Nationals Baseball: Desmond Extension

Thursday, February 27, 2014

Desmond Extension

In one of the most notable asides from a Boz chat, last week Boz casually mentioned in a chat that Desmond turned down a deal in the 85.5million / 7 year neighborhood, similar to the deal Adam Jones got. That sounds like a lot of money!  If this actually happened, why did he turn it down?

Well first let's look at the Adam Jones contract and see how it would actually compare to Desmond. In Desmond's favor, Jones got an 85.5 / SIX year deal. That's about 14.25 million a year.  If we go just by that a 7 year deal for Desmond would be 100 million dollars, rather than 85.5. Prior to the contract year Jones had one good WAR year (4.3 WAR - and I'm using fWAR if that matters to you). Desmond has produced two straight years at least that good, which would also suggest a larger contract. 

Against Desmond, Jones' contract only bought out a single arbitration year. There is a sense that arbitration years are worth less, and thus can sometimes have significantly lower payouts than FA years bought up. The Nats would be buying up two arbitration years. Also Desmond will turn 29 (very late) this season. Adam Jones was a couple months from 27 when he signed. You expect age-wise better years from Jones.

That's just a starting point. Really what you want to know is what SSs are being paid now and how does Desmond compare to these shortstops. We're going to look at recent long term deals covering many FA years. Desmonds fWAR (don't concentrate on this as a hard number - just think of it as relative value) for the past two years combined is 10, 5 per year. This is considered his age 28 season for stats purposes.
  • There was one big SS contract signed this off-season. Jhonny Peralta signed a 4 year deal for 53 million or an average of 13.25 million per year, covering ages 32-35.  He averaged 3.6 WAR in the three years leading up to the deal
  • Prior to the 2012 season,  Jose Reyes signed a 6 year deal for 106 million or an average of 17.6 million, covering ages 29-34. He was roughly a 5.5 WAR player when healthy but had some injury history
  • Prior to 2011, Troy Tulowitzki extended his contract 7 years longer for 134 million, or 19.1 million per year, covering ages 29-35. A 6+ WAR player in a theoretical full season, Tulo has had constant injury woes taking chunks out of his seasons. 
  • Commenter Todd Boss mentioned I left out Elvis Andrus. 8/120 million (15 per) for a 4 WAR player at time of signing covering years 26-33.  Elvis is a doubly unusual case.  He had his first full year at such a young age (20) that to cover the usual age-ragne would require a 9-10 year deal, that's why it ends at 33. Also the contract has a player opt out after 4 years. At age 30, which could make it a 4/62 deal.  Either way confirms point - good FA SSs are worth at least 14.25 a year.
If you look at this the 7 year deal for Desmond is kind of fair, though an 8th year would grab that 35 year old season which teams did for Peralta and Tulo. The money offered though IS light. If you believe in straight talent, not factoring in health issues, then Desmond fits inbetween Peralta and Reyes. That 14.25 a year for Jones could be about right, maybe a little on the low side. If you factor in health, and honestly why wouldn't you, you could argue he should be making about the same as Reyes or Tulo, in the 18 million dollar range. (Tulo gets a little bonus for being THE Rockie). This puts his contract anywhere from the 7/100 million dollar deal on the light side to an 8/144 year deal on the heavy side by straight comparison.  7/85.5 vs 8/144? That's a lot of money potentially left on the table.

Even if you want to look at the Simmons deal (7/58, 4.7 WAR last year) as a place to start, Desmond can immediately point to his FA years bought out at 13 and 15 million dollars a year respectively.  That's right around the 14.25 we're setting as a base for Ian. The only deal that looks favorable to the Nats is Starlin Casto's where they bought out 3 FA years at 9, 10 and 11 million.  Of course at the time Casto was about a 3 WAR player, significantly less valuable than Desmond.The only hope for the Nats is Stephen Drew getting a terrible deal, but again, he's not that comparable, already 31 with a 3.5WAR season last year, preceded by two injury riddled years.

The numbers make it pretty simple. If the Nats offered 7 years at 85-90 they offered under market value for what 7 FA years would bring. Perhaps if you factor in the bought out arbitration years you could justify 7/90 but that's right at the bottom limit of what you could justify. Desmond, is making the right choice. Now he needs to back it up with another good year.

16 comments:

Section 220 said...

Excellent post. One question is, why the low (relatively speaking!) offer? Are the Nats as an organization obsessed with value? Or do they just not realize how much things cost?

Donald said...

At this point, Rizzo is in a relatively weak bargaining position and Desmond is in a strong one. The Nats don't have any credible replacement in the minors. I don't think Rizzo likes to bargain from a weak position, so it's not a surprise that a deal hasn't been made. He was probably just feeling out Desmond to see what he was expecting without tipping his hand on his top offer.

If Espinosa miraculously bounces back and hits well, or Walters improves his defense dramatically, Rizzo's hand gets much stronger. If that doesn't happen, Rizzo's position next year probably isn't much weaker than right now anyway. And with the back-loaded contract he's under now, even if the price goes up next year, Rizzo got a cheap 2014 to help offset.

