March 30, 2009

Bargains and Boondoggles

Value Dissonance

by Christina Kahrl

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In fantasy leagues, everyone loves to talk about bargains and boondoggles, the guys you overbid for, and the guys who give you quality production for a song. With real-world baseball right around the corner and just about everybody under contract, it's also time to take stock of those players in the 2009 season who will be giving their teams full bang for their buck and then some, as opposed to those players who'll be delivering a lot less than you expect for what it took to bring them in.

One of the most important considerations for generating these kinds of categories is that we need to recognize that not all contracts are created equal. A young player who signs a multi-year extension that takes him through his arbitration years and perhaps also the first year or two of his eligibility for free agency is almost automatically going to be a bargain to the team that leverages their control over his immediate future to offer him some security and lock him up, while eradicating the variable of whatever an arbitration panel might award him from their bottom line. As a matter of grinding, actuarial fact, outside of the rare early arrival like Alex Rodriguez, these contracts almost always cover most or all of the peak seasons of a young player's career, between the ages of 25 and 29 (or what we statheads like to simplify as the "age-27" phenomenon). Since they're generated without any open bidding on the market, it's easy for teams to make a relative score here, as the Rays did last spring by signing Evan Longoria to a six-year, $17.5 million deal that gets sweeter still when you consider that it gives the club options on him for 2014 at $7.5 million, and for 2015 and 2016 for $11 million apiece. Whether they pick up the options or not, if Longoria lives up to his projected value over a replacement-level third baseman-a mere $59 million from 2009 to 2013-he represents a massive bargain for his employer. Add in his projected 2009 value, set by PECOTA at $10.675 million in a year where he's getting paid $550,000, and we have an easy choice for the biggest bargain at third base.

It's because of that kind of consideration that you end up with a few obvious names when you look at the ten players whose value figures to be greatest in 2009, but there are different factors involved when it comes to service time and contract status:

Player             MORP         Actual Salary
Albert Pujols    $36.475M         $16.000M
Hanley Ramirez   $34.225M          $5.500M
Jose Reyes       $25.825M          $5.750M
Matt Wieters     $24.500M            $400K
David Wright     $24.125M          $7.500M
Carlos Beltran   $21.350M         $18.500M
Chase Utley      $21.000M         $11.000M
Chipper Jones    $20.200M         $11.000M
Grady Sizemore   $19.850M          $4.600M
CC Sabathia      $18.100M         $14.000M

Obviously, some of these things are not like the others. Sabathia and Beltran aren't bargains, though in each case you can say that Brian Cashman and Omar Minaya did their work well, since in each instance we're talking about free agents getting top dollar on the open market-and still being more than worth it. (Their likely value at the back end of their long-term contracts is another matter, but we'll get to the boondoggles and pick that point back up again in a bit.) Here we also find several unsurprising examples of young players locked into multi-year extensions not unlike Longoria's: Wright, Utley, and Sizemore, for example. Chipper Jones might be the equivalent of a lottery ticket-when healthy, he's a bargain because he figures to rank among the best players in the league.

The guys who really stand out as bargains, however, are Albert Pujols, Hanley Ramirez, Jose Reyes, and Matt Wieters. It's important to recognize that none of these players were ever free agents on the open market. Pujols signed his seven-year, $100 million extension in 2004 to dodge arbitration, a deal that looks like a relative steal now. Similarly, Omar Minaya didn't kvetch over his lot, he did the entirely sane thing with Reyes (as with Wright), and locked him up early. Hanley Ramirez inked his six-year, $70 million extension last May, making it clear that while the Marlins might be cheap with their more mediocre talents once they achieve arbitration eligibility, they had the good sense-financial as well as player evaluation-to get HanRam hammered into place as the centerpiece of the franchise.

In the same way that our aggressive projections for Wieters' performance as a rookie upsets a few mental applecarts since he has just one year of pro experience split between High- and Double-A, that projection plays its part in our valuation modeling. As a 2007 draft pick, Wieters was never anybody's but Baltimore's because of their willingness to pay a $6 million bonus for the fifth overall pick (and Scott Boras client). If he lives up to our projections, being worth that kind of money might seem insane for a rookie, but catchers are rare, and catchers with Wieters' kind of talent as a hitter represent a player development grail of sorts. You can't really second-guess the Rays picking David Price first overall that year, and the Royals and Cubs picked teen phenom infielders Mike Moustakas and Josh Vitters, but the Pirates picking Daniel Moskos with the fourth pick represents another unhappy legacy of the Littlefield era.

