Dylan Cease Extension???

A couple of weeks ago I was listening to the SoxMachine podcast and my guy Josh Nelson ripped through an idea about how to secure Dylan Cease’s services for one additional year beyond his current amount of team control. I haven’t been able to get the idea outta my head. Luckily for me (and you), Josh clipped that segment and dropped it into a video on YouTube. His and Jim Margalus’ thoughts on the subject are below. WATCH IT!

Did you watch it?

Scroll back up and watch it you fuck, it’s for your own good.

Okay, now that you have watched it, I think it’s a good idea for me to break this down the way I see it and make some adjustments that I think incentivizes both sides. I’m not saying either side would do it under the conditions I am suggesting, this sort of thing might be a non-starter (basically extending for one additional year), we’ll get into why later. There are reasons each group could latch onto it in this somewhat unconventional union.

Josh’s Original Pitch

This was Josh’s original pitch in the podcast. This effectively runs out to a 3 year $60 million extension. However, the key parts are that A) 2024 and 2025 are still years of White Sox control under which Dylan Cease is eligible for arbitration and B) 2026 is his first year of free agency. Both very important elements to trying to figure out what kind of deal would make sense for the parties in question.

The White Sox are incentivized to do a short-term extension like this not only because Dylan Cease is a stud who just finished runner-up in AL Cy Young voting, but because an additional year with the White Sox lines up nicely with the control of many current “CORE” members. I recently blogged about whether trading Colson Montgomery was a decent idea. Below is a cutout from that blog that denotes the current “CORE” members of the team and their expected tenure.

Adding Cease for 2026 lines him up with the other most important players on this current roster. Andrew Vaughn, Luis Robert and Eloy Jimenez are the current (and future) most important hitters on this team. Keeping the “Ace” of the staff for just one more year would fit like a glove. A glove stuffed with benjamins, most likely, but a glove nonetheless.

We see why the White Sox would like this, but why would Scott Boras let Dylan Cease agree to this?

He most likely wouldn’t. Buying out arbitration years is one thing, but clipping just the first year of Free Agency is a particularly BIG ASK by a team. That’s the most valuable year of any player’s career (in theory). I wrote a blog back in the Pandemic Year of 2020, thinking out loud about long-term contracts. Think about long-term contracts as basically a loan amortization schedule.

The theory fits best on a car loan. When you buy a car and take out a loan on it, you have to pay the same amount monthly for let’s say 5 years. Over that time, the car generally depreciates both in fair market value and also in your enjoyment of use. The same thing happens with baseball players. See the table below for an example from the blog that is linked above. The early years of a long-term deal are generally at a discount to the team, which allows the player to get the total ransom.

Now this is a fake / made-up deal, but you get the idea. The early years are discounted (to the team), allowing for the player to build up the total amount of money they will earn all-in. The latter years of the deal, that the team always complains about, are the return discount to the player. The team paid fair market value, amortized, at the time of the deal. Don’t fall for their (the team’s) bullshit propaganda about the back end of contracts and how they are KILLING THEM. It’s total BS.

The only way you can get something like this (me thinks) is by resetting the market in a way, or at least the player’s market. You need to make the number eye-catching. It needs to jump off the page. The buyout needs to be material to both the player and the marketplace.

OK! Let’s get to a Dylan Cease deal! Arbitration Years First!

Dylan Cease is signed for 2023 on a 1 year $5.7 million deal. 2023 is the first of his 3 arbitration seasons before heading into free agency for the 2026 season (sorry for the redundancy, just trying to level set). It’s tough to estimate arbitration raises into the future.

However, Dylan Cease’s year 1 raise is substantial, which makes sense because he finished 2nd in AL Cy Young voting in 2022. Below are the two best comps I could find for him of recent vintage, their arbitration raises and the expected growth of Dylan’s based on his year 1 salary. This should encompass both current market conditions and the quality of the player to the best of my limited abilities.

David Price and Jacob deGrom feel like the two best comps to Cease. The main issue is that both of these guys won Cy Young awards after year 1 of arbitration (not that they weren’t studs prior to that), so there is some skewness to their raises. deGrom won his 2nd straight NL Cy Young going into his year 3 raise. Between the two calculations you get approximately $32M – $34M of expected salary for Cease assuming there isn’t a major drop off in performance. Above, in Josh Nelson’s example he gave Cease $32M combined in the first two buy out years, so I feel pretty comfortable with this ham-fisted analysis. Let’s move along to buying out his first year of free agency.

Buying out Year 1 of Free Agency

We need to find a close comp to 1 year of fair market value of the very best pitchers in the league. Luckily for us Uncle Steve Cohen (Jerry’s BFF) has signed a couple of contracts of recent vintage that give us as close of a proxy as we could possibly get. The deals he has handed out in consecutive years to Max Scherzer and Justin Verlander are short in term and high in AAV. Given that these two are still near or at the top of their respective games, I think this is the best available proxy.

Both deals have an AAV (Average Annual Value) of $43.33M. Woooo!! Now a couple of additional things to consider. These guys are in the back end of their 30’s while our hero Dylan will be 30 when he plays his first season as a newly minted free agent. Also, we are trying to project several years into the future and so we need to add a growth rate here (I used 5% per year) to be apples to apples. When I plug this all into the TI-82 we get approximately….

That’s right. Now that’s a number. That’s something that a Scott Boras might not laugh his ass off at you when you pitch it to him.

Make It Already

Okay, okay. So a couple of quick thoughts before closing this down and putting some dollars to paper. We need to give the White Sox some discount, so I am going to haircut the arbitration years we calculated by 20%. This may end up being a lot or a little depending on how well Cease pitches and how fast the market place realizes the value of top end pitching. Next, if we are buying out year 1 of free agency, we probably need to give Cease and Boras a little insurance, just in case things don’t go great that season and they aren’t interested in tumbling into the market after a clunker. We’ll give them a player option for 2027, basically a “reset your value” year. Does that work for everyone? I’m the only one voting in this blog, so YES. Below is what I would propose as an extension.

That’s right, 4 years $100M, but really it boils down to a 3 year $77M extension. The discount in 2025 and overall across 2024 and 2025 (in theory) should allow the team (if they were so inclined) to add talent to the roster to help complement the CORE that we mentioned earlier as well as the Colson Montgomery’s and Bryan Ramos’ of the world that will be arriving. It also keeps Dylan around for one more year, resets his market at an eye-popping number and gives him appropriate insurance should things go wrong in 2026.

I see this as the type of risky deal that might make the White Sox puke, but it also might make Boras Corp give it a second look.

Am I nuts? Maybe. But it’s hard to pencil out a deal like this without coming up with a wild conclusion.

-BeefLoaf

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