Examining The Homer Bailey Extension

Reactions among fans and MLBTR readers to the initial report of Homer Bailey nearing a six-year deal in the $100MM range seemed at best uncertain and negative at worst. The Reds and Bailey have since reportedly finalized a six-year, $105MM contract that includes a $25MM mutual option (or $5MM buyout) for a seventh season, and little seems to have changed.

The most common criticism I've noticed to this point is that Bailey's career numbers don't make him feel like a $100MM pitcher. However, Bailey's career, as a whole, has little to do with the dotted line on which his signature will find itself in the coming days. The Reds aren't paying Bailey to be the pitcher he was as a 21-year-old or even as a 24-year-old. Cincinnati is paying Bailey for his recent work and what they feel he can do from 2014 through 2019. Bailey's career 4.25 ERA shouldn't be a factor when we evaluate this deal from the outside, because it almost certainly wasn't a major factor when the Reds were deciding whether or not he was worth this price.

In making the deal, Cincinnati appears to be banking on Bailey continuing the improvement he's shown over each of the past two seasons. Dating back to 2011, Bailey has seen year-to-year improvement in his command, ground-ball rate, swinging-strike rate, velocity and out-of-zone pitches chased by hitters. The changes haven't necessarily manifested in his ERAs — though his 3.68 and 3.49 totals from the past two years are solid — but teams have already begun to demonstrate that they're willing to pay for things other than ERA. Given the volatile nature of that stat, it's no surprise to see clubs betting on trends, skill-set and age rather than the ultimate outcome.

For some context, Bailey's 10.7 percent swinging-strike rate in 2013 tied for 11th in the Majors among qualified starters. In fact, he trailed White Sox ace Chris Sale by just 0.01 percent in that field and induced grounders at nearly the same rate — 46.1 percent for Bailey and 46.6 percent for Sale. His 34.9 percent opponents' chase rate was tied for 10th in all of baseball with Hiroki Kuroda and Bailey's own teammate, Mat Latos. Bailey's average fastball velocity jumped from 92.2 mph in 2011 to 92.5 in 2012 and 94.1 in 2013. That 94.1 mph average was the seventh-highest in the Majors among qualified starters, and his velocity actually increased as the season wore on. The Reds probably aren't concerned with his ability to sustain that heat, as he averaged 94.4 mph over 113 innings in 2009 (Fangraphs' Jeff Sullivan took an extended look at Bailey's velocity spike earlier in the week).

Bailey hasn't been on the disabled list since 2011 and has topped 200 innings in each of the past two seasons as well. On top of displaying promising peripherals, he's demonstrated some durability. While that can change at a moment's notice, 200-plus innings will get a pitcher paid, and the Reds likely feel that Bailey's medicals give him a strong chance of staying healthy moving forward. Also of significance is Bailey's age; at 27 years old (28 in May), the Reds are buying more prime years than a team would typically receive in paying open-market prices for a pitcher. Starting pitchers that reach free agency are usually closer to 30 or 31 than Bailey would have been (heading into his age-29 season).

Looking at other pitchers who were extended with five to six years of service time (with some help from the MLBTR Extension Tracker), Bailey's deal is the third-largest in history for a pitcher one year (or less) from free agency. He rightfully fell well short of the extensions signed by Clayton Kershaw and Cole Hamels, but he was able to top Jered Weaver's five-year, $85MM deal. That contract was thought to be team friendly at the time, however, and Weaver's deal is also two years old at this point.

As MLBTR's Charlie Wilmoth noted Sunday evening, the deal essentially amounts to five new years and $95MM, as Bailey was in line for a salary in the $10MM range anyhow. Put another way, he's signing away five free agent years for $15MM more than Anibal Sanchez received a year ago (also for his age 29 to 33 seasons). With one more strong season under his belt and further TV revenue flooding the game, Bailey would likely have topped Sanchez's mark, even in a relatively strong class of free agent pitchers that figures to include James Shields, Justin Masterson, Max Scherzer and possibly Jon Lester (though Lester seems highly likely to sign an extension of his own, and Scherzer could do the same).

Age again becomes a factor here, as Bailey is four years younger than Shields, two years younger than Scherzer and Lester, and one year younger than Masterson. Even if Shields were perceived as the better of the two pitchers next winter, would a team be more comfortable guaranteeing him top dollar starting in his age-33 season, or would Bailey's age-29 season be more alluring?

Reds GM Walt Jocketty and his staff are continuing to place a premium on age (we've already seen this, to varying degrees, in the offseason with Freddie Freeman's extension and the free-agent deals signed by Phil Hughes and Masahiro Tanaka). While Bailey did have a three-WAR season in 2013, it's unlikely that the Reds feel he's reached his ceiling at this point. A nine-figure guarantee for a pitcher with just two seasons of 200 innings and a career 4.25 ERA seems excessive to many, but again, the Reds aren't paying Bailey for his accomplishments (or lack thereof) in his age-21 to age-24 seasons; the Reds are paying Bailey to be the pitcher they believe he can be based on improvements in non-ERA elements of his game over the past few years.

