Dodgers Extend Clayton Kershaw
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'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
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
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
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.
Quick Hits: Kershaw, Tanaka, Matsuzaka, Twins
Bargains abound on the free agent market, opines Doug Miller of MLB.com. Miller lists the following sleeper candidates for solid production in 2014: catcher Michael McKenry, first bagger Casey Kotchman, outfielders Chris Coghlan, Derrick Robinson, Grady Sizemore, and Tyler Colvin, and pitchers James McDonald, Suk-min Yoon, and David Aardsma. Here are a few more links to round out the day:
- Ace Clayton Kershaw has had ongoing discussions with the Dodgers about an extension that could reach ten seasons with over a $30MM annual salary, says Ken Gurnick of MLB.com. Club GM Ned Colletti said just recently that talks have been active, and of course the club reportedly extended Kershaw a $300MM offer during the 2013 season. Such a deal would make Kershaw the best paid player in baseball history, both in terms of total guarantee and annual salary.
- Meanwhile, the Dodgers are still in on the biggest open market pitcher of the offseason, Masahiro Tanaka. As Mark Saxon of ESPNLosAngeles.com explains, the Yankees have an urgent need for Tanaka, while the Dodgers more aptly want the hurler. If Los Angeles nevertheless outbids the Yanks for the Japanese star, says Saxon, it would represent a fundamental power shift in the game.
- You can count the Athletics out of the mix for Tanaka, reports Susan Slusser of the San Francisco Chronicle (via Twitter). Though GM Billy Beane surprised many when he nabbed Cuban outfielder Yoenis Cespedes, Slusser says that Oakland is not pursuing Tanaka.
- Reports earlier this evening that Daisuke Matsuzaka had re-signed with the Mets proved untrue, as multiple reports made clear. But Matsuzaka still realistically could land in New York on a minor league deal, Andy Martino of the New York Daily News reports. He would compete with in-house options for the club's fifth and final rotation slot.
- The Twins have hit before on the international market, and may now have their eyes on a couple of Cuban pitchers. According to a report on Twitter from 1500 ESPN Darren Wolfson, Minnesota sent three scouts to Mexico to see hurlers Misael Siverio and Odrisamer Despaigne throw in a showcase.
AL East Notes: Price, Tanaka, Yankees, Almanzar
When the offseason began, many speculated that David Price's time with the Rays was coming to an end, as the ace southpaw would be traded at the height of his remaining value (two years of team control) and Tampa Bay could save money and add even more quality prospects to their system. The perception amongst rival executives now, however, is that Price will stay put through the coming season, ESPN's Buster Olney reports in his latest Insider-only column. "Ninety percent chance he stays," one rival executive said. "The [trade] market hasn't materialized." MLBTR readers seem to agree with that sentiment — according to a recent poll, less than 31% of respondees feel that Price will be pitching elsewhere by Opening Day.
Here's some more news from around the AL East…
- Also from Olney's piece, some executives believe the Yankees and Dodgers will be the two final players in the race for Masahiro Tanaka. The Yankees have the greater need for pitching and perhaps even more pressure to sign Tanaka now that most of Alex Rodriguez's salary is off the books for 2014. The Dodgers, meanwhile, have shown they'll pay any price for a player they want, and are "more shameless in their bidding," according to some rival executives.
- If the Yankees can't sign Tanaka, they could again focus on staying under the $189MM luxury tax limit, WEEI.com's Rob Bradford speculates. Rodriguez's suspension could make the Yankees' payroll decision more difficult, as had A-Rod's 2014 salary still been fully owed, New York could've added Tanaka and other needed upgrades with the assumption that they'd be well over the $189MM threshold. If Tanaka signs elsewhere, however, Bradford isn't sure that the Yankees would be willing to pay another big luxury tax penalty for one of the other big free agent starters (Ubaldo Jimenez, Ervin Santana or Matt Garza) and they surely wouldn't go over $189MM just to sign a closer.
- If recent signees Delmon Young and Alexi Casilla make the Orioles' roster, it could hurt their chances of keeping Rule 5 Draft selection Michael Almanzar, Eduardo A. Encina of the Baltimore Sun writes. Almanzar was taken by the O's from the Red Sox in last month's draft, and if Almanzar isn't on the Major League roster for the entire 2014 season, Baltimore has to offer him back to Boston for $25K.
- CSNBaltimore.com's Rich Dubroff predicts 24 of the 25 players who he feels will make the Orioles' Opening Day roster. The 25th spot is being left open for a starting pitcher from outside the organization, as Dubroff feels the O's will add a starter between now and the start of Spring Training.
