How much would I pay Josh Hamilton?

This winter, Josh Hamilton will be the biggest name on the free agent market (sorry, Zack Greinke). Hamilton got off to a historic start this season, and all signs pointed to him running away with the AL MVP and cashing in this offseason. He had a crazy-high weighted runs created plus (wRC+) that was well over 200 (league average is 100), in April and May.

Interestingly, Hamilton’s plate discipline wasn’t very good in those months. Near the end of May, Dave Cameron wrote a FanGraphs article entitled “Josh Hamilton: King of Swings“; which discussed the strangeness of Hamilton’s success, despite poor plate discipline, and left us with this dandy of quote:

Logic says this can’t last. As long as Hamilton keeps chasing pitches way out of the strike zone, pitchers have no real incentive to throw him anything in the strike zone, especially when he’s crushing pitches in the strike zone with regularity. But, they’re already throwing two out of every three pitches to him outside of the zone, and he hasn’t stopped swinging at them yet….
I’m not sure anyone should ever throw Josh Hamilton a strike again.

Well, pitchers stopped throwing Hamilton strikes and his numbers plummeted. His wRC+ in June was below average (92), and Jeff Mathis would laugh at his July wRC+ (49). The inconsistency of his play, his addictive past, and his injury history are three majors factors teams could point to as reasons not to offer Hamilton a lucrative contract.

Hamilton’s plate discipline hasn’t improved in August, but his numbers have significantly. If it wasn’t for Mike Trout, with a good September Hamilton would have a legitimate case for the AL MVP award, even with the two bad months.

Hamilton is going to finish this season with some ridiculous numbers, and will be the best outfielder on the market this offseason, but how much (and how long) should his contract be?

Matt Swartz has shown that front offices value outfielders higher than their actual wins above replacement (WAR), especially left fielders, which most likely will be Hamilton’s position moving forward. So there’s a good chance that some team will overpay for Hamilton. The market that has been established for premium outfielders in free agency, agrees with this idea.

Over the course of Hamilton’s six-year career, he’s been worth about four to five wins per season. Below is a comparison between Hamilton’s first six years, and the numbers of fou-r to fivewin outfielders who have signed big contracts in recent years:

Player AVG OBP SLG fWAR wRC+ BB/K 1st Yr FA Age Contract Signed
Carl Crawford .302 .347 .463 29.1 125 0.41 29 7 yr/$142 MM
Jayson Werth .274 .373 .485 20.5 125 0.53 32 7 yr/$126 MM
Matt Holliday .318 .387 .545 28 135 0.53 30 7 yr/$120 MM
Josh Hamilton .305 .364 .549 25.1 136 0.43 32 ???

A seven-year deal with a total net worth between $120-140 million seems to be the market for outfielders of Hamilton’s talent level, and reports say that is the type of deal Hamilton is hoping to receive on the open market.

Holliday’s contract has been great so far. He’s one of the most underrated players in the game and is clearly worth more than $17 million per season, but at the same time that contract is still young (with four seasons remaining).

But honestly, are there two worse contracts out there than Crawford’s or Werth’s?

The answer, of course, is yes. Chone Figgins, Barry Zito, Michael Young and Vernon Wells come to mind very (almost too) easily as players who are massively overpaid. But, aren’t the Werth and Crawford deals beginning to be thrown around as a similar type of horrible albatross?

I think their two deals have to be cautionary tales for any potential Hamilton contract.

{exp:list_maker}Werth has been worth (I apologize) just 3.7 WAR over almost the first two years of his contract, and he’s signed through his age-38 season
Crawford has been worth 0.6 WAR over the first two years of his contract. He had Tommy John surgery last week, oh and also last week, he was literally dumped on the Dodgers, because his contract was burning that big a hole in John Henry‘s pocket. {/exp:list_maker}
No team should be crazy enough to give Hamilton a seven-year deal. Even if he didn’t have a history of injuries, agreeing to pay anyone (even someone with as much talent as Hamilton) $15+ million, at age 38, is nonsense. And the fact is Hamilton does have an injury history.

Hamilton isn’t going to play in 150 games this season; 2008 is the only year he broke the 150-game plateau. Although 2009 was his only season truly decimated by injuries (he played in just 89 games), he has shown that he can be a four-win player in just 120 to 130 games, which is about all a team who signed him could expect.

Free agency does make some teams crazy, though. We saw the deals Prince Fielder and Albert Pujols signed last offseason, and even Matt Kemp and Joey Votto‘s extensions had some ridiculous length and total value, when they weren’t even free agents.

