Should the Mets extend Francisco Álvarez?

Morning Dose: Thursday, February 29

☀️ Good Morning:

The Mets keep winning! They are now 4–1 in Grapefruit League play after Pete Alonso and Trayce Thompson powered them to victory on Wednesday.

Meanwhile, David Stearns continues to keep an eye on the starting pitching market, having “checked in” with Michael Lorenzen, while “monitoring” whether Jordan Montgomery’s price might drop. A deal with a pitcher like Montgomery still seems unlikely.

Today, I will discuss what a Francisco Álvarez extension might look like, but first some takeaways from yesterday’s action.

☕️ Grab your coffee for your morning dose of Mets Fix!

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🏝️ Grapefruit Takeaways

❶ PETE GOES BOOM: The Polar Bear stepped to the plate twice on Wednesday and turned both into trouble. Starting with a sky-high ball that got lost in the sun and was ruled a double:

Followed by his first home run of the spring:

He has four hits in his first six spring at-bats.

❷ TRAYCE: Matching Alonso hit-for-hit, Trayce Thompson went 2-for-2 with a double and homer of his own:

After hitting a meager .086 in the Cactus League last March with the Dodgers, he has found his rhythm wearing a different kind of blue. He is now 4-for-7 with six RBIs and two homers in three games.

“This is a guy that’s making some adjustments — being more direct to the ball being one of those — and he’s having results out of the gate,” manager Carlos Mendoza said of Thompson, via the NY Daily News. “That’s important. We know the type of athlete he is and what he brings to the table. He’s a special defender with the speed.”

Despite the hot start, Thompson will still most likely act as Triple-A depth in the outfield. Tyrone Taylor, who David Stearns knows well from his time in Milwaukee, is slated to be the fourth outfielder behind Brandon Nimmo, Starling Marte and Harrison Bader. If one of them were to get hurt, Thompson could get the call while Drew Gilbert continues to mature his game in Syracuse.

❸ GOOD NATURED: Shortstop prospect Jett Williams used his speed to beat out an infield hit and record his first RBI of the spring.

Williams is also making strides off the field, having fun and building relationships as a young player: “When he’s not in the lineup, we’re making fun of him,” Mendoza relayed to reporters. “It’s good that he’s creating those relationships, and he’s having fun.”

❹ MARTE RETURNS: Starling Marte appeared in his first Grapefruit League game of the season, leading off, playing right field and going hitless in two at-bats.

“I go out there and watch the fans, watch the kids, see how much fun they're having. It's always special to be out there,” Marte said after the game.

A healthy Marte could open the door for a slightly different roster construction with Ji-Man Choi cracking the roster as a left-handed bat over DJ Stewart, whose added versatility in the outfield could theoretically become less of a separating factor. Stewart has a minor-league option remaining, but the Mets also believe he has refined the swing changes he implemented last season to find success.

⏭️ UP NEXT: The Mets will play under the lights for the first time this spring against the Astros in West Palm Beach with José Quintana scheduled to take the mound.

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🎧 Mets Fix Podcast

In our latest episode, Blake, Peter and JB discuss the excitement of Spring Training, a potential Francisco Álvarez extension, the Senga injury and a few interesting storylines to follow in camp and beyond.

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💵 Extending Francisco Álvarez

A rumor circulated earlier this month that the Mets and Francisco Álvarez were close on a contract extension. While that report was quickly put to bed, I thought it would be useful to dive into the details of what an extension might look like, and why (or why not) it would work for either side.

♟️ Challenges

Valuing a contract extension for a player like Álvarez is a difficult task:

1. He’s freaking young! He had a great rookie campaign but he only has one year of service under his belt, providing limited data to project future performance.

2. For catchers, it’s even more challenging since they play a labor-intensive position, introducing injury risk and the possibility they end up moving to a new position, which impacts their value proposition.

Durability: There are only two catchers who have averaged at least 100 games behind the plate over the past eight seasons: J.T. Realmuto and Martin Maldonado. Only seven have done so over a shorter three-year window.

Position change: To give you an idea of how much value is lost if Álvarez were to move away from his full-time catching role, his 2023 WAR value would have dropped from 2.7 to 0.8 by simply splitting his time between DH and catcher. He could make up some of that ground as a first baseman with an exceptional bat, but Mets fans are hoping someone else is manning that position for the forseeable future.

That’s why of the 27 players to sign contract extensions before their 23rd birthday, only one, Salvador Perez, was a catcher. And among catchers of any age who have signed an extension since 2010, only five have done so with less than two years of service time.

🔻 Uncertainty can be a good thing in contract negotiations. For the Mets, it’s what allows them the opportunity to sign Álvarez to a long-term deal that could pay him far below market value in future years. For Álvarez, it provides him leverage to secure an early commitment based on the promise of more productive years ahead.

This dynamic also creates a tipping point for the timing of an extension. Each season the Mets wait to lock up Álvarez could end up costing them more in terms of AAV (Average Annual Value) if he continues to perform at a high level; Or, it could end up saving them if he regresses and they gain bargaining power in future negotiations.

Of course, both sides could mitigate some risk by including club or player options in the later years of a new deal. Player options can sometimes prove helpful to both the team and the player by adding more guaranteed years to a contract to help stretch out the AAV.

💰 What would an extension look like?

Enough context, let’s get into the numbers!

How does eight-years, $68 million sound?

