Ten Things I Didn’t Know, Um, A While Ago

It’s been a while, hasn’t it? It’s hard to come up with 10 new things each week during the offseason, so don’t look for many more of these columns until next spring. But here are some things to mull over in the meantime…

It’s the First Base Twilight Zone

Submitted for your approval. The day before Thanksgiving, two eerily similar first basemen are traded in eerily similar deals. Carlos Delgado is a 33-year-old left-handed first baseman who is owed $48 million for the three years left on his contract. Jim Thome is a 35-year-old left-handed first baseman who is owed $46 million for the three years left on his contract.

Delgado is sent from the Marlins to the Mets, along with some cash, for three players. Thome is traded from the Phillies to the White Sox, along with some cash, for three players. The Marlins receive a major leaguer and two minor leaguers, including the Mets’ top-ranked pitching prospect. The Phillies receive a major leaguer and two minor leaguers, including the White Sox’s top-ranked pitching prospect.

The deals are so similar that comparisons are inevitable. Personally, I’d rather have Delgado than Thome, because of Thome’s age and injury history. But I do expect Thome’s numbers to look better than Delgado’s next year, simply because of the difference between Shea Stadium and the Cell. I’d also rather have Aaron Rowand in center field than Mike Jacobs at first. I don’t follow the minors enough to choose between Yusmeiro Petit (whom the Marlins got from the Mets) and Gio Gonzalez (the pitching prospect sent from the Sox to the Phils). So let’s call it a wash. In terms of players, I give the edge to the Mets and Phillies.

However, I’d also rather have $22 million than $7 million. That’s the difference in cash that changed hands, with $22 million going to the Sox and $7 million to the Mets. Like most everything in the offseason, the difference between these two deals was in the cash flow. Does that make them relatively even? Only your accountant knows for sure.

Rowand’s contract ain’t bad either.

In 2004, Rowand had a stupendous year, flashing great leather in center field and creating 92 runs and 21 Win Shares in only 534 plate appearances. In retrospect, it was a spike year for the center fielder, and his 2005 performance is what the Phillies should expect. Outstanding defense, average offense.

Rowand is under contract for the next three years, which is probably a boon to the Phillies, who won’t have to go through arbitration with him. Most interesting is the option for his final year of arbitration eligiblity, which is $3.25 million if the player calls it and $5 million if the club calls it. In other words, there is a minimum/maximum of $3.25 and $5 million. That’s what you would call budgetability, if there were such a word.

What do major league ballplayers and gasoline have in common?

Maybe you remember the waiting lines to buy gasoline in the 1970s. No? Well, then, maybe you at least remember the free agent year of 2000, in which the average free agent signed a deal worth almost $4 million a year? Do A-Rod, Jeter, Manny, Hampton, Mussina, Dreifort and Neagle ring a bell? Every one of those guys signed a contract worth at least $50 million in 2000. Maybe, in both cases, you thought those crazy days were over.

Well, inflation is rising, as Yogi Berra might say, at the gas pump and at the ballpark. Here’s a table of the average salary and length of all free agent contracts signed each of the past seven years (based on my own research):

   YEAR    AVG SAL/YR     AVG YRS   NO.
    1998   $2,932,213       2.12    93
    1999   $2,879,532       1.86    57
    2000   $3,992,089       2.19    77
    2001   $3,744,319       2.00    68
    2002   $2,921,583       1.49    79
    2003   $2,344,848       1.48   149
    2004   $3,223,961       1.74   152

Salaries peaked in 2000, after which major league owners managed to restrain themselves for a few years. In 2003, the strategy of flooding the market with free agents, originally expressed by Charlie Finley, seemed to particularly help keep salaries down. Last year, however, dollar and contract length inflation would not be denied. The average annual value of a contract rose $800,000 and the average length rose a quarter of a year.

By the way, the 1970s were truly an age of hyperinflation. The general CPI rose an average 8% during those years, while baseball salaries rose an average 17%. In general, baseball salaries have risen about nine points higher than the overall inflation rate over any appreciable length of time in the past 30 years. This is why 10% is a reasonable baseball inflation target these days. Some say that rate is unsustainable. I used to say the same thing.

This year’s free agent crop seems to be holding its own.

B.J. (“Don’t Call Me Robert”) Ryan just signed a five-year, $47 million deal with the Blue Jays. Ryan will receive a $10 million signing bonus, and his salary will run like this:

2006: $2 million
2007: $5 million
2008-2010: $10 million each year

David Gassko already covered the economics of this deal, but when was the last time a reliever signed a five-year contract? I’m not sure, but maybe … never?

