As it stands, the Red Sox have Dustin Pedroia in town for both the 2013 and 2014 seasons, and then again in 2015 if they so choose. After that, Pedroia, who has been Boston's regular second baseman since 2007, will be a free agent for the first time in his career. Three years is a long time in baseball years, but that isn't stopping the Red Sox and Pedroia from talking about a long-term contract extension.
As of this writing, there are zero details to share about how long the extension would be, when it would kick in, and how much it would cost the Red Sox. In that sense, there's not a whole lot to react to. But, on the other hand, there's enough context to work with when you consider how Boston works, what Pedroia has been paid, and what the second base market looks like to be able to suss something out to consider.
Here is what we know. Pedroia is owed $21 million guaranteed over the next two years. He either gets a $500,000 buyout (included in the $21M) or his 2015 option is picked up for $11 million in the third year. In essence, a three-year, $31.5 million deal, paying an average annual value of $10.5 million.
The Red Sox could let things run their course, and make a decision on whether or not to keep Pedroia after he has completed his age-30 and then age-31 seasons. There are positives to this approach: the Red Sox get to see if Pedroia is going to continue to play in a way that causes him injury, and in effect makes him a risky player to hold on to. They can see how he ages -- second basemen are notorious for aging poorly -- and go from there.
There are negatives to this as well, though. There will be free agent second basemen in between today and when Pedroia is out from under his contract. Robinson Cano is one such free agent, following the 2013 season, and it wouldn't be a shock to see him pull in something that paid him $140 million over seven years, and that's if he doesn't go hardcore and ask for 10 years, as happens these days. Something like that could significantly alter the market, making Pedroia a more expensive risk than he would be had the Red Sox just held on to him when they had the chance. Think of the Adrian Gonzalez extension as an analogue: the Red Sox never would have signed him for the money they did, had they waited until after 2011, as other first basemen like Albert Pujols and Prince Fielder tore what was an established market to pieces.
There's also the fact that the Red Sox don't really have any second basemen in the system right now -- the shortstops they do have are either likely to move off of the position elsewhere, or have bats for short, not second. It's maybe not a huge consideration, as they could find one at a future draft, or sign someone else to play the position. But it's a consideration nonetheless.
In addition, there are reasons to think that the arguments against extending Pedroia are either overblown, or canceled out by other matters. Second basemen don't age well mostly because they are deficient from the start. Second basemen are players who couldn't hack it at shortstop, often due to problems with athleticism and tools. The only reason Pedroia moved off of short is because his arm wasn't cut out for it, and while he would have worked at short, he was a better fit at second. This is what separates him from being a Dan Uggla, who the Braves regretted a long-term extension for nearly from the moment it was signed, and brings reason to hope for his being productive longer than some keystoners.
Second basemen fit into a few different groups that tend to age poorly. They are less athletic than shortstops, so sometimes you get "old-player" skill-sets, like that of Uggla: low averages, lots of walks, reliance on power. That's great when they are at their peak, but they tend to fall off sooner, as their bats slow and their already behind-the-curve bodies age. There's almost always some major deficiency in a second baseman's game, be it defense, athleticism, lack of patience... Pedroia is much better equipped than your average second baseman, much more complete of a player, and while he won't last forever, he's a great bet to stick around longer than, say, Uggla.
There's also the off-the-field considerations -- how you measure them is a tough problem to solve, but they are there. Pedroia, like others before him, is considered a clubhouse leader. He's the player you want the young ones to look up to, for work ethic, dedication, all of those things. Jason Varitek and Mike Lowell had that role in the past, at a time when Pedroia was a pup. Again, it's not the reason. But it's something to think about.
Last, the Red Sox shouldn't go and spend all of their new-found budget just because they have it, but it's likely they could re-sign Pedroia without breaking the bank. Pedroia had won an MVP and a rookie of the year award before he signed his first contract for six years at $40.5 million with an option for a seventh season. The Red Sox made him a rich man, but Pedroia could have held out for more, or taken Boston to arbitration every year. He didn't, and a deal that benefited both sides came from it. Whether or not he's willing to do that again is an open question, but you'd have to think there's a compromise in here somewhere, where Pedroia gets to be even richer, and paid fairly, while limiting the risk Boston puts into a second baseman who at that point will be an aging figure.
In essence, we're talking about a few different options, some more desirable than others. It's unlikely the Red Sox would do something like what the Phillies did with Ryan Howard, committing a ridiculous sum of money to a high-risk player who was already declining, so let's stick to realistic outcomes. The first, and least desirable, is to run through his current deal, then start a new contract in 2015 that goes on for another four-to-five years. That would make Pedroia a Red Sox through 2018 or 2019, when he would be 34 or 35 seasonally, and would likely have a higher AAV than other possibilities. That's maybe pushing risk a little too far, in regards to betting on Pedroia lasting as a productive player.
The Red Sox could scrap his current deal entirely, and give him a new five- or six-year deal that runs through 2016 or 2017, when he would be either 32 or 33 by seasonal-age. Whereas now he is making $10.5 million in AAV, Boston could bump it to $15 million, bringing the total value to $75 million or $90 million, depending on the years. That's a raise, and a considerable jump in guaranteed money. Pedroia could probably get more on the open market, but it's worth seeing if he'll stay in Boston for less. Plus, again, Pedroia is running a risk here, too: if he falters or is hurt after rejecting an extension, he loses out on guaranteed money he could have had. Ask Nomar Garciaparra about that some time.
Then there's a combination of the two ideas. Play out his 2013 and 2014 seasons, and guarantee his 2015 option. Build an extension on top of that for another three or four seasons, at around $15 million a year, giving him about $75 million over six years, or about $90 million over seven. While this is a longer deal than suggested previously, the average annual value, thanks to the existence of the original deal, is low, at under $13 million. He would still be a risk to decline given the ages we're talking about, but when playing against the budget and the cap, he wouldn't be a significant hit.
The luxury tax, except for last season and this one, where it was frozen due to new collective bargaining agreement considerations, has risen anywhere from around $7 million to nearly $12 million from one season to the next since 2005. It will be at $189 million for 2014 -- you can assume it will go up by another $30-$40 million, by the time Pedroia's hypothetical extensions would end, giving Boston plenty of room to work with, especially since 2018 or 2019 Pedroia would still be making 2013 dollars. In contract negotiations, inflation of the U.S. dollar is a team's best friend. (This, in turn, allows the Red Sox to increase the AAV, through either front- or back-loading the contract, past what is suggested here.)
Is this too much for the Red Sox to risk with Pedroia, who, as said, is already under contract for the next few years? Or is fear of what the market might change to by the time Pedroia is a free agent a significant reason to move on him now? As is so often the case, it all depends on the price.