Odubel Herrera's contract is already looking smart
The contract Odubel Herrera signed this offseason is the kind of deal that can end up paying immense dividends for the Phillies two or three years from now, the same way Chase Utley's and Jimmy Rollins' first contract extensions did for those 2007-11 teams. While no commitment is without risk, the potential reward the club stands to realize is immense.
If you had any doubt about the wisdom of the deal, look at the Rays' recent contract extension with centerfielder Kevin Kiermaier (and by recent, I mean it was just reported this morning by the Tampa Bay Times' Marc Topkin). The contract is worth a reported $53.5 million over six years, still well below what an identical player would receive on an open market, but 45 percent higher than Herrera's deal in terms of Average Annual Value.
Over the last couple of years, Herrera's .773 OPS ranks 10th among centerfielders (min. 800 plate appearances), while Kiermaier's .728 ranks 16th, behind former Phillie Rule 5er Ender Inciarte (.739), who signed an extension identical to Herrera's later in the offseason.
Their career numbers:
Inciarte (23-25): .292/.337/.381 (.722 OPS), 56/76 SB, 11.8/7.8 K%/BB%, 6.1/0.8 XBH%/HR%, 1586 PAs
Kiermaier (24-26): .258/.313/.425 (.738 OPS, 44/56 SB, 18.3/6.6 K/BB%, 8.8/2.4 XBH/HR%, 1313 PAs
Herrera (23-24): .291/.353/.419 (.773 OPS), 41/56 SB, 22.1/7.6 K/BB%, 7.0/1.9 XBH/HR%, 1193 PAs
Herrerra has been the better hitter by a relevant margin (his OPS+ of 111 means he was 11 percent better than league average, compared with five percent above average for Kiermaier and four percent below average for Inciarte). He's also one year younger.
If you had to choose one of the three as your centerfielder of the future and all you had to go on was the above numbers, you'd be a fool to pick anybody but Herrera, particularly given the steps he took to cut his strikeout rate and increase his walk rate last year, the first of which dropped from 24.0 to 20.4 percent and the latter of which rose from 5.2 percent to 9.6 percent (in other words, he cut his K/BB ratio by more than half).
That K/BB ratio is as important a marker as it is a concrete measure of performance: the selectivity it indicates paid off in measures for greater than an extra walk here or one fewer strikeout there. One of the concerns about Herrera after his dynamite rookie campaign in 2015 was his ability to adapt to MLB pitchers now that they had a book on him. Specifically, he needed to either improve against off speed stuff or get a higher percentage of his swings against fastballs.
The latter is what happened. Herrera ended up seeing a higher percentage of fastballs last season by about 2.5 percent, per FanGraphs' data. One thing to monitor as he ages is whether he can homer off more of those fastballs, the way Shane Victorino eventually did. Not that Herrera has lacked for gap power thus far. Rather, that pop and his body type make you wonder if he might have a 20-25-homer season in him at some point (though 15 is certainly more than adequate from your centerfielder).
Yet Herrera's deal looks on paper to offer his team the most bang for its buck, with a $6.1 million AAV and two team options for a combined $24 million, meaning the Phillies can postpone his free agency by three years.
Inciarte's AAV is the same, but it gives the Braves control over only his first two free-agent seasons. And, as we noted above, Inciarte is the lesser player.
So what gives?
The Phillies struck a year earlier than the Rays or Braves. Kiermaier and Tampa Bay had previously agreed upon a $2.975 million salary for his first arbitration year, while Inciarte was in line for a similar salary (the Marlins' Marcell Ozuna, another comp, will earn $3.5 million this year in his first year of arbitration).
Herrera, by contrast, stood to make somewhere in the neighborhood of $550,000. The Phillies gave him an opportunity to double his career earnings with the stroke of a pen, dangling a $1.25 million signing bonus to go with the $1.25 million in annual salary he'll receive for 2017.
The deal makes sense for the Phillies both on the front end and the back end. Herrera will receive $5.5 million over the first two years of the deal, a total he'd have come close to matching if he went through arbitration on a year-to-year basis (e.g. Ozuna's $3.5 million, plus the $550,000 Herrera would've received this year, plus inflation, etc.). But it's the later year where the Phillies will reap a reward that could translate to them being able to staff their roster with an extra veteran player from 2021-23.
Explanation:
While the Phillies will pay Herrera according to a slowly increasing schedule ($1.25 million in 2017, $3.0 million in 2018, etc.), the contract will count toward the luxury tax as $6.1 million in all five years of the deal, because MLB calculates a club's official payroll by dividing the total guaranteed money on a contract by the total guaranteed years. That gives a team like the Phillies added incentive to lock guys up early: in doing so, they can essentially front-load some of the real financial impact of a deal onto seasons in which they expect to be well under the luxury tax threshold (2017 and 2018) and then enjoy more spending flexibility in years when they figure to be major players in free agency. For example, while Herrera will take home just $5.5 million in 2017-18 combined, his salary will count $12.2 million against the tax threshold. The same holds true when he makes $17 million in the last two guaranteed years of the deal. So the Phillies pick up some extra cash that way.
They also will pick up a huge amount of "extra" cash in those first three free-agent years, assuming Herrera maintains his current pace. For instance, the Cardinals just signed 31-year-old Dexter Fowler to a five-year contract with a $16.5 million AAV after a couple of seasons of similar production. While Fowler will make $49.5 million in his first three years of free agency, the Phillies will pay Herrera a max of $30.1 million in AAV. That's an extra $6 million per year, not counting inflation or other factors that could play into the 2021 market, when Herrera would've been eligible for free agency. That's an extra $6 million per year the Phillies can spend elsewhere.
Smart stuff.
For reference:
Odubel Herrera AAV
Bonus: 1.25
2017: 6.1 (1.25)
2018 (Arb1): 6.1 (3.0)
2019 (Arb2): 6.1 (5.0)
2020 (Arb3): 6.1 (7.0)
2021 (FA1) : 6.1 (10.0)
2022 (FA2) : 11.5 (2.5 BO)
2023 (FA3) : 12.5 (1.0 BO)
Kevin Kiermaier
2017: 8.92
2018: 8.92
2019: 8.92
2020: 8.92
2021: 8.92
2022: 8.92
2023: Opt
Ender Inciarte
Bonus: 3.5
2017: 6.1 (2.0)
2018: 6.1 (4.0)
2019: 6.1 (5.0)
2020: 6.1 (7.0)
2021: 6.1 (8.0)
2022: Opt (9.0/1.03)