Free Agent Notes: Tanaka, Santana, Reynolds, Baker, Guerrier
Here is the latest on several free agent situations around the league:
- While not technically a free agent, Masahiro Tanaka can still be signed by any club that is also willing to pay his $20MM posting fee. Reports out of Japan indicate that the Yankees and Dodgers are the favorites to land the 25-year-old righty, tweets David Waldstein of the New York Times, with Tanaka's wife reportedly interested in landing on the West Coast. The Angels are also said to be among the top suitors for Tanaka's services, says MLB.com's Alden Gonzalez (referencing a recent report from Japanese outlet Sports Hochi).
- The Orioles, Twins, and Yankees recently asked for medicals on righty Ervin Santana, reports FOX Sports' Ken Rosenthal. (Links to Twitter.) New York appears only to be performing due diligence, says Rosenthal, who notes that Santana's flyball tendencies make him a poor fit at Yankee Stadium. Meanwhile, the Twins seem unlikely to add another free agent starter, Rosenthal adds.
- There are at least five clubs that "have been in on" infielder/DH Mark Reynolds, reports Jon Heyman of CBSSports.com (via Twitter). The teams include the Nationals, Rangers, Twins, Orioles, and Yankees.
- Right-handed starter Scott Baker has several minor league offers in hand but is holding out for a guaranteed MLB deal, tweets Darren Wolfson of 1500 ESPN. The Twins have not been interested in a reunion thus far, Wolfson adds.
- Another former Twin who spent time with the Cubs last year, right-handed reliever Matt Guerrier, is set to throw off of a mound on Friday as he rehabs from an elbow injury suffered late last year, Wolfson tweets. Minnesota is interested in potentially bringing him back, according to Wolfson.
Masahiro Tanaka Rumors: Sunday
Earlier today, we learned the Cubs are prepared to offer Masahiro Tanaka a nine-figure contract and a National League GM expects one team will "come in and blow everyone away." Here's the latest on the top ranked player on MLBTR's 2014 Top 50 Free Agents list still on the market:
- The level of the Dodgers' aggressiveness in pursuing in Tanaka may be defined by the progress, or lack thereof, in extension talks with Clayton Kershaw, according to ESPN's Buster Olney (Insider subscription required).
- The Blue Jays have scouted Tanaka, but their reluctance to offer players seven-year contracts make it unlikely the prized right-hander will sign with Toronto, writes Bob Elliott of the Toronto Sun.
- Also within Elliott's article, a source provides this scouting report on Tanaka: "Plenty of great Japanese hitters say his four-seam fastball and splitter are indistinguishable. His regular season was outstanding: 95-96 mph, four-seam fastball, location was great, velocity was great and an unhittable splitter, along with a hard slider."
- Elliott's source also outlined what Tanaka will be seeking from potential suitors. "Tanaka wants to go to a World Series, wants a city where his family will feel at home since they don’t speak English. He has a desire to be on a team with potential to win and loves the pressure."
Latest On Masahiro Tanaka
3:07pm: John Shea of the San Francisco Chronicle hears that Tanaka's initial preferred cities are Los Angeles, New York and Boston (Twitter link).
Meanwhile, Nightengale softens his stance in a pair of new tweets, noting that the Dodgers confirmed their interest but don't want to spend "wildly" or do anything crazy with their bid in order to land Tanaka.
1:04pm: While team president Stan Kasten said in a radio interview yesterday not to predict the Dodgers to land Masahiro Tanaka, Bob Nightengale of USA Today reports (via Twitter) that the Dodgers have made it known that they will go "all out" to sign the Japanese ace and "certainly won't be outbid."
Of course, because of the new posting agreement between Major League Baseball and Nippon Professional Baseball, signing Tanaka is no longer simply a matter of outbidding your opponents. Any team that wishes to pay the $20MM posting fee can negotiate with Tanaka as if he were a free agent, and the team would only lose that $20MM if an agreement between the two sides were to be reached. In other words, virtually any team in the Majors can afford to negotiate with Tanaka, and he could have preferences beyond signing for top dollar.
We've heard a great number of teams connected to Tanaka over the past two days, as the right-hander is in Los Angeles at this time meeting with teams face-to-face. In the past 24 hours alone, the Yankees, Diamondbacks, Angels, Dodgers, Cubs, White Sox, Blue Jays and Indians have all been linked to Tanaka.