Since we're talking about sources of unhappiness, let's move to the less-happy category of boondoggles, where it might please fans tired of the Red Sox/Yankees tango in the Hot Stove League that both teams deserve special mention here. That's because both clubs have far too many instances of big-ticket free agents who will fall far short of their contractual value, but in looking at some of the contracts where teams are out almost eight large or more relative to what they're getting for their money, you find some interesting names:

Player              MORP         Actual Salary
J.D. Drew          $3.550M         $14.000M
Hideki Matsui      $2.575M         $13.000M
Alex Rodriguez    $15.275M         $32.000M
Todd Helton        $2.500M         $16.600M
Jeff Suppan        $1.700M         $12.500M
Barry Zito         $3.325M         $18.500M
Michael Young      $5.975M         $16.000M
Jose Guillen       $1.425M         $12.000M
Magglio Ordonez    $4.675M         $18.000M
Gary Sheffield     $1.900M         $14.000M

Generally speaking, these are all free agency-driven big-ticket salaries, although Helton's presence reflects the downside of signing one of those franchise deals with a player under team control. I've deliberately set aside pitchers who are injured or out for a significant portion of the year-while the long-term contracts given to Jason Schmidt looked bad at the time and turned out that way, as with Tim Hudson or Billy Wagner (for example), there were reasons to offer those deals. Instead, I'm focusing on who's actually going to be playing-just not very well, relative to their paychecks. Not all of this might seem fair-Michael Young and Magglio Ordonez and A-Rod all have considerable value, after all, but what their teams had to pay for their services is a lot more. The free agency disasterpiece of Zito's deal is a well-worn trope of the market at its most irrational, but Jeff Suppan deserves honorable mention among those healthy hurlers their employers regret bringing aboard.

Angels fans and Dodgers fans wondering why Gary Matthews Jr. and Juan Pierre aren't here should take heart that we see Pierre's contributions still costing their teams considerable money, but with Pierre's value somewhere just under $3 million, and Matthews' somewhere around $1.5 million, they don't seem likely to cost their clubs eight large, not that this makes you feel any better about the deals they got.

Set aside in sort of a special category all his own is the Captain-Derek Jeter is being paid $20 million in 2009 because of who he was when he signed his ten-year, $189 million deal in 2001. Now that we're in the back end of his deal and projecting his 2009 performance to be worth just $5.55 million. It takes an awful lot of faith in what he's worth in terms of advertising and pinstriped brand management to say that he's really earning the extra $14 million or so, but that isn't very fair to Cashman or the Yankees-they got great value from Jeter at the front end of the deal, they accepted the risk here at the back end, and it's not as if the money spent kept them from spending big this past winter.

Special overpriced scrub award: Because you can make mistakes on the bottom of the roster as easily as you can on the top, let's bring up Aaron Miles of the Cubs, or perhaps more properly GM Ed Lynch [Ed. Note: Per Christina's comment below, this was an uncaught error at publication; the GM is of course Jim Hendry, and happily so.] for giving Miles a two-year, $4.9 million contract. The projected value of his production in 2009 is $550,000, barely above league-minimum, and is projected to drop to $425,000 in 2010. Flushing $4 million over two years is small potatoes, but one of the things we expected in terms of changing free-market behavior is that we anticipated that mediocre players would have a hard time, while teams would (wisely) pay a premium to top-end talent. That's still generally true, but every once in a while you still see bad deals like this. The Cubs decided they had a specific need, felt they had to fill it from among the limited supply of free-agent middle infielders, and paid a small-scale premium for replacement-caliber talent. More power to Miles for getting the benjamins, though.

Special Bonus Good Guy: A surprise value might be Cristian Guzman of the Nationals. Signed to a two-year, $16 million extension as a reward for the best year of his injury-plagued four-year deal, it looks as if his new health (and life after LASIK surgery) adds up to a guy worth almost that much for 2009 alone, with a projected value of of $14.55 million.

A version of this story originally appeared on ESPN Insider .

Christina Kahrl is an author of Baseball Prospectus. 
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