The San Francisco Giants have preemptively taken one of the best free agent bats off of this winter's market, reportedly signing right fielder Hunter Pence to a five year, $90 million extension.
Pence is having one of the best years of his career in 2013, hitting .282/.339/.484 with a career-high 27 homers. The 30-year old is making $13.8 million this season, and his new contract will pay him an average of $18 million per year, taking him through his age 35 season.
The contract seems like a slight overpay, especially given Nick Swisher's performance heading into free agency last winter and the contract he eventually got (4 years, $56 million). But compared to the five year, $85 million contract that Andre Ethier got a year ago (which already looks like a disaster), the Pence contract doesn't look that bad.
I think my main issue with this extension is that it almost seemed like the Giants were bidding against themselves. Why not wait until after the season, throw a qualifying offer at Pence, and see what the market will bear? Giving him an offer would likely scare a lot of teams away (as we saw last year with Swisher and Michael Bourn), and the Giants might have been able to get Pence for more of a discount than they got (which really, isn't a discount at all).
There's a difference between potentially overpaying young talent (like we've seen with, for example, Cameron Maybin in San Diego) and potentially overpaying older talent (like with the Angels' trio of major free agents), and this is more of an example of the latter than the former. For as much as the Giants needed Pence to fill one of their holes in the outfield, San Francisco essentially just took the money they were spending on Barry Zito over the past few seasons and gave it to Pence.
Their payroll for 2014 is already above $100 million with the Pence contract (assuming the $18 million AAV), and the club only has a pair of starting pitchers (Matt Cain and Madison Bumgarner) locked up next year. Sure, the team is likely going to exercise Ryan Vogelsong's option, but the Giants can't be serious about giving Yusmeiro Petit a role next year or possibly re-signing Chad Gaudin as a starter, can they? Offense wasn't the issue for the Giants in 2013, and it's looking like it won't be an issue again next year. However, simply not worrying about the rotation is something that might end up biting them in 2014 and beyond if they don't do something it, and I really don't think throwing buckets of money at Tim Lincecum is going to solve any of their issues.