First things first: 10 is a lot of years and $292 is a lot of millions.
But is it worth that much to the Detroit Tigers to keep Miguel Cabrera wearing the Olde English D for the rest of his career?
One could make a case that Cabrera would be worth something close to that if he was currently on the open market as a free agent. There’s evidence that, as an industry, MLB teams are paying free agents roughly $7 million per win. If we use that as a starting point, along with his Steamer-projected 6.2 WAR for 2014, a 0.5 WAR per year age-related decline, and a 5% rate of league-wide salary inflation, we can build a rough (but perhaps reasonable) value model for the next 10 years of Cabrera’s career (all dollar figures in millions).
We’re making a heck-ton of assumptions here, to be clear, but if we’re anywhere close, then Cabrera’s next ten seasons could be worth something like $330 million (use $6.2 million per WAR to hit $292 million in total value, so still reasonable).
Unfortunately for the Tigers (and our analysis), we can’t really count 2014 and 2015 as part of the extension as the Tigers already had him under contract for $22 million for both years. We should really be analyzing this as an eight-year, $242 million extension covering 2016-2023. If we look at it that way we get:
So perhaps the contract still works out pretty close – basically $3 million shy – but we’ve completely lost all margin for error on our initial assumptions. What if $7 million per WAR is too high for the current market? What if a 0.5 WAR per season doesn’t accurately reflect Cabrera’s expected aging curve? What if inflation ends up being flatter than 5% per season? We could start cutting into that value pretty quickly.
For example, if we change nothing but the current $/WAR starting point – from $7 million to $6.5 million – the total value drops to $227 million. If it’s really $6 million (a more commonly used number)? We’re talking $210 million in total expected value.
My initial reaction to the contract news was that it was bonkers crazy. That may not really be the case, but it’s still a stretch at minimum. The best we can hope for seems to be that he ends up being exactly worth the price with almost zero upside to be gained (and this only if Miggy can remain an average player in his age 39 season). The worst case (where Cabrera stays reasonably healthy and productive) is this is a $40 million overpay.
When extending a player who’s still two years away from free agency you’d really like the contract to have a certain amount upside to it. Instead, the Tigers are assuming all of the risk for the next two seasons, betting on Cabrera to stay both (1) healthy and (2) wildly productive in seasons that were already covered under the previous agreement.
Is this a bad deal? Maybe, maybe not. I can’t say for certain. But it certainly doesn’t look like a particularly good deal for the Tigers.