The reliever market in Major League Baseball has never been more complex or so punishing on small market teams structured for contention. In Andrew Miller, the Indians beat almost every team in Major League Baseball to an inefficiency which they wielded to their advantage in the 2016 postseason. Yet, Allen was an overlooked part of this advantage. While Andrew Miller won the ALCS MVP award, Cody Allen allowed zero runs in 13.2 playoff innings pitched with 24 strikeouts. In any other bullpen it was a legendary performance, in Cleveland it was part of a dazzling bullpen performance that left that team on the precipice of greatness. Yet, time passes, performance in a near-miss postseason is forgotten.
Perhaps most important, Allen’s postseason performance, while exceptional, was not thought to be unexpected or fluky because for the past half decade he has been one of the best relievers in Major League Baseball.
There is Cody Allen, one of the 15 bests relievers in baseball for the past four and a half years. By almost any measure, ERA/FIP, you name it, Allen has been bordering on dominant. At 28 years old, Allen is at the peak of his powers with the highest strikeout to walk rate of his career. With Allen’s final year of arbitration being the 2018 season, the Indians and Allen are faced with a difficult questions. What is the future going to hold?1 Are they meant to be together forever?
This piece aims to analyze a potential contract extension from both sides, that of Allen and the Indians.
The Indians roster is firmly established in 2017 and 2018 with the only significant players up for free agency being Carlos Santana, Bryan Shaw and Michael Brantley.2 After 2018, Brantley, Andrew Miller, Cody Allen, and Lonnie Chisenhall are all set up to be free agents. However, the Indians may have both the means and the basis for retaining a few of these players. While specifics of contention beyond 2018 are impossible to predict, a team built on cost-controlled talents of Jose Ramirez, Francisco Lindor, Bradley Zimmer, and Francisco Mejia is advantageous. With cost-controlled productive position players roster construction becomes simpler as well as targeting needs. For the Indians, with Shaw expiring in 2017, Allen and Miller in 2018, the Indians are preparing for a major bullpen exodus with seemingly no obvious replacements in sight.3.
While extending relievers has long been a risk-heavy and fruitless process, the Indians, if focused on remaining in contention should pursue an extension of either Andrew Miller or Cody Allen. Miller in my current estimation is unlikely to stay based on expected cost and the Indians trepidation about giving a reliever a large extension at 33 years old. With Allen being younger, more productive and ultimately more projectable going forward than Shaw, Allen makes the most sense for an extension. In this vein, locking down a a multi-year extension on Cody Allen post-haste is a must. Every second Allen draws nearer to free agency limits the Indians leverage. An All-Star break deal would have been a boon with the conversation likely transitioning to the off-season.
There is of course significant risk for the Indians in extending Allen. Allen has had Tommy John surgery though he has remained very healthy throughout his big league years. The other concern is that Allen is a two pitch pitcher relying on above-average fastball velocity and a filthy knuckle-curve. However, this is the case for most relievers, with many relying heavily on a single offerings. At 28 years old, almost 29 Allen is nearing what is often a cliff of decline for relief pitchers.
Velocity, one of Allen’s key weapons tailing off for most relievers at an accelerated rate after 30. In this sense, the Indians in extending Allen would be embracing some risk of decline. Adding two years onto Allen’s contract would be ideal for the Indians, signing him through 2020 before the aging curve shifts even more towards collapse. In order to acquire two more years of control over Allen, the Indians would need to significantly escalate his salary in 2018 over what his arbitration number would be. Of those in the top 15 in production for relievers since the start of 2013, Allen has pitched the most innings which may be another signal of risk from use.
Allen signed for $7.4 million to avoid arbitration in 2017 with his number likely to sit around $10 million for 2018 if sent to arbitration. Time for context. First, while Allen is a class below Aroldis Chapman’s five year $86 million deal reflects the increasing team allocations for elite pen help. For this discussion, Mark Melancon’s current contract with the San Francisco Giants is a tight comparison. Melancon by the spreadsheet above has been slightly better than Allen over the past four and a half years. On the other hand, Melancon’s contract was signed for his age 32-35 seasons whereas the Allen extension I propose would be adding his age 31 and 32 seasons. Melancon recieved four years and $62 million from the Giants for an annual average value of $15.5 million.
The Indians would have two advantage in this contract: 1) Allen is still under contract with less negotiating power and 2) Melancon has a slightly better track record for the past 5 years. The Indians could offer the following contract with a positive chance of surplus value:
2018:$13 million (would be an increase of roughly $3 million over what Allen would receive in arbitration)
2020 $13 million
2021: option $15 Million with million dollar buyout
This would guarantee Allen $40 million but also represent a below market price for the reliever.4
Cody Allen’s current situation is somewhat complex for a few different reasons. First, Allen was a 23rd round pick with a virtually nonexistent bonus out of college and the entirety of his earning came at the big league level. Last season was the first time Allen grossed over a million dollars, with career earnings sitting around $14 million. Of course at a high marginal tax rate with a short earning life span this is a little less overwhelming and leaves the door open for him to be moved by a significant offer of guaranteed money. Second, Allen a progressive player who embraces sabermetrics and Fangraphs understands the aging curve as well as injury risk which plague relievers like himself.
However, Allen can look at the free agent market and see that Mark Melancon received that four year $62 million deal. Brett Cecil, barely more than a LOOGY signed for four years and $30 million. Of course, there is also the unlucky Greg Holland. Holland, a devastating reliever from 2011-2014, declined in 2015 due to arm health and missed all of 2016 due to injury. The Rockies scooped him up out of the bargain bin in 2017 for just $7 million guaranteed with a $15 million vesting option.5
On the other hand, Matt Swartz Fangraphs resident has demonstrated the rising cost per win which he estimates at $10.2 million in 2017. Cost inflation likely continue at its current rate potentially impacting Allen’s expected annual average value. Allen like many athletes will be looking for as many years of guaranteed pay as he can acquire. $13 million is likely an acceptable base rate if Allen was guaranteed a fourth season. If Allen did not receive a sufficient long term guarantee, he can earn $10 million and embrace the risk in 2018, and if health is on his side seek a deal close to that of Melancon.
The Indians have been know to be inordinately creative with incentives and vesting options. Perhaps a vesting option similar to Holland’s in Colorado would be an acceptable approach to add a fourth year. The Indians have a limited time-span to offer Allen a significant lifetime contract guarantee which would allow below market cost on a likely above-average big league reliever inside their window of contention. With little help forcing its way into the big league picture, the time to talk extension for Cody Allen is now.
- The question of the Indians contract options with Cody Allen was raised by my good friend Adam Burke at a recent bash on the home run porch [↩]
- The Indians have an option on Brantley that they will almost certainly pick up. [↩]
- Side pieces Zach McAllister and Dan Otero walk in 2018 if they even last that long [↩]
- This would only represent a minimal increase over the Indians previous large investment in a reliever, Kerry Wood. The Indians gave the injury plagued Wood two years and $21 million guaranteed. [↩]
- Holland needs only two more saves to reach 30 for the option to vest [↩]