When the Reds extended Aaron Harang's contract to keep him in Cincinnati, I was ecstatic about the decision. When the Reds followed up by extending Bronson Arroyo's contract, I had a number of concerns. A year later, I still doubt the wisdom of extending Bronson Arroyo's contract.
ACQUISITION AND EXTENSION
Prior to his acquisition, the Red Sox signed Arroyo to a below market contract. Arroyo agreed to the below market deal in an effort to improve his chances of staying with the Red Sox, who promptly took advantage of his resulting bump in trade value created by the below market contract by sending Arroyo to the Reds for Wily Mo Pena.
So, when he was acquired by the Reds, Arroyo was under a below market three year contract. He was set to be paid $2.75M in 2006 in his age 29 season, $3.8M in 2007 in his age 30 season, and $3.95M in 2008 in his age 31 season.
In 2006, Arroyo posted a career best season, posting a 3.29 ERA, 1.19 WHIP, and a 184/64 K/BB ratio in 240.2 innings. That level of production for only $2.75M is a tremendous bargain. However, it seemed like a misstep at the time for Krivsky to extend his contract at that point and the decision doesn't look much better now.
After the 2006 season, Krivksy gave Arroyo a contract extension, which increased the 2008 salary and extend him through 2010 with a team option for 2011. Arroyo received a signing bonus to be paid in 2008 of $2.5M, which essentially increases his 2008 salary from $3.95M to $6.45M. He is set to paid $9.5M in 2009, $11M in 2010, and a team option of $11M in 2011.
Given that Arroyo was coming off a career season, Krivsky picked a poor time to negotiate a new contract, which is highlighted by Arroyo's return to earth in 2007. In 2007, Arroyo posted a 4.23 ERA, 1.40 WHIP, and a 156/43 K/BB ratio in 210.2 innings pitched. Even so, he was still a good bargain at $3.8M, but his performance was a bit disappointing.
However, the question is whether the Reds would have been better off if Krivksy hadn't extended Arroyo's contract.
ELIAS RANKING AND POTENTIAL FOR COMPENSATORY PICKS
After the 2007 season, Arroyo was ranked by the Elias Sports Bureau as the #13th NL starting pitcher, which makes him a type-A free agent. Type-A free agents net two compensatory draft picks when they leave via free agency. Of course, his performance in the 2007 and 2008 seasons will dictate his ultimate 2008 Elias ranking, but there's a good chance that he'll maintain a type-A rating and at the very least he'd net one compensatory draft pick as a type-B.
So, if Arroyo had not been extended, then he would have been under contract for 2008 at $3.95M and had the potential to bring in two compensatory draft picks after the season. In addition, for the first time in a long while, the Reds have homegrown pitching on the horizon in the form of Homer Bailey, Johnny Cueto, and Matt Maloney. So, if things break right, then there could be viable options to replace Arroyo after 2008.
ALTERNATIVE 2009 REALITY
If the Reds hadn't extended Arroyo, then they would get his 2008 production at a lower cost and be in position to receive two compensatory picks after the season. If they were to let Adam Dunn walk after the season, then they'd be inline for two more compensatory picks.
If they followed this course, they'd have four compensatory picks to bolster the farm system, millions of dollars from the departure of Dunn, Griffey, and Arroyo to improve the MLB roster, and a 2009 lineup resembling the following:
1) A.Harang r
2) H.Bailey r
3) J.Cueto r
5) M.Maloney l
1b) J.Votto l
2b) B.Phillips r
3b) E.Encarnacion r
ss) A.Gonzalez r
lf) J.Hamilton l
rf) J.Bruce l
If the Reds had chosen to follow that plan, then they'd have a strong, young, cost effective lineup for 2009, a great deal of payroll flexibility, and the ability to restock the farm system with four compensatory picks. That's a team that's built for the present, but with a definite eye towards the future. Instead, they have Arroyo locked up at the going market rate when there are likely better starting pitching options developing in the minors.
It seems like the Reds overreacted to a perennial shortfall in starting pitching by unnecessarily extending Arroyo. In short, the Arroyo contract extension seems ill-advised and the result of a poor balancing of present and future needs. Unless Arroyo bounces back to his 2006 level performance this year, it seems like they would have been better off letting him walk after the season for compensatory picks.