Nationals Baseball: Ramblings about contracts

Friday, February 06, 2015

Ramblings about contracts

Reading through the comments just now I thought, "Hey no one took me to task about my take on Jayson Werth's contract". Then I realized I never posted that. I started writing it but moved on to the post you see for yesterday. Mystery explained.

Anyway this wasn't going to be a post about Werth's contract but since I started down that road now I'll at least give you my talking points. Werth contract was a unnecessary overpay to start. I've gone over what we knew/were told about the market at the time pretty extensively several times (not necessarily in blog form). No I wasn't a GM in 2010 but everything says "foolish money throw". Think the Prince Fielder deal if you want an example you might buy into since it's not your team. Werth has made the contract move from "terrible" to "not terrible" by playing better than expected to this point. However, the fact that he's basically earned what he's been paid up to now does not make it a good deal yet like some are saying. The way long-term deals work to make it a good deal you want to be ahead when you start to hit the decline, not even. Right now you'd be expecting him to be in decline so Werth can make this contract a good deal by having another great year and a decent one after that. But that's just potential, not given. I'm bothered by this fact that there's this kind of weird equation going on with the contract. Since it was thought of as terrible and it's no longer terrible that some how it's good? No. The fact that the Nats are in a place where it might be good is great but it's still in "might be" land.

Anyway what got me thinking about contracts was Keri's piece on the worst contracts in baseball.  (No, not Werth. I just said it wasn't terrible!) I find these kind of things fascinating.

It starts off with a double Swisher/Bourn thing where a executive says "Man, wouldn't it be great if the Indians could have that money for these guys to get a Andrew Miller and James Shields right now" Basically he's saying "Wouldn't it be better if Cleveland didn't gamble on veterans and lose two years ago so they could gamble on veterans now?"  It's not the gamble that was the problem it was the losing. Shields and Miller are no better gambles (I'd argue worse). If Swisher and Bourn were ok now the team would look real good. This highlights how teams that don't commit to spending have to get these things right. This is the kind of spot I was afraid the Nats might find themselves after the whole "topped out" nonsense. They aren't here right now and I don't expect them to be, but it took the Scherzer signing to get me to believe it. This nether land where success can only be achieved through luck, or getting nearly every FA signing exactly right is not a fun place to be.

Only two of the worst deals are your "oh no long pitcher deals!" (Sabathia and Verlander). Let's look at ages in that first FA year for these two and the Nats trio we've been discussing.

Verlander 31
Scherzer 30 (31 in July)
ZNN 29 (30 in May)
Sabathia 28 (29 in July)
Strasburg 28 (29 in July)

You may think this doesn't tell you much as both Verlander and Sabathia's contracts ended up here. But Sabathia's deal only ended up here because of the opt-out the Yankees put into it that turned what was a 7/161 deal into a 8 / 186 with 9 / 211 potential. Imagine if that contract was ending this year as it would have under a normal contract. The Yankees would have gotten 4 great years and a World Series out of it. Anything half-way decent this year and you'd have to feel good about the deal overall and it probably wouldn't be on this list. Meanwhile with a bad season this year Verlander could top it next year. Verlander broke down at 31, Sabathia at 31 going on 32. Pitchers are the equivalent of NFL running backs. You want as many years before they hit 33 at the most as possible. Say what you will about Scherzer's durability versus ZNN's TJ (neither were ridden as hard as Justin or CC) but I'm sticking with age above all. 

You can see that Andrus is in there. That's why before the Trea Turner deal and we were all about deals for MI, I thought that was the only guy the Nats could get from TX. This is the guy they want to deal. Keri notes several times that you should be careful when buying out years and I understand that but I think there's a huge fundamental difference in buying out a guys' control years at 24 and buying out the last contract year at 31. The Andrus deal wasn't bad because of buying out years, it was bad because he couldn't hit, showed he couldn't hit and the Rangers didn't seem to care and extended him forever. I'd have no qualms about buying out control years for everyday players that have shown they are good in order to get deals that end around age 34. I think those are good gambles.

I think the Cubs have done it right with their Casto and Rizzo extensions. They pay them a good deal more than they have to but nothing payroll breaking until they are 29. Then they have options at higher values that might be bargains then depending on how they are playing and how the contracts have grown. It's a big potential loss for the Rizzo and Casto because they are becoming FAs at 30 or 31 instead of 27 or 29 but it's a lot of security. This isn't just a couple years of good money it's five plus. It won't happen with Bryce but this is what the Nats should try to do with Rendon. "Hey you are still an injury risk but we'll buy out all your arb years now and maybe a year of FA too, with an option year for us. How's that sound?"

The big takeaway I see is that injuries are often the contract breakers and, no duh, they tend to start to happen more after you get over 30 (some of us, I'm sure can attest to that). On these lists which contract wasn't made worse by injury? Upton, Ethier, Andrus, Jackson, Bourn, maybe Jimenez depending how much you think his ankle mattered. When you get into those years say 32 33 you can't say "if they stay healthy" you have to presume injury.

This gets back to Max again. The Nats were really in good shape with contract/age prior to his signing. Werth is old but still playing well (along the injury front - I'll note it would already been a no doubt good contract if he didn't get injured. They may have had a perfect talent evaluation of the guy and thought they really could win with that deal but with that starting age they couldn't beat injury) and only the newly acquired Yuney Escobar (33) and Ryan Zimmerman (34) were guaranteed money past age 30. Scherzer brings it all the way to 36. I'm just uncomfortable with it.

Still like I've said before - this isn't a deal for 7 years of good pitching. This is a deal for a Sabathia. Give the Nats 3-4 very good to great years. Get them over the hump and win a championship. If he can do that, it's all good.


