Justin Masterson Extension Makes Sense for Cleveland Indians, But It’s Not a Bargain

Sep 25, 2013; Cleveland, OH, USA; Cleveland Indians relief pitcher Justin Masterson delivers in the ninth inning against the Chicago White Sox at Progressive Field. Mandatory Credit: David Richard-USA TODAY Sports

It seems as if Cleveland Indians Starting Pitcher Justin Masterson is more than just a magician on the mound, able to escape and avoid potentially sticky pitching situation. It appears as if he’s also a master of misdirection, if his recent contract request is legit.

Where the recent contract extension for the statistically-similar Homer Bailey of the Cincinnati Reds seemed to be what Masterson would be asking for in an extension, Masterson has stated in the past week he’s very open to the idea of signing a shorter contract extension, possibly between three and four years and around $40-60 million total.

Most Indians fans were, understandably, elated to hear this news. Masterson is indeed, a good pitcher. Consider where the Indians were just a few weeks ago: the team had feared it would have to go to arbitration with its staff veteran, only to have Masterson sign a deal below what he had originally filed for in arbitration. It seemed like the Indians were prepared to ride out 2014 with Masterson, extend the qualifying offer, bid him goodbye if he declined the offer, collect the draft pick compensation (and the valuable draft pool money) and move on with life.

It wasn’t a bad plan by any means. As stated before (and I will again later), Masterson is a good pitcher. Since joining the rotation full-time in the 2010 season, Masterson has been fairly reliable, starting no fewer than 29 games in a season (logging no fewer than his 180 IP in 2010), which in of itself is valuable. When you factor in Masterson being well-above replacement in all of these seasons (1.9 fWAR in 2012 represents his lowest total WAR in that span, which isn’t terrible by any means,

but it’s not great

), riding out the 2014 season and extending the qualifying offer seemed like a safe bet.

Masterson is an above-average pitcher, that’s a given. But he’s not an elite pitcher. Both baseball-reference.com and Fangraphs.com use a variation of ERA (ERA+ for BBR and ERA- for Fangraphs) which adjusts for park factors (so it’s easier to compare a guy like Masterson to say, a guy like Seattle Mariners ace RHP Felix Hernandez, who pitches in the spacious Safeco Field). Although their methods vary slightly, 100 is the league average in both cases, with anything below 100 being above-average in Fangraphs’ ERA- and anything above 100 being above-average with BBR’s ERA+. It’s a tad confusing, but the gist is, two sites use a different method and come to similar results. The major-league leader in 2013 was Clayton Kershaw of the Los Angeles Dodgers, with a 194 ERA+. Hop over to Fangraphs, and the game is changed but the results are similar: Kershaw still leads baseball, with a 54 ERA- here. In fact, the 2013 top-10 leaders are the same for both Fangraphs’ ERA- and BBR’s ERA+ (with the only difference being Fangraphs seems to favor Seattle’s Hisashi Iwakuma, who ranks ninth in ERA+ but is fifth in ERA-). Masterson had an ERA+ of 109 last year, which puts him slightly above-average. There’s not much disconnect with Fangraphs’ assessment either, where he had a 90 ERA- (remember, in BBR, anything over 100 is above-average while the inverse is true with Fangraphs’ ERA-).

You might be saying, “Who cares what Masterson’s ERA+/- is, he can pitch!” And you’re not incorrect. He can pitch. But digging further into the numbers doesn’t ease concerns about Masterson’s average-ness. Masterson’s strikeout-to-walk ratio last year was 2.57, which was the highest of his career. It put him 54th in baseball, well behind MLB-leader Cliff Lee‘s 6.94 K/BB ratio, and actually in the bottom half of the 81 eligible pitchers.

Masterson’s new view on a contract appears to be in the three-to-four-year range, for anywhere from $40 million (likely for a three-year deal) to $60 million (likely for a four year deal). These demands are nowhere near the deal Bailey signed, which will be either five years for $95 million total (assuming his sixth year is bought out) or six years and $115 million total. So yeah, compared to Bailey, Masterson’s demands seem like a bargain. Fans apparently seem to think it’s a bargain, too, and the chorus of “SIGN MASTERSON MEOW” voices and tweets seem to grow by the day since Masterson publicly commented on the matter. “He WANTS to be here!” “He LOVES Francona!” “He’s such a good guy he’s not looking for top dollar!”

Sep 24, 2013; Cleveland, OH, USA; Cleveland Indians starting pitcher Ubaldo Jimenez (30) is congratulated by starting pitcher Justin Masterson in the seventh inning against the Chicago White Sox at Progressive Field. Mandatory Credit: David Richard-USA TODAY Sports

But though Masterson’s potential extension may be a bargain compared to Bailey’s deal, it’s not certain Masterson’s demands are actually a “hometown discount” bargain that many fans seem to think they are. Anthony Castrovince of MLB.com mentions a three-year deal for Masterson would expire after the current collective bargaining agreement between MLB and the player’s union expires. It’s certainly plausible Masterson saw the wait his former teammate Jimenez went through due to the qualifying offer (and possibly even the wait former Royals starter Ervin Santana is still going through) and decided Cleveland isn’t so bad, and it might be worth it to sign an extension now and bank on a payday with the new CBA.

