The Luhnow Plan: Avoid the bottleneck

The good news: Jeff Luhnow has a plan.

The bad news: Everything may not follow his plan.

As news begins to leak about the Astros’ efforts to  tie up some of their younger players, questions, concerns and criticisms are all sure to increase. And, since Luhnow doesn’t talk about his business openly, it leaves a lot to the imagination.

In other words, the unknown creates a fertile ground for rabbit trails, wild speculation and crazy conspiracy theories.  One need look no further than Malaysia flight 370 to see that.

What Luhnow is searching for, however, can be boiled down to two words: cost certainty.

And here’s why.

With such a young base, including three #1 draft picks, Luhnow well knows that the chickens will come home to roost sooner than later. Like the old Fram oil filter commercial: You can pay me now or you can pay me later.

Fact is, later this decade, those proverbial chickens will come home to roost. Depending on how the Astros stack their roster in 2014-16, many of the younger players will hit arbitration in 2016-17 and free agency in 2019-20. For staggering reasons, the Astros want to delay George Springer‘s free agent season until after the 2020 season.  Or cushion the blow with a team-friendly deal.

That’s exactly what Luhnow did with Jose Altuve, who signed a team friendly four-year/$12.5 million deal with two option seasons (2018-19) that could make the deal worth $25 million. Altuve would have been eligible for arbitration next season and free agency in 2017. Cost certainty at second base.

Just at a quick glance, here’s a list of players and their arbitration and free agent paydays.

Imagine a handful of other players whose clock could start later this year or in 2015: Mike Foltynewicz, Carlos Correa, Jonathan Singleton, Mark Appel, Domingo Santana, Delino DeShields and others. Suddenly, you see the bottleneck that awaits.

Luhnow is looking ahead and sees the traffic jam. He can wait until then to address it, but fans will complain loudly when the payroll reaches $100-$110 million and the Astros still have to trade players away because of budget.

By locking up only a few of the players perceived as core to avoid the bottleneck, the Astros can afford to spend more on free agents or future stars like Cosart, Springer, Correa et al.

It’s all about cost certainty. And, yes, it’s all about the business side in many cases.

But who would have thought Dominguez and Grossman would have been perceived as the core? Then again, who says there is that perception?

The Astros can reach cost certainty by locking up even non-star players, those who are solid producers or just above average. And, those who fit the makeup and locker room mentality, a huge part of the equation. Think about it: Often, it’s those players whose salaries are out of control. Is Michael Bourn really worth $13.5 million? Would you prefer to have Bud Norris at $5.3 million? Not that those are average players, but they aren’t the stars you build the team around either.

By giving Dominguez and Grossman 5-6 year deals worth, say, $12 million, the Astros provide those players some security and give the organization that cost certainty that will allow them to make major offers to the eventual stars (read: Correa, Appel, Springer, etc.).

Quite obviously, some players may be insulted at the offers, but Luhnow has to make the overtures and plan for the future. The future is not now, but the Astros could find themselves in a heap of trouble if they don’t plan for the future…now.

Since no one knows which of the players will be stars and which ones will simply be serviceable (or busts), it’s hard to nail down specific offers for specific players. The Astros could keep their payroll in the $50-$75 million range for the new 2-3 years, but if this group hits arbitration in 2017 and free agency in 2019-20, payroll will skyrocket to the point Houston could not keep everyone around.

Pick any two pitchers from the list above and any two of the position players. Imagine if they become top of the rotation guys or middle-of-the-order hitters. And, then they all hit arbitration in 2017 after being regulars for 3-4 years.

The payday could be huge and wreck the Astros’ budget. And, don’t give me that argument about Crane won’t spend. Frankly, the big payday is closer than you think. So is the $100 million payroll.

So, yes, the Luhnow plan is being rolled out behind closed doors. And the plan is to avoid the inevitable bottleneck.

33 comments on “The Luhnow Plan: Avoid the bottleneck

  1. So far, there has been no indication that a 100 million payroll is closer than I think. Chip, what evidence is there that Crane will spend a 100 million? And yes, we’ll lose quite a few of those 2019/2020 guys, but if we have built the best minor league system in the game, it should not be a problem. Most of the players you note will be traded away before 2019/2020. And we’ll get players to fill holes in return. Players not readily available in our own system. Gone are the days of guys playing their entire careers in Houston. It’s unfortunate, but except for those few teams spending in the 200 million range and beyond, the days of us watching a Biggio or a Bagwell play their whole career for one team are over. But we will need to emulate an organization like St. Louis and be willing to spend on payroll too. But most importantly, we’re going to need to create a quality organization like the St. Louis model in order to get guys to want to come here. And right now, we’re pretty far from there.


    • daveb, at this point, what evidence is there that he won’t spend $100 million. The only evidence either way is that they began to trend upward this year with investments in Feldman and Fowler after bottoming out in recent years. I do believe there may also be a trend developing that Luhnow will spend the most money on players his team acquires or develop. We’ll see how that one plays out.


