Cleveland Indians: Estimating a Carlos Carrasco Contract

One of the Cleveland Indians’ aces could take home a king’s ransom in free agency

The Cleveland Indians have a cost-controlled ace in Carlos Carrasco. With the best starting pitchers now signing contracts with annual average values in excess of 30 million dollars, Carrasco’s four-year, 22 million dollar deal is looking better than ever, for the Indians. For Carrasco, this deal means that he might miss out on the mother load, but at least he had a certain financial future after a season of two extremes.

Beyond the financial security this deal offers, Carrasco still only has just over four years of major league service time. This means that he would be a free agent after the 2017 season, which is still two years away. It is too soon to speculate about the free agent environment for that off-season, but we can still wonder about what he would make in an alternate universe where he is a currently free agent.

So, how much of a salary might he command?

There are many different ways of estimating a contract. One is to simply estimate a player’s wins about replacement (WAR) over the lifetime of a deal and multiply by the estimated cost of a win per season. Another is to look for comparable contracts and adjust for the player. For this post, I will use the second method to estimate the length of the deal, but I will use the first method to estimate the dollars in the deal.

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First, let’s get an idea of how long a contract Carrasco might take home. He turns 29 in March, so he would be one of the younger pitcher options on the market. His agent could easily ask for a six-year contract, which would run through his age-35 season. It is even possible that Carrasco walks away with a seventh year.

To estimate the value of this contract, let’s establish a few things. First, we will begin with a 50/50 blend of Steamer’s projected RA-9 and FIP WARs for 2016. Then, to estimate an aging curve, we will subtract half a win of value for each season. Finally, we will estimate the cost of a win using today’s eight million dollar number and a five-percent inflation, which reflects recent trends.

Here’s what these inputs yield. All values are in millions of U.S. dollars.

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Whoa. That is a lot of money.

Is it too much money? Somewhat surprisingly, no it is not. David Price just signed a seven-year contract worth about 20 million dollars less, but that included an opt-out clause. If we put a similar structure to the Carrasco deal – three years, opt-out, four years – the total dollars would probably drop around 15 or 20 million dollars.

Even if one argues that Carrasco has really only had a season and a half of dominance, the fact that he was a top prospect with the Phillies and Indians remains. Sure, a lack of track record might damper his market, but all it takes is one team to value him as a former elite prospect with 40 starts of dominance. Oh, by the way, he is only entering his age-29 season. Now a contract in the range of 230-240 million dollars makes sense.

So let’s say that Carlos Carrasco could earn a seven-year, 237 million dollar contract in free agency. If we compare the remaining six years left on his current contract, valued at roughly 37.5 million if the Indians pick up both options, to the first six years of that chart, we see that Carrasco’s current contract has an estimated 175 million dollars of surplus value. Suddenly, it makes a lot of sense why teams have an interest in Carrasco, and it makes a lot of sense why the Indians have such a high asking price.

But this also brings us to a really big point: this is why teams have six years of control over a player. In reality, Carrasco will not have six years of service for another two seasons. Giving him a contract that runs from 2018-2022 with the same assumptions as above yields a five-year, $158 million deal. That is a lot of money, but it seems a lot more reasonable.

This big difference between 158 and 237 million dollars really underscores the significance of the six years of team control. Teams would be buying more of a player’s prime than in the current model. While this would certainly make it more difficult for small-budget teams to compete, the cost of a win in free agency would probably drop. The demand on players would most likely remain, but the supply would increase.

Next: Shopping baseball's bargain bin

Recap:

Carlos Carrasco would have a big payday if he were a free agent. He could take home a seven-year, $237M deal or a six-year, $212M deal with some proper negotiations. This underscores the importance of six years of team control for small or mid-market teams, but it also highlights the lost value for players. Most importantly, this allows us fans to understand just how valuable Carlos Carrasco’s contract is for the Cleveland Indians and any potential trade partner.