Why did the Mariners give Felix Hernandez 175 million dollars even though he may not be worth it?

The Seattle Mariners have just extended Felix Hernandez to the largest contract a pitcher has ever received, for reportedly 175 million dollars over 7 years. Hernandez is among the best five pitchers in baseball today, and will only be 33 when the contract ends. This kind of investment for a pitcher is inherently risky and Hernandez may not perform up to his contract on the field, but it is understandable why the Mariners would commit this amount of money to their only franchise superstar.

Hernandez has been one of the top ten starting pitchers in baseball since 2009. Over the last four years, he has an ERA of 2.81, a FIP of 3.03 and an xFIP of 3.21. Over his career, he has an ERA of 3.22, a FIP of 3.30 and an xFIP of 3.29. He has been incredibly durable in his career, making at least 30 starts each season for the last six years and pitching more than 230 innings per season for the last four. The quality and quantity of his starts make him worth 24.1 WAR over the last four seasons according to fangraphs and 20.4 WAR over the same span according to Baseball-Reference.

He actually enjoyed his best season in 2012 in terms of his peripherals (strikeouts, walks and homeruns allowed). He struck out 23.8% of the batters he faced, a career high, and only walked 6.0% of them, a career low. He allowed only 0.54 homeruns per 9 innings, the lowest of his career other than his rookie season. Overall, he had an ERA of 3.06, a FIP of 2.84 and an xFIP of 3.20 and 6.1 WAR last season according to fangraphs. He was only 26 years old last season, so his aging and decline are not expected to arrive soon. He has never had any elbow or shoulder injury in his career, so his risk of an injury may be lower than another pitcher with an injury history. All things considered, Felix Hernandez is as safe as a pitcher can get if a team is willing to give a long-term contract.

That being said, any pitcher can suffer from an arm, elbow or shoulder injury with any pitch. The recent retirement of Brandon Webb serves a perfect of such an abrupt injury. From 2004 to 2008, Webb pitched at least 200 innings a season. He has only pitched 4 innings since then due to a series of shoulder injuries. This reminds us of the risks involved with any pitcher, even one who has been as durable as Hernandez.

Even if Hernandez does not suffer from any significant injury over the next seven years, it will be extremely difficult for him to perform up to his contract. Hernandez already has two years of 40 million dollars left on his contract before the extension, so the new extension is basically 135 million dollars for 5 years from 2015 to 2019, when he is 29 to 33 years old. Let’s compare Hernandez’s extension with the latest long-term contract for a pitcher – Zack Greinke’s 6-years 147 million contract. Both pitchers are 29 at the start of the contract. Greinke has one more year on the contract, but Hernandez earns 2.5 million more per year. Hernandez has undoubtedly been better and steadier than Greinke, who has consistently allowed more runs than his peripherals suggest since his Cy Young season in 2009. On the other hand, Hernandez’s extension is still two years from starting. This extension eliminates the possibility that he may get hurt or regresses before he becomes a free agent after 2014 season for Hernandez. This is a crucial part of the comparison. Just look at how Tim Lincecum’s stock has changed after his dismal 2012 season. As a result, Hernandez should receive less money than if he were on the open market because the extension provides him financial security regardless of his performance for the next two seasons. Assuming 5 million dollars per WAR for 2013 season and 5% growth every year after, Hernandez’s extension would require him to contribute 4.5 WAR per year from 2015 to 2019 to live up to his extension. Even though Hernandez has surpassed that mark every season for the last four years, it will be difficult for him to average that mark for seven more years. Pitchers, even the best ones, are volatile and injury-prone. This makes the extension an overpay, especially considering that Hernandez still has two years left on his contract.

So why did the Mariners extend him? First of all, Hernandez is the biggest star on the Mariners. Winning draws fans, but so does Hernandez. Last season, in the 18 games Hernandez started at home, the Mariners drew an average attendance of 24000. In the other 63 home games, they drew only slightly more than 20000 fans. Secondly, the revenue in baseball is growing rapidly. Every team is expected to receive 25 million dollars more per year from revenue sharing beginning from 2014. The Los Angeles Dodgers, owner of a 7 billion dollar TV deal, are symbolic of the growth in baseball. If the Mariners waited till the end of 2014 season and Hernandez repeats what he has been doing his entire career for two more season, Hernandez may ask for a contract north of 200 million dollars and the Mariners may lose their franchise player. Hernandez may be the most popular Mariner among fans since Ken Griffey Jr., and his departure will likely result in a loss of fans and decline in attendance unless the team is competitive.

The value of Felix Hernandez to the Mariners is different from his value to other teams. This extension may not make sense for the Mariners financially, but it makes sense on the sentimental side. That, however, should not stop us from calling this extension an overpay for what Felix Hernandez is likely going to contribute on the field.