Indians Extend Asdrubal Cabrera

News broke Sunday afternoon that the Cleveland Indians had come to terms on a contract extension with shortstop Asdrubal Cabrera. The deal, which buys out Cabrera’s third year of arbitration in 2013 and delays his free agency until after the 2014, is reportedly worth $16.5 million.

Assuming the deal is actually in place (the team has thus far declined to comment) it’s obviously good news for the fans. Many saw the 2012 and 2013 seasons as the Indians’ only real window to contend for the foreseeable future as Cabrera, Shin-Soo Choo, and Ubaldo Jimenez were all scheduled to hit the free agent market for 2014—if nothing else, this is a clear sign that the team believes it can sustain a competitive team for at least an extra year.

But looking beyond the statement this deal makes and examining the actual terms of the extension, how does this deal look for the Indians?

Let’s start by looking at what Cabrera would have made through arbitration in 2013. As a rule of thumb, first-year arbitration-eligible players make about 40 percent of what they would earn on the open market, while second- and third-year arb-eligibles get about 60 and 80 percent of their free agent value, respectively.

The Indians avoided arbitration with Cabrera, a second-year eligible player, this winter by agreeing to pay him $4.55 million for the 2012 season. Based on that figure, Cabrera would be projected to earn about $6 million in 2013—$6,066,666.67, to be exact. In that light, the Indians are essentially settling his 2013 arbitration case a year early and paying $10.5 million to keep him around in 2014.

This would obviously qualify as a huge bargain for the Indians. His arbitration settlement was an absolute steal for the Tribe, so continuing to pay him at the same effective rate for 2013 is a huge win for Cleveland. On top of that, the $10.5 million the Indians would effectively pay Cabrera for 2014 (the yearly breakdown of the deal has not yet been disclosed) in a market where marginal wins are worth about $5 million means Cleveland is paying him for roughly 2.0 WAR of production—i.e., an average player.

Say what you want about Cabrera’s defense or his ability to repeat his 25-homer season, but there’s little doubt that he’s an above-average player. No major valuation system put him below 2.7 WAR for 2011, and he projects as about a 3.0-WAR player in 2012. Even if regression takes its toll, unless he suffers a debilitating injury that $10.5 million will at least be about market value for Cabrera in his age-28 2014 season. And that’s the worst-case scenario.

But assuming that Cabrera would have paid at the same rate in arbitration isn’t necessarily fair. Instead, we could look at this deal as representing 180 percent of his annual value (80 percent for his third arb year in 2013 plus 100 percent for 2014). Based on that split, this contract would value Cabrera as worth $9,166,666.67 a year—we’ll call it $9.2 million.

Assuming five percent annual inflation in the player market, a $9.2 million 2014 salary would equate to an expected value of 1.7 WAR of production…or about half of what he did last year. I know I’m getting a couple years ahead of myself here, but that’s going to be a tremendous bargain.

How much would a real market-value extension net Cabrera? Assuming he’ll be worth 3.0 WAR a year in 2013 and 2014 (if anything, that might be a bit conservative) he’d earn $12.6 million in arbitration next year. He’d get $16.5 million—i.e., the value of this extension—for his free agent 2014 season. That’s about $29.1 million of value that the Indians just got for $16.5 million.

This isn’t to say that Cabrera is a lock to provide the Indians with a great return on their investment. He could suffer a dramatic decline or his career could be derailed by injuries, but this way he still gets paid. Presumably he considered his financial security to be of greater importance than maximizing his payday—otherwise his agreeing to this extension wouldn’t make any sense. In essence, this deal is the exact opposite of the contract restructure the Indians agreed to with Fausto Carmona Roberto Hernandez last month, in which Hernandez (perhaps misguidedly) left some guaranteed money on the table in exchange for reaching the free agent market sooner.

All in all, this looks like a great deal for both sides—Cabrera cashes in and gets financial security while the Indians got some cost certainty on a dramatically below-market deal. Nice job by Chris Antonetti & Co., both for a solid investment and for making a statement that the team won’t just be waving a white flag come 2014.

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