Was Elvis Andrus’ Extension Necessary?

The Rangers recently extended 23-year-old shortstop Elvis Andrus for three years and $14.4MM.  The contract covers Andrus' three arbitration years.  As we'd expect for a Boras Corporation client, the Rangers were not able to secure any free agent seasons.  Does this contract extension offer value to the Rangers as opposed to just going year-to-year?

I talked to a couple of agency employees who estimated Andrus' year-to-year arbitration earnings in the range of $15.3-15.5MM, with salaries around $3MM, $4.8MM, $7.5MM if his offense holds steady.  Andrus brings runs and steals to the table and might win some Gold Gloves, but arbitration doesn't pay this skillset handsomely.  The Rangers didn't get much cost savings here, unless Andrus takes his offensive game to another level.

As with any extension, the Rangers got cost certainty, in that they don't have to haggle with the Boras Corporation three times to determine Andrus' salaries.  There is also the benefit of pleasing Major League Baseball, as the contract might help keep future shortstop salaries down.

The downside for the Rangers is that Andrus' earnings for 2012-14 are now guaranteed, even if his offense suffers a downturn or he endures a significant injury.  Such events would have limited his arbitration salaries.  J.J. Hardy's 2009 season is a good example: his performance and playing time plummeted, so he settled with the Brewers for just a $750K raise.  The Rangers no longer have that protection, and all they received in return was a million or two in savings and some cost certainty. 

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