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Dodgers, Ramirez Remain In Early Stages Of Extension Talks

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The Dodgers locked up Clayton Kershaw with a historic seven-year contract extension last week, guaranteeing the game's best pitcher an annual salary of at least $30MM for the next five seasons and possibly as much as $215MM over seven years. That pact crosses one major extension candidate off GM Ned Colletti's list, but Hanley Ramirez still has just one year left on his deal. According to Yahoo's Tim Brown, the Dodgers and Ramirez remain in the "early stages" of extension discussions, but talks are ongoing (Twitter link).

Apparently, not much has changed on the Ramirez front since late November, when talks were then said to be ongoing as well. Clearly, the Dodgers have had their fair share of business to attend to, as since that time they've extended Kershaw, aggressively pursued Masahiro Tanaka and signed five free agents to Major League deals. As shown in MLBTR's Transactions Tracker, Brian Wilson, J.P. Howell, Chris Perez, Jamey Wright and Juan Uribe have all been signed in that time, and the club also worked out a trade with the Mets for their Rule 5 Draft selection.

Presumably, their courtship of Tanaka is the top priority in the coming week, given the fact that the highly touted right-hander's deadline to sign is this Friday. Adding Tanaka to the mix would seem to be the final piece to a rotation that already includes Clayton Kershaw, Zack Greinke, Hyun-jin Ryu and Dan Haren, leaving a Ramirez extension as one of the last remaining keys to the offseason. Of course, landing Tanaka could lead to further trade discussions for Colletti in regards to Chad Billingsley and Josh Beckett (my own speculation). Bronson Arroyo is reportedly on their short list of targets, should Tanaka not agree to don Dodger blue for the next several years.

Regardless, a great deal of the Dodgers' work appears to be done for the winter, which would leave Colletti and his staff with roughly two months to work out an extension for Ramirez prior to Opening Day 2014.

West Notes: Astros, Dodgers, Mariners, Rangers

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A source tells MLB Daily Dish's Chris Cotillo that the Astros haven't discussed a long-term extension with Jason Castro yet. The 26-year-old appears to be a candidate for a long-term deal after a 2013 breakout campaign that saw him slug 18 home runs and generate 4.3 fWAR, tops among AL catchers not named Joe Mauer. However, he's now eligible for arbitration, and could become expensive quickly if he's not interested in an extension. As FOX Sports' Ken Rosenthal observed recently, teams appear increasingly willing to trade players who resist being locked up. Here's more from baseball's Western divisions:

Nikkan: Clubs Submit Formal Tanaka Offers

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Clubs angling to sign Masahiro Tanaka made formal offers by Jan. 16, Nikkan Sports reports (Japanese link). The list of teams includes the Yankees, Dodgers, Diamondbacks, White Sox and Cubs, with nearly all clubs putting together offers worth more than $100MM over six years.

The Diamondbacks have made no secret of their pursuit of Tanaka this winter, and according to Nikkan, they've offered him a deal for six years and $120MM. Such a contract would be the largest in Diamondbacks history by a wide margin. "Like other teams, we're very interested," CEO Derrick Hall was quoted as saying at a recent meeting of MLB owners. "We want to win this competition." Owner Ken Kendrick also reportedly met with Tanaka directly during his recent tour of clubs in the U.S.

The Dodgers and Yankees are believed to have made equivalent offers, according to Nikkan, while comments by Angels owner Arte Moreno suggest that the team would have trouble fitting Tanaka into its budget. Overall, we appear to be nearing the stage in negotiations where the only step remaining is Tanaka's actual decision.

NL Notes: Reds, Cardinals, Padres, Dodgers

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Here's the latest out of the National League:

  • Even as they continue to work out contracts with key pitchers Homer Bailey and Aroldis Chapman, the Reds are keeping an eye on the free agent market, reports MLB.com's Mark Sheldon. GM Walt Jocketty says he is looking for an extra outfielder and infielder, indicating that he'd like to have a player at Triple-A that can handle shortstop in the event of an injury to Zack Cozart. "We're still looking at a couple of guys," said Jocketty. "I don't think there's been any progress, especially this week. Once a lot of the agents get through the arbitration process this week, we'll have more time to pursue any last minute invites for Spring Training that create more competition." 
  • The Cardinals have improved in several areas without sacrificing prospects or draft picks while the rest of the division largely stood pat in terms of acquisitions, says Bernie Miklasz of the St. Louis Post-Dispatch, but that does not mean the club has only smooth sailing ahead. While the organization dealt with injuries impressively last year, it is no sure thing to do so again, and players like Peter Bourjos and Allen Craig have some injury baggage. Whether the team can get a repeat performance from Matt Carpenter, and get production from an all-new middle infield (Jhonny Peralta, Kolten Wong, and Mark Ellis) are also all open questions.
  • After signing all but one arbitration player (Andrew Cashner), the Padres' payroll looks likely to end up at around $87MM by Opening Day, writes Dennis Lin of U-T San Diego. That would constitute a delivery on owner Ron Fowler's promise of a payroll increase of over 20%, says Lin, who opines that the team could still look to extend Cashner and add a southpaw to the pen.
  • As noted in an earlier post, MLB.com's Ken Gurnick says the Dodgers should prioritize an extension of Hanley Ramirez over the signing of Masahiro Tanaka. Meanwhile, reports Mark Saxon of ESPNLosAngeles.com, the team has continued to talk with Michael Young about a return for the trade deadline acquisition. 

