March 28, 2014

Transaction Analysis

To Keep Miguel Cabrera, the Tigers Spend Too Soon

by Ben Lindbergh

DETROIT TIGERS Team Audit | Player Cards | Depth Chart

Signed 1B-R Miguel Cabrera to an eight-year, $248 million extension on top of the two years and $44 million remaining on his current contract, locking him up through 2023. The contract includes two vesting options for 2024 and 2025, at $30 million apiece.

Or, in simpler terms:

Gave 1B-R Miguel Cabrera the biggest guaranteed payout in the history of U.S. professional sports. [3/27]

In our AL Central preview earlier this week, I gave the Tigers a virtual fist bump for reportedly rejecting Max Scherzer’s eight-year extension demand:

Coming off a Cy Young season, and with his financial future reportedly protected in the event of an injury, Scherzer wasn’t going to give Detroit the kind of discount that would have justified making a commitment without knowing whether his arm would survive this season intact. Since the Mike Hampton contract, teams have been unwilling to sign a pitcher for eight years, even with pitchers whose mechanics are regarded as lower-risk than Scherzer’s. Scherzer knows that with Jon Lester (and maybe Justin Masterson) signing extensions at some point this season, he’ll be in a class of his own on the open market, so there’s no incentive for him to settle. If the Tigers are going to pay through the nose to keep him, they might as well do it with more data at their disposal.

I might have been more reserved in my praise if I’d known what Detroit would do with that money instead.

***

Most sentences that start with “Not to take anything away from _____, but…” do end up tarnishing someone. Even when we aren’t attacking a player’s performance, we can’t critique his contract without taking one thing away: the idea that he’s worth the money he’s making. In Cabrera’s case, it takes the biggest contract ever to dislodge that idea.

Pull back a bit on Cabrera’s career, and all the Trout/MVP/Triple Crown talk that dominates the discussion around him starts to seem silly. (Okay, starts to seem even sillier.) Cabrera, by WARP, has been the second-best player in baseball over the last two years (behind Mike Trout), the last three years (behind Joey Votto), and the last four years (Votto again). He’s been so good for so long that you have to stretch the start date all the way back to 2001—when Cabrera was 18 and in A-ball—before he falls out of the top five.

And though Cabrera turns 31 in three weeks and, even after slimming down since his Marlins days, shows some visible jiggle under his uniform when he rounds the bases after his latest long home run, he hasn’t shown any signs of decline, save perhaps for his groin strain (and subsequent surgery) toward the end of last year, which would have led to his first-ever DL stint had it happened before September. That injury affected Cabrera’s late-season performance and limited him to a post-rookie-year low of 148 games, but he still set career-highs in both TAv (.372) and WARP (7.9). Aside from Bonds, Sosa, and McGwire, only Jim Thome (2002) and Albert Pujols (2008, 2009) have had a TAv that high in a 600-PA season since 1972 (when Dick Allen did it).*

*Cabrera’s .344 TAv over his last four seasons is only the 46th-best four-year stretch of at least 2500 plate appearances since 1950, counting overlapping stretches by the same player.

So, yes, Cabrera is the kind of hitter whom other teams covet and his own team wants to keep. Detroit has won three straight division titles with teams built around Cabrera’s bat. Last year’s Tigers had the league’s fourth-oldest position players, and the club’s collections of minor-league and 25-and-under talent rank fourth-to-last in the league. They share a division with the Twins, who are terrible now but have baseball’s best farm system, and the Royals, who have the no. 7 system and a chance to win now. In this year’s BP annual, Will Leitch argued that the Cardinals, by building a drafting and player development machine that would let them to economize enough to afford Albert Pujols, put themselves in a position where they could survive, and even flourish, when Pujols departed. The Tigers, unlike St. Louis, haven’t laid the groundwork to succeed without their superstar. Put yourself in the place of owner Mike Illitch (who’s old enough not to worry about the back-end of Cabrera’s contract) and GM Dave Dombrowski, who may have just closed the door on bringing Scherzer back, and you can see why the thought of Cabrera walking away would make them antsy.

