Should Indians Sign Justin Masterson to a Long-Term Deal?

The Cleveland Indians currently control Justin Masterson through the 2014 season. MLB Trade Rumors estimates that he will earn somewhere around $5.7 million through arbitration in 2013 and based on similar projections he will command near $8.5 million in 2014. Rather than wait for the clock ticks down to free agency and the leverage to shift towards Masterson, should the Tribe attempt to sign him to a contract extension now?

Since being acquired from the Boston Red Sox at the trade deadline, in 2009 Masterson has made 106 starts (113 appearances) and posted a 30-45 record with a 4.27 ERA. He is a heavy groundball pitcher whose 56.8 percent groundball rate from 2010-2012 ranks sixth in the among qualified starting pitchers. Over the same time period he has been as tough against right-handed hitters holding them to a wOBA of .280 (ninth-lowest in MLB), but he continues to get hammered by left handed batters—out of 121 qualified starting pitchers he ranks 90th with a .346 opponents’ wOBA versus southpaw hitters.

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In a time when it seems every young pitcher has had some sort of arm ailment, Masterson has been a durable contributor in the Indians rotation. In the last three seasons he has logged 180 innings, 216 innings, and 206.1 innings, but despite the consistency of his workload his overall body of work has been anything but.

Many in baseball questioned whether Masterson’s future was in the bullpen or in the rotation, but he settled in as a starting pitcher in 2010 and the 2011 season was appeared to be a positive season of growth. He finished the year with a 12-10 record and a 3.21 ERA, demonstrating improved command of the strike zone and decreasing his walk rate from 3.9 BB/9 in 2010 to 2.7 BB/9 in 2011. He also seemed to make progress on limiting the damage against left-handed batters, limiting them to a .746 OPS after they had OPSed .784 against him in 2010.

Big things were expected from Masterson in 2012, but he was unable to continue his upward trajectory. Instead, he took a step back, finishing with a record of 11-15 and an ERA of 4.93 in 34 starts. Like so many of the Indians players the 2012 season was a tale of two halves. Before the All-Star Break he and went 5-8 with a 4.40 ERA a .683 OPS against in 18 starts; the second half was much different as he went 6-7 with a 5.60 ERA and an .800 OPS against in 16 outings.

Even though Masterson may have taken a step back with his 2012 performance he is still a dynamic young pitcher (he’ll be 28 on Opening Day) who has produced close to 12 wins above replacement since 2009. But there is no guarantee that he will return to his 2011 performance nor is there any certainty that he will remain the pitcher he was in 2012. So the risk of any long term contract extension with Masterson and the Indians has to be completed with shared risk.

I’d like to see the Indians offer Masterson an extension that would guarantee him $31 million over the next four seasons and could be worth up to $70 million over six years. The contract would include a $3 million signing bonus in exchange for removing any no-trade provisions and pay him a guaranteed $6 million in 2013, $8.0 million in 2014, and $11 million in 2015.

The Indians would then hold three club options for the 2016, 2017, and 2018 seasons. The 2016 option would be worth $12 million and include a $3 million buyout. At the same time that the decision is made regarding the 2016 option they would have to make a decision on both the 2017 and 2018 options, each valued at $15 million. If the Indians decided to pick up the 2016 option at $12 million but decline the 2017 and 2018 options, his 2016 salary would increase to $15 million.

The contract modeled here is a shared gamble that could pay off handsomely for both parties. The Indians lock up a possible top-of-the-rotation pitcher for up to six more years which provides stability in an area that they must build up if they want to contend. Meanwhile, Masterson bypasses an opportunity at free agency but is guaranteed to make $31 million and at the worst could hit the open market as soon before his 31st birthday. If the Indians pick up the remaining three options his annual value of $14 million per season will most likely be in par with what similar pitchers are earning.