After inking an extension with the Dodgers, Clayton Kershaw has lots of reasons to smile—215 million reasons, to be exact.
Well, that didn't take long. After rumors spread early Wednesday that the Los Angeles Dodgers were working feverishly to lock up star left-hander Clayton Kershaw to a long-term deal, the two sides have agreed to an extension merely hours later.
The latest report, from Ramona Shelburne of ESPN Los Angeles, is that Kershaw, who was due to hit free agency after the 2014 season, will be paid handsomely:
The Dodgers and Clayton Kershaw have agreed on a seven year, $215 million contract, sources have told ESPN. Out after five— Ramona Shelburne (@ramonashelburne) January 15, 2014
Kershaw obviously makes out like a bandit. On the surface, the Dodgers have to be thrilled to know that they'll be hanging on to the top pitcher in the major leagues for several more seasons.
There's reason to believe, though, that this will wind up working out much better for Kershaw than the Dodgers in the end—and it has nothing to do with potential career-threatening injury problems for pitchers or the regrettable history of contracts of this scope and size.
There are two key points to take away from this reported deal. The first is that Kershaw will be able to opt out after five years, meaning he has the ability to hit the open market for the first time in his career after the 2018 season—as a 30-year-old with perhaps a historic resume at that point.
The second is that the average annual value (AAV) of the deal—that would be $30.7 million—is the highest in Major League Baseball history, as Buster Olney of ESPN points out:
Kershaw's deal a record for average annual value, and the fact that he can become a free agent at 30 again, through an out, is remarkable.— Buster Olney (@Buster_ESPN) January 15, 2014
That sound you hear? It's the cha-ching of Kershaw's bank account.
The 25-year-old hit the jackpot—and then some—by setting the record for largest contract ever handed out to a pitcher, surpassing Justin Verlander's deal from last March. That extension also covered seven years, but it pays out "only" $180 million. And Verlander didn't get the opt-out clause.
That, folks, is the most significant dynamic of this entire thing. The ability to opt out is exactly what protects Kershaw and hamstrings the Dodgers. In fact, the opt out and Kershaw's performance have more or less an inverse relationship.
That is to say, the better Kershaw pitches over the next three, four, five years, the more likely he is to trigger the clause and use it as leverage against the Dodgers, who will face enormous pressure to go all-in on a second massive deal.
Only next time the threat of 29 other teams getting involved in the bidding will be immediate, not a year away like it was this time around. And in the event this plays out, the next contract will cover only Kershaw's 30s, and perhaps extend into his late 30s, making it even riskier.
Of course, if Kershaw starts to pitch worse in a few years, well, he has the safety net of $30-plus million coming his way for two more seasons.
In some ways, this is exactly what's happened with CC Sabathia and the New York Yankees. As a free agent, Sabathia inked a $161 million contract—also for seven years, notice a trend?—in December 2008 that allowed him to opt out after three years.
That's just what the fellow lefty did following the 2011 season. After Sabathia helped the Yankees win it all in 2009 and compiled 17.6 WAR—tied for fourth in baseball from 2009-2011, per FanGraphs—the Yankees basically had no choice but to re-sign him. They did, to the tune of $122 million more over five years.
Sabathia serves as an example of both the good and bad that comes with Kershaw's agreement. He was fantastic for the first three years of the deal, up through his age-30 season, after which the opt out was executed.
And since? Well, Sabathia has battled arm troubles, including surgery last offseason to remove a bone spur in his left elbow, and then he struggled through the worst season of his career (4.78 ERA).
Sabathia is now in his decline years, and the Yankees are still on the hook for a minimum of $76 million through 2016. Due to a vesting option, though, that could easily jump to $96 million through 2017, as long as Sabathia doesn't suffer a shoulder injury during the 2016 campaign.
Basically, Sabathia and his representation timed everything perfectly.
That's what Kershaw and agent Casey Close—who also reps rotation-mate Zack Greinke, and got the right-hander a three-year opt-out clause on his six-year, $147 million contract a year ago—may well have done here. After all, it's no accident that Kershaw has a built-in escape after his age-30 season, just like Sabathia did.
To that end, it doesn't really matter much that Kershaw will be entering his age-26 season next year, whereas Sabathia was going into his age-28 season in year one with the Yankees.
It's also no accident that Kershaw will be able to nix his new deal after 2018. Take a look at the other big-money contracts on the Dodgers, paying particular attention to the expiration dates:
|PLAYER||TERMS||AAV||FINAL GUARANTEED YEAR|
|Clayton Kershaw||7 years, $215 M||$30.7 M||2018*|
|Zack Greinke||6 years, $147 M||$24.5 M||2015*|
|Adrian Gonzalez||7 years, $154 M||$22 M||2018|
|Carl Crawford||7 years, $142 M||$20.3 M||2017|
|Matt Kemp||8 years, $160 M||$20 M||2019|
|* = opt-out can be triggered|
Cot's Baseball Contracts
By the time 2018 rolls around, most of those deals will be over and done with, meaning the Dodgers may well have money to spend all over again—just when Kershaw can hold that against them.
Essentially, the only way the Dodgers ace winds up not opting out after 2018 is if his performance falls off dramatically between now and then.
Now, this isn't all doom and gloom. Let's not lose sight of the fact that Los Angeles just locked up the best pitcher in the world at a price ownership and management decided was affordable (for them). Plus, because Kershaw is still only 25, the Dodgers won't necessarily have to pay for much, if any, of his age-related drop-off over the back end of this deal.
That sets up both the Dodgers and Kershaw well when it comes to winning over the next few seasons. But Kershaw also cleverly set himself up to leverage his franchise player status into another massive amount of money in a second—and potentially more regrettable—extension down the road.
Kershaw is now an ace with an ace in the hole.
Information from Cot's Baseball Contracts was used in this story.
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