As for Bailey, he and his agents at Excel Sports Management were likely confident in his ability to post strong totals in his walk season, but there's also the reality that pitchers simply get hurt with relative frequency. Even a two- or three-week DL stint related to his elbow or shoulder would have cast some doubt on his free agency, and missing a significant chunk would have been disastrous.

While many will be quick to call this an overpay, it looks to me as if the Reds paid market value (or close to it at five years, $95MM) for Bailey's 2012-13 skill set, with the belief that he can take another step forward and be the type of pitcher who could have signed for something closer to $120MM+ over six years next offseason. Those outcomes illustrate the risk for both sides: for the Reds, paying market value a year early, and for Bailey, potentially missing out on tens of millions of dollars. Of course, if he regresses or gets injured, the deal will quickly look poor for the Reds, but that's the case with any long-term deal. And given Bailey's age, there's no reason to suspect significant regression in 2014.

26 Responses to Examining The Homer Bailey Extension Leave a Reply

  1. Scott 1 year ago

    I thought this was excellent analysis.

    • Gop5 1 year ago

      I agree. It’s always nice to see a team pay someone based on what they feel their potential is rather than seeing a team pay for what a player HAS done in the past while they’re not old.

      I’d rather see a player get extended for overpay on a chance in their young years than a 31 year old that gets a 10 year contract for $240 M. I love the idea of long term extensions, like the Rays are good at doing, and taking a chance on a player before they get a chance to leave. It’s great to see the game moving that way.

  2. Josh 1 year ago

    Agreed! Really well-written article

  3. Ryan 1 year ago

    Good job making the argument. The problem is, no matter how you spin this, it was a contract that pays him for his very recent success and the assumption he will become elite. Why make the deal if you’re the Reds? I feel like they just paid market value for a guy with tons of risk and average reward. Wainwrights deal with my cards looks unreal in light of this one…

    • Steve Adams 1 year ago

      Wainwright’s deal also covers his age 31 to 35 seasons, where Bailey’s free agent years will kick in for his age-29 season. The Reds will be done with Bailey’s deal when he’s 33 years old if they wish, while St. Louis is guaranteeing Wainwright $19.5MM in his age-34 and age-35 seasons.

      That’s not to speak ill of Wainwright’s deal, which does look great for the Cardinals. I’m just giving a reason as to why the Reds felt as though they could take the risk. I think in their mind, the “downside” is that Bailey repeats 2013 for the next several seasons, which isn’t too shabby. The upside is that he becomes a consistent four- to five-win pitcher, making $19MM annually a perfectly reasonable price, given the market.

      • Natsfan89 1 year ago

        Steve, what does this mean for Jordan Zimmermann? Him and Bailey had comparable numbers last season, they’re the same age, similar situations, and Zimmermann has the added advantage of putting up 3 good seasons in a row.

        How much more would the Nats have to pay Zimmermann to get him locked up longterm?

        • TheNextEpstein 1 year ago

          I would say somewhere slightly above where Bailey sits. probably in the range of 6 and 120-130mm would be reasonable. I am guessing Mat Latos would get something in that range as well.

        • Jeff_Todd_MLBTR 1 year ago

          Won’t speak for Steve, but I’d have to think that Bailey’s deal would be viewed as a floor if talks take place next year (assuming Zimmermann has a healthy, largely typical season).

          If you’re asking about possible value for a deal reached during the current off-season, remember that Zimmermann has an extra year of control remaining (although the Nats have already promised him $24MM over the next two seasons). Bailey has now shown a higher strikeout ceiling, but Zimmermann has just been better for longer and hasn’t been shy about saying he wants a full market deal. I’d be surprised if he took anything less than Bailey got over the same period of time, even if agreement was reached during this spring.

          • Natsfan89 1 year ago

            Thanks for replying man, love that you guys do that.

      • Ryan 1 year ago

        We are getting really consumed about age here and i’m not sure why. Pitchers typically don’t see a decline until the 34-36 years. My concern with the deal is that his increase in velocity is not for long and his downside looks alot more like his 11’/’12 seasons (a 4ish FIP and k/9 just a touch over 7). Upside imo being 2013 (mid 3ish WAR).

        I will admit that my disgust with this deal has alot more to do with the outrageous money that slightly better than mediocre starters are getting these days than it does with HB. I cringe to think what some team will pay guys like Lance Lynn and Rick Porcello (other 3ish WAR arms).

        What would his avg win over replacement need to be over the next 6 to make this deal justified (break even) for the Reds?

        • TheNextEpstein 1 year ago

          The reason people are consumed with age is that the Reds are banking on Bailey to have more upside than you are saying. His peripherals the last 2 years suggest a much lower ERA and the steady improvement he has made year to year suggest he might get better. He certainly has the stuff to be a No. 1, the question has been consistency. You don’t throw 2 no hitters if you don’t have that kind of stuff.

