The White Sox locked up starter Chris Sale with a long term extension. Most people agree that it was a very good deal for the White Sox to lock up a young ace through his arbitration-peak years. Some fans question whether Sale and his agent left a lot of money on the table.
The deal was a five year extension worth $32.5 million (base). The contract also
includes club options for the 2018 and 2019 seasons. The 23-year-old
will earn $850K in 2013, $3.5MM in 2014, $6MM in 2015, $9.15MM in 2016
and $12MM in 2017. The White Sox have options for $2018 ($12.5MM) and
2019 ($13.5MM) with $1MM buyouts. CSN Chicago reports that the contract contains an bonus program that could make the total contract worth $60 million.
Why are young pitchers like Sale, Jonathan Niese, Derek Holland, Yovani Gallardo and Jon Lester, signing five year extensions worth more than $30 million only after two years of MLB service time?
First, it may the guarantee money. If a pitcher, especially one with health risks because of wind up or other issues, the incentive is to lock up as much guaranteed money as soon as possible.
Second, is to accelerate the level of arbitration money while discounting the overall contract value. If Sale did nothing, he would be paid slightly more than the league minimum of $500,000. So he gets a raise in 2013. His first year of arbitration usually yields around 25% of a comparable veteran starter salary (which today is around $13 million). That would be $3.25 million. The extension gives a tad more. Second year arbitration is around 50%, or around $6.5 million. The third year of arbitration is around 75% or $9.75 million. So the White Sox are getting a slight discount on the back end of the deal. Third, with the guarantee money settled, the contract will still expire when Sale is under 30, which is going to be a huge payday if he is healthy and continues to perform well.
Third, the risk of injury is apparent. Sale has seen ace John Danks go down for almost an entire season. And scouts still question whether Sale's quirky deliver will lead to injury issues.
The risk to the White Sox is that it has spent $32.5 million no matter what Sale accomplishes going forward. The White Sox have loathed the long term starter deals, but new GM Hahn is thinking more long term. But it makes sense to lock up two lefty aces in Danks and Sale to what are currently perceived as below market deals.
