November 9, 2015

Rubbing Mud

Reach For the Stars

by Matthew Trueblood

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Jason Heyward is the cream of this free-agent crop, but David Price, Zack Greinke, Johnny Cueto and Jordan Zimmermann are sure to grab a lot of the headlines this winter. It’s been a while since so many very strong starting pitchers hit the market during one offseason. At least two of those four guys will get nine-figure multi-year deals, and it could be all four. That’s sure to raise the hackles and the red flags of columnists everywhere. Every winter (even when there are only one or two major pitching prizes on the market, as there were last year), we get articles like this one and this one, which detail the dangers and the historical pitfalls of the $100-million contract for pitchers. This is as conventional as baseball wisdom gets: big free-agent deals are traps. They’re sucker’s bets. They’re bad, bad, bad.

Here’s the thing, though: any team needs to foray into free agency in order to thrive. It’s damn near impossible to draft and develop an entire team with a chance of winning anything, let alone to do so on an ongoing basis, repeating the feat. Trade is necessary for the growth of any economy, and outside talent is necessary for the growth and improvement of any organization. So the question isn’t whether large or long-term free-agent deals for pitchers fit the guidelines we use to define and identify financially savvy moves, but rather, whether those big commitments are really worse for a team than smaller ones. And the answer, as it turns out, is no. In fact, hooking the biggest fish (even at the biggest price) might just be the most successful strategy there is for supplementing organizational pitching depth with outside talent.

Everyone loves a low-risk, high-reward move. The A’s got 4.5 WARP from Bartolo Colon in 2012 and 2013, on a pair of one-year deals totaling $5 million. The Cubs nailed one-year, $6-million deals for both 2013 and 2014, for Scott Feldman and Jason Hammel, respectively. They weren’t in a position, as Oakland had been, to leverage their finds into a significant bump in playoff probability, but they made hugely profitable trades involving each hurler.

Those deals are terrific, when they pan out that way. Here’s the thing, though: they rarely do. Over the last four offseasons, there were 52 one-year big-league deals signed by starting pitchers. They cost a total of $298.45 million, and the pitchers who agreed to those deals generated 24.9 WARP. That’s $12 million paid per win added. That’s not exactly a bargain.

In fact, here’s how deals of various lengths have panned out over these last four winters. Where deals aren’t yet complete, I’ve counted only the number of seasons that pitchers have already pitched, and have used the annual average value of their deal to estimate the money paid out thus far.

Dollars Paid Per WARP, Free-Agent Starters, By Contract Length, 2012-15

Now, obviously, there are problems with just adding up and averaging out the WARPs here. The Royals gave Jason Vargas a four-year deal, after all, but it was only worth $32 million. Hiroki Kuroda and A.J. Burnett signed five one-year deals during this period, but each was worth more than the average salary Vargas will earn, and they could easily have gotten multi-year deals.

Let’s run at this from another direction. Here are the same deals, broken down by annual average value.

Dollars Paid Per WARP, Free-Agent Starters, By AAV, 2012-15

Again, don’t take this as gospel. It’s four years, and just the front end of some of the longer-term, higher-AAV deals in question. The problem so many people have with huge free-agent contracts, after all, is the messy back end of said pacts. You can see, though, that the willingness to pay a higher price for a starter doesn’t just give a team more overall value. In the short term, at least, it also delivers that value more efficiently.

Obviously, the richest handful of teams in the league can afford to count on inflation, developing revenue streams, and the sheer margin of error their superior cash flow affords them to offset whatever losses they realize when long-term deals do go south. Most teams struggle to overcome big misses. On the other hand, it sure looks like shopping in the clearance section is an even less efficient way of doing business.

TINSTAAPP is almost as true without the second ‘P’. Even big-league pitchers are prone to a lot of variance in their performance, and injury poses an ever-present risk. Small contracts tend to go to guys for whom the risk is well-known and the error bars are exceptionally wide, but the market isn’t generating enough of a discount based on that risk. Mid-level deals like the four-year agreements signed by Matt Garza, Brandon McCarthy, Ricky Nolasco, Ubaldo Jimenez, Ervin Santana, and Edwin Jackson during these last few years are going to players the market views as mid-rotation workhorses. In those cases, it seems to me that teams just aren’t seeing the risks that really lurk there—risk of injury, yes, but also risk of regression, of that one half-step backward that starts a spiral.

This year, there are going to be successes in that Garza-McCarthy arena. There are too many guys in that tier of free agency for all of them to fall flat. John Lackey, Jeff Samardzija, Scott Kazmir, Wei-Yin Chen, Mike Leake, Hisashi Iwakuma, and Brett Anderson all could get something between McCarthy’s $48 million over four years and C.J. Wilson’s $77.5 million over five. Some of those deals will work out; most will not. If a team wants to spend wisely to upgrade their rotation, though, they should spend big, and grab one of the front-line studs.

Matthew Trueblood is an author of Baseball Prospectus. Follow @MATrueblood
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