A Payroll Refresher Following Cristian Javier’s Extension

Only a couple of weeks on the job and general manager Dana Brown has already locked up a key member of the Astros core to a contract extension that’ll ultimately buy out two free agent years for $42 million. Arguably Houston’s most dynamic starter, Cristian Javier is fresh off a nearly three-and-a-half-win season with ever-improving results. An occasional lack of command was his greatest weakness at times, which led to some clunkers of outings in 2020 and 2021, but his improvement in 2022 set the stage for a strong season and subsequent postseason. Brown is betting on Javier’s improvement carrying into future seasons, and his results when his control is at its best, or near it, prove he is a worthwhile pitcher to invest in going forward.

Javier will earn a guaranteed $64 million across the five-year extension and still enter free agency by his age-31 season. While risk exists for both sides, it is a deal where the potential benefits outweigh those risks. Due to how the salary structure of this contract is laid out, the highest risk from Houston’s point of view lies within those two final seasons when Javier will earn $21 million annually if ineffectiveness or injury occurs. For Javier, it is the risk of leaving money on the table if his performance continues at this rate.

However, Javier’s extension in terms of how it adjusts player payroll for tax purposes, which directly impacts roster construction, is laid out differently than what he will actually receive in cash per season. Instead of applying the cash amount of Javier’s annual earnings towards the tax threshold stated above, the Astros chose to distribute Javier’s salary equally ($12.8 million) across all five seasons for tax purposes. While this means the organization moves closer to the first threshold under this arrangement, it does provide future flexibility by limiting the tax hit to only $12.8 million each season when Javier will earn $21 million. A savvy move for a franchise looking to sign multiple players to long-term extensions in the coming years.

For the 2022 season, per Cot’s Baseball Contracts, the Astros are now roughly $19.754 million below the first tax threshold of $233 million, with Javier’s extension now reflected on the books. The odds of Jim Crane spending up to, or even exceeding, that level in 2023 appears non-existent, which is likely one reason behind the timing of the extension. With ample space to absorb more payroll without incurring a tax penalty while simultaneously increasing future flexibility, it made sense to strike a deal now. There is value in cost certainty, and the Astros now have it with one of their young starters for the next five seasons. It is also worth noting that the club has the budget in place to add salary in-season, if needed, for another postseason run.

For the long-term planner, Javier’s extension is hopefully the first of a wave of extensions, with Kyle Tucker, Framber Valdez, Jose Altuve, and Alex Bregman all mentioned by name from Brown as possible candidates. Of this group, it remains doubtful that Tucker signs an extension without being substantially blown away by an offer, but stranger things have happened. With Altuve and Bregman under contract only through 2024, the time is also approaching to determine the long-term course at second and third base. At this juncture, I’d be surprised if the two infielders don’t have new contracts in place by 2024.

For Valdez, from an outside point of view with zero inside knowledge, I think an extension for him could be next. While it is true that the Astros already have Javier, Lance McCullers Jr., José Urquidy, Luis Garcia, and Hunter Brown under club control through 2026, it is imperative to retain as much quality pitching as possible. Even the best-laid plans for the future can run awry (oh, hey, the 2002 Astros rotation entered the chat). But this franchise has the payroll flexibility even if it continues to adhere to the tax thresholds to lock up more players shortly under Brown. His track record in Atlanta and now Javier’s extension provides the blueprint for what the new general manager is aiming to accomplish.