There's also the uncertainty around Znn that may be holding Rizzo back. I'm assuming Desmond is a higher priority but if Cole and Giolito crash this year (or Strasburg or Gio needs TJ) it might change his priority.

Harper said...

Sec220 - Why the low offer? Because they can. With two years left in arbitration they have a year to figure out what they want to do and gamble on cost savings if something happens to Ian in 2014. Like Donald said, Nats are in bad position and they'd be buying high. Things might be the same before next year (likely will be) but it's hard to see it getting that much worse for the Nats as far as negotiating is concerned. Now if they offer low again before next year... that's just lowballing.

Sirc said...

Rizzo might be in a "relatively weak" bargaining position now, but soon he will be in a null bargaining position.

Other than a player who absolutely can't imagine playing in another uniform, good players should never sign a contract one year prior to free agency. That's where Desmond will be this time next year.

This is it. This is the time to sign them. Also, there shouldn't be any such thing as "home team discounts." From a strictly rational perspective, teams should pay a premium to sign players who are so close to free agency. I honestly don't understand the concept of a home team discount.

I also don't know why Desmond or Zimmermann would continue to negotiate after 3/30/14. Even if they desperately want to resign with the Nationals, the market should determine their value, not the Nationals. Until another team is involved there is no true measure of the numbers they should be discussing.

Shin-Soo Choo proved that no one should ever sign a contract before becoming a free agent. And before him it was Jayson Werth. These guys got huge money because teams bid against one another despite their relatively modest numbers. They are not franchise players, and likely make little impact on ticket pricing or national attention. But they did it the right way: they went into the open market and ended up with an absolute value.

If you get injured, then settle for a home team discount. Otherwise wait for the Yankees and Dodgers to be involved before making any decisions.

I believe that's what Jordan Zimmermann has been trying to say all along, and what Ian Desmond should be saying as well. Zimmermann should be saying "I'll take Greinke's contract + a few more million" if the Nats want him to sign right now. Why not? Desmond should be telling the Nats to add a few tens of millions to what Ryan Zimmerman signed before he even considers signing anything. It doesn't mean they have to leave, but to sign anything before they become free agents should cost more, not less.

Chinatown Express said...

@Sirc: I'll go a step further and ask whether there should really be a hometown premium, not a discount? A franchise player is a marketable asset to a team, whereas a hometown team isn't really a marketable asset to the player. I recognize that David Wright is a better 3B than Zim. I think they're both great dudes. I should, as a fan, applaud a Zim-for-Wright trade (which would obviously never happen). And I would. But it would still feel like a little bit of a betrayal. In the same way, as a fan I'd prefer Zim'nn to Greinke, even if Greinke is worth 0.2 WAR more.

The only rational reason a player should give a hometown discount is because he has personal reason to prefer that geographic area, or because the transactional costs of moving to or living temporarily near the new team would exceed the extra money he'd realize. If he gives a hometown discount for any other reason, he's acting out of sentimentality, pride, or stupidity.

Sirc said...

@Chinatown Express

/agreed

I would like to believe that Desmond and Zimmermann want to play in D.C., but the Nats need to do their part and pay.

It'll sort itself out one way or another.

Todd Boss said...

Nobody's mentioned what I think is the real comp contract that Desmond is looking at: Elvis Andrus 8yr/$120M deal. Desmond is a significantly better hitter, 20/20 threat and nearly the defensive player Andrus is; why not hold out for that contract?

Donald said...

I'm not sure it would be purely out of sentimentality, pride or stupidity. Bear in mind that we're talking about a boatload of money regardless. I don't think Desmond's quality of life would differ at all if he were making $100m vs. $120m.

If all you care about is getting the largest salary possible, then sure you go into free agency. But Desmond may care about winning too. He might not want to pull a Cano and take the higher salary from a perennial loser. If so, that limits the places he'd go. Then he's got to figure who of those teams would bid for him. The dodgers already have an SS locked in so they probably aren't bidding. The Yankees will probably not want to wait two years for Desmond to become available. The Braves won't pay and have an SS, etc.

For Znn, I'd guess the injury concern is even higher. Plus, maybe staying in the NL is a priority so he doesn't face a DH every day. And maybe he hates pitching in Philly and Cincinnati and Colorado so he removes them from contention.

All I'm saying is that if you are making more money than you can spend in a lifetime, you are probably weighing other factors, whatever they may be. I'm not saying the Nats should expect them to take a discount. But assuming they will automatically go to the highest bidder might not be true either.

John C. said...

The Dodgers do NOT have a long term SS; Ramirez is a FA after this season. Just when Jeter steps down to open a massive hole on the NYY. Bidding between the Dodgers & Yankees will be crazy, and the runner-up will look straight at Desmond. And don't forget the Phillies, who will have a big TV deal, contracts expiring and a need to replace Rollins.

blovy8 said...

I'll play devil's advocate and say Desmond's bargaining position might not get any better than now. If he's still worth the extension value we're speaking of after 2015, he'd likely have a qualifying offer taking a lot of possible clubs out of the picture. He'll have had two more years to rack up a couple more injuries and/or lesser numbers in one of them. That was certainly a consideration when he signed his 2/17.5 deal, otherwise he'd have just gone into the arbitration hearing and probably won.

