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An explosion of extensions in MLB

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Teams signing players to lengthy, high-dollar deals

Back at the turn of the 21st century, the world of baseball economics experienced a complete overhaul. The massive multiyear contracts of players like Alex Rodriguez (10 years, $252 million) and Manny Ramirez (eight years, $160 million) introduced the sports landscape to the concept of the $20 million-a-year player.

However, while those contracts were (mostly) successful in their way, there were also a number of lesser players who received deals that far outweighed their actual value. Forgettable pitchers such as Darren Dreifort and Chan Ho Park got multi-year deals and huge paydays. The failure of those deals helped to stabilize the market.

In addition, general managers around the league became increasingly aware of the benefits of controlling young players. In the aftermath of the Steroid Era, players weren't putting up the same late-career numbers. This placed an added premium on youthful talent.

In recent years, a massive monetary flow fueled primarily by a spate of enormous local television contracts has changed the game yet again. Big contracts are everywhere, but even among just the signings from this past offseason, organizational reasoning is all over the map.

In free agency, we saw some impressive deals. Zack Greinke signed a deal for six years and $147 million; the next highest was Anibal Sanchez re-signing with the Tigers for five years and $80 million. On the hitting side, outfielder Josh Hamilton was the big fish, getting $125 million for five years from the Angels, while B.J. Upton got $75 million from the Braves for five years.

But it's in the realm of contract extensions that we saw some truly remarkable signings. There was the seven-year, $175 million deal that kept Mariners ace Felix Hernandez in Seattle through the end of the decade. And just in the past week, we've seen San Francisco give star catcher Buster Posey an eight-year deal valued at $167 million and the Detroit Tigers lock up superstar starter Justin Verlander to the tune of $150 million for five years on top of the $30 million he's slated to make over the next two seasons.

These dollar figures are certainly difficult to comprehend, but the changing nature of pro sports revenue has redefined the economic model.

The free agent totals are impressive to be sure, but it is the explosion of extensions that merits closer attention. While many teams have strived to sign younger players to long-term deals that help offset the exponential salary growth inherent to both arbitration and free agency, teams are also recognizing the massive value of a 'face of the franchise' type of player. A loyal fanbase has never been more valuable, and nothing keeps fans loyal like a team that keeps their homegrown stars around.

Hernandez, Verlander and Posey are superstars winners of Cy Youngs and MVP awards. They are the sorts of players that can come to define their teams. And while the dollar figures might seem excessive, the truth is that these players are young enough that barring injury they can remain effective over the length of the contracts. Hernandez will be 33 during the last year of his deal while Verlander will be 36; certainly past their primes, but likely to maintain at least a modicum of effectiveness. And Posey will be 34 he likely won't be behind the plate for his entire career, but as a two-time World Series winner with a batting title and an MVP under his belt, he's not likely to see his production fall off drastically either.

In terms of on-field production, these contracts will likely all be overpays, free agents and extensions alike. But hometown heroes like Hernandez, Verlander and Posey have helped define and legitimize their respective franchises their contributions to organizational culture are well worth the extra dollar.

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