Contract extensions are usually popular with fan bases, which is not the norm for financial transactions. It’s easy to see why – all the ingredients are there. People love to emotionally project a popular and productive player to be popular and productive for years. An extension does that, provided you don’t think too hard about the financial side of it. That’s the actuarial department's job.
All the ingredients are also certainly there for the contract extension Glen Perkins signed with the Twins. Perkins has been awesome since moving to the bullpen, including being named an All-Star last year. He’s a hometown guy and media and fan-friendly. As Twins Assistant GM Rob Antony said, “I think there's a premium value for a closer that's 31, that's done a pretty good job for us, that fits in very well in this clubhouse, and means a lot to this team.” With that background, why wouldn’t a deal get done?
The more interesting question for both sides might why a deal did get done, considering Perkins was already under team control for the next three years at a bargain rate. Here are how the deals compare:
The deal gives Perkins a raise over what he would make the next couple of years and guarantees another $14M in future earnings. It costs him a chance to hit the free agent market in 2017, when he might have made almost twice as much as he will get paid over the last two years. Of course, he would have been be 34 at that point. The security was worth the big payday. That’s why Perkins approached the Twins about the deal.
There is also an interesting provision that gives a subtle nudge to the Twins to NOT trade him. If he is traded, that option year changes from a team option to a player option. That makes him not quite the tradeable asset that he would be otherwise.
The Twins take on the risk of a 31-year-old getting hurt and being on the hook for another $14M. But the savings they could reap if he stays healthy are considerable. You’ll recall that as Joe Nathan approached free agency, the Twins signed him to a four-year deal that paid him $11.25 million starting when he turned 34 through turning 36. (That didn’t turn out so well.) This five-year deal tops out at about half that much money and ends when Perkins is 35.
It also keeps Perkins anchoring a bullpen in those years when the Twins believe they’ll return to being competitive. “We believe that he’s going to be part of turning this thing around,” said Antony.
It is somewhat unusual for a team that already has a good contract to risk an extension. It’s also unusual for a premier player to seek one out. Perhaps in this case, the hometown ties played a part in overcoming those traditional obstacles. Antony concluded, “We know that this contract, [Perkins] signed, because he wants to be in Minnesota. We signed because we want to keep him here.” Together they found a deal that the team, the players, the fans and even the actuarial department can support.