How Likely Are First Round Draft Picks to Sign Extensions in Baseball?

Published: Feb 24, 2014 22:53pm EST
By Lance Rinker, Managing Editor for Konsume Sports

Please Note: This article was updated Feb 24, 2014 @ 10:53pm EST

 

How likely are first round draft picks in baseball to sign extensions after they make it to the major leagues, but before hitting free agency? Or, how likely are organizations to sign said first round draft picks to contract extensions before they hit free agency? Chicken meet Egg. Egg meet Chicken.

Allow me to start off by saying that my findings are no way indicative of determining whether players are or are not more reluctant to sign early extensions by being high draft picks. All we can do is review the data and try to find any trends that may expose themselves to us, unless of course we take a poll where every General Manager and team owner agree to honestly respond to it.

Another thing we must consider is this; do we really know, can we really say with the utmost certainty, when organizations really began to consider long-term extensions for their players before they are eligible for or actually hit free agency? It kind of feels like a new way of doing business to me, as in something that really began sometime in the 2000’s but I could very well be wrong in that belief.

I pulled all first round draft picks from Baseball Reference from 1990 to 2010 and there were 902 players drafted, including the supplemental first round, and 547 of them actually made it to the majors (60.6%). Of those 547 players drafted in the first round only 91 actually signed extensions before hitting free agency (16.6%).

I decided to look at this from several different angles. If we only consider players chosen within the first 10 picks of the first round then 40 of those players signed early extensions, or 43.9% of the 91, and the players drafted outside of the top 10, 51 (56%) in total, signed early extensions at a higher rate. That makes sense considering that players drafted in the top 10 are generally viewed as having the most talent and the greater chance of making it in the majors and it could be argued that they have the greater earning power among their peers drafted behind them, but that of course also relies greatly upon performance at the position they play.

Next, I decided to break the data up by looking at those players drafted with the top 15 picks and found that 57 of the 91, or 62.6%, signed early extensions versus just 34 players (37.4%) that were drafted outside of the top 15.

Then I decided to test my theory that organizations signing players to extensions early was somewhat of a new strategy and viewed all early extensions signed from 1990 to 1999 and then 2000 to 2010. For players signed early from 1990 to 1999 there were 41 (45.1%) and players drafted from 2000 to 2009 there were 50 (54.9%).

Those results make sense considering how the value of a single win has only escalated on a fairly consistent basis as player salaries and team revenues each rise to record levels. And yes, the growing trend is for organizations to lock up their young, top talent to favorable contract extensions early on to save some money over the long run. There’s always the risk that player gets hurt or their production craters and never recovers, but that’s the cost of doing business.

Additionally, players have multiple reasons for inking that first big contract extension early on because it allows them to have plenty of financial security while they are still very young and the vast majority of these deals still allows them to hit free agency before their age-30 season; just in time for another big payday if they continued to produce.

Here is the positional breakdown of early extensions, but it’s important to note that this only accounts for the positions played at the time they were drafted and not where they ultimately ended up:

P: 38

OF: 17

3B: 11

SS: 10

C: 7

1B: 6

2B: 2

The most interesting thing to me, and also most odd, is the sheer volume of pitchers receiving and agreeing to contract extensions before they hit free agency. Pitchers get hurt. Long-term contracts for pitchers almost never pan out for the signing team, so why are so many being inked to early extensions? It is certainly possible teams are simply willingly accepting that fact and are choosing to lock up their best, young talent – especially if that player happens to be a starting pitcher – because it’s so much more expensive to pay for on the open market.

Another thing that stood out to me is the utter lack of early extensions for players at catcher, first and second base. Catcher and second base are likely due to the lack of top tier talent that has come through the minor league systems and into the majors over the last decade or so. First base is a bit of a head scratcher and possibly it’s for the same reason.

Are these results indicative of certain organizational philosophies in regards to which positions they deem more worthy of early extensions over others, do any of these decisions have to do with positional scarcity, or is it only a matter of performance?

 

 

Contract data was pulled using Baseball Reference’s contract database. If any errors are found please contact me. You can find the spreadsheet with all of my data here

Full Link Here: https://drive.google.com/file/d/0BznyYlKX4h5mZk9sZmxROU1kSEU/edit?usp=sharing


 

Comments (2)



  • Lance Rinker   Feb 24, 2014 @ 11:54PM
    Great point Mike. I actually didn't even think about that simple explanation. Thanks for pointing it out. -

  • Michael Owen   Feb 24, 2014 @ 11:48PM
    I think something you're missing here Lance is that the number is higher for pitchers simply because they make up more of a roster In your case study pitchers made up 41.7% of the the players that re-signed earlier. When you figure that for most teams, pitchers make up 48% of their roster, that number would actually be kind of low. -

Lance Rinker
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