Breaking Down the Mitch Keller Extension

A look at the new extension signed by Mitch Keller.

Photo Credit: WTM

After signing a $77 million, five-year extension last Friday, Mitch Keller has become the latest Pittsburgh Pirate to tie themselves to the organization long-term.

Keller will be paid a $2,057,500 signing bonus while keeping his previously agreed-upon arbitration salary of $5,442,500 for 2024. His compensation will nearly triple in 2025, going to $15 million, then increase incrementally from there: $16.5 million in 2026, $18 million in 2027, and $20 million in 2028.

Before looking at payroll implications, how does it stack up historically in terms of the team’s history?

The $77 million guarantee is second in team history to only Bryan Reynolds’ $106.75 million; however, his $15.4 million Average Annual Value (AAV) surpasses Reynolds’ record $13,343,570 million AAV.

To be clear, for reasons that go deeper than what we’re going to touch on here, it’s not entirely clear if this is officially Reynolds’ AAV, but one way or the other, Keller is taking the top spot.

As far as pitchers go, Keller passes Francisco Liriano for the largest contract ($39 million) and AAV ($13 million) while leaping He Who Shall Not Be Named ($22 million) for the largest extension. Charlie Morton was the last starting pitcher to have any free agent years bought out, all the way back in 2014.

Of course, the following is subject to change—assuming Keller sticks around for the entirety of the contract or a new signing doesn’t pass him up—but Keller’s following four yearly salaries would hold the top four spots in team history, with Reynolds’ previous high (again, yet to happen) of $15 million now tied for fourth. In 2017, Andrew McCutchen was paid $14 million, which is, to date, the highest yearly salary actually to be paid out.

What about payroll? Well, it depends on which measure you’re looking at. Two calculations are tracked and subsequently reported—Labor Relations Department (LRD) and Competitive Balance Tax (CBT)—and while fans don’t realize it, it’s the LRD that they often cite and care about most.

While both prorate the signing bonus over the guaranteed life of the deal, LRD assigns each individual yearly salary to that particular year, while CBT blankets the AAV over the entire life of the deal. So, seeing as Keller’s 2024 salary did not change, LRD only goes up $411,500—the prorated signing bonus—while the CBT estimate goes up $9,957,500, the difference between the AAV on Keller’s original arbitration agreement and his new deal. By my count, that currently puts the LRD estimate at $80,744,907.

As far as my current estimate goes, Keller’s extension puts the Pirates firmly above $100 million—$114,309,924—for CBT purposes. This is why I say fans care about the LRD projection, as many pine for a $100 million payroll, which it should be in 2024, at least according to the CBT. The last time the team passed that threshold was in 2018, but they have never had an LRD payroll cross $100 million. The closest was 2016, when they finished at $99,866,170, per Cot’s Baseball Contracts. For what it’s worth, my own personal calculations back this up as well.

One final subject I wanted to touch on—there is definitely some confusion regarding the verbiage of the deal, as to whether it’s a four or five-year extension. Reportedly, it is replacing the deal Keller already had in place despite the same 2024 salary.

Sometimes, precedent is the best place to look regarding confusing MLB happenings, and just last offseason, Rafael Devers signed a 10-year extension that kicks in this season, independent of an already agreed upon arbitration salary for 2023. In contrast, as I alluded to above, it’s not entirely clear when Reynolds’ new deal did or didn’t start, and if official CBT calculations for 2023 are ever released, that will become more clear. Unfortunately, it’s not exactly always cut and dry.

So, in the end, whether you want to look at it as a four-year extension or a five-year deal, the results are the same: one year of arbitration was bought out, along with three free agent years and an AAV of $15.4 million, the largest in team history that sets a precedent for pitchers moving forward.