Transaction Analysis: Clayton Kershaw Predictably Makes the Most Money

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Signed LHP Clayton Kershaw to a seven year, $215 million extension with the ability to opt out after five. [1/15]

In a move that shocked no one, baseball’s biggest spenders have turned the game’s best pitcher into its highest-paid pitcher. The most surprising thing about Clayton Kershaw’s new contract is that the Dodgers didn’t get it done sooner.

Teams in need of pitching have spent much of the winter putting the best available MLB pitchers’ agents on hold while waiting to see whether Masahiro Tanaka would return their calls. Such is the appeal of a successful mid-20s starter in a market mostly made up of over-30 arms, even one with a posting fee, a worrisome workload, a possibly flat fastball, and no MLB experience. Kershaw is only 227 days older than Tanaka, and he more than makes up for the age difference with superior stuff, a nearly perfect health history, two well-deserved Cy Young wins, and an admirable fondness for orphans. It’s almost impossible to conceive of what a pitcher worth more on the open market would look like.

You can make a strong argument that Kershaw is the most accomplished 25-year-old pitcher of the past century. This is that argument, boiled down to one table:

Those are the best ERA+ marks among pitchers with a minimum of 1,000 innings pitched through age 25. The last time a young pitcher made the league look this silly, the Lusitania was still sailing. In an era of enlightened pitcher usage, Kershaw hasn’t had the opportunity to add as much value as a number of young pitchers who were worked harder early on. But inning for inning, there’s been no one better.

The only argument against doing a long-term deal with Kershaw is the one we always trot out: pitchers are risky, so signing them to long-term deals is dangerous. There’s something to be said for that argument. Ten years ago, five of the top 10 pitchers by WARP were 25 or under:

Signing any one of them to a long-term extension might have seemed like a good idea at the time. Three of them were never as good again, and the other two (Santana and Peavy) have combined for 825 DL days. Go back half as far, to 2009, and again you’ll find five 25-years-old in the top 10:

Not one of them has had a season since that was worth as much, though some have still been quite valuable. Kershaw, to this point, has been better than all of them, as that top table showed. But as dominant as he’s seemed, he’s not actually invulnerable. The likeliest outcome is that he’ll continue to be great, if slightly less so, but there’s still some chance that he could be Brandon Webb. Memento mori.

Two of the top predictors of pitcher health are previous injury history and age. Kershaw has never been on the disabled list, and he won’t turn 26 for another two months, so he seems like a safe bet so far. A third predictor is pitches thrown, and there he seems slightly scarier: Baseball-Reference tracks pitch counts back to 2000, and in that time, only Felix Hernandez and CC Sabathia have thrown more than Kershaw’s 18,643 pitches through age 25.

This all seems sort of circular: Kershaw has avoided the DL, which suggests that he’s more likely to stay healthy, but because he hasn’t been hurt, he’s been able to pitch more, which suggests that he’s less likely to stay healthy. Either way, he can’t win. Of course, we’re mostly flailing in the dark when we project pitcher injuries, so as long as Kershaw had no bones sticking out through his skin, someone was going to sign him to a huge contract if the Dodgers didn’t. Because of his history with Los Angeles and the likelihood that the team will keep contending, he’s worth as much in LA as he would have been anywhere else. And should disaster strike, the Dodgers have the deep pockets to survive the sunk cost.

And while it sounds strange to say it, considering that Kershaw will be making more per season than any previous player, that cost could have been higher. Last March, Justin Verlander signed a five-year extension that will pay him $28 million per year from his age-32-36 seasons. That contract, which at the time promised to pay him more per year than any other pitcher, came when he was 30, and two seasons away from free agency. Kershaw’s, for just $2 million more in AAV, comes when he’s about to turn 26, and only one season away from free agency, leaving him with less incentive to play it safe. In light of his age, his past and projected performance, and the going rate for wins this winter, Kershaw could have held out for more and gotten it, either now from Ned Colletti or later, had he hit the open market intact.

The contract he did get includes an opt-out clause that can be exercised in five years, at which point Kershaw will be as old as Verlander is now. Unless he gets hurt or declines significantly, he’ll trigger that clause and cash in again, so for Kershaw, this is just the contract before the contract. The Dodgers, meanwhile, get a short-term discount and escape the back-end risk that would have come with one of the 10-12-year proposals the two sides discussed. And because they got the deal done before arbitration, the Dodgers don’t have to tell Kershaw why he isn’t worth whatever he would have filed for, which could have hurt his feelings and made him more likely to leave. The sort of person who can’t cotton to the idea of athletes making millions will see this extension as another sign of a screwed-up system. But in the industry context, this isn’t an overpay; it’s just another player getting paid what a revenue-rich market will bear.