          That being said I don’t think front offices view Porcello or Lynn as having the same ceiling that Bailey does, the same could be said for Masterson, although Master is much closer to Bailey than the other two.

    • jacks81x 1 year ago

      The risk is there, but I think the reward is better than average. Bailey is only 27 and entering his prime, has made huge improvements in his game the last couple years, and from all accounts is a good clubhouse guy. The Wainwright deal is a great one for the Cards, but those types of deals are more the anomaly than the norm. All contracts come with risks. Bailey could break his arm tomorrow and never pitch again, or he can be a 200-inning, 16-win guy for you the next 5 years. You can do all the statistical analysis you want, but at the end of the day every contract is paid out for the combination of potential and past success.

    • TheNextEpstein 1 year ago

      Paying him “Elite” money would be far more than 105mm over 6. Elite money as we have seen are Tanaka, Greinke, Kershaw, Felix Hernandez, Verlander contracts just to name a few. Since he isn’t in that category he got less, makes perfect sense.

      • johnsilver 1 year ago

        I’ll go there also. He got a tad less AAV than Cain did perhaps back in ’10 and a couple of years less. Close to same performance prior to Cain signing though. That would be someone to compare to.

  4. monroe_says
    monroe_says 1 year ago

    After breaking the long curse of poor pitching development that had plagued the Reds’ system for decades, it’s excellent to see Homer stay in Cincinnati for what will hopefully be his prime. While he had a rocky start at a very young age, it truly has been a treat to watch Bailey progress. I thought for sure he’d be gone and I couldn’t be happier to have been wrong.

    • Chettmoses 1 year ago

      Agree 100%…I also thought that bailey would bulk on a deal and leave Cincy for Texas. I think Bailey’s that pitcher that tries to beat ever batter, every single at bat. You can see the intensity with him when a batter gets a hit or drives in a run…He wants to win and that attitude will do two things:

      1. Make him evolve into a great pitcher
      2. drive the rest of the Reds to do better

      Bailey might become the leader of this squad!

  5. TheNextEpstein 1 year ago

    Great analysis in the post above, it looks like an overpay to someone that doesn’t dig into the numbers a little deeper, but is fair market. Hopefully they are able to lock up Latos as well.

  6. livestrong77nyyankz 1 year ago

    Bailey is money and now he has lots of it and deservedly so. I of course wanted my team to get him in free agency next year but its nice to see the Reds lock up another one of their young stars.

  7. pft2 1 year ago

    Adjusting for league, is Bailey that much better than Santana or Jiminez? Where was the fair market for them, even adjusting for the draft pick (which is about 5 million value for a non top 15 pick, and less for late rounds)

    • TheNextEpstein 1 year ago

      Yes, younger than both Jimenez 30 and Santana 31, a lot less volatility in performance at the younger age, makes him a higher price than both.

    • bjsguess 1 year ago

      THIS ^^^

      If I had a choice to pay Bailey 5/$95 or Jimenez 4/$50M + late round draft pick I do the Jimenez deal all day long. No way anyone can convince me that Bailey’s extra year is worth $45M + the cost of a draft pick.

      Jimenez has posted 3 WAR or more in 5 of the last 6 seasons. He had a solid platform season with 3+ WAR. He’s a little older but has consistently turned in 180IP seasons for the duration of his career.

      There’s more risk with Jimenez from an injury and performance perspective but I still don’t think that risk is anywhere close to the discrepancy between these two players.

      • Metsfan93 1 year ago

        Jimenez’ actual stuff has seen a decline, though, which could signify decline. I don’t think Jimenez is going to get better from here. His established level or worse is what you’re getting. Runs-allowed-wise, the Reds are banking Bailey’s peripherals and stuff leads to slightly better results. I see this as Anibal Sanchez plus a little, basically, which is fair. Sanchez made good on ignoring ERA and signing him to that deal in just his first season. I don’t think Bailey has THAT potential, but close to it.

  8. Chettmoses 1 year ago

    Has anyone told BP yet……just wandering what he thinks of the deal….LOL JK

  9. Dan Bowen 1 year ago

    If I’m someone like Jarrod Parker, I’m excited right now.

  10. I think this money would have been better spent on Mat Latos. The scouts have always loved Bailey’s stuff since he was first drafted and he finally started achieving like it in the past two years. Was Bailey really going to command much more on the open market, even after another good year? I really don’t see the big savings in this deal from the Reds’ perspective. It’s a deal that probably won’t hurt them but a small-market team like the Reds need to “win” deals instead of breaking even for long-term success.

  11. LazerTown 1 year ago

    Is a large deal but the biggest gain is his age. They aren’t paying for decline. Compare him to someone like Cano who they are giving more per WAR for what he produces now, but they have to eat a whole lot less at the end. And that is where there is value in this. Maybe he isn’t elite, but if you don’t have to pay those ugly age 35+ seasons, you should be happy.

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