After Hamilton hit four home runs in one game this May, Jeff Passan wrote a column for Yahoo! about Hamilton’s contract hopes. In that column he made two priceless statements. The first dealt with Hamilton’s “Jekyll and Hyde”-esque dual personality:

The Josh Hamilton who hit four home runs Tuesday night is a player the Texas Rangers would love to sign long term, and considering that sources told Yahoo! Sports they’ve reopened negotiations with him on an extension, they’re trying.

The Josh Hamilton who fell off the wagon in February is a year-at-a-time question mark whom neither the Rangers nor any team in baseball can trust with a huge-money deal.

He is indubitably both men: the American League’s representative in the most-talented-player-in-baseball contest opposite the National League’s Matt Kemp and the recovering addict who twice has suffered embarrassing public relapses that, coupled with a deep injury history, muddy any prognosis of long-term viability.

And the second quote, which I think is pure gold:

Still, it’s reasonable for Hamilton to seek the sort of money afforded players of his caliber. Kemp, 27, signed an eight-year, $160 million extension last offseason. A year before that, the Washington Nationals gave seven years and $126 million to outfielder Jayson Werth, who turned 32 less than two months after he signed, like Hamilton will.

The most important thing to remember about free agency: All it takes is one team. One team to covet his talent. One team to dream he stays healthy. One team to crave his star power. Just one to take a sledgehammer to sanity.

Hamilton’s free agency situation is just unique. Who knows what the future holds for any free agent? But it seems almost impossible to know what the future holds for a player with the immaculate talent that Hamilton has, because quite honestly do his pros outweigh his cons?

Passan also pointed out that Hamilton is in Texas and that Texas knows him and his needs. And I think it would make a lot of sense for Texas to bring Hamilton back, especially considering the fact that teams get “more bang for their buck” when retaining free agents than when they acquire free agents from another team. Texas has shown it is willing to spend big, but I don’t see the Rangers offering Hamilton a seven-year contract; their front office is just too savvy to make that type of move. Heck, there were reports last offseason that the Rangers offered C.J. Wilson only something like a four-year $60 million deal.

So, if not Texas, then who?

As Passan said, it takes only one team that wants to catch lightning in a bottle—a team that is blinded by Hamilton’s sheer talent and throws logic out the window when the other factors and recent big contract failures are considered. But will any of the large-revenue ball clubs be in the market for Hamilton and become that one team who dreams bigger than others?

{exp:list_maker}The Yankees won’t be in the market, as they are attempting to dip beneath the luxury tax threshold
The Angels still have Vernon Wells on the books, so I don’t see Jerry Dipoto bringing in another aging outfielder long term, and should be more concerned with locking Trout up
The Dodgers can’t be possibly be in the market for Hamilton… unless they’re printing money or something
The Red Sox just freed up a ton of payroll flexibility and have no left fielder, but they’re probably going to use that money on Jacoby Ellsbury and starting pitching, not on Hamilton, especially with what just happened with Crawford
The Nationals want to be a big market club, but they already have Werth on the books
The Marlins spent crazy money last offseason, but the likelihood of them venturing down that road again is slim
The Phillies need outfielders and Ruben Amaro Jr. loves long-term deals, so I guess it’s a possibility, but still feels like a long shot
The Tigers and Giants are possible mystery teams that could maybe make a run at Hamilton
{/exp:list_maker} I have no idea where Hamilton is going to end up. I also have no idea if any team has the money and is willing to invest seven years and a large chunk of cash in exchange for his services.

What I do know,though, is what the most lucrative contract I would be willing to give Hamilton, if in a hypothetical world I were the head of a major league organization.

The absolute largest (in both length and dollar value) contract I’d give to Hamilton would be a five-year $80 million ($16 million per season) deal. And I’ll tell you why.

Why?

I think there is a decent chance that at age 36 Hamilton could still be a serviceable player. The assumed rate among the sabermetric community for one fWAR (FanGraphs’ calculation) is $5 million per WAR. I’ve heard arguments that the rate could be $6 million or even higher (Matt Swartz states in comment No. 25 on this link that it could be $6.7 WAR, next season). But to be safe, I’ll stick with $5.25 million per WAR as my starting point for a potential Hamilton contract extension, based on a five percent inflation rate.

Under these assumptions, if Hamilton signed a five-year $80 million deal he would need to be worth about 14 WAR over those seasons. Hamilton has been worth more than 25 WAR over the last six years (with September of this year left to accumulate more WAR). Projecting baseball players (especially one who will be entering his mid-30s) is not easy, especially one with the injury risk that comes with Hamilton, but I think a projection of 14 WAR is within the realm of possibility.