      • Chip, there is no real evidence either way I don’t think we can look at Feldman/Fowler and use that as evidence we’re on our way to 100 million, especially sooner than we think.


  2. Chip, I might also add that while delaying free agency as long as possible might be the fiscally responsible thing to do, it certainly won’t help in building relationships with players and agents. I contend that as a general rule, this is a bad idea, and bad for business because it impacts the on field product, but more importantly, all the young guys we have now will leave town just as soon as they get a chance to go. And it also goes back to guys throughout the league wanting to play or not for a particular organization. I don’t think we have a very good reputation right now. That’s just a guess.


  3. What there is evidence of is that this bottleneck Chip speaks of is created by the plan itself. Therefore, trying to get potential star players to sign potentially undervalued contracts is the way Luhnow plans to help alleviate the bottleneck he created himself.
    How is that bottleneck being made worse? By keeping all the top prospects down on the farm as long as possible until they all hit their prime moneymaking years at the same time, thus assuring the fans that some of their favorite players will be gone, but also assuring the fans that their team will continue to be bad in the meantime.
    So how do you judge the worth of the plan, by the worst possible results the plan has produced so far, or the coming Armeggedon of inaffordibilty that is being referred to five years from now, in this eloquent posting of Chip’s? Either way, the plan doesn’t look like genius at this moment, does it?


    • oldpro, the bottleneck was created by the situation, part of which was inherited by Luhnow. While I do believe that business is playing a part in Springer’s demotion, frankly, neither he nor Singleton pushed the envelope this spring, making it much, much easier to make the call. Folty has never seen AAA and few pitchers will make the jump from AA to the majors, so that’s not an unusual call to send him down either. Now, if he doesn’t see the light of day in ’14…


      • Well, if we can believe the reports that the club was willing to sign Springer to a ML contract last year, then he would have been playing in Houston last year too. And if that report is accurate, I can see where Springer might not be reporting to camp without a real spring in his step. Again, I think relationship building is so important in building a quality organization.


  4. Chip, here is a spreadsheet that someone does. I saw this “bottleneck” or “train wreck” coming last year. To compete with our own prospects, it will get quickly to an average of $3-4 Million and that is approaching $100 Million in payroll. (One has to really take their hat off to Beane in Oakland in judging cheap talent) I love Altuve, but when you read a “cheap option” at $6 Million, multiply that number times 25 players. Finally, look at Arb 1 for 2015 – I don’t see any of those being here unless they really improve. We have a lot of chaff that will be gone soon.


  5. So we’ve heard that the Astros approached Springer about a deal that he would have been a fool to sign. We have heard they approached Castro but nothing has happened with that.
    There are also articles about working on extensions for Grossman and Dominguez. I’m guessing those might have better chances of occurring.
    I don’t think there is any harm in the club chasing these types of agreements, but I’m betting that the agents and players are a lot more reluctant to do this based on some recent agreements that seemed to favor the club a lot more than the player.
    I agree to a point with daveb – I do believe that there will be trades done to unload some of the folks and to help re-stock the minors. I don’t have a clue what the payroll will be 5 years from now – I know it should be in the $100 million range – but what it ends up will tell the tale won’t it?


  6. “…he can wait until then to address it, but fans will complain loudly WHEN the payroll reaches $100-$110 million and the Astros still have to trade players away because of budget…”

    Hey Chip, interesting your choice of the word “WHEN”. Don’t you mean “IF”?

    Sounds like you are (subconsciously) conceding that a paltry payroll will hamper the future of this franchise after all, no?


      • Actually, it was two questions, but with the same impetus.

        I am really am interested in your take on the matter. Do you think payroll will be a problem once the onslaught of young players start to mature?


  7. Should we be satisfied with becoming Oakland or tampa Bay? Although you are right that salaries will quickly climb in the same years, For the players to be worth keeping they will have had to perform. The concerns I have are whether the team can peak before we start seeing tough decision s on who to trade or let walk, and whether there will be any financial flexibility to add the final piece to the puzzle in a given year. If the luhnow plan involves crane calling up fans and asking for $10 million to sign a free agent…


  8. Cost certainty can do one other thing – it can make trading a player a clearer situation. Other teams will know exactly what their obligation is going forward. The downside is you make a 4 year contract with Dominguez and his bat goes back to first half of 2013 instead of second half of 2013. The plus side is you are not throwing 10 or 12 million a year at someone – the down side is that a lot of the guys you are trying to lock up are not sure things yet.


  9. While I like the fact (rumor, whatever) that Luhnow is trying to lock up some players, I think if the numbers are right he needs to put a little more money on the table for some.

    The Matty D deal sounds about right.

    One think we all have to realize is that money you get sooner than you should is worth more than that same money later. So say Matty D or Springer or whoever gets $4 million in 2015 instead of the $500,000 they otherwise would have made, that extra $3.5 million now has more value to that player than the same money in 2017 and even more than 2019.


