The Red Sox have avoided arbitration with Wade Miley once and for all, signing their newest southpaw starter to a three-year, $19.25 million contract extension with a club option for a fourth year.
Originally, Miley was slated to become a free agent in 2017. Now, thanks to the addition of the option year (valued at $12 million with $2 million in incentives according to Bob Nightengale), Miley will remain in Boston through 2018 so long as the club still wants him around.
As you might expect from a deal like this, the Red Sox are overpaying slightly now in order to keep costs down should Miley succeed with the team. This may seem like odd timing given that Miley is coming off the worst year of his career by ERA, but it makes sense when you consider the thought process that led the Sox to acquire Miley in the first place. Essentially, they're just doubling down on what they've decided is a good bet. The Red Sox see in Miley a pitcher with strong peripherals that just failed to shine through in Arizona. Put in front of a stronger defense, with his ground balls mitigating the Fenway factor, Miley should be as good as he was before, if not better.
In that situation, the Red Sox will enjoy a nice bargain in Miley. And frankly, even at his 2014 level, the Red Sox are paying around market price. Just look at Rick Porcello, who earned $13.2 million in his second and third years of arbitration coming off relatively unimpressive seasons (thanks in no small part to a Prince Fielder/Miguel Cabrera infield), and is now set to make $12.5 million after a successful 2014.
In fact, the numbers are even kinder to Boston than it might seem. Since the team is already over the Luxury Tax threshold in 2015, adding an extra $2 million or so to Miley's salary on the 2015 payroll is largely inconsequential. Meanwhile, in the years to come, the average annual value will be at or below the price they're actually paying to Miley
As just a contract extension, this is a reasonable move for the Red Sox. There's the chance Miley is a complete bust, at which point the team will have to eat what is still a relatively small sum of money for a team with a payroll as large as Boston's. But in the entirely likely event that the Sox knew what they were doing when they traded for him, they'll end up saving a fair bit of payroll space along the way. But it's the option year that's the real prize, giving the team one more year of potentially prime Miley without having to pay for the extra three or four years he'd likely have received in free agency.