The Andrus and Simmons deals have a lot of built-in defensive value that Desmond just doesn't give you. 14 million in a FA year isn't going to be that big a deal for the Braves if Simmons can hit his weight, and because of his age, it would be an easy contract to dump for them at almost any point if they decide they need offense. Andrus' deal I think is already looked at as a bit of a mistake though, and may not be predictive. Age starts to work against Desmond, since he's really just average-ish at short, and I think the contract length could be a sticking point. The extra year(s) should be the Nats sweetener rather than something they WANT to do as in the other examples. You can move Tulo to a lesser position and his offense will play there. Desmond only looks good now compared to Tulo and Reyes because he hasn't missed as much time. In two years, that could change. His value has built on power, baserunning, and handling short, but even a minor injury could screw with that. It seems liek a bad 2012 season from Stephen Drew killed his multi-year deal aspirations when he was 29. He could be that guy.

Someone's going to sign Hanley next year, and the Yankees (apart from one Cashman discussion) didn't care about Jeter's defese at short for the last decade. The Dodgers are as rich as Croesus, but they just signed that Cuban SS Arruebarruena for a five-year deal. The most money in free agency will probably come from a crappy club.

If you believe the projections, Desmond is only a 3 WAR player next season, and if you use bWAR, he's been a 4 WAR player the last two seasons. Now at his peak, maybe he's a premium player, a meh 2015, and no one will want to give up a pick to sign him. Even setting aside Espinosa's potential bounce back, if the Nats can't sign him, they could go defense-first there, and spend the money on another position.

Chinatown Express said...

Donald: I'll play Scrooge McDuck to your Donald Duck. If Zimmermann gives up ~$40mil (the difference b/w the Nats' offer and Harper's back-of-envelope projection) to play for a winner instead of a loser, he's stupid AND prideful AND sentimental. Sure, there's a declining marginal utility to income, but $40m is still a massive amount of money. He could use it to buy mosquito nets in Africa and save thousands of lives. He could build a dozen inner-city schools with it. Isn't that satisfaction worth playing losing baseball for six years?

KW said...

I hate long contracts, for a number of reasons, but they seem to have become the price of doing business. So let’s hit a few things. First, do the Nats need to sign Desmond long-term? Probably. He’s one of the two or three top offensive shortstops in baseball, although he did have a power decline last season despite being healthy. I don’t see Espinoza as an alternative, as he seemed about the same as usual at the plate today, turning a 3-0 count into a weak out. That object in his rearview mirror is Zach Walters, doubling twice. Can Walters get his defense and OBP up to MLB snuff in two years if Desmond walks? That’s the question, as he seems like the only likely alternative.

If they’re going to sign Desmond and feel like they’ve got to carry it out to seven year, I hope they do it now instead of waiting until he’s 30. It would be much better to be finishing a big contract with a 35-year-old SS than a 37-year-old one. (Look up Rollins’ decline between 33 and 34 if you don’t believe me.) Also, let’s think out of the box. Nearly every team tries to backload contracts. I understand the point of not wanting to spend the money until you have to, but that leaves you with a couple of problems. First, you’re not paying the player peak money when he’s at his peak. Second, when you’re then overpaying him when he’s past his prime, you’re making him untradeable (except perhaps to the Dodgers).

All of that said, here’s the seven year arc I would suggest for Desmond, including overpaying him for his two ARB years: 10-15-20-20-18-17-15 = 115. That comes out to $16.4 per, better than Andrus. But in looking at those numbers, I’m struggling with the question of whether Desmond is still going to be worth that much to the Nats when he’s 33/34/35.

Donald said...

Just to clarify, Chinatown, I wasn't expecting Desmond to accept the low-ball offer he was given. But taking a $100 vs. $110 or so might happen. It's still a lot of money, but if you're popular for a winning team you also make a lot more in advertizing. Take someone like Cano. He signed for $240m on a team that probably won't make the playoffs, maybe ever during his contract. Had he gone to the Dodgers, or stayed with the Yankees for $200m or fewer years, he might win a few WS and make up the difference in endorsements. And while he may still make the hall of fame, there's a fair amount of evidence that winning championships helps make your case much stronger.

All I'm trying to say is that players don't always automatically choose the highest bidder, nor should they. There are a number of factors to weigh, and choosing a team like the Nats, who could be perennial contenders, with guys he knows and likes should be worth something.

Anonymous said...

I personally would like to see Desmond extended ;)

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Anonymous said...

KW, Desmond's power decline occurred when he was playing with a sore hamstring in September. He slashed .314/.358/.500 with 4 HR and 7 doubles in August, but .257/.303/.317 with 0 HR and only 5 extra base hits in September. That's also the month when he committed 5 of his 20 errors. Not a coincidence. If he's healthy, he's MLB's second best hitting shortstop who can also play defense (Tulo, adjusted for ballpark, is a bit better).