  10. History tells us half of those minor leaguers won’t succeed regardless. In my mind the three salaries he is going to have to plan around will be Appel, Correa and Springer – and I am not 100% sold on Springer, maybe just 90%. Chris Young looked pretty good for a time too. I do think he will be fine – but I think there is an outside chance that it is going to take, one day, A-Rod type money to keep Correa. There is just something about the kid that makes me think he is special.

    Castro, Cosart, maybe Carter and Grossman, will be fairly expensive, something like a Norris, but very manageable, especially for a franchise so far below the mark.


    • Hey – half these major leaguers may not succeed either. We don’t have a lot of sure things on the roster, but let me ask, would you rather have Bud Norris at $5.3 million or Feldman at $10 million? Do you want me to tell you which one the Orioles picked? Would you rather have Dexter Fowler at $7.5 million, or George Springer at $500,000? I think that’s the first “difficult” decision Luhnow will make. He’ll let Fowler walk after 2014 and save the money, then move Springer back to CF.


    • Steven, since the Astros are top-heavy with higher picks — including some of those we’ve traded for — I think the success rate could be higher. Now, will they all be stars or just serviceable players remains to be seen. And, the more I think about it, the more I’m leaning toward the idea that cost certainty can most easily be managed in those players Luhnow expects to be serviceable perhaps.


  11. Wanted to add to Steven’s comment about minor leaguers not making it. I looked back 4-5-6-7 years ago at the “champion” A & AA teams. It was amazing in that over half of the players on those teams NEVER made it to the majors (or at least not yet). In baseball-reference dot com, you could immediately see the Bold type player that at least got to the majors, and those that never made it out of the minors. Not busting on “the Plan” but you really just need 1 SS every 4-20 years, and 1 – 3B, etc. So a log jam of players winning championships in the minors, does not constitute a winning team in the majors. Prospects in abundance is good, but a few major league all-stars is better.


  12. I agree mostly with all, this isn’t really my comfort zone in discussion. We are really treading into unknown waters when we talk about establishing cost certainty. If the Astros had given Burke a 5 year deal in 2006 – after he had established a pretty decent line – it would have ended up money thrown away. Same with Ensberg. Same with Lane.

    We just don’t know what will happen. Dominguez may go superstar on us – a 23 year old that hit 21 homers last year, maybe he becomes a 24 year old that hits 30. Maybe he hits 15 and only hits .220. Maybe Castro takes the next step and becomes the best offensive catcher in baseball, maybe his numbers fall somewhere in between 2012 and 2013 versions.

    Really, all you can do is stack the highest number of prospects that you can, and establish a payroll number for THIS year and wait and see how performances shape out. There is no way to establish future performances, and contracts like Altuve’s are still a fair risk to the franchise – much like Burkes would have been.

    If the prospects become superstars, as Correa, Appel, Springer, Singleton, McCullers and maybe someone else not even in conversation might, it will be a good problem to have.


    • Steven, just noticed your comment on Dominguez. He might hit 30 homers, but I don’t see superstardom with his OBP history. Now if he hits 30 and ends up with a defensive rep like Nettles or Robinson, he can get by with a .290 OBP.


      • His OBP, and bad swing rates, is why I lean towards the .220 15 HR guy, and not the .270 30 HR guy – but I will say this – he also doesn’t strike out a lot, comparitively, and he has had better walk rates in the minors than he demonstrated last year. There is obviously a lot more offensive potential to both improve his walk rate and of course he will probably always have a decent average as long as his K rate is under 20%, assuming at least passable BABIPs.


  13. Another thought on the Springer (yet anyone) situation. If Springer were on a team with a bunch of expensive 35 year olds, he would already be on the team at $500K and getting ready to replace a 36 or 37 year old that has peaked. But because we don’t have any expensive players like most teams, he does not get a chance to move up. So this plan could cause a bottleneck for years in the minors holding back potentially ready MLB players. You have to play them to see how many are Wallace, and how many are Castro. Minor league numbers are an indicator, but the temperature in Denver is only an indicator of the temp next week in Houston.


  14. The Astros did not play well today and were beaten soundly by the Marlins. It seems that the outfielders we kept did not field so well and we only got seven hits by seven different players. Our opening day pitcher gave up 7 hits and five runs (four earned) in five innings to the hard hitting Miami Marlins. The Astros will be in perfect Astro form by opening day.
    Peter Moylan gone facing Tommy John Surgery and Wojo out til mid May for OKC.


    • No we don’t. Martinez released this morning. Downs, Petit, and Amador sent down. Luhnow has got to be disappointed with Amador not losing weight. Maybe Amador was perfectly satisfied playing in Mexico and being fat. Something tells me Heras is a lot more ambitious than Amador.
      Now for that bullpen. Crain out Downs out Moylan out. One of the youngsters may sneak in.


  15. For the record, my opinion only, but Luhnow does not look all that bulletproof so far this year. He might have contracted the Ed Wade affliction by taking the wrong job. And when do we get a chance to talk about our manager at some point prior to the opener?


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