Here’s the thing, though: He wasn’t walking away. Not now, and not after this season. Cabrera wasn’t due to hit free agency until after the 2015 season, which means that Detroit could have taken its time with these talks.

This contract would look completely different if Cabrera were a free agent now. In a winter when Robinson Cano got 10 years and $240 million from the Mariners (who also gave up a draft pick), we would, perhaps, have understood if a free agent Cabrera—who’s six months younger than Cano, and a reigning back-to-back MVP—had gotten 10 years and $292 million to stay with the same team.

That’s not the case here. The Tigers had two full seasons of Cabrera control remaining—two seasons (or at least one, if they didn’t want to go down to the wire) in which they could have learned more about what kind of player he’ll be at age 40. If, at any point from 2014–2015, Cabrera’s body breaks down, or his bat starts to slow, or his conditioning slips, or his problems with alcohol abuse recur, the Tigers won’t be able to adjust their offer accordingly. They’ll be forced to pay him what they thought he’d be worth in March 2013, before they had that additional info.

Theoretically, then, there’s a tradeoff involved in any extension signed well before free agency: The team forgoes the chance to pick up extra intel in exchange for a discount on the deal. The player gets security, and the team gets to spend less than it might have had to later, offsetting the risk that the player won’t age as expected. For this deal to make sense for the Tigers, they’d have to be paying Cabrera less than he would have commanded as a free agent after 2015, assuming a typical trajectory over the next two years.

Are they, though? Let’s walk through the absolute best case for Cabrera’s next two seasons (as Sam Miller and I did today on Effectively Wild). In this scenario, Cabrera’s performance doesn’t decline significantly: He remains the best hitter in baseball, a durable, 6-8-win superstar. Maybe he picks up a second Triple Crown. When he hits free agency, he’s sitting on four straight MVP awards. How much does that Cabrera make?

It seems unlikely that even best-case Cabrera would land a 10-year deal, given that he’d be heading into his age-33 season. So let’s say he’d get eight years—the same eight years the Tigers signed him for yesterday. How much would he make in each of those seasons? Well, current Cabrera will be bringing home $31 million; factor in some inflation and those extra MVPs, and hypothetical future free agent Cabrera could conceivably raise that to $35 million—an extra $4 million annually, or $32 million over eight years. So, by signing Cabrera now, the Tigers could be saving somewhere around $32 million—if he doesn’t get hurt or decline at all from a second-best-in-baseball level.

Is that amount of money worth the extra risk the Tigers are taking on by sealing the deal now? No, I wouldn’t say so, especially since that scenario is so unlikely. Even if Cabrera’s true talent level doesn’t waver, he’s likely to regress from his career-best performance at the plate last season (he’d have to exceed his 90th-percentile PECOTA projection to match his 2013 TAv), and odds are that his physical skills will start to slip. What were the chances that his stock wouldn’t have fallen slightly at some point between now and free agency, given how much a share of CabreraCo costs now?

For Detroit, this isn’t just buying high. It’s buying high knowing that you’re likely to have a chance to buy lower later. It’s not just the money that makes this extension a mistake. It’s not just the timing, either. It’s the combination of the two: this amount of money at this particular time. Maybe the fact that Dombrowski can change Cabrera’s name from pencil to pen on the internal 10-year depth charts will give him more flexibility to make smarter supplementary moves. Maybe the commitment to Cabrera helps attract a future free agent, or sells a few season tickets. We shouldn’t disregard those factors just because we’re even worse at projecting them than we are player performance. But for them to be deciding factors, the associated dollar figures would have to be big.

If money were no object, we could wave away any apparent overpay. But the Tigers aren’t the Dodgers; we know, given its offseason salary dumps and the holes at short and left field, that this franchise has financial limits. If committing to Cabrera this early prevented the Tigers from shoring up another weakness now, when the team has its best chance to win, then the decision is even more suspect.

But remember when I promised not to take anything away from Cabrera? Sure, the Tigers probably spent more than they had to, and for that, this contract deserves to be criticized. But at least they spent on a stud. What should they expect out of Cabrera from now through age 40?

