The Yankees are in the middle of a transition and there is a good chance RHP Masahiro Tanaka might not be a part of it after 2017.
Tanaka can opt out of his seven-year deal after this season, and if he pitches anything like he did in 2016, he will most certainly test the free agent market. Should the Yankees allow it to get that far?
Tanaka has been the Yankees' best starter over the last three seasons, most recently putting together his finest full-year effort, in which he put to rest chatter that he was not a bonafide ace. If the Yankees lose Tanaka to free agency, they run the risk of entering the 2018 season without a tested frontline starter, let alone an ace.
CC Sabathia and Michael Pineda become free agents at season's end, and while they might not be the biggest losses in many eyes, if Tanaka goes elsewhere it would leave the Yankees with five mostly inexperienced starters should the club stick with the current pitchers in the organization. If the team seeks assistance on the free agent market to fill one or two voids, surely Tanaka would be among their considerations.
If the Yankees were to open discussions with Tanaka and his agent Casey Close, it should be expected that Tanaka would want at least two-to-three more years on top of the three years left on his current deal following this season. Tanaka is currently set to earn $67 million ($22.33 million annually) over the final three years of the deal, which in my view means he would want a major boost in average annual under a potential new deal.
Recent top-tier free agent starter contracts have eclipsed $25 million per season and entered into the $30 million range -- Jon Lester ($25.8 million), Max Scherzer ($30 million), David Price ($31 million), and Zack Greinke ($34.4 million). It should be noted that each of those players was hitting their age-30 season when the deal was struck and will take them into their mid-30s.
If Tanaka turns in another strong season in 2017, he would certainly warrant conversation in the $28 million per season vicinity. Depending on the length of the contract, Tanaka could be set to earn $140-to-168 million across five or six seasons based on a $28 million average annual value (AAV). Such a pact would bring Tanaka through his age-32 or age-33 season and I would suggest it could take a higher AAV.
The Yankees will not have to abscond from the youth movement within the rotation by extending Tanaka. There would still be four spots left over for whichever of the many prospects can prove themselves in 2017 and beyond. In fact, extending Tanaka provides the Yankees a necessary veteran leader among the rotation as the youngsters grow into their roles.
The starting pitcher free agent class next offseason has exactly two players, Jake Arrieta and Yu Darvish, who will be 32 and 31 years old respectively, that might be considered ace quality and do not have a reasonable contract option to pick up. If Tanaka is allowed to opt out, his market could soar beyond the $28 million AAV suggested earlier with multiple bidders expected to be interested in his services.
An important question here is whether or not it makes sense for Tanaka to consider an extension. One incentive for Tanaka to sign an extension soon is that the salary is guaranteed before his 2017 performance can impact his value. If he is happy in New York and sees the Yankees as one of a few fits for his prime seasons, it is possible he would be willing to sign an extension in an effort to avoid dealing with a free agent scenario. The flip side is Tanaka can improve his value with another stellar season.
Finally, the elephant in the room is that Tanaka has a partial tear in the UCL in his elbow that was diagnosed in 2014. He rehabbed and has worked through the injury, ultimately performing quite well -- enough so that he might have significantly diminished concern surrounding the elbow both from his and the team's perspective.
Of course, Tanaka would be thoroughly examined in spring training and if Yankees doctors are encouraged by the state of the ligament there would be little worry going forward for the club.
This is hardly an easy decision for either party. There are valid arguments for both sides. In my view, the Yankees should at least be in the process of gauging Tanaka's interest in an extension if they believe he is someone that they want on their club over the next five-to-six seasons.
If the Yankees believe they are going to move in another direction, then there is no sense in opening talks. They could even entertain trading Tanaka at the trade deadline under that circumstance.
However, I would hesitate to suggest the Yankees feel moving forward without Tanaka is in their best interest -- especially when considering the look of the 2018 rotation and the continuing inflation of salaries for top-tiered starters who will be available before the 2019 season.
If preliminary talks start now, a review of the entire situation midseason would provide the team with a chance to assess the progress of its prospects and Tanaka an opportunity to gauge the direction of the team's future. At that point, a mutual decision on an extension might be more easily consummated.