The Imbalance Sheet

The Really Insane Deals

by Keith Law

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Alex Rodriguez's signing isn't all that interesting, even though it has generated all the headlines. He's an exceptional package: a power hitter who hasn't reached his power peak; a seven-skill talent with great plate discipline and an improving defensive profile; a generally classy guy with no interest in recording rap albums; and he plays one of the two most difficult positions to fill in baseball. Add to that baseball's shrewdest agent and a couple of frustrated, rich owners who want to make a big splash, and you get an enormous contract.

No, Manny Ramirez's contract is the most interesting of the large ones signed this offseason. It marked the first major free-agent signing in the history of the Boston Red Sox (sorry, Matt Young and Jack Clark don't count). It meant that instead of placating the fans and signing Mike Mussina to be the #2 starter everyone in Boston is convinced the team needs, the Red Sox were trying to fix what was broken: the offense.

Even without Pedro Martinez, the remainder of the Red Sox pitchers would have ranked third in the American League in ERA last season. That's light-years better than the team's hitters, who ranked 11th in runs scored, on-base percentage and slugging average. The Red Sox had gotten far too little production from their outfield in the past 324 games; now, a Trot Nixon/Carl Everett/Ramirez outfield will rank as one of the AL's two or three most productive. With a healthy Jose Offerman leading off and no Wilton Veras sightings, the Sox will pick up 50 runs or so from their moves and are at least the equal of the Yankees at the moment.

However, not enough observers have bothered to quit wagging their tongues long enough to look at the ridiculous contracts handed to some of baseball's less-talented free agents this offseason. David Segui got $28 million over four years from Baltimore, despite the presence of aging prospect Chris Richard, Rule 5 draft pick Jay Gibbons and forgotten man-beast Calvin Pickering, any of whom could produce 85% of what Segui will produce at 5% of the salary.

Derek Bell was the worst regular outfielder in the National League for the last two seasons. The allegedly cash-strapped Pirates gave him $9 million for two years despite the presence of Adrian Brown, Emil Brown, John Vander Wal and forgotten hacker/prospect Chad Hermansen. The Mets coughed up a four-year, $40-million contract for Kevin Appier, who has not pitched well since shoulder surgery in early 1998 and who isn't likely to be demonstrably better than teammate Steve Trachsel, who signed for half the length and one-fourth the cost of Appier's deal.

These deals are created entirely by the unwillingness of owners to execute the cost-saving maneuvers one sees in successful businesses of all stripes. The fact is that outside of the superstars--supply of whom sits below demand despite the expanded reach of scouting in the past 15 years--the supply of ballplayers far exceeds the demand for them. First basemen who can post OPSs above 800 are a dime a dozen. Heck, you can find one who can post a 900 OPS in the Frontier League (Morgan Burkhart), Japan (Roberto Petagine), Mexico (Erubiel Durazo), Triple-A (Julio Zuleta, Ivan Cruz) or on the Orioles' bench (Chris Richard). Need a catcher who can slug .500 with a few walks and adequate defense? Try Creighton Gubanich or Tom Wilson before you waste money on Joe Oliver, Chris Widger or Carlos Hernandez. Need a left-handed reliever? The Red Sox just cut Tim Young, who has a career minor-league ERA of 2.34, while the Phillies wasted $9 million on Rheal Cormier, whose shoulder probably has one full strand of muscle left without a tear in it.

The problem is that owners, GMs and many fans don't see it this way. They don't see that Mark Grace and Roberto Petagine are, at worst, equals at the plate and on the field. They ascribe a significant value--and thus, money--to players who have performed in the major leagues.

There are two fundamental problems with this approach. First of all, a player who has an above-average year in the major leagues may not have any realistic chance of repeating the performance. He may have a major injury (Dustin Hermanson, in all likelihood), he may be too old (Mark Grace) or his good performance may have been a fluke (Garrett Stephenson). There are reasonable ways of figuring this into the valuation of a player, but if just one owner decides to take the optimistic route and ignore all the warning signs, the player will get too much money.

Second, most baseball officials refuse to accept what Bill James demonstrated 25 years ago, that past minor-league performances, properly translated, are as predictive of future major-league performance as are past major-league performances. This is a primary reason why Baseball Prospectus exists, and accepting the premise is a major driver of why the Oakland A's are the successful organization that they are.

The A's are the only team that understands the concept of disposable talent. They signed Matt Stairs and Geronimo Berroa and acquired Randy Velarde and Kevin Appier, then threw them away when they became expensive. They signed Tom Wilson and traded for Jeremy Giambi and Chad Bradford when those players became available because they could fill holes cheaply and as effectively as major-league options. It's when teams refuse to believe that Billy McMillon can outproduce Derek Bell they'll pour money down a toilet.

Agents are complicit in this process, because it has put millions of dollars in their pockets. If all 30 GMs suddenly decided to opt for minor-league talent instead of major-league mediocrity, salaries would decline because the supply of such talent exceeds demand. Alex Rodriguez and other players in the ether wouldn't be affected, which is why his contract was so uninteresting to me. Agents need to see salaries continue to escalate for mediocre talents like Segui and Bell, so they do nothing that would erode the conventional wisdom, even if it would help other players in their stables.

Revenue sharing will be meaningless until enough owners recognize that the imbalance between supply and demand for the bottom 95% of ballplayers is leaning in the wrong direction. You can hand millions to Pittsburgh, but they'll just sign Derek Bell instead of Billy McMillon. Revenue sharing and a salary cap won't do anything to help increase parity until that changes.

Keith Law can be reached at klaw@baseballprospectus.com.