In response, the Mets signed Billy Wagner to a four-year deal worth $10.5 million a year, with an option for a fifth year at $8 million. It will cost them $1 million to buy out that option. The only reliever to ever receive that much money per year is Mariano Rivera, who earned $10.5 million last year (and will do so again this year). The second-highest paid reliever last year was Wagner, at $8.7 million, followed by Eric Gagne at $7.7 million and Keith Foulke at $7.1 million. No other reliever was paid more than $7 million last year.

Admittedly, Ryan and Wagner are two of the best bullpen aces in baseball right now, but these are two long, expensive deals. Plus, the five-year $60 million contract that Paul Konerko signed yesterday is expensive compared to two years ago, when Vladimir Guerrero got only $10 million more for the same number of years. It’s too early to tell for sure, but inflation seems to be rising, indeed.

There’s a strategy for inflation.

Let’s say you own a gasolline station, and you’re watching your gas prices go up and up. Wouldn’t it be nice to have a long-term contract with a supplier for a fixed price? Wouldn’t that take care of all your problems?

In fact, that’s the exact strategy you should follow in inflationary times. Easier said than done, particularly for gas station owners. But imagine you’re a baseball owner or general manager, watching player salaries rise 10% a year. What should you do? Sign players to long-term contracts at fixed prices?

Well, yes and no. Unfortunately, baseball players break and age (stupid baseball players!), and they’re not the most predictable producers in the first place. But, for the right player, it’s not a bad idea.

Let’s take Rafael Furcal as an example. Let’s say you believe Furcal is worth $10 million to you, that you sign him to a four-year deal for $10 million a year, and that he’s going to follow the normal aging curve outlined in Nate Silver’s PECOTA projection from last year. Here’s a table of his projected VORP (Value Over Replacement Value) and salary for four years.

                       2006    2007    2008    2009
VORP                   28.3    24.8    24.0    22.2
Salary (millions)     $10.0   $10.0   $10.0   $10.0
Discounted Salary     $10.0    $9.1    $8.3    $7.5
Disc. Sal/VORP         $0.35   $0.37   $0.34   $0.34

For the last two rows of the table, I discounted the $10 million salary 10% a year (see how inflation erodes the value of a dollar?) and then divided the discounted salary by each year’s VORP. You can read more about VORP and PECOTA at Baseball Prospectus.

This is a lot of gas to make a simple point. On the last line, you can see that your team will actually pay less for Furcal (in “dollars per VORP”) in his last year than his first, even though he’s gone downhill and you’ve paid him $10 million each year. In fact, if you paid him less in the first two years and more in the last two years (a la B.J. Ryan), the effect would be even more pronounced.

Just something to keep in mind as you contemplate those upcoming crazy contract offers. Key question: how do you think Paul Konerko, who will receive exactly $12 million each of the next five years, will age during that time?

Esteban Loaiza sure has good timing.

At the end of the season, Washington starter Esteban Loaiza had a mutual option with the Nationals (meaning both the player and the team had to agree to call it) for $4.5 million. The Nationals said yes, but Loaiza said no thanks, I can do better. Good move.

Loaiza just signed a $21.4 million, three-year contract with Oakland. He’ll be paid a $3 million bonus, $5 million in 2006, and $6.5 million in both 2007 and 2008. My first impression, like a lot of folks, was “Huh?”

Let’s review. Next year, Loaiza will be 34 years old, so this contract runs until he’s 36 (plus an option year for the next year). He was 12-10 with a 3.77 ERA last year, which is pretty darn good, but he pitched at RFK, the best pitcher’s park in the majors (along with PETCO in San Diego). His ERA was 2.86 at home and 4.17 on the road, which ought to be a huge flashing warning sign.

Take a closer look, however, at these home/road breakouts:

           K/IP   BB/IP  HR/IP   DER
Home       .864   .209   .082   .730
Away       .729   .299   .084   .666

I initally thought the difference between Loaiza at home and away would be in his home run rate (because of the ballpark), but he had the same rate both places. It was actually his other key stats—strikeouts, walks and Defense Efficiency Ratio—that changed on the road. These sorts of stats are not generally impacted as much by a ballpark. Maybe his home/road split was more of a fluke than anything.

I’m not saying signing Loaiza to this deal was a good move. It strikes me as a big risk with an aging pitcher, despite what I said previously about long-term deals and inflation. Plus, the A’s gave up their first-round draft choice to the Nationals. But, given those home/road splits and this crazy market, it’s not Eric Milton.

