Analyzing Colby's Next Contract

I don't have any funny leading quips today. That is, I don't have any attempting to be funny leading quips today. So, here - a Youtube video for all of you who received a Shake Weight for Christmas but are still a little unsure how to use it.



Much has been said about The Albert Pujols Saga, but what about Colby Rasmus? After his one-year, $0.418 million contract, Colby has three more years of arbitration eligibility before he hits the unrestricted market. I propose that the Cardinals make locking him in the next priority behind Albert in the same fashion that the Cardinals did with Adam Wainwright and the Reds with Johnny Cueto.

The rationale for making a deal now as opposed to arbitration each year? First, Colby is an emerging star in the league and integral piece in the long-term future of this ballclub. After Albert, there will be Colby and his group of rag-tag veterans. Signing him to a long-term deal assures you keep that piece in place.

Second, the timing is right. Colby is coming off two solid but not quite spectacular years, and the balanced between potential and realized value still heavily leans to the potential side. A deal now capitalizes on his realized value at this point versus his realized value three years from now. Those numbers could be radically different in either direction, and a premium would certainly have to be paid to compensate for the "potential" side of the negotiations. However, if Colby was smart, he would take the long-term deal now and play for a bigger one in the future. Kind of like Pujols and Wainwright.

Third, the deal could serve as a gesture of good faith in a relationship that has been a little rocky to say the least. A motivated Rasmus is a good Rasmus.

The downsides? There are plenty. It may be that Colby is farther to the right on the potential-realized value spectrum than we think, and he's worth as much now as he'll ever be. In that case, it would make greater sense to move him along year-by-year until he's ready for a long-term contract.

Let me illustrate. Colby was worth $14.1 M last year according to Fangraphs and $10.3 M in 2009. On a regular returns model of player value, the value of a player usually increases with time until peaking a certain point, usually in the late 20's, early 30's. Right now, all systems indicate that the slope of that line - his increase/decrease value - is going to be pretty steep upwards over the next several years, meaning that this year we should expect to see his worth increase even more (Fangraphs predicts $18.1 M), and from there, it should increase even further. This can be labeled as his future potential, and the $14.1 M he was worth this season as his realized value.

Signing Colby now bases his market on solely his realized value with a premium for future potential. Keeping that premium below his actual future potential will mean that DeWitt gets greater bang for his buck versus having to negotiate a long-term deal at a $20 M starting point plus future potential premium.

However, the risk the Cards face is that the premium exceeds his actual realized value down the road. Maybe he gets hurt, has an awful slump, mentally unravels... who knows? The Cardinals would be overpaying at that point, perhaps by a lot.

Where GM's make their money is identifying future potential and negotiating a premium below that. My guess is that Colby's best years still lie ahead of him, and the Cardinals would be wise to capitalize on the time value of potential now... while they still can.