Masahiro Tanaka Rumors: Friday

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Let's round up the day's rumblings on Masahiro Tanaka, who will have chosen his new club by this time next week:

  • Both Chicago organizations are real contenders for Tanaka, Dan Martin and Ken Davidoff of the New York Post wrote yesterday. An industry source says that the Cubs and White Sox have serious interest in the Japanese ace. Seven teams met with Tanaka during his trip to the U.S., the pair notes, though the Sox are the only ones to have publicly acknowledged a face-to-face. 
  • Those meetings have not yet resulted in feedback, according to Jesse Sanchez of MLB.com (via Twitter). Teams had around an hour to pitch Tanaka, but have not heard back. "Nobody knows where they stand," says Sanchez.
  • The Cubs have withheld cash thus far in order to keep a sufficient war chest to make a real run at Tanaka, says Gordon Wittenmyer of the Chicago Sun-Times. But with a "debt-strung, skittish-to-spend ownership," in Wittenmyer's words, the club may not be a real player in the sweepstakes. 
  • The Dodgers are actively involved in talks with Tanaka, reports Dylan Hernandez of the Los Angeles Times. This report confirms what many had suspected (and the front office had indicated): the club will not be precluded from another massive investment after extending Clayton Kershaw. As Mark Saxon of ESPNLosAngeles.com further reports, GM Ned Colletti has had discussions with Tanaka's reps at Excel Sports Management all week long. "We're still, first and foremost, concerned with the quality of the team we can put together, and adding it up comes second," said president Stan Kasten. "This is a long-term strategy of ours. After five or six or seven years, it will make a lot more sense than it does to people looking at today's snapshot."
  • For his part, MLB.com's Ken Gurnick is not so sure that Los Angeles will go all out for Tanaka, though it is interested if he values the chance to play on the West Coast and is "willing to make his decision on factors other than total financial package." But with interest that has been only "lukewarm at best," says Gurnick, the Dodgers would probably not look to win a bidding war absent intervention from the ownership group. A Hanley Ramirez extension is, in Gurnick's estimation, a higher priority for the L.A. brass.

Arbitration Filing Numbers

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MLBTR's Arbitration Tracker is the place to go to see the arbitration contracts agreed upon thus far, as well as the figures exchanged between teams and players that were not able to reach agreement before today's noon deadline to swap salary positions. Matt Swartz's arbitration projections are available here.

As MLBTR has previously explained, 146 players officially filed for arbitration (after some eligible and tendered players had alread reached agreement). Of those, 40 players will exchange figures with their clubs. Of course, those players can still reach agreements before their hearings (which will take place betwee February 1st and 21st). If the case goes to a hearing, the arbitrator must choose one side's figures, rather than settling on a midpoint.

For the Braves players listed below, however, Atlanta says it will cease negotiations and take all cases to a hearing. Two other teams that have swapped figures with some players — the Nationals and Indians — also have employed variations of the "file and trial" approach with their arbitration cases.

Though a tweet from FOX Sports' Ken Rosenthal indicates that the Reds have joined the list of teams employing "file and trial," GM Walt Jocketty did not seem to echo that position in comments today to MLB.com's Mark Sheldon. It turns out that the team has only taken that position with respect to players whose deals were valued under the $2MM level, tweets Jeff Passan of Yahoo Sports.

We will use this post to keep tabs on the the highest-stakes arbitration situations remaining — those where the player files for at least $4.5MM:

Dodgers Extend Clayton Kershaw

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The Dodgers have officially announced the extension of ace Clayton Kershaw, who receives a groundbreaking seven-year, $215MM contract one year before he would have qualified for free agency. Notably, the deal includes an out clause that the southpaw can exercise after five seasons, at which time he will still be just 30 years old.

Kershaw

Kershaw's representatives at Excel Sports Management have secured their client the highest-ever annual salary for a baseball player. His $30.7MM AAV bests those achieved in the one-year, $28MM deal for Roger Clemens back in 2007 and Alex Rodriguez's ten-year, $275MM deal.