When we try to project a player like this, we run into a couple of competing, contradictory narratives. The first is that Cabrera, as a Hall of Fame-type talent, is likely to experience an especially gradual decline. “Elite players don’t age like normal,” as someone said to me earlier in response to the signing. I’m not so sure that’s the case. When Colin Wyers, Dan Turkenkopf, and I checked in on A-Rod’s aging pattern in mid-2012, we found something that surprised me: Hall of Fame hitters—even inner-circle ones—don’t decline any more gracefully on offense than Hall of Fame-eligible hitters (who had enough staying power to stick around for at least 10 years, but who as a group were average-to-good but not great). The hitters who make the Hall are better to begin with, of course, so they’re still worth starting after less talented players have aged out of the game. Still, Father Time subtracts the same yearly percentage of their performance at the plate. While Cabrera’s decline will begin from a lofty peak, it’s probably fair to expect him to shed value at the same rate as a player like Victor Martinez.

The second narrative says that Cabrera, as something of a one-dimensional super-being, is more susceptible to decline than an equally productive player who contributes in multiple ways. Cabrera is already a bad baserunner and a below-average defender at first base, and he can’t move further down the defensive spectrum without giving up his glove (which might happen during the front half of this deal). When the bat starts to go, he’ll have no ancillary skills to cushion the decline.

Is there any truth to the second narrative? To find out, Andrew Koo and I looked for all position players since 1950 who were worth at least 20 total wins in their age 27–30 seasons (Cabrera totaled 25.5), then excluded those who are still adding to their age-31-40 WARP total. That gave us a sample of 73.

We then divided that group into “one-dimensional” and “multi-dimensional” stars. The players in the former group, which will one day include Cabrera, had negative fielding + baserunning value in their age-27-30 years; those in the latter group had positive fielding + baserunning value. Not surprisingly, there were more multi-dimensionals than one-dimensionals, and the multi-dimensionals were worth a bit more. (It’s not easy to be worth 20-plus wins over a four-season span through offense alone.) With that division done, we checked to see whether there was any difference between groups in career length or WARP accrued in the five- and 10-year periods after age 30.

Group	# Players	27-30 WARP	AVG Career Length	5-YR WARP	10-YR WARP
One-Dimensional	22	23.2	7.7	17.8	21.8
Multi-Dimensional	51	25.6	7.6	18.1	23.6

The verdict? Nope. Players from both groups averaged a little less than eight years in the league after age 30. The one-dimensionals produced 94.0 percent of their age-27-30 WARP from ages 31-40; the multi-dimensionals came in at 92.2 percent. Cabrera’s bat-only profile shouldn’t make us more pessimistic about his future. I’ve been guilty of saying that a Cabrera extension could have “Pujols potential,” but Pujols’ decline—so far—has been steeper than that of the typical elite-level player.

Cabrera’s personalized 10-year projection, based on an impressive crop of comparables—George Brett, Frank Robinson, and Pujols lead the list—is even more optimistic than the generic forecast for “one-dimensionals,” crediting him with another 27.4 WARP through age 40. To put that into perspective: The long-term forecast is saying that Cabrera will produce essentially the same WARP total over the next 10 years that he has in his previous four. That’s a lot of value, but 10 years is a long time. Even if you assume that teams are already paying $7 million per free agent win, and even if you assume that that rate will rise by five percent per season, you can’t quite get Cabrera’s expected value to equal his certain cost.

So the Tigers acted, probably prematurely, and got a premium player at a premium price, giving back some of the surplus value from Cabrera's first Detroit contract. In the process, they darkened the short-term future of the free-agent market, widened the smile on the face of Mike Trout’s financial planner, and appalled, shocked, and disgusted 29 other owners and front offices. Writing about extensions can be boring, because it usually takes time to feel their effects. In a sense, that’s true of this one, too: our projection for both Cabrera and the Tigers in 2014 are unchanged from two days ago. But in another sense, Cabrera’s extension seems significant. This is one of those moves that makes wins cost more.

Ben Lindbergh is an author of Baseball Prospectus. Follow @benlindbergh
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