The St. Louis Cardinals locked in another member of their core today, signing Stephen Piscotty to a contract extension. Do the Cardinals get any value out of this deal?
Unexpected news came out of right field this morning, when Jon Heyman broke that the St. Louis Cardinals and Stephen Piscotty agreed to a contract extension. Ken Rosenthal later confirmed details of the extension.
This signing comes just one day after finalizing a new deal with St. Louis Cardinals icon Yadier Molina. Piscotty’s contract, however, is more comparable to the recent agreement with Carlos Martinez, as well as past deals with Kolten Wong and Allen Craig.
Pre-arbitration extensions are becoming more common in the MLB, and the Cardinals are arguably one of the best at locking players up. Through these deals, General Manager John Mozeliak gets cost certainty over an extended period and avoids the arbitration process. Avoiding arbitration can be a good thing, since the process can get ugly (just ask Dellin Betances).
The main motivation for front offices to pursue these deals, however, is to lock in surplus value. Surplus value is the difference between how much a player would be worth through the normal market channels versus how much he is actually being paid.
In a perfect world, players are paid exactly what they’re projected to be worth, but that is very rarely the case. When a team signs a player to an extension, you’d expect positive surplus value. In other words, the team pays the player less than their expected value, which the player takes in order to get financial security. Piscotty is getting a guaranteed $33.5M, with a max of $50.5M. Life changing money.
So, what is the value to the St. Louis Cardinals, relative to their alternative, which would have been putting Piscotty through the team control process?
Piscotty’s situation is fairly unique. With 2017 his age-26 campaign, he is relatively old for a player with player with his amount of service time. Without an extension, he would have been arbitration eligible beginning in 2019, his age-28 season.
His contract status for this season and next was “Renewable.” Under these terms, if the player and team do not agree on a contract during the offseason, the team can renew the player’s contract for the upcoming season at the league minimum. Through this process, players like Noah Syndergaard play for only $605,500.
To project his value in arbitration, I used the 25/40/62 rule outlined by The Point of Pittsburgh and an average aging curve. I determined the aging curve by looking at the change in WAR per 600 plate appearances for all players with 100+ plate appearances in consecutive seasons since 2006, and averaged the change by age. The result is below.
This shows that, on average, players decline starting at a young age. The reference point where WAR/600 equals 0 is at age 26, and 2017 is Piscotty’s age-26 season.
Next, I projected Piscotty’s value over the length of the contract. I used FanGraphs Depth Charts 2017 projections scaled to 600 plate appearances as my starting point and aged Piscotty’s WAR/600 according to the curve above. To project that value in dollars, I used the price of $9.0M per WAR calculated by Ben Markham and a 5.5% inflation rate based on historical data.
For projected arbitration salaries, I used his projected free agent value in 2021 (his last arbitration year), which is technically incorrect. However, had I used his projected value in 2022, I’d be basing the projections off a very low or negative value.
Additionally, in both of the following scenarios, I assume the team declines the option for 2023 and pays the $1M buyout.
These projections are not kind to Piscotty. Currently, he is expected to be below replacement level by his age-31 season. If you see him as an average player right now, which the projections do, then this isn’t surprising. In this case, the extension yields a negative surplus value of $28M. Under those assumptions, this is a terrible deal for the Cardinals.
St. Louis Cardinals fans (and apparently the front office), however, don’t really think that Stephen Piscotty is an average player. After all, he did put up 2.8 WAR last season and is expected to hit cleanup for most of 2017. So, instead of using the FanGraphs projections, this time I used his 2016 WAR/600 to project his value.
The projections still don’t like this deal for the St. Louis Cardinals. This case still yields a negative surplus value of $17M, and the extension is still a terrible deal for the Cardinals.
For the St. Louis Cardinals to break even on this contract compared to what they would have paid through the team control process, Piscotty would have to average about 3.0 WAR per year through 2022 or 2023. That scenario is pretty unlikely.
That said, this contract is small enough that it shouldn’t handcuff the team’s ability to spend in future offseasons. It also eliminates the risk that Piscotty performs better than projected by the aging curve and increases his value.
Additionally, the arbitration process still likes traditional stats like home runs and RBI, so there is a risk that Piscotty would increase his value by accumulating RBI behind the trio of Dexter Fowler, Aledmys Diaz, and Matt Carpenter.
These types of deals are relatively low risk. No one expects Piscotty’s production to fall off a cliff (although it did with Allen Craig). His aging curve projects similarly to Ryan Ludwick, who was productive through age 30 before descending into mediocrity. If Piscotty puts together a 5-WAR season like Ludwick did in 2008, then this extension will look acceptable in hindsight.
Right now, though, this deal doesn’t make any sense. The St. Louis Cardinals had no reason to rush in locking up Stephen Piscotty, and it looks like they overpaid.