Kershaw's extension also gives him more new money than any pitcher contract in baseball history. Indeed, the deal exceeds the next biggest commitment — the seven-year, $161MM C.C. Sabathia deal — by a whopping $54MM. Likewise, it dwarfs other, more recent guarantees, including Zack Greinke's $147MM free agent pact and the extensions of Cole Hamels ($144M in new money), Justin Verlander ($140MM), and Felix Hernandez ($135.5MM). 

Though it does not have a no-trade clause, Kershaw's contract contains language that would significantly impact his rights in a trade scenario. First and foremost, Kershaw would obtain the right to void the deal if traded. If he is sent to another club mid-season, he could void the rest of the deal before the start of the following season. If, instead, Kershaw is dealt during the offseason, he gets the right to void the remainder of the contract after the end of the ensuing campaign. He would also pick up a one-time, $3MM bonus if he is traded during the offseason.

Obviously, these clauses present a significant barrier to any trade, at least until the point at which Kershaw's opt-out clause would otherwise be available to him. In particular, they convey immense leverage to Kershaw to demand a massive, new extension from any team that wishes to acquire him. 

Kershaw's salary will be somewhat backloaded. The big lefty will earn $22MM in 2014, $18MM of which is a signing bonus and only $4MM of which is in salary. His salary then tracks as follows: $30MM (2015), $32MM (2016), $33MM (2017), $33MM (2018), $32MM (2019), and $33MM (2020). The deal also contains incentives: Kershaw stands to earn $1MM for a Cy Young campaign and $500K for landing second or third in the voting. 

This means that the opt-out decision facing Kershaw after the 2018 season will effectively be a two-year, $65MM proposition. If he leaves that money on the table, the deal would end up paying him $150MM over five years, good for a straight $30MM AAV.

Kershaw's nearly unprecedented level of early-career performance had lined him up for a projected $18.15MM arbitration payday this year, in the analysis of MLBTR contributor Matt Swartz. As MLBTR's Tim Dierkes notes on Twitter, that would imply an approximately $32.8MM AAV ($197MM over six years) for Kershaw's free agent years.

Indeed, Kershaw's historic contract was earned by a legitimately historic run in his career's early going. The soon-to-be 26-year-old became only the third pitcher in MLB history — following Greg Maddux and Lefty Grove — to lead the big leagues in ERA for three straight seasons, which he accomplished after posting the low mark again last year. He has registered a close second to Verlander in terms of fWAR (18.5 against 19.1) among starters over that same time period.

Last year was Kershaw's best season yet, as he posted a 1.83 ERA in 236 innings, leading the league in strikeouts (232) and WHIP (0.915) to go along with his ERA title. The net of his MLB career to date is a 2.60 ERA in 1,180 innings, buttressed by 9.2 K/9 against 3.0 BB/9. He has made at least 30 starts in every year since 2009 and has thrown over 200 innings for each of the last four seasons. Needless to say, Kershaw has been both outstanding and durable.

For the Dodgers, Kershaw adds a massive, but seemingly manageable, new obligation to the books. As I explained back in November, Los Angeles was running away from the rest of the league in terms of post-2014 salary obligations. Though major signings by clubs like the Yankees and Rangers have evened things out somewhat in the interim, L.A. will continue to set the pace on future spending. But that spending level is backed up by an unmatched $340MM local TV revenue stream.

As I further explored, the Dodgers stand to gain the most out of any team in baseball from an inflationary salary environment, as their massive obligations stand to see the largest decrease in real value as salaries rise. The money owed Kershaw, too, could reduce substantially in relative terms if salary trends continue upward. Moreover, as also illustrated in that piece, Los Angeles has a huge ramp-down in its future commitments beginning after the 2018 season, which creates some additional breathing room. But with the opt out landing at that same point, that salary space could ultimately end up going towards yet another extension.

As Dierkes notes on Twitter, Kershaw's contract is the ninth MLB deal to include an opt-out clause. Of the other eight deals, only those agreed to by Vernon Wells and Elvis Andrus came by way of extension rather than free agency. 

Looking at the broader market impact, the Kershaw extension will undoubtedly be pointed to in negotiations regarding other top starters. Major arms that are set for free agency next year include Max Scherzer, James Shields, and Jon Lester, with David Price headlining the 2016 crop. Though Kershaw may be in a league of his own given his age and track record, his new deal certainly stretches the scale of reasoanbly attainable salaries upwards.

ESPN.com's Ramona Shelburne first reported the signing and its terms (via Twitter). Jon Heyman of CBSSports.com first reported the annual payment structure on Twitter. Joel Sherman of the New York Post first reported the deal's trade provisions (all links to Twitter). 

Photo courtesy of USA Today Sports Images.

Reactions To The Clayton Kershaw Extension

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Dodgers owner Mark Walter says one reason his team decided to give Clayton Kershaw a new $215MM contract is a cautionary tale about the Cubs and Greg Maddux, Bill Shaikin of the Los Angeles Times reports. In 1992, a 26-year-old Maddux won his first Cy Young award as a Cub, but the Cubs let him leave as a free agent after the season. He won three more straight Cy Young awards, but he won them all with the Braves. The Braves then went to the playoffs four times before the Cubs got back to the postseason again. Here are more reactions to the Kershaw extension.

