Cash Considerations: Risky Reds' contract extension could become best bargain in MLB

Welcome to Cash Considerations, a new weekly column at Blog Red Machine where we'll break down the impacts of baseball economics on small-market teams like the Cincinnati Reds. Whether it's analyzing impending free agents, examining trades, predicting contract extensions, or reminiscing on bargain acquisitions from years gone by, this will be your weekly destination for all things relating to the Reds' financial affairs.

The Reds have been, and always will be, a small-market franchise. Quite frankly, there's something refreshing about that. While it can be frustrating to watch teams like the Los Angeles Dodgers and New York Yankees drop a nine-figure salary on a free agent at the drop of a hat, it's also gratifying to watch a team like the Reds draft and develop their own homegrown talent in order to combat the bullies of with the big wallets.

New Reds manager Terry Francona said during his introductory press conference that the team's youth and payroll are not excuses. With that being said, let's look at a potential contract extension with one of the Reds' best young players that would bump up the team's payroll heading into the future.

Risky Reds' contract extension for Nick Lodolo could become best bargain in MLB

Injuries are part of the game, and they've been a big part of the game for Nick Lodolo. After his rookie season in 2022, Lodolo was considered one of the Big Three on the Reds roster. Alongside Hunter Greene and Graham Ashcraft, Lodolo was expected to lead the Reds to new heights in 2023.

Unfortunately, all three starters experienced a sophomore slump. Greene couldn't keep the ball out of the outfield bleachers (1.53 HR/9), Ashcraft couldn't get through the opposing batting order more than twice (.273/.335/.517 slash line third time through the order), and Lodolo couldn't get off the injured list (started just seven games due to a lower leg injury).

Lodolo faced even more obstacles in 2024. Though he was able to log a career-best 115 ⅓ innings pitched last season, lingering effects from his 2023 injury, plus a left groin strain, blister, and finger sprain all contributed to Lodolo's four trips to IL.

But, when the left-hander is on the mound, he's arguably the best starter on the Reds' staff; and that's saying a lot considering Greene is part of the rotation as well. For his career, Lodolo has a 27.3% strikeout rate and has historically been better than league-average in walk rate. Last season, Lodolo earned a 42.9% whiff rate with his curveball and can be a nightmare against left-handed batters.

Reds should sign Nick Lodolo to an incentive-laden contract extension

There's a lot to like about Lodolo's game, but his health has become a major concern. Which is exactly the reason why the Reds should make the move this year and sign the southpaw to a contract extension that takes him through his arbitration window (2027) and tacks on a couple extra years. Having done something similar with Hunter Greene in 2023, the Reds are no strangers to such a deal.

Greene's six-year, $53 million contract offers the Reds a blueprint, though any deal Lodolo signs should be loaded with incentives that offers extra cash if the left-hander hits certain markers (innings pitched, games played, etc.). If the Reds craft the deal just right, and Lodolo stays off the injured list, it could represent one of the best bargains in baseball.

The sky's the limit for Lodolo. He was the first pitcher taken in the 2019 MLB Draft and has shown time and time again to be virtually unhittable. It all comes down to health. But with the ever-rising cost of starting pitching, the Reds must find a way to remain competitive without breaking the bank. Inking Lodolo to an incentive-laden contract, while also continuing to draft the likes of Rhett Lowder and Chase Burns, is a good place to start.

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