Recently, Jose Ramirez signed a surprising extension with the Guardians, overriding his previous contract. The new one simply pays him $25M per year, for seven years, through his age-39 season. The Guardians are the only team he’s ever played for, and clearly, he wants to keep it that way.

So how does it look on paper?

Short answer: it’s great for the team.

Partly, that’s because it’s not really $25M per year. There are deferrals in the deal – $10M per year, paid out 10 years after they’re earned – which lowers the net present value to $20.8M per season, according to Jon Becker of Fangraphs.

He’s gone from $46M in surplus value to $51.4M, which means it’s even more of a bargain for Cleveland than before – PLUS they get seven years of his baseball prowess, which includes his on-field value, his team leadership, his fan marketability, etc. Everybody wins! And Jose gets to spend his whole career in one place. 

Meanwhile, Ramirez is so consistently good that he figures to continue to be surplus value-positive all the way through his age-38 season, which is remarkable. And even his final year, at age 39, is not egregiously underwater – it’s manageable (unlike many big contracts, which are deeply underwater on the back end). 

Here’s the breakdown (note: AFV is our term for “adjusted field value,” which is the market value of his expected performance, and includes factors like aging decline, injury risk, and $/WAR inflation):

 

 

Ramirez might not stick at 3B through those later years. For perspective, two other hall-of-fame 3B types are comparable: Miguel Cabrera had a similar extension, and he moved to 1B in his mid-30s, then eventually DH. But Adrian Beltre stuck at 3B well into his late 30s, and proved it could be done (his career also ended at age 39, which might be the age benchmark the Guardians are using here). 

All of which is to say, this is a great deal for everyone – the team, the player, and the fans. It’s the epitome of a hometown discount.