Astros: Time to break down Jose Altuve’s new contract

Could Jose Altuve’s new contract extension with the Astros be a rare win-win for both parties?

Two more seasons. Just two more seasons. Those few words kept rolling around in this author’s head all offseason. Jose Altuve, the star second baseman for the Astros, could only be in Houston for two more seasons.

The worry was short-lived.

The Astros, as you all probably know by now, have signed Altuve to a long-term contract extension. The $151 million contract extension kicks in following the conclusion of the 2019 season. Barring an unforeseen series of events, Altuve will be wearing the classic “H-Star” on his head through the 2024 season.

At first glance, this contract extension between the 2017 AL MVP and the Astros appears to be a win-win. Even the fans win with this contract as this keeps one of the faces of the franchise in town for quite some time. There is value to have such a well-liked and respected player representing your team.

But what does the contract truly entail? Let me break down the specifics.

2020: $26 million
2021: $26 million
2022: $26 million
2023: $26 million
2024: $26 million

Wait a second! The numbers don’t seem right. If you add up all of the annual salaries, you should calculate $130 million. Oh, there is a signing bonus involved! The salary bonus of $21 million will be prorated over the next two seasons.

2018: $6 million in base salary; $11 million in signing bonus
2019: $6.5 million in base salary; $10 million in signing bonus

As you all know, Altuve’s original contract extension that he signed before the 2014 season was for four-years, $12.5 million. This also included two team options in 2018 and 2019 for $6 million and $6.5 million. Needless to state, the Astros already exercised the 2018 team option without little thought. The 2019 team was a near certainty to be exercised next year. Altuve’s latest extension essentially guarantees the 2019 option while adding the $21 million bonus to his base pay over the next two seasons.

If you count the original base salary of the two team options, Altuve’s future pay is $163.5 million. There is also a full no-trade clause. Altuve essentially controls his future through 2024.

Did I forget to mention that Altuve did quite well with his new deal?

While the general populace may balk at the sheer amount a baseball player can make, the contract is quite reasonable in terms of baseball salaries. Mike Trout, for example, is scheduled to make roughly $33 million per season over the next few years, and he will likely make more in annual salary once he reaches free agency. Altuve’s extension seems even more reasonable when compared with Robinson Cano’s ten-year, $240 million contract that he signed with the Mariners before the 2014 season.

Out of all contracts in baseball history, Altuve’s new contract places him 21st overall. The $163.5 million he is scheduled to make from 2018 through 2024 ranks right behind Buster Posey’s $167 million contract that runs through 2021. The Astros’ second baseman newest contract surpasses the $161 million that CC Sabathia made through 2015 and the $161 million Chris Davis signed before the 2016 season.

There is little doubt that the Astros were right to sign Altuve to a new contract extension. Heck, you have to lock up the 2017 AL MVP if the opportunity comes knocking, right?

In terms of the Astros’ finances, Altuve’s future salary shouldn’t put a major dent into future plans. For one, Houston will have some payroll relief in the coming years due to expiring contracts.

Upcoming Expiring Contracts
Dallas Keuchel – UFA in 2019; $13.2 million in 2018
Charlie Morton – UFA in 2019; $7 million in 2018
Marwin Gonzalez – UFA in 2019; $5.125 million in 2018
Tony Sipp – UFA in 2019; $6 million in 2018
Evan Gattis – UFA in 2019; $6.7 million in 2018
Justin Verlander – UFA in 2020; $20 million in 2018 and 2019
Brian McCann – UFA in 2019 or 2020; $17 million in 2018 and $15 million vesting option in 2019

These are significant players whose contract status with the team ends in the next year or two. And Yuli Gurriel’s and Josh Reddick’s contract ends following the 2020 season. However, a good portion of these savings will be applied to other players already on the Astros who will be approaching the end of their arbitration windows. I also expect that the front office led by Jeff Luhnow will make a strong push to retain a few of these impending free agents. Regardless, Altuve’s new salary should not be a major deterrent for the Astros in the foreseeable future.

The timing of the extension itself was a bit surprising. Altuve always appeared like a lock to reach free agency following the 2019 season. Don’t forget that his agent is the infamous Scott Boras. Part of me wonders how much impact did the slow offseason played a part in the contract negotiations. It is plausible that Boras advised his client, in light of the offseason, to take the deal.

Altuve probably noticed the same troubling trends and wanted to be proactive. No guarantees are made about a player’s future free agency and what kind of offers they’ll receive. For example, Altuve’s health in two years. Likely due to many factors, internal and external, the reigning AL MVP made what he felt like was the best decision for him and his family. This is all speculation on my part, though.

Next: We should not be worried about Brian McCann’s hitless spring

Overall, the contract extension between Altuve and the Astros seems to be a fair deal for both parties. Altuve is likely still underpaid, in the short-term, based on his past value. There is some inherent risk for the Astros though, which I will detail in another post, but enough promise is there for this partnership to continue to flourish.

**Statistics and information courtesy of FanGraphs, Spotrac, and Cot’s Baseball Contracts via Baseball Prospectus**