February 20, 2007

Bad and Badder

Which Contracts Were Truly the Worst?

by Neil deMause

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Last month, a trivia question I posed on BP's Unfiltered blog turned into a more meaningful query: Of all the crappy contracts that Pittsburgh Pirates management has handed out over the last decade or so, which was the most craptacular?

With the aid of Nate Silver's MORP formula for converting on-field performance into dollar value, I soon had the--well, an--answer. While the likes of Derek "Operation Shutdown" Bell ($9 million, -0.2 WARP) and Kevin Young ($24 million, 2.8 WARP) were deservedly infamous, the "winner" as the biggest waste of Bucs bucks turned out to be Jason Kendall. Despite being a solid five-wins-a-year player during the course of the six-year deal he signed in November 2000, the backstop with the busticated ankle still fell $28 million short of earning his keep.

Blowing $28 million with the stroke of a pen, as Pirates GM Cam Bonifay did back then, is pretty impressive. But as impressive as the Pirates' record of lousy judgment is, surely there are examples of other teams' deals that ended up being even more costly?

With that in mind, I set out to examine all the most infamous free-agent signings of the last decade or two. The basic math is simple enough: MORP tells us how much money a player's production was worth in each given year; subtract his actual salary over the course of the contract, and you have how much he was worth above (or, in these cases, below) what he was paid.

I did use a couple of fudges. First, I used average salary rather than taking the time to break down who had back-loaded contracts or whatever. (Life is short.) For players whose contracts still have a couple of years to go, I used PECOTA projections to fill in the missing MORP data. And since Nate hasn't calculated individual MORP formulas for every year on record, I applied a simple 8% devaluation per year before 2006, which is a reasonable approximation of salary inflation. Finally, all figures were adjusted to 2006 dollars, using the fabulous Minneapolis Federal Reserve CPI Calculator.

The result is a figure that represents how far a player fell short of being worth his salary. For lack of a better term, let's call it Ballplayer Amortized Deadweight, or BAD. The bottom ten:

Player         Year     Salary     Years  WARP       MORP     CPI      BAD
Mike Hampton   2001  $121,000,000    8    18.3   $17,207,490  .96  -$108,399,488
Ken Griffey Jr 2000  $116,500,000    9    27.7   $29,348,726  .95   -$92,169,385
Mo Vaughn      1999   $88,000,000    6    10.1    $7,023,315  .88   -$91,671,718
Alex Rodriguez 2001  $252,000,000   10    82.1  $166,968,886  .98   -$86,501,641
Mike Piazza    1999  $105,000,000    7    35.2   $39,005,017  .90   -$73,678,609
Kevin Brown    1999  $105,000,000    7    34.3   $43,612,270  .90   -$68,534,946
Jason Giambi   2002  $120,000,000    7    36.2   $54,269,714  .97   -$67,863,127
Derek Jeter    2001  $189,000,000   10    53.7  $122,338,396  .98   -$67,814,450
Manny Ramirez  2001  $160,000,000    8    57.4   $98,703,283  .96   -$64,017,459
Chan Ho Park   2002   $65,000,000    5     8.8    $6,567,329  .94   -$62,030,436

Now there's some serious bills being flushed down the toilet--not to mention a reiteration of Nate's conclusion in Baseball Between the Numbers that Rodriguez "has been overpaid even though his on-the-field contributions have been everything his employers might have expected from him and then some."

Still, there's something unsatisfying about this list. Is Derek Jeter's contract really among the worst in baseball history just because he's been a five-win player rather than an eight-win player over a decade?

One solution is to use the suggestion of reader Keith Sawyer, who made a similar complaint about my selection of Jason Kendall as the biggest waste of dosh in Pirates history: "If Kendall was ($28.1 million) over six years while Young was ($22.8 million) over four, couldn't it be argued Young was actually the weightier boat anchor on a per year basis?"

That makes sense, and gets more to the point of what we mean when we say "bad contracts"--while it may be just as bad an investment to bleed $1 million a year for ten years as to blow it all at once, it's not as impressive a bomb. Moreover, at least a bad contract spread out over time limits your losses; a really terrible one-year deal just leaves you the opportunity to make an even worse signing the next year.

So with that in mind, let's refine BAD with a per-year version--called, of course, in line with BP's other rate-stat metrics, BADr. (And yes, I know that really only the rate version should be called "amortized"--back off from my acronyms, pal.) Our Hall of Shame now consists of:

Player          Year     Salary     Years  WARP      MORP     CPI         BAD        BADr
Mo Vaughn       1999   $88,000,000    6    10.1   $7,023,315  .88   -$91,671,718 -$15,278,620
Mike Hampton    2001  $121,000,000    8    18.3  $17,207,490  .96  -$108,399,488 -$13,549,936
Chan Ho Park    2002   $65,000,000    5     8.8   $6,567,329  .94   -$62,030,436 -$12,406,087
Albert Belle    1999   $65,000,000    5    11.6  $12,361,525  .87   -$60,365,224 -$12,073,045
Darren Dreifort 2001   $55,000,000    5     4.0   $2,233,612  .92   -$57,479,726 -$11,495,945
Jeff Bagwell    2002   $85,000,000    5    21.4  $31,019,487  .94   -$57,304,154 -$11,460,831
Juan Gonzalez   2002   $24,000,000    2     5.1   $3,749,912  .90   -$22,500,098 -$11,250,049
Mike Piazza     1999  $105,000,000    7    35.2  $39,005,017  .90   -$73,678,609 -$10,525,516
Ken Griffey Jr  2000  $116,500,000    9    27.7  $29,348,726  .95   -$92,169,385 -$10,241,043
Denny Neagle    2001   $51,000,000    5     6.3   $4,947,730  .92   -$50,165,872 -$10,033,174

While some of the names are the same here, the Jeters and Ramirezes who topped the BAD list merely thanks to the length of their deals have given way to ... well, Darren Dreifort. If you want a BADr poster boy, you could do worse: In exchange for five years of drawing down $11 mil a year, Dreifort couldn't even match the production of Jose Lima or Tony Womack.

John Perrotto takes a closer look at the circumstances of some of these deals plus a couple of other infamous bad moves, like Wayne Garland, who suffered total existence failure shortly after signing a big-bucks deal in the late '70s) elsewhere on BP.com today. So I'll just finish up with a few general observations:

• If you're really going to waste money, you need to spend it in the first place. A $5-million-a-year outfielder who ends up getting put on waivers in June is a terrible investment, but even if he contributes nothing, at least all you're out is $5 million. But handing out $15 million per annum to a pitcher who only had only had a couple of exceptional years, both in pitchers' parks, and never struck out even six batters a game, now there's a way to really burn a hole in your bottom line.
• Injuries kill. Obvious? Maybe. But it should still be a warning flag when devoting megabucks to a guy who's shaped like a citrus fruit.
• Look ahead, not back. Mo Vaughn would have been almost worth his pay if the Angels had gotten his performance from 1993-1998, rather than 1999 on. But nobody should have needed PECOTA to tell them that a 30-year-old nominal first baseman had his best days behind him.

Neither BAD nor BADr is meant to be the final word on bad signings--if you want to make a case that signing Carl Pavano (-$8,748,134 BADr) or Greg Vaughn (-$8,111,588 BADr) was a worse move than lavishing $105 million on a 30-year-old Mike Piazza, you'll get no argument from me here. But it's still a useful metric for weeding out the truly epic disasters from the mere head-slappers, and reminding ourselves that even signing a future Hall of Famer can blow up in your face if you lavish enough money on him at the wrong time.

Neil deMause is an author of Baseball Prospectus. 
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