After much discussion in the blogosphere and elsewhere, Matt Holliday signed a seven year, $119 million contract to return to the St. Louis Cardinals today. Holliday was courted by the…well, we’re not exactly sure who courted Holliday prior to signing with the Cards. We know that Boston offered Holliday a five year, $82.5 million contract to play left for the Sox before turning their attention to John Lackey and Mike Cameron. Aside from that, the Orioles were rumored to have shown some interest in Holliday, though rumors of them offering the free agent outfielder an eight year, $130 contract were shot down by O’s brass.
Aside from the Sox, the O’s, and the Cards, no one else has seemed to have shown much serious interest in the ex-Rockie, Athletic, and Cardinal. There’s this recession going on, you see, and teams are wary of nine-figure contracts and/or dealing with superagent Scott Boras. Even the Yankees, considering the potentially bountiful 2011 free agent class and the relatively negligible marginal value that Holliday would bring to the team, steered clear of the top free agent on the market.
|**There’s little doubt that the Holliday signing should help make the Cardinals a strong competitor for the next several seasons.** (Icon/SMI)|
There will be a great deal of debate about the size of Holliday’s contract but what’s inarguable is that the Cardinals have gotten a legitimate middle-of-the-order hitter to place behind Albert Pujols in the Cards lineup which helps to make the team a playoff contender for the next several years. That fact, along with Pujols’ godlike status in the Gateway City, will help encourage Pujols to extend his contract with the Cardinals for the remainder of his career (provided the team will be able to come up with the necessary booty now that they’re giving Holliday $17 million per year through 2016). Still, what is the likelihood that Holliday lives up to his Zito-like contract?
The value of one win above replacement level has been estimated at about $4.4 million on the free agent market. The question then becomes, “how well will Holliday perform during the seven years Holliday wears the birds on the bat?”. Over the last three seasons, Holliday has been worth 8.0, 6.3, and 5.7 wins, respectively. Assuming his value declines by half a win per year, we can expect him to be worth around 5.2 wins in 2010. At $4.4 million per win, that puts Holliday as being worth $22.88 million in 2010, a five million dollar surplus to the Cards. Holliday will be 30 next week, however, and we should expect some regression as he ages. If we assume his value declines by half a win per year, we can expect him to be worth 2.2 wins in 2016, the final year of his contract. Assuming a seven percent inflation rate for players’ contracts, Holliday would be worth $14.5 million in the final year of his contract, about $2.5 million what the team is paying him.
What if, however, Holliday isn’t quite as good as those projections suggest. After all, how many 36 year old outfielders were worth at least 2.2 wins last season? Answer: Three. Ichiro Suzuki, Mike Cameron, and Raul Ibanez. Sean Smith’s CHONE projections have Holliday as approximately a 4.5 win player in 2010 and Matt Klaassen at Fangraphs has Holliday as a nearly identical 4.6 win player this season. If we use Klaassen’s 4.6 win number, Holliday’s total value to the Cards over seven years is about $113 million, just six million dollars shy of the amount the Cards will pay him.
|Year||WAR||$ Value/Year||Total Value||Team’s Annual Surplus|
|2010||4.6||$4.4 M||$22.88 M||$5.88 M|
|2011||4.1||$4.7 M||$19.30 M||$2.30 M|
|2012||3.6||$5.0 M||$18.14 M||$1.14 M|
|2013||3.1||$5.4 M||$16.71 M||-$0.29 M|
|2014||2.6||$5.8 M||$15.00 M||-$2.00 M|
|2015||2.1||$6.2 M||$12.96 M||-$4.04 M|
|2016||1.6||$6.6 M||$10.57 M||-$6.43 M|
|Total||21.7||—-||$112.91 M||-$6.09 M|
Most people will say that coming up short by just six million dollars is a small price to pay for Holliday’s production today, the increased likelihood that Pujols signs with the team, and the increased likelihood that the Cardinals will win championships during the early part of the contract. After all, flags fly forever, right? All that’s true, of course and it’s unlikely that the Cardinals will end up burdened with a Barry Zito or Vernon Wells-like contract down the road. Klaassen makes an excellent point, however, that “paying average market value for a win isn’t necessarily a ‘dumb’ move, but it isn’t ‘smart’ either.” Though Holliday’s contract appears to pay him what he’s worth, this is only an “average contract” from the team’s perspective.
Moreover, the contract appears to include a clause that will trigger an automatic eighth year if Holliday finishes in the top 10 in the MVP voting in year seven. Of course, if Holliday plays well enough to finish that high in the MVP voting, he’s likely to be pretty productive in year eight as well. Still, one can’t help but wonder why, with the ostensible lack of competition for Holliday’s services, Cards’ GM John Mozeliak was willing to guarantee a seventh year and offer up the eighth year option. Boras had already declined the Red Sox’ offer and, though the Orioles seemed interested, there were all sorts of signals out that Holiday preferred to play for a competitive team, stay in the National League and with the Cardinals. Couldn’t Mozeliak have signed Holliday to a six year, $102 million offer — thus beating Jason Bay‘s average annual value and saving the team the seventh, and least valuable to the team, contract year? When Boras insisted on the seventh year and the vesting option for the eighth year, couldn’t Mozeliak have just dared Holliday to go play for the Orioles instead? Isn’t it likely that Boras and Holliday would have blinked and settled for the six year deal?
Though it appears as though Boras did manage, once again, to get a GM to bid against himself — thus increasing his client’s contract — if the worst thing we can say about the contract is that the team unnecessarily is on the hook for one additional year, this is unlikely to be a horrible contract from the team’s perspective. The team is better today than it was yesterday. The signing won’t cost the team a first round draft pick, though neither will it net them two had Holliday signed with anyone else. The fact that the team is more likely to be competitive throughout Pujols’ golden years should give him one more reason to extend his contract with the team rather than waiting to see how many millions the Yankees, Red Sox, or Mets would throw at him. The Cardinals have to be considered the favorites to repeat as champs of the NL Central. After all, flags fly forever, right?