The Orioles need to be careful not to hand out too many extensions

Pre-arbitration and arbitration extensions can be very useful for an organization. They allow a team to sign a player to a multi-year deal and can keep the overall cost of the deal down for them. In most cases, those contracts are backloaded, so while the Average Annual Value (the part of the contract counted for the Luxury Tax) may be higher than the player's salary early in the deal, it can reward major savings late in the deal.

The Baltimore Orioles have taken advantage of these types of extensions four times in the past 18 months. First with Samuel Basallo and his eight-year deal, then getting Shane Baz and Kyle Bradish to each sign five-year extensions, and finally signing Yennier Cano to a two-year deal.

The thing about these contracts is they come with major risk, especially for the younger players. In Basallo's case, he had just five days of MLB experience when he signed the contract; that is a major bet on his potential to become worth the contract. There is no telling what Basallo will become over the next few years of his MLB tenure. He could develop into the star bat they hope, but he could also be a backup catcher, first baseman, or DH if he doesn't.

Orioles need to learn from the Red Sox example and be careful when giving out extensions

The Orioles need to make sure they are choosing the right talent to extend, or they could run into long-term problems like the one the Boston Red Sox are facing. They gave second baseman Kristian Campbell an eight-year deal just days into his MLB tenure back in 2025. In June last year, Campbell was sent down to the minors and hasn't been called back up since. The Red Sox are still on the hook for his contract, and his AAV still counts against their books despite not playing in the majors for over a year.

The other risk that comes with a bad extension is not being able to trade the player. Other organizations will not take on money for a young player who isn't playing well enough to earn it. They might acquire a young player who hasn't been paid as a reclamation project.

David Rubenstein said at Shane Baz's introductory press conference that they are "open for business" when it comes to early extensions. He said it obviously has to make sense for both sides, but since then, they've done two more. It will absolutely help their books. The final three years of Basallo's contract will each be counted for much less than they are paying actually paying, over seven million for the final two. The final two years of Baz's contract will count for $8 million and $12 million less, respectively,

The Orioles have a very young team, and sometimes organizations that don't have the money to give them the full pay once they reach free agency, like the Braves, start handing out early extensions. It can work, but it's a major risk. The Orioles are loaded with young talent in the majors and minors, and they need to truly evaluate the ceiling of their players compared to other players they have in the minors, and players they could acquire with them, before making a rash of long-term extensions that could box them in.

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