Adding Tanaka to the mix would give the Dodgers a potentially unrivaled rotation in terms of dominance, as he would join Clayton Kershaw, Zack Greinke, Hyun-jin Ryu and Dan Haren. The addition of Tanaka would seem to push Josh Beckett and Chad Billingsley out of the picture for the Dodgers, though both dealt with injuries in 2013. Billingsley isn't expected back until summer after undergoing Tommy John surgery.
Masahiro Tanaka Rumors: Thursday
With the courting of Japanese starter Masahiro Tanaka now firmly underway, here is the latest on the top remaining free agent (in the estimation of MLBTR's Tim Dierkes):
- Tanaka is in Los Angeles not only to meet with clubs, but to undergo a physical, reports Steve Dilbeck of the Los Angeles Times. Tanaka will have his physical on Thursday and release the results to interested clubs. With a sizeable workload already under Tanaka's belt at age 25, says Dilbeck, agent Casey Close may be looking to get out in front of any health concerns.
- After Dodgers GM Ned Colletti said yesterday that discussions were in the "feeling-out" stage, president Stan Kasten further discussed the team's interest in Tanaka today in an interview with Mark Willard and Ben Lyons of ESPNLA 710, writes Mark Saxon of ESPNLosAngeles.com. "You can be assured we'll investigate everything and, if there's a way that it made sense, I'm sure we would consider it," said Kasten. "But I wouldn't predict it, I wouldn't hang our hat on it, because I think the team we have right now in place is ready to go to spring training, ready to start the season and ready to compete and win."
- Diamondbacks GM Kevin Towers also discussed Tanaka from his club's perspective, indicating to Nick Piecoro of the Arizona Republic that he anticipates a chance to meet with Tanaka and his camp. "They've been good through the process," Towers said in reference to Tanaka and Close. "I'm sure they've dealt with us the same way they've dealt with other clubs." Towers also addressed the issue of whether Arizona could compete with other teams that may have greater financial flexibility. "We don't know if it's about dollars or location or the chance to be competitive," said Towers. "Nobody has really met with him so I don't think any of us have any idea. … If they come out and say it's going to be the club that spends the most money on him, then we're probably not the front-runner. But everything right now is pure speculation by the media." The D-Backs' top baseball man declined to disclose his sales pitch, but did say that his organization has "spent a great deal of time putting together what our plan of attack is and what our selling points are."
- The White Sox have issued a statement confirming that club representatives met with Tanaka and his camp today, Scott Merkin of MLB.com was among those to report (through a series of Twitter links). GM Rick Hahn was joined by executive VP Ken Williams and manager Robin Ventura for a meeting that was, in Hahn's words, "exploratory in nature."
- Meanwhile, the Red Sox have been in touch with Close, GM Ben Cherington told WEEI.com in a radio interview today. As WEEI.com's Alex Speier tweets, Cherington said that "we'll see how it plays out" as to whether the club ultimately meets with Tanaka and company.
- The details of the negotation process could have a major role in where Tanaka ultimately ends up, Ken Rosenthal of FOX Sports explores in a series of tweets. For instance, the Diamondbacks have a scout who played with Tanaka in Japan, while Angels executive Hal Morris played ball with Close in college. While such advantages may be minor, Rosenthal says that clubs are looking for any edge.
- The precise structure of the deal could also be highly variable, says Rosenthal, and may well include creative contract terms. Rosenthal cites Close's utilization of an opt-out clause in the Zack Greinke deal, and proposal to include a similar clause in a Clayton Kershaw extension. An opt-out clause or even a massive AAV over a shorter term would not be surprising, according to Rosenthal.
Earlier Updates
- Tanaka arrived in the United States to begin meeting with Major League clubs, tweets David Waldstein of the New York Times. Tanaka was originally planning on flying into Chicago, but an NL official tells Waldstein that weather caused him to fly into Los Angeles instead.
- Jon Heyman of CBS Sports reports that Tanaka's camp could meet with as many as a dozen by Friday. According to Heyman, the Dodgers, Cubs, and Yankees (in addition to the above-noted Angels, White Sox, and Diamondbacks) all have meetings set. The Blue Jays have also had multiple conversations with Tanaka's camp already, he adds, but it's unclear if they have a face-to-face meeting set in Los Angeles. Heyman reports that Tanaka began meetings yesterday and could meet with five to six teams per day.
- We also learned additional details on the payment schedule for the posting fee that will be owed by whatever team ultimately lands Tanaka.
Jeff Todd contributed to this post.