March 6, 2013

Contractual Matters

The Sinking and the Sunk

by Jeff Euston

Printer-friendly

Contact Author

For all of their accomplishments, the Yankees don’t generally fare well with spending efficiency. Using Marginal Dollars per Marginal Win—Doug Pappas’ yardstick to measure the bang for a buck a club gets out of its payroll—we find the Yanks spent $4.28 million per win in 2012, ranking 23^rd among the 30 clubs in spending efficiency. That actually was an improvement from their rank of 25^th in 2011 ($4.02 million per win) and 28^th in 2010 ($4.23).

This is not so much an indictment of the Yankees’ front office—they’ve won an average of 95 games per year since 2010—as it is an inevitable result of the highest payroll in the game, mixed with slight regressions in production or injuries to a key high-paid player or two.

In fact, if you thumb through your new copy of Baseball Prospectus 2013 and line up the Marginal Dollars per Marginal Win figures contained in each team Prospectus Box, you find that no team with a payroll of $100 million or more ranked in the top 10 in spending efficiently last season. The most efficient of the $100 million clubs, the White Sox, ranked 12^th, spending $2.31 million per win. Leading the field were two clubs light on high-priced free-agent talent: the Athletics, who paid a mere $890,000 per win, followed closely by the Rays, at $1.21 million.

The Yankees don’t figure to make a leap forward in the efficiency rankings this season, either, if PECOTA projections and payroll figures for 2013 are any guide. The explanation lies with one of the significant drags on salaries last year: Alex Rodriguez.

A-Rod posted a WARP mark of 1.2 in 2012 while earning $30 million, sparking a severe spike to the price the Yankees paid for each marginal win. At 37, he is recovering from a second hip surgery, and the Yankees still owe him $114 million through 2017—more than they did when they acquired him in 2004. PECOTA forecasts a 2013 WARP of 1.1 for Rodriguez, who will earn $29 million this season. If he is not a sunk cost already, he’s sinking fast.

The Yankees also are one of the few clubs with significant dead money on the books already for 2013. They’re on the hook for $8.5 million of A.J. Burnett’s salary this season, placing them among nine clubs—shown in the chart below—paying at least $1 million or more for players to work elsewhere this season.

But the inefficient spending surely won’t end there. A number of high-priced players carry the looming threat of sunk-cost potential for 2013. Here are the 20 players most likely to be financial landmines to their clubs this season. Each carries a combustible mix of a low WARP projection and an eight-figure salary. The list is limited to players making at least $10 million with a projected WARP above zero. (Jeff Francoeur and Jason Marquis, you’re off the hook!)

Barry Zito, Giants
2013 salary: $20,000,000
Projected 2013 WARP: 0.1
$ / Projected WARP: $200,000,000
Zito’s projected $200 million cost per win is an awful marriage of exorbitant cost and minimal production, and the sheer magnitude of his price to future earnings ratio dwarfs everyone else on the list. In a perverse twist, the Giants might need to monitor his workload this season. The $18 million option on Zito’s contract becomes guaranteed if he reaches 200 innings.

Vernon Wells, Angels
2013 salary: $24,642,857
Projected 2013 WARP: 0.9
$ / Projected WARP: $27,380,952
Wells announced this spring that he plans to retire after the 2014 season, prompting one less-than-kind Twitter user to wonder, “How will we be able to tell?” The Angels actually owe Wells just $21 million this season. (The balance of his salary figure is a share of his signing bonus, already paid by Toronto.) But Wells is hardly a bargain at that price, either. Conveniently enough, his deal comes off the Angels’ books after the 2014 season, just as Mike Trout will be heading to arbitration for the first time.

Alex Rodriguez
2013 salary: $29,000,000
Projected 2013 WARP: 1.1
$ / Projected WARP: $26,363,636
Rodriguez hopes to return from his hip injury by midseason. PECOTA projects him to hit 11 home runs in 247 plate appearances. If he manages to hit 13 and tie Willie Mays’ mark of 660, A-Rod would earn a $6 million milestone bonus and touch off the most curious celebration since Barry Bonds hit No. 756 in 2007.

Ted Lilly, Dodgers
2013 salary: $13,166,667
Projected 2013 WARP: 0.5
$ / Projected WARP: $26,333,334
Lilly is coming back from arthroscopic shoulder surgery and joins Chris Capuano and Aaron Harang as fallback options for the Dodgers’ loaded rotation of Clayton Kershaw, Zack Greinke, Hyun-Jin Ryu, Chad Billingsley, and Josh Beckett. Welcome to the world of eight-figure situational relievers.

John Lackey, Red Sox
2013 salary: $15,950,000
Projected 2013 WARP: 0.7
$ / Projected WARP: $22,785,714
In his second outing of the spring Friday, Lackey threw breaking balls for the first time as he continues his recovery from ligament-replacement surgery to his right elbow. So there’s that. There’s also another year to go on his contract—at a cost of another $15.95 million for 2014. But Boston has an opportunity to recoup some of Lackey’s value because the injury kicked in a club option for 2015 at the league-minimum salary—a savvy bit of negotiation that served as a model for similar language in Seattle’s recent extension for Felix Hernandez.

Alfonso Soriano, Cubs
2013 salary: $19,000,000
Projected 2013 WARP: 0.9
$ / Projected WARP: $21,111,111
The flip side of the February 2004 A-Rod trade, Soriano is just six months younger than Rodriguez. His relative health and 2012 rebound might make him an attractive trade target. However, Soriano would have to approve a deal, and the Cubs would have to swallow a large portion of the $38 million left on his deal.

Michael Young, Phillies
2013 salary: $16,000,000
Projected 2013 WARP: 0.8
$ / Projected WARP: $20,000,000
Young will man Mike Schmidt’s third-base position in Philadelphia this season while the Rangers pay the lion’s share of his salary. In a wholly unrelated note, Schmidt has gone public with his endorsement of Michael Young as a Hall of Famer.

Chris Carpenter, Cardinals
2013 salary: $12,500,000
Projected 2013 WARP: 0.7
$ / Projected WARP: $17,857,143
Despite his mixed results, Carpenter’s return to action at the end of the season was one of the more pleasant surprises of 2012. Sadly, the outlook for his return in 2013 is bleak.

Derek Jeter, Yankees
2013 salary: $17,000,000
Projected 2013 WARP: 1.2
$ / Projected WARP: $14,166,667
Jeter is 39 and returning from a broken ankle, but another 200-hit season could push him into heady company on the all-time list for career hits. He opens 2012 in 11^th place with 3,304 hits, 210 shy of Tris Speaker, who is fifth all-time. Jeter’s contract includes a player option for 2014, so it’s not unreasonable to think Stan Musial’s mark of 3,630 might be within his reach. Then again, most mere mortals don’t play shortstop regularly at 39.

Johan Santana, Mets
2013 salary: $25,500,000
Projected 2013 WARP: 2.2
$ / Projected WARP: $11,590,909
An offseason of rest apparently has not fully cured what ailed Santana’s shoulder, and he’s now stalled in a long-toss program and unlikely to be ready for Opening Day. Though this is the final guaranteed year of his $137.5 million contract, the Mets will pay another $5.5 million to buy out a 2014 option.

The Next Ten

Jeff Euston is an author of Baseball Prospectus. Follow @JeffEuston
Click here to see Jeff's other articles. You can contact Jeff by clicking here