a high monetary price. Verlander has proven to be perhaps the most durable pitcher in the majors the past several years – he hasn’t thrown fewer than 200 innings in any big league season – and has had his innings total reach approximately 270 each of the last two years (including playoffs). All of this work could cause his arm to breakdown and some point, but we haven’t seen any indication that happening yet.
Normally with a player in Verlander’s current situation I would recommend waiting at least a year to begin contract negotiations. He’s not likely to be better in the next two seasons than he was the last two seasons, so why pay peak price and assume all of the risk when there’s no harm in waiting? That would usually make sense, but due to new national television money set to drop after next season, contract rates could soar in the not-too-distant future.
Major League Baseball signed an eight year with ESPN, Fox, and Turner which will pay the league $12.4 billion dollars over eight years beginning in 2014. According to Mark Newman of MLB.com, that’s “more than a 100 percent increase” over the current national TV rights contract (this covers events like ESPN Sunday Night Baseball, the Fox Saturday games, and Postseason coverage). The revenue is spread evenly between all 30 teams. Assuming this contract pays double the current contract (even though the article said it more than doubled), then we’re looking at $775 million dollars going to the teams each season (roughly $25 million per team). And they don’t have to do anything to get that money, they just get it.
If all that cash gets directed to players’ salaries, we’re looking at the players’ piece of the pie jumping from roughly $3 billion (where it was this past season) to nearly $3.8 billion – roughly a 25% increase. This type of money won’t mean a team like the Tigers could sign more free agent players, it would mean they’d be paying the free agents they do sign more money. So, if our current paradigm says Justin Verlander would get a contract extension of, say, $120 million over four years, market value (in 2014) may push that total dollar amount closer to $150 million (number for illustration only).
If the Tigers were to negotiate with Verlander now – and commit to the long-term risk – they may be getting him for a bargain (even if the $30 million(ish) average annual value looks insane at the moment).
I’m not really in the position to say the organization should do this – that’s a ton of money even if inflation does hit hard – but it’s certainly something they should be thinking about. They have to decide which path carries more risk: locking him up now while he’s at his peak or waiting a year or more and gamble that contracts don’t spike with the sport’s influx of additional revenue.