Yankees Ace Luis Severino Is the Latest Player to Take Guaranteed Money, a Trend Likely to Grow

Four players with bright futures signed contract extensions instead of risking free agency a couple years from now. Is this the new trend for promising young players?

It’s another day and another team-friendly extension has been signed in MLB. Early Friday afternoon, reports emerged that the Yankees were signing righthander Luis Severino to a four-year, $40 million deal with a fifth-year option, thus buying out his arbitration-eligible seasons. The news comes on the heels of the Twins handing out a pair of five-year contracts—to shortstop Jorge Polanco and outfielder Max Kepler—that also wiped out each player’s arbitration years and some free agency. That move followed the Phillies and righty Aaron Nola agreeing to a four-year deal that did the same.

On the surface, there’s nothing all that strange about this rash of deals. Players often agree to extensions in Spring Training, particularly ahead of arbitration hearings. In 2018, nine players received new long-term contracts between the start of the year and Opening Day, ranging from Red Sox catcher Christian Vazquez’s modest three-year, $13.5 million deal to Jose Altuve’s $151 million mega-extension. All served the purpose of buying out arbitration years and a bit of free agency. All were also on favorable terms to the teams. Instead of the player earning year-to-year in arbitration, the teams control a player through their 20s, which are their most valuable years.

That too is nothing new. Long-term deals are, by and large, usually team-friendly moves. Players prefer guaranteed money to annual instability (aside from Trevor Bauer, that is), and that usually means getting less overall than they would otherwise. Consider it the equivalent of winning the lottery and electing to receive your payment as a one-time lump sum instead of an annuity: The former is an immediate but smaller payout, while the latter is larger but doled out once a year over a long stretch of time. Most winners choose the lump sum because, in the immortal words of J.G. Wentworth, it’s their money, and they need it now. For 99.9% of these guys, that money is life-changing, and to have it all guaranteed no matter what—including injury, the monster at the end of the book for all players—means that it’s frequently a no-brainer to sign an extension.

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But it also means accepting less than you’re worth. Both Severino and Nola would have made a good deal more—likely anywhere from $10–20 million total—had they gone through arbitration annually. In Nola’s case, he also handed over what would have been his first year of free agency (after the 2021 season) for $15 million, plus a club option valued at $16 million (with a $4.25 million buyout) for the next year. (Severino also lost a year of free agency, but through a fifth-year club option.)

Nola, who finished third in the NL Cy Young voting last year, would have entered free agency at 28 years old; it’s hard not to imagine him getting a long-term deal that topped $15 million per year. To take a recent example: Nate Eovaldi, who hit free agency for the first time this winter at age 28, received a four-year, $68 million contract from the Red Sox despite a horrifying injury history that includes Tommy John surgery. Nola has been healthy since his 2017 ligament replacement surgery, and it feels like he sold the most valuable year of his career for relatively cheap.

The same holds true for Polanco and Kepler. In his deal, Polanco—who wasn’t yet arbitration eligible—surrendered his first year of free agency for $7.5 million, plus has club options worth $10.5 million and $12.5 million, respectively, for the next two. Kepler—a Super-Two player set for an arbitration hearing this spring—gave up his first year of free agency for $8.5 million, with the second now tied to a $10 million club option. Buying out free agency years isn’t usually that cheap. When the Giants signed Brandon Belt to a six-year, $79 million contract at the start of the 2016 season, his first free agency season cost them $16 million. Similarly, the Marlins paid Dee Gordon $13 million for his first free-agent year in a five-year extension signed earlier that winter. Polanco and Kepler aren’t as good as Belt or Gordon, but the Twins are paying very little for what should be their biggest bargaining chips.

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It’s no surprise that this is happening during a frozen winter in which teams have all but ignored free agents, leaving the likes of Bryce Harper and Manny Machado unsigned along with dozens of others. It’s not hard to imagine younger players looking at the travails of their elders (and, in the case of Harper and Machado, their betters) and worrying that the same fate awaits them.

The result is owners saving money on the front-end while also not paying for free agents. These contracts do go wrong sometimes: The Rays gave Matt Moore a five-year, $14 million deal after the 2011 season, only for him to blow out his elbow before the ’14 campaign. But even then, Tampa got two All-Star-caliber years from Moore, and for a relative pittance, too.

The other factor here is a potential work stoppage after the 2021 season, when the current collective bargaining agreement expires. With all the discontent from players over how free agency has played out the last two winters, it seems increasingly likely that a labor dispute awaits. Locking in guaranteed money now is a hedge not just against injury, but a strike as well.

These deals, though, are ultimately a reflection of how squeezed players are in their youth. Draft and international signing bonuses have been slashed by MLB in the last six years. Minor league salaries are poverty wages. Players make the major league minimum for at least the first two years of their career, while top prospects get their debuts delayed so teams can game service time and gain extra control. And free agency is years in the distance.

As Nationals closer Sean Doolittle pointed out in a Twitter thread a couple of days ago, “The security these deals offer can seem too good to pass up.”
Doolittle would know: He signed a five-year, $10.5 million contract with the A’s early in the 2014 season that carried a pair of club options for ’19 and ’20. It’s far less than he’d be able to make now, but as he noted, he took it because he’d spent six years in the minors (three injured), had undergone two knee surgeries and made a position switch. “Players who sign these deals aren’t part of the problem,” he wrote. “The problem is the system.” Consider these extensions, then, another sign of the system at work.