I was sort of surprised to see the Detroit Tigers locking up Nate Robertson for three years and $21.25 million. While I normally like buying out free agent years, I don’t think this was a good move. The Tigers bought out only one year for not much of a discount.
As a free agent, I have him valued at $30 million over the next three years. But the Tigers would have gotten him for about what they will pay him during his arbitration years—$4.5 (2008) and $7 million (2009)—without much risk. If he has a phenomenal year in 2008 it’s possible that he gets more in 2009, but if he pitches poorly they get him for less. Why not just go to arbitration and take a small risk? A small fluctuation in performance means little to the Tigers, but is quite significant to a single player whose livelihood depends on his talent. The cost savings are supposed to occur in 2010 when he gets $10 million. But I have him valued at about $11 million in his first year as a free agent, which isn’t much of a cost savings.
It doesn’t seem like the Tigers are getting much of a discount for insuring Robertson against a decline in his play. I think it would have been better to let the future play out, and if he continues to pitch as he has, then you suck it up and pay the extra million. But maybe this is a sign that salaries are in for an even bigger jump than I am anticipating.
Thanks to David Pinto for the pointer.