Good move? Or not?
Today, there will be no graphs, no spin rate charts, nothing super analytical. Sure, there will be some dense numbers (I can’t help myself), but what this article will really be like is the introduction argument to debate club and we will then discuss the pros and cons in comments.
To lead in, Tommy Edman is one of my favorite players and I have a rooting interest in this player. I also want to use the contract he signed, and the data point it represents to evaluate if this was a contract extension the Cardinals were smart to avoid (or not). Turns out, there is a lot to unpack here. A note: This was considered a contract extension because the Cardinal’s had already bought out Edman’s last arb year and were set to pay him $9.5m in 2025 as the last year of a 2-year contract.
Let’s start with the trade
The Cardinals parted ways with Tommy Edman and unknown minor leaguer Oliver Gonzalez and received Eric Fedde and Tommy Pham in return. The Dodgers were involved and ultimately Edman ended up in LA, but from the Cardinal perspective, you could sum this up as they essentially traded 1.5 years of Eric Fedde for 1.5 years of Tommy Edman. Each were projected to hit the FA market at the end of the 2025 season. For the 1.5 years, their projected WAR would be approximately equal. One might argue Edman projected a bit higher in fWAR, but also Edman’s salary was higher at $9.5m against Fedde’s fixed $7.5m contract. Functionally, the Cardinals moved equal parts salary and fWAR value from a position player to a pitching spot. They didn’t add. They just re-allocated.
Let’s break down the extension
After the 2024 season concluded with a Dodgers World Series Championship, the Dodgers signed Tommy to a $74m contract extension, buying him out of the 2nd year of his Cardinals contract (which bought him out of his last arb year), plus another 4 years. This contract includes a $13m club option for the 2030 season (where Edman would play as a 35 -year-old), with a $3m buyout. The contract pays him in the form of a $17m signing bonus plus $5m salary for the 2025 season (total 2025 compensation: $22m) and then $12.5m for the following 4 years. $25m of the final 4 years is deferred, so they really only pay him $6.25m in each of those 4 years.
As a side note: it is hard not to notice yet another example of a team front-loading a contract (with signing bonus) and back-loading (with deferrals). I’m watching this trend to identify what the competitive advantage is. These teams clearly see one. My first theory is that MOST teams don’t have the financial wherewithal to do this stuff, and thus the competitive advantage comes in eliminating most of the competition for the player services. I mean, really, can you imagine the Cardinals paying a $52m signing bonus like Snell got, or $75m that Soto got? My second theory is that the big money teams are betting (and can afford to bet) that revenues will rise at a faster rate than the league mandated discount rate, thus discounting the deferrals even more than already are, reducing their potential impact on out-year finances. My third theory is that there is a difference in money calcs between what a team has to escrow for deferred payments and how they treat the contract for CBT purposes. In the Edman contract, that is about $1.6m/yr CBT reduction. In the Dodgers world, a $1 of CBT savings likely saves another $1 in CBT tax. Stated another way, the AAV of this contract is $15m/yr on the surface. The CBT AAV of this contract? $13.4m. The real cost of this contract (NPV) is $11.7m/yr. The Dodgers discount the CBT value (for the 5 year he plays) saving CBT tax dollars, then actually pay him in out years that CBT doesn’t care about. My back-of-the-napkin calc is that the CBT savings alone ($8m, non-discounted) cover about 30% of Edman’s deferrals ($25m, non-discounted, to keep it apples-to-apples). One might note that such CBT “savings” would appear to shift part of the cost of the contract to revenue sharing recipients (they don’t receive $$ the Dodgers don’t pay via CBT). That would be clever, huh? These theories are not exclusive (and all unproven). Back to the main point of the article. More on this topic next off-season when my financial experts crack the case.
