Sure, on the surface, the signing of Yoenis Cespedes by the Oakland A’s seems absurd. Why would the rebuilding A’s want an expensive import like Cespedes? How did the destitute A’s even land him? But if you dig a bit deeper, it actually makes quite a bit of sense. Let’s back up a few months.
- 12/09/11: Oakland Athletics traded cash, LHP Craig Breslow and RHP Trevor Cahill to Arizona Diamondbacks for RF Collin Cowgill, RHP Jarrod Parker and RHP Ryan Cook.
- 12/23/11: Oakland Athletics traded LHP Gio Gonzalez and RHP Robert Gilliam to Washington Nationals for RHP A.J. Cole, RHP Brad Peacock, C Derek Norris and LHP Tom Milone.
- 12/28/11: Oakland Athletics traded RHP Andrew Bailey and RF Ryan Sweeney to Boston Red Sox for RF Josh Reddick, 1B Miles Head and RHP Raul Alcantara.
Everything lines up. All three of those trades accomplished the same goal—trading away valuable established players for a larger quantity of younger and cheaper guys. Billy Beane took a look at his roster and realized that the franchise as-is didn’t have a playoff contender in it. Tear down now, build for later.
So how in the world does a free agent splash like Yoenis Cespedes fit that plan?
Well, it doesn’t, really. All indications by Billy Beane and owner Lew Wolff are that if a new ballpark is going to come at all, it will likely be sometime around 2015—or even the year after. Clearly, management would love to draw in new fans by having a good, exciting team when the new ballpark opens, so it makes sense that Beane is timing this rebuild to line up in that time frame, four or five years from now.
But, well… Cespedes was handed a four-year contract. It doesn’t take a mathematician to see that, unless Cespedes is extended, he won’t be able to play for the A’s in the new ballpark for very long, if at all. So what was the point?
Let me put this line of questioning on hold for a second. I’ll come back to it. Forget about the rebuilding cycle or a new ballpark or anything. In a vacuum, is $36 million over four years for Yoenis Cespedes a good financial investment?
Jim Callis of Baseball America estimated that Cespedes would “wind up just outside of the top 10” on his list of top overall prospects. Kevin Goldstein of Baseball Prospectus slotted Cespedes in at 20. John Sickels of Minor League Ball estimated that he’d be the ninth-best hitting prospect (not overall, but just among hitters). A few years back, Victor Wang did a lot of great work into prospect valuation, and he found that hitters ranked in the 11-25 overall bracket are worth an average of 1.32 Wins Above Bench (WAB) per year. After adjusting the baseline to replacement level and after assuming an average free agent rate of $5 million per win, I get an expected value of $36.3 million over the life of the contract. Cespedes’ actual contract pays out $36 million over the four years. The expected value is a rough estimate, but it seems to be right in line with the ink on the page.
But is the market rate enough? The A’s are a cash-strapped franchise, and to succeed, they need to get more wins than their payroll would purchase at the average market price. So, again, what was the point?
Here’s the kicker. There’s a pretty big difference between Cespedes and most other free agents.
With most free agents, a team can fairly accurately guess what level of production it’ll get. Sure, every once in a while you find a gem like Lance Berkman or a stinker like Adam Dunn, but for the most part, free agents are generally known quantities. Cespedes isn’t that. The safe bet is that he could average two WAR per year. But he could easily bust and be worth nothing at all, or he could be a perennial All-Star.
No one really knows how he’ll hit in professional baseball here in the U.S. Compared to most free agents in baseball, the variance on the set of his expected outcomes is enormous.
Which brings me back to the point I started with. Thanks to the rebuilding, the A’s had a bit of cash to throw around. Last year, owner Wolff admitted that the team had a hilariously tiny $370,000 profit (not even one minimum salary player!). This was with a payroll that sat at $67 million to open the year. Before the Cespedes signing, the A’s had pared their 2012 payroll down by $10 to $20 million. Beane made a calculated risk in a non-contending year—if Cespedes busts, the A’s lose only money. That money would have either sat around as zeroes in a bank account or been used to pay cheap veterans in a non-contending year. If Cespedes hits well, the A’s will have a valuable player on their hands. It’s all of the upside of a wild card, with very little of the risk.
Sure, with this contract, Cespedes may not be around when the A’s hit their new ballpark stride. But if Cespedes turns into the player the A’s hope he can be, they’ll have first dibs on extending him with the money from the new ballpark, should that come to pass. If not, hey, at least Billy Beane’s made the A’s more interesting—for the time being.