Dave Cameron of Fangraphs recently asked if Masterson’s demands represented an actual bargain, and it’s worth reading what he thinks. Cameron expects Masterson to be worth around 7 wins or more from 2015 through 2018 (or when a three-year extension would kick in, assuming the extension doesn’t just rip up his already-signed 2014 contract). Cameron estimated the median price of a win this past off-season was approximately $6 million, although it is worth noting not all analysts agree on this exact number.

In Cameron’s own words:

"Even at $7 million per win, assuming some inflation and that Masterson continues to pitch at an above average level in 2014, that’s $49 to $63 million over four years. Or almost exactly what he’s rumored to be asking for.The value to the Indians here probably isn’t the total cost, but instead, the chance to get that fourth year on a team option. Even if Masterson simply agreed to sign for 3/$45M with no option, it’s not clear that this is a large enough discount for a mid-revenue team like the Indians to take the risk of doing the deal a year ahead of time. After all, the Indians aren’t a team that can afford to buy a ton of market priced wins, and so to take on the risk of his 2014 health and performance, they should get a real discount over what Masterson would be expected to get as a free agent.In looking at Masterson’s actual expected production and the market price of wins in free agency, Masterson’s asking price seems entirely reasonable. Fair, even. He’s made the Indians a solid offer at a price that makes sense for him and probably makes sense for them as well. But it seems like the “massive bargain” reaction that I had, and many others seem to be having, might be more of a result of the Bailey overpay than anything else.If we allow Bailey’s deal to “set the market” for good-not-great pitchers, then we’re tacitly acknowledging that this particular type of pitcher should be drastically overpaid relative to buying other types of wins on the market. Bailey’s deal shouldn’t be the anchor for a fair Masterson price. Bailey’s deal was too high, and the Indians are right to not want to to go anywhere near that price."

Assuming Masterson signed for around $15 million a year (which is what he is asking), he, Nick Swisher ($15 million per year) and Michael Bourn ($13.5 million per year) would make approximately $43.5 million, or slightly over half of 2014’s estimated $82 million payroll. It’s certainly possible payroll could increase beyond $82 million in 2015, when a Masterson extension would kick in, but it probably makes the team slightly nervous to commit over 50 percent of the payroll to three players.

Sep 25, 2013; Cleveland, OH, USA; Cleveland Indians manager Terry Francona (left) and relief pitcher Justin Masterson celebrate a 7-2 win over the Chicago White Sox at Progressive Field. Mandatory Credit: David Richard-USA TODAY Sports

The Indians would clearly be taking on some risk here (particularly if any extension was simply added on to the existing 2014 contract, which seems likely). They’re effectively paying Masterson like a free agent pitcher a year prior to him actually being a free agent. Yes, there is certainly risk with any free agent contract, but it’s important to note this risk is not the same as the risk in signing a free agent deal – this is essentially a future contract, and while it’s certainly possible the 29-year-old Masterson will improve in 2014 (or at least stay at his same level of performance), it’s probably equally possible he performs worse in that span as well.

The absolute worst-case scenario here seems to be similar to former Indians starter Jake Westbrook, who signed a three-year extension going into the 2008 season. Westbrook was 30, much like Masterson would be at the beginning of his extension, and their numbers are actually quite similar, with Westbrook having a bit more of a body of work at this point in his career. Westbrook was injured in 2008, required Tommy John surgery that forced him to miss most of that season and all of 2009, and the Indians didn’t even get 250 IP total from Westbrook’s extension. This isn’t implying Masterson will also get hurt, but more to illustrate how sometimes even sure-thing contracts don’t work out.

If the Indians were to sign Masterson to an extension today, they are effectively gambling he will be better in 2014 so that the contract looks like a bargain come winter time. It’s not a bad gamble by any means, but this isn’t a slam-dunk bargain deal by a player who desperately wants to stay in Cleveland. None of this analysis takes into effect any intangible benefits Masterson may bring to the club, such as being a leader in the rotation and a good teammate. As someone who isn’t around the team and therefore not privy to these benefits, it’s hard for me to factor them into the analysis of a possible extension, but it would be remiss not to mention them as factors into a possible deal.

So is such an extension a worthwhile risk for the Indians? My answer would be likely yes, in spite of the somewhat damning evidence to the contrary. A short-term extension, even if signed this season, wouldn’t be a bargain, but it would be hard to look at the deal as a massive overpay. Performance-wise, it’s probably realistic to expect Masterson to continue being an above-average innings eater, which with a now-young pitching staff could prove to be immensely valuable. Factor in Masterson’s desire to stay in Cleveland, with manager Terry Francona, and this seems to be a fair deal for both sides, even with its risks. The Indians can keep their veteran starter through the last of his more productive years, and Masterson will still likely get to cash in on at least one more payday after even a four-year extension. It may be an overpay, but unfortunately I’m not certain the Indians can afford to hold their ground and hope for a market correction.

Justin Masterson is a good starting pitcher, and by all accounts, a good human being as well. Signing him to an extension, particularly a short-term extension, is probably a good thing for the team, and certainly a good thing for the fans. But we can probably stop pretending he’s just made the Indians an offer they can’t refuse.