  • $215MM is "crazy" money, but that doesn't mean the Kershaw deal is a bad idea, writes FOX Sports' Ken Rosenthal. Rosenthal notes that, last summer, the Dodgers offered Kershaw a seven-year deal in the vicinity of $200MM, so their willingness to go slightly higher helped get the deal done. Rosenthal also notes that Kershaw's opt-out clause, which allows him to leave after five years, is a key part of the deal, since opt-out clauses are very player-friendly.
  • Kershaw is close to being "the Mike Trout of pitchers," Dave Cameron of Fangraphs writes. Health permitting, he could well end up "the best pitcher of his generation." The contracts for Justin Verlander and Felix Hernandez helped set a baseline for Kershaw — Kershaw is better than either one, and was a year closer to free agency. Cameron also writes that, unless Kershaw gets hurt, he will probably opt out of his contract in five years. It appears he sacrificed a bit of upfront money in the contract in order to have the right to opt out of it.
  • If you're going to give a pitcher $215MM, Kershaw is exactly the kind of pitcher who should get it, Steven Goldman of SB Nation writes. He's still just 25 and has a solid health record, and the Dodgers have gone relatively easy on his arm.

Dodgers Still Want To Add A Starting Pitcher

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Even after signing Dan Haren earlier in the offseason and agreeing to extend Clayton Kershaw today, the Dodgers hope to add another arm to their staff, report Ken Rosenthal and Jon Paul Morosi of FOX Sports (Twitter links). Masahiro Tanaka is a possibility, but would be an ownership call, while Bronson Arroyo is also on the team's "short list" of options.

Club GM Ned Colletti has said that, despite inking Haren, another starter addition remained possible. The rotation presumably will include Kershaw, Zack Greinke, and Hyun-jin Ryu in addition to Haren. For the fifth spot, absent a new signing, the club would be expected to host a Spring Training competition between veterans Josh Beckett and Chad Billingsley.

While Beckett and Billingsley remain question marks due to injury issues, the two are owed a combined $27.75MM by Los Angeles next year. Presumably, either or both could become trade candidates in the event that another starter is brought in.

Dodgers Trying To Extend Kershaw This Week

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2:07pm: Dodgers president Stan Kasten has confirmed that the club is looking to complete a deal with Kershaw in the near term, according to a tweet from Bill Shaikin of the Los Angeles Times. "I am hopeful that, by the [arbitration exchange] deadline Friday morning, we can work something out," Kasten said in reference to Kershaw.

Kasten also left the impression that a Kershaw extension would not preclude the club from pursuing Masahiro Tanaka, Shaikin further tweets. Though he declined to discuss the Japanese hurler, Kasten said that he does not "think any one contract impacts any other."

11:15am: ESPN's Buster Olney says Kershaw and the Dodgers are "at the two- or the one-yard line" in terms of completing a record-setting extension (video link).

8:28am: The Dodgers and Clayton Kershaw are discussing an extension, according to Ken Rosenthal of FOX Sports, who reports that the team would like to have an agreement in place by Friday. Los Angeles' preference is to have a deal in place by the time the two sides are set to exchange arbitration figures.

Rosenthal reports that the two sides were close on a seven-year, $210MM extension last season before the Dodgers backed off and adds that early in the negotiation process, a 10-year, $250MM contract and a 12-year, $300MM pact were discussed. Rosenthal also reports that the near-agreement last season contained an opt-out after the fifth year that would've allowed Kershaw to hit the open market again at age 30. The Dodgers gave Zack Greinke an opt-out after three years of his deal, and Kershaw has the same agency — Excel Sports Management.

Kershaw is fresh off his third straight National League ERA title and his second Cy Young in three years, having pitched to a 1.83 ERA in 2013. Over the past five seasons, Kershaw has pitched to an incredible 2.43 ERA with 9.3 K/9 and 2.9 BB/9, and his command has improved in each of those seasons. He averaged nearly five walks per nine innings as a 21-year-old in 2009 but averaged just two per nine innings last season. Kershaw's accomplishments make it seem as though he's older than he actually is, but incredibly, he's still entering just his age-26 season.

As MLBTR's Tim Dierkes noted back in April, CC Sabathia's $161MM guarantee is the largest "new money" extension ever signed by a pitcher, though Justin Verlander and Felix Hernandez have had larger guarantees that included the money from previously existing deals. MLBTR contributor Matt Swartz projected an $18.2MM salary for Kershaw next season if the two sides simply work out a one-year deal via arbitration, but a long-term deal would obviously require a significantly larger annual value.

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