Starting Pitcher Salaries

Speaking of Eric Milton, last year I posted a study about the contracts that were being handed out to starting pitchers, using the same free agent data I referred to above. Several people have quoted from the study, so I figured I better update it. First of all, here’s a chart of the average salary paid to a free agent pitcher over the past seven years.

   YEAR    AVG SAL/YR     AVG YRS   NO.
    1998   $2,809,596       1.97    33
    1999   $3,059,596       1.85    33
    2000   $3,876,645       2.32    38
    2001   $3,578,516       1.97    32
    2002   $2,817,977       1.38    42
    2003   $2,440,293       1.46    71
    2004   $3,278,344       1.66    68

You might call this chart “The Rise and Fall and Rise of Pitching Salaries.” 2000 and 2001 were awesome years to be a free agent pitcher (Chan Ho Park and Mike Hampton, come on down!) in terms of both salary and contract length. Actually, all the observations we had before apply to this table too.

Last year, I also presented a chart of all contracts worth $3 million or more, to focus on the top pitchers. Here’s the same chart, updated through last year’s figures.

   YEAR    AVG SAL/YR     AVG YRS   NO.
    1998   $4,438,426       2.78    18
    1999   $4,489,035       2.32    19
    2000   $5,234,375       3.00    24
    2001   $5,637,500       2.76    17
    2002   $5,088,531       1.94    17
    2003   $4,550,298       2.14    28
    2004   $5,931,746       2.43    30

As you can see, the jump in salaries was truly staggering when you focus on the top pitchers. The average top pitcher garnered almost $6 million per year in his contract, a jump of $1.4 million from the previous year and more than in any year of the last seven. Was the 2004 bunch a better group of pitchers than the 2003 bunch? Well, a cursory glance at their 2004 Win Shares suggests they weren’t. Top pitchers who signed free agent contracts in 2003 contributed 57 Win Shares during the 2005 season. Those who signed contracts in 2004 contributed 63. In other words, the relative talent of the two pools was about the same.

There aren’t many free agent starting pitchers this year. Thank goodness!

The true Series MVP was Lance Berkman.

Enough about free agents and contracts, already. Let’s talk baseball! I already posted a column about Win Probability Added for the World Series and Aaron and I covered it in The Hardball Times Annual. But I should share a couple of new WPA items with you.

Jay Bennett, one of the early advocates of WPA, posted his own World Series results using his Player Game Percentages system. His results were very similar to ours, except for some differences between the pitching/fielding split.

Also, several people suggested I should look at “Series Probability Added” instead of Win Probability Added. Even better, one person told me how to do it. See, the idea is that some games are more important than others, as Dennis Boznango discussed in a couple of great articles earlier this week. For instance, in this most recent Series, the first game had a bigger impact on who eventually won than the last game, when the Series winner wasn’t really in doubt.

So I applied some math to the Series WPA results and came up with a list of the leading SPA players. Here are the leaders:

Player         WPA     SPA
Berkman       0.70    0.10
Konerko       0.34    0.07
Crede         0.41    0.06
Jose Vizcaino 0.29    0.06
Blum          0.41    0.05
Dye           0.44    0.04
Podsednik     0.24    0.04
Cotts         0.27    0.04
Pettitte      0.21    0.03
Luis Vizcaino 0.21    0.03
Backe         0.36    0.02
Marte         0.18    0.02
Garcia        0.32    0.02
Widger        0.13    0.02
Politte       0.09    0.02

Lance Berkman was still the Series MVP, but several players skipped many places. For instance, Konerko came in first for the Sox, because his second-game grand slam was a huge hit in an important game.

Derek Jeter hits a lot of ground balls.

One of the things I found while putting together the stats for The Hardball Times Annual was that Derek Jeter hit a ground ball in 43% of his plate appearances last year. That’s Luis Castillo and Ichiro Suzuki territory, and I didn’t think Jeter was that kind of hitter.

He didn’t used to be. That GB percentage is the highest of his career, and his line-drive percentage has declined from 24% to 20% to 19% in the last three years. Take a look at his batted-ball graph to see what I mean.

You don’t have to love baseball to play it.

Here’s a great story about a homeless man who found some comfort in softball. Even though he doesn’t like the game.

References & Resources
One discerning reader has pointed out to me that a statement I made about the impact of long-term salary and aging isn’t true. If you paid Furcal less in the early years of a contract, and more in the later years, then the cost per VORP would indeed go up, even on a discounted basis. Another one pointed out to me that I had calculated Esteban Loaiza’s age incorrectly (which I’ve since corrected).

Thanks goodness for discerning readers!

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