Here’s the breakdown of my projection which assumes:
{exp:list_maker}Hamilton will be a four-win player, in 2013
He’ll lose a large chunk of one season due to injury
He’ll be a left fielder over the course of the contract
He’ll be a two-win player at age-36 {/exp:list_maker}

Year (Age) WAR $/WAR Revenue Cost Net Value
2013 (32) 4 $5.25 $21.00 $16.00 $5.00
2014 (33) 4 $5.51 $22.05 $16.00 $6.05
2015 (34) 1 $5.79 $5.79 $16.00 -$10.21
2016 (35) 3 $6.08 $18.23 $16.00 $2.23
2017 (36) 2 $6.38 $12.76 $16.00 -$3.24
otal 14 $79.83 $80.00 -$0.17

I think not only that this is a reasonable projection for Hamilton, but also it would be a win-win contract for him and the team that signed him. When December or January rolls around, Hamilton will probably end up with more money or more years than this. Heck, Gary Matthews Jr. once signed a five-year, $50 million deal.

The trouble with any contract projection is we’ll never know what’s going to happen, until it happens; which is part of the reason why this type of analysis is so much fun. How could anyone on the outside know the inner workings of a front office? They are hardly ever public (Moneyball, I’m looking at you), and it seems from the outside looking in that front offices hardly ever act rationally.

Jonah Keri made a great argument on Monday about the Dodgers and a new possible market inefficiency. Maybe teams will follow the Dodgers’ path and stop trying to be corporations that want to make large profit while accumulating WAR. Instead they might try to be baseball organizations that simply accumulate WAR, and don’t care if it hurts their overall profit.

Who knows if other teams will follow their lead. I also don’t know if this idea will have any effect on Hamilton’s free agent contract, but it could and that type of unpredictability is what makes baseball so great.

References & Resources
All statistics come courtesy of FanGraphs. All contract info comes from Cot’s Contracts.

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Comments

  1. chuck said...

    the only way hamilton gets more than five years is with an american league team.  dh could keep him healthier.  first base is also a possibility, since hammy is very athletic and could learn the position.  if thats the case, boston could make a run so that their fan base believes the team wants to compete quickly.

  2. Glenn DuPaul said...

    I’m not a proponent of theory American League teams can give longer deals to power-hitting free agents, because of the DH-rule.  There are those who state that the DH keeps hitters healthy and maybe will be their position in the future, if their legs really breakdown. 

    I’m not saying that this is a wrong idea, I could be completely wrong. I’m just saying that I’m not a huge fan of it, because I’ve never seen any statistical evidence backing that point.

    We could see it happen though with Prince Fielder and Albert Pujols, but that’s so many years down the line.

    Thanks for the comment though, it’s something I left out of the article, because I’m not a proponent of it, but if you are then it definitely should be considered for this type of analysis.

  3. Dave said...

    I think decent fit for Hamilton would be the Mariners.  They (obviously) need offense, but have OK pitching, with a load of top pitching prospects on the way.  If some of the young pitching pans out, all they need to do is get some hitters to be a contender.  Hamilton is about the only top hitter on the market.  The Mariners have the revenue.

    While he may (will) end up being too expensive for what he brings to the table, I think Seattle is the best fit.  Of course, odds are against him actually ending up there.

  4. Glenn DuPaul said...

    Dave, I think you’re right on with the M’s.  They could need a big outfield bat as much as anyone, and they have the revenue to pull the deal off. 

    He probably will end up being too expensive and costing the team who signs him, and for some weird reason I feel like the Mariners would have to way overspend to get him to come to Seattle.  But, you never know, if the Rangers offer him something horribly low, staying in their division may be just what Josh wants. 

    I’m really interested to see where he goes, for how long and for how much, cause I honestly have no idea

  5. outliarbaseball.com said...

    I wrote a piece today on Matt Holliday’s consistency, and how it sets him apart from other batters. Hamilton has one of the most drastic splits of any hitter between actual results and consistent floor.

  6. Hank G. said...

    “And I think it would make a lot of sense for Texas to bring Hamilton back, especially considering the fact that teams get “more bang for their buck” when retaining free agents than when they acquire free agents from another team.”

    I think that statement is totally illogical. I can think of two reasons why teams retaining free agents do better than teams acquiring free agents from another team:

    1. They are able to sign the player at a discount to the free market because the player doesn’t want to change teams.

    2. They know the player better than other teams and drop out of competition when the salary offers reach unrealistic levels.

    Just saying that it makes sense for the Rangers to retain Hamilton doesn’t make sense.

  7. Glenn DuPaul said...

    @Hank, I think we actually agree with each other.  I think those two reasons you thought of are part of the reason why teams make more off of retained free agents than they do off of ones from another team.  There are more factors that go into that though.

