The Boston Red Sox should avoid a messy arbitration hearing by locking up left-handed pitcher Eduardo Rodriguez to a multi-year deal.
The Boston Red Sox failed to reach an agreement with two of their arbitration-eligible players prior to last month’s deadline. They have already rectified one of those disputes by signing Andrew Benintendi to a two-year deal. It’s time to do the same for Eduardo Rodriguez.
Rodriguez’s arbitration hearing is scheduled for this Wednesday in Arizona. It’s unclear if the team has any intention of exploring multi-year offers to buy out his remaining arbitration years but there are a number of reasons to consider it if Rodriguez is open to that option.
Rodriguez filed at $8.975 million and the Red Sox offered $8.3 million. An arbitration panel will be tasked with deciding which salary the player will be owed. The sides weren’t all that far apart and the difference is practically insignificant in the wake of the blockbuster trade with the Dodgers that created plenty of room in their budget.
Regardless of the outcome from this hearing, his salary will essentially double from the $4.3 million that Rodriguez made during his breakout 2019 season when he won 19 games, posted a 3.81 ERA, and finished sixth on the Cy Young ballot.
This is Rodriguez’s second year of arbitration eligibility and he’ll go through the process one more time next year before hitting free agency – unless the Red Sox can strike a multi-year deal.
Now that the Red Sox are safely below the luxury tax threshold they can afford to pay Rodriguez a bit more in 2020 in order to save money in the future. For example, let’s say the Red Sox gave him a 2-year, $22 million deal to replace his final two arbitration years. That contract would be in line with what the New York Yankees are paying James Paxton, a lefty who produced similar results in recent seasons. Paxton earned $8.575 million last season and avoided arbitration in his final year of eligibility with a 1-year, $12.5 million for this season.
The two-year deal for Rodriguez could be structured with $9 million in 2020 and $13 million in 2021. He would earn slightly more than what he’s asking for this year and next year’s salary is a fair estimate based on what Paxton and Marcus Stroman ($12 million) will earn this season in their final year of arbitration.
The $11 million average annual value is what would count for luxury tax purposes. Boston no longer needs to worry about crossing the threshold this year. Paying a little bit more now means that Rodriguez’s salary counts less toward the tax next year when the Red Sox are expected to jump back into the free agent market. Saving a couple of million bucks for tax purposes could be significant if Boston intends to spend again next year.
The Red Sox could take it a step further by trying to buy out at least one of his free agent years. A 4-year, $62 million deal could be structured similar to the aforementioned two-year offer with two additional years tacked on at $20 million per year. Rodriguez could then hit free agency after the 2023 season when he’ll be 30 years old.
That would bring the AAV to $15.5 million, which Boston can easily afford this year. It cuts into their budget a bit more than expected next year but it’s worth it in order to keep Rodriguez off the open market for two more years at a reasonable AAV.
It could work as a three-year deal that buys out only one year of free agency or as a longer deal. The point is that locking in a multi-year contract now reduces the cost for tax purposes in future seasons.
Rodriguez could be leaving money on the table by accepting this type of offer. If he follows up last year’s career season with an even better one then he could be in line for a big raise. On the other hand, a pitcher with his injury history could take a more cautious approach that locks in guaranteed money. Last year was the first time Rodriguez made more than 24 starts in a season.
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Trading Mookie Betts and David Price to the Dodgers created plenty of financial flexibility. With all the expensive free agents already off the market this winter, using those savings to invest in the core of their roster would be a wise way to allocate their remaining budget. The Red Sox took a small step toward that goal by signing Benintendi to a two-year deal. Now it’s E-Rod’s turn.