To break down the contract a bit more, here are some numbers
The Net Present Value (NPV) of this $74m contract is $58.9m in today’s dollars. If you apply aging curves (discussed last week HERE) to his average peak WAR (11.3 WAR for ages 26-28), Edman projects to ~13.9 WAR for the next 5 years of the contract. Given that projection, the per WAR cost of this contract is ~$4.2m, which is a good (great?) deal for the Dodgers. Contracts for 2.5-3 WAR players seem to go for $6m-$7m per WAR, so this contract has the potential for some pretty nice surplus value. Imagine if he popped another 5 WAR season in a contract year that pays him $6.25m. Now, THAT is surplus value.
Should the Cardinals have considered keeping Edman and giving him such a contract?
Lots of things to consider. I can think of reasons on either side of this argument. I’ll lay them out and let readers add their own thoughts. It’s not as clear to me as it might be to some others. Assuming the FO had a good read on Edman’s potential FA market, we do have the benefit of seeing what the Front Office may have considered and ultimately, we know the decision they made.
Reasons to make the trade and avoid the contract
1. Is giving long, expensive (ish) contracts to mid-range players smart investing? It consumes constrained $$ that could be focused on higher-end talent.
2. Higher dollar contracts tend to go to players that produce value through their power numbers. Edman’s .727 career OPS isn’t close to the higher dollar market of O’Neill, Santander, Hernandez, to say nothing of Ohtani or Soto. Edman’s value comes more from defensive prowess, base running and versatility.
3. Edman’s primary contributions occur at positions the Cardinal’s appear to have good depth with talent making well less than even Edman’s reasonable contract rate. This was a smart re-allocation of constrained resources ($).
4. The Cardinal’s weren’t going to offer Edman a QO at $21m (for a guy the market values at more like $10m-$12m/yr). So they weren’t going to get a draft pick keeping Edman and letting him go to FA. By flipping to Fedde, the QO comes into play (he’s looking at payday > $50m this winter) and they will either retain Fedde or QO him and realize a late 2nd round equivalent draft pick, which has its own value that is probably higher to the Cardinals given their direction to re-infuse the development pipeline.
5. The cash considerations related to high dollar signing bonuses and long-term deferrals are out of the Cardinals’ league, especially in their current cost shaving mode.
6. The timing for signing this contract with this player at this time was wrong. It would saddle the team with another long-term contract (with probably another NTC) at a time when the incoming regime wants maximum flexibility.
7. Edman is 30 and his prior two seasons were below average due to injury. Too much risk here. The primary risk with a 30-35 year-old player isn’t so much that their performance will degrade rapidly (that does happen), it is more that they will get hurt and never really make it back. Taking the average 30 y/o player, it is a 50-50 proposition that they are even playing at 35.
Reasons to NOT make the trade and give the contract
1. The surplus value of the contract he signed is attractive and really looks like a smart bet. The issue with the St. Louis front-office has been paying market rates for mid-level talent, not paying below-market rates. Surplus value is always good, especially for a player you can plug in almost anywhere.
2. Edman brings an intrinsic value that would be associated with him remaining a Cardinal for at least the major portion, if not the entirety, of his career. As a (projected) 30 WAR player, he would be Red Jacket material. That pipeline looks a little thinned out right now and he’d be a nice infusion. Cardinal traditions and history are part of the unique recipe for Cardinal’s marketing success. They need a few more wins in this arena.
3. Keeping Edman would allow for Donovan to be traded, which could bring in talented pitching, and would better balance the RH/LH platoon splits of this team.
4. At some point, the Cardinals are going to have to come up with a financial model that allows them to compete with these kinds of contracts. Not necessarily at the Soto/Ohtani/Harper level, but if guys like Edman are getting these contracts, the Cardinals will have to play in this market.
5. Edman’s value comes from skills that don’t degrade a lot in the 30-35 age range. Glove, speed, some RH hitting competency. He is a decent bet to get the option even at age 35.
I’m sure there are more pros and cons, but I will leave it here and throw it open for discussion.