That would give Álvarez the fifth-highest total contract value among active catchers at the ripe age of 22, while slotting his AAV in-between two of the most pertinent comparables (whom we will talk about in a bit), and just outside the top seven values held by veteran backstops. It would also give him the opportunity to sign his next contract at the age of 29 when J.T. Realmuto cashed in on the biggest contract in catcher history.

The Mets could add two club options to give themselves some added security without impacting the AAV too much (Club Options are not considered guaranteed years, so only the buyout amount gets added to the guaranteed value). But putting that aside, here is what the framework of an extension could look like:

Team control years: Depending on how bullish you are on Álvarez’s near-term projections, he will likely secure himself a decent payday if he simply passed through the arbitration system before reaching free agency.

• Looking at comparable catchers on arbitration salaries, a catcher like Álvarez should make ~$20 million during his team control years.

• The Mets would have to structure his extension to account for that, offering more money in the near-term to offset the lower relative values during his free-agent years.

Buying out free-agent years has become more expensive in recent times. We have seen a slew of early extensions on players, such as 19-year-old Jackson Chourio, 21-year-old Julio Rodriguez, and recently 23-year-old Bobby Witt Jr.

Using Witt Jr.’s extension as a template, the Royals were only able to achieve a roughly $14.3 million discount on his annual salary in the now team-controlled free-agent years covered in his extension relative to what you would have expected him to get on the open market. The AAV savings come from the amount of pre-arb and arb years covered in the deal that remain at a relative discount.

Catcher AAV: For Álvarez, catchers tend to come at an AAV discount even when they reach free agency — J.T. Realmuto has the highest AAV of all time at $23.1 million. Teoscar Hernández nearly surpassed that as a 31-year-old coming off a 1.8 WAR season. For Álvarez to break the AAV mark as a free agent, he would need to prove he is one of the best catchers in baseball, at the same time Adley Rutschman and William Contreras are making the case.

An extension that pays him $12 million in the years he could have qualified as a free agent would still make him one of the top-paid catchers in baseball, while mitigating some risk that he turns into a 2-win catcher instead of a 4-win catcher. Álvarez would probably be leaving money on the table, but this is how early extensions work: he gets more money up front in exchange for less down the road.

🤔 How did I get to this number?

The table below provides a list of catchers who have signed the largest contract extensions in terms of total value. Since some of these deals are over 15 years old, I translated the AAV into 2023 “relative tax” dollars by creating a factor based on the initial luxury-tax threshold in 2023 compared to the year the requisite player signed (Note: the table shows Salvador Perez’s second extension after signing one at the age of 21 for $7 million).

Best comparables: As you can see, Álvarez would slot nicely in-between division-rival backstops Sean Murphy and Keibert Ruiz in terms of total value and AAV. He’s probably a little better than Ruiz at a similar service point, but hasn’t yet proven to be as consistent as Murphy, who was also closer to free agency when he signed.

Going back to the detailed framework table in the previous section, I also made sure to compensate Álvarez during his pre-arbitration and pre-free-agency years relative to what Ruiz and Murphy received in those seasons.

🍎 Should the Mets extend him now?

Again, it’s a tricky calculation.

Cash vs Tax Savings:

• A problem the Mets run into in giving Alvarez a new contract before the 2024 season is the near-term tax consequence.

• As a third-time payor, they would be on the hook for 110% in taxes on every additional dollar they would be charged on an AAV that would be much higher than his current league-minimum salary.

• In other words, an extra $7MM would actually cost them an extra $14.7MM, wiping away $7.7MM in potential cash savings on a long-term deal.

That said, every future dollar saved in AAV — assuming they can negotiate a lower AAV now than in the future — will be instrumental in helping them avoid tax penalties in the future. Perhaps they don’t find themselves at the 110% rate every year, but if they want to reset their draft pick penalties, they will need all of the savings they can get on each year of his contract.

Waiting game: Álvarez already earned a little extra ($350,284) from the new pre-arbitration bonus pool and could earn more this season, giving him some extra cash on top of his split salary. That doesn’t make up for the potential to earn millions in a new signing bonus, but he can continue to bet on himself for another season and perhaps earn an even bigger payday next offseason.

For the Mets, they will hope they find themselves in a difficult negotiating position as Álvarez continues to play because that means he is turning into one of the game’s best young catchers. The value of having an owner like Steve Cohen is you can wait and see how a player’s market develops and still pay for them even if it blows up.

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◾️ Shohei Ohtani announced on Instagram that he is getting married.

◾️ Yoshinobu Yamamoto looked absolutely filthy in his Cactus League debut with the Dodgers, striking out three batters and throwing 16 of his 19 pitches for strikes.

◾️ The Orioles signed infielder Kolten Wong and right-hander Julio Teheran to minor league contracts.

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🔗 Why Mets are bullish on Starling Marte as age, injury concerns loom, by Joel Sherman, NY Post: “Lindor related that he told Marte on Wednesday how he sees him waiting on the pitch longer again, because Marte trusts that his ability to snap the barrel of the bat has returned. So, Lindor said, has the calm in how Marte pursues a fly ball or effortlessly whips a throw. ‘He’s back to relying on every single tool he has.’”

🔗 Mets’ Adam Ottavino knows the stolen base numbers. How he aims to change that in 2024, by Tim Britton, The Athletic ($): “In the past, Ottavino felt he could always home in on holding a runner in a key spot, by throwing over enough or holding the ball long enough. The new rules negated each as an option for him in 2023, and the adjustments he did try to make — attempting a third pickoff, altering where Pete Alonso stood when holding the runner — were, in his words, ‘stabbing in the dark.’”

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