    Players who switch teams have to move their families, adjust to a different, team, manager, and park, as well as living up to the big contract they just signed in an attempt to prove themselves to a new fanbase. 

    There are other reasons for this as well, I’ve read Swartz’ original article in the 2012 THT annual in a while, but I’m sure he has some other suggestions. 

    I will say this though, Josh Hamilton has been an incredible player for Texas, he’s comfortable there and they’re comfortable with him, and I’m sure they’d be happy to have him for the next 3-5 years.  So, if you read my next sentence, the one after you stopped the quote, I said that their organization is too savvy to offer him a 7-year deal.

    Texas is going to offer Hamilton a deal and try to get him back, they probably won’t retain him though, as someone will outbid them, and then that team will get less bang for their buck than Texas would have, had he signed their deal.  And I think we’ve come full circle into an agreement, fair?

  8. Hank G. said...

    I agree that we’re not that far apart, but I’d still disagree with the wording that the Rangers should pursue Hamilton because they might get more “bang for their buck”.

    They should try to re-sign him because he is a very good player and might give them a home team discount (or credit for taking a chance on him when he was unwanted).

    Because they should have a better idea about his future worth (and know more about his personal demons than other teams), they should be willing to drop out of the bidding at an appropriate level.

  9. Glenn DuPaul said...

    My wording was funky and I apologize for that. I should have laid it out like:
    “Texas should pursue him for a lot of reasons, one of which is that they know him better and he’s already comfortable there/may give a hometown discount; thus, they would most likely get the most bang for their buck.  This has been shown to happen often with free agents in studies by Matt Swartz”

    Your second and third paragraphs are the main reasons why it would make sense for Texas to re-sign him.  I kind of thought this was assumed, but probably should have laid it out in more detail in the original article.

    Also, it seems to me that you don’t think he’ll get a hometown discount, and quite frankly, I don’t either.

  10. Hank G. said...

    No problem, I just thought that your original wording implied something you did not actually mean.

    I don’t see any reason for a player to give a hometown discount, without a compelling reason. If he really likes his situation, lives in the city and doesn’t want to move his family, sure. But to leave millions of dollars on the table through some idea of “loyalty” doesn’t make sense to me. The owners seldom have any concept of loyalty when it comes to the players.

    I do think that Hamilton has more reason than most to stay with Texas, given his history. But it’s a personal decision and I have no idea what he’ll do.

  11. D Leaberry said...

    All hardball fans here in Washington recognize that the Werth deal was a foolish mistake by Mike Rizzo, a man who has been both lucky in that he’s had back-to-back first draft picks fall into his lap courtesy of his predecessor Jim Bowden, and wise in that he realizes that pitching and defense is 80 percent of the game.  Trading Josh Willingham for a relief pitcher who can’t find the plate and a spare centerfielder was his other big mistake.  Rizzo won’t make a mistake like he made with Werth again.

    As for Hamilton, it makes sense that he either stays in Texas or takes big bucks elsewhere- the Mets, the Yankees, the White Sox, the Cubs or the Red Sox.  With Jeter and Rodriguez coming to the end of the line and the subsequent freeing up of salary, the Romney-rich Yankees might want to plug Hamilton into a line-up with Cano, Granderson, Texeira and Swisher.  He’ll want a Werth/Crawford contract and the Yankees might be the only team willing to go so far.

  12. Glenn DuPaul said...

    The Yankees aren’t willing to go there though.  Unless Brian Cashman has suddenly been moved by the Dodgers’ foolishness, the Yankees are going to try to get under the luxury tax by 2014.  Thus, they have already said that most likely Swisher will be out of their price range.  So I definitely don’t see them offer Hamilton a deal similar to that of Werth/Crawford. 

    The Cubs and Mets are looking to rebuild, so I don’t see Hamilton going there.  The White Sox and Red Sox are more realistic, but still feel like a stretch.

  13. D Leaberry said...

    I’ll amend my Yankees assertion after some research.  Rodriguez was foolishly signed through 2017, which hampers what the Yankees can do.  Jeter is owed a year plus another at player’s option(which he’ll take) as well.

    The Red Sox have freed up lots of money to sign Hamilton and probably should try and sign him.  The White Sox will be free of Adam Dunn after 2014 so they might have the resources for a long term deal.

    But something to think about signing hitters to big contracts.  Prince Fielder has delivered everything that his exploits in Milwaukee promised.  Yet the Tigers are struggling to make the playoffs because the pitching has not been as good this year.  Conversely, the Orioles have had sub-par hitting years from JJ Hardy, Mark Reynolds and Matt Wieters yet they are in the thick of the playoff race for the first time since the mid-90s.  Why?  Pitching and defense.

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