Next week I'll do two of my favorite off season columns. The dream scenario (honestly I think we can think about win total records again) and the nightmare scneario (missing the playoffs, this teams too good to think about .500)

18 comments:

Chinatown Express said...

Long contracts have two problems: 1. You're possibly overpaying for all the reasons Harper discussed above. 2. MLB execs and managers are lousy at writing off sunk costs. The best move the Braves have made in the last three years was DFA'ing Uggla. That roster spot is worth something, the wasted at bats are a cost, and a lot of teams are unwilling to cut their losses by cutting the guys they're paying for sub-replacement results.

If the Scherzer contract had come with a press release that said "we absolutely promise we will move Max when he's no longer an effective starter, and will cut him when he's no longer an effective pitcher" I would like it a lot more. But I'm worried we'll see the Nats trotting him out way past the end of his effective career. At least Werth can potentially be hidden on the bench or traded to an AL team to DH.

Harper said...

CXP - Werth won't go anywhere. He's a symbol now. But I've grown ok with that. If he can repeat last year he would have made the contract worth it and that's insane to think about coming from where we were in August of 2012.

He basically had to be one of the ten best offesnive players in the league from that point on, better relatively then he ever had been, AND not miss major time to injury, after just doing so. AND HE DID THAT.

It could still all crap out if this injury leads a mediocre 2015 and a bad final two but given that the Nats were like $500 in the whole and now might be just $50 down when they count their money. I'll take it.

Anonymous said...

Harper what is your opinion on having a six man rotation in order to keep wear and tear down? Also not a fan of long contracts to free agents. Pay those that are in house already.

Harper said...

anon - I'm not against long FA deals but it either has to be for the right aged player (Bryce coming into FA would be a good one) or the perfect piece for right now swallowing the back end. Just a very good 31 year old signed to a 6 year deal is a real iffy move.

I don't like 6 man rotations I'd rather do shorter inning stints. Either way I think the rotation is too young to start adjusting in that fashion, maybe in a couple years.

I'm kind of the fan of the opposite though - if you've got a good core of 4 guys under 30. Just roll with 4. I think whether you get hurt before your early 30s is more about your arm and individual stressors (very high pitch count games) then overall season long stress.

Jimmy said...

The Jonah Keri article is always good. Honestly, I feel like we were one less Twins phone call away from having one of either Bourne or Bj Upton sized hole at CF. I believe it was reported that we were in on one or both of them when they hit free agency, so glad we were able to get Span.

Wally said...

I guess that I would frame the point a little differently: the contract isn't a problem if you can correctly evaluate the player's performance. The biggest problem with those really bad contracts is how quickly the player turned into a sub replacement level player. There wasn't any fading away. Howard, Hamilton, Uggla, Upton ... all of those guys just torpedoed down into rocking chair status in the years that they were supposed to still be stars. I think most teams could absorb a $22m guy producing 2-2.5 WAR. They still lose out on the value proposition, but it isn't a killer for performance and value because the guy is at least an average player. Turn that guy into a sub replacement level guy, and it kills your payroll and on field performance.

So why don't teams predict these guys falling off the cliff? I think that coming out of the PED era is part of it, so aging curves should soon start to be better understood. I have never viewed PEDs as creating performance that the guy couldn't do anyway, but I do think it helped guys avoid getting worn down and helped to avoid, or recover quickly from, injury. So take it away (particularly if a guy's body got used to having them) and you see these abrupt performance shifts.

I can't blame you for drawing a sharp line on age, but I don't think it will prove to be the right predictive measure. I would be willing to bet in 5 or 10 years, there will be a lot more data that shows flags on body types, or pitching mechanics, or whatever that will guide performance aging curves. And ultimately baseball will become like breeding horses :)

KO said...

@Wally - there is also the Winner's curse. Teams are willing to pay for where they evaluate the effectiveness will end. So those teams that predict the sharp drop off aren't bidding as high as the teams that end up signing a guy.

KO said...

@Wally - there is also the Winner's curse. Teams are willing to pay for where they evaluate the effectiveness will end. So those teams that predict the sharp drop off aren't bidding as high as the teams that end up signing a guy.

Bjd1207 said...

@KO - That's a REALLY insightful point. Contracts are almost guaranteed to go to a team that over-values them. Out of 30 teams, if 28 project the same age drop off but 2 teams project something slightly better, they're almost always going to pick the better contract and are almost destined not to live up to it.

The contract they end up signing invariably has the highest expectations because it was...ya know...the biggest contract

John C. said...

Chinatown Express said...
[SNIP]
If the Scherzer contract had come with a press release that said "we absolutely promise we will move Max when he's no longer an effective starter, and will cut him when he's no longer an effective pitcher" I would like it a lot more. [SNIP]


I couldn't help but laugh when I read this, at the thought of a team actually doing this at the kickoff of a contract. That will never happen. There may well be teams that internally make this commitment, but the resulting blowback from fans and players ensures that they don't say it out loud.

Still, it would be funny. In a "pass the popcorn" kind of way.

Froggy said...

Ryan Zimmerman is 34?

Zimmerman11 said...

I'm getting really impatient for baseball... might have something to do with the two feet of snow (and another on the way) that have accumulated in the last week.

Anyone send a care package or visit Jayson Werth in lockup?

Wally said...

The winner's curse is definitely a real thing, but I was going with a different theory, which is that many of these teams missed out on the performance of some guys by an order of magnitude. Pujols signed for 10/$240, Cards were strongly rumored to be topped out at 8/$200m. Those offers for a guy who put up 1 good year (good being defined as slightly above average, but not a star year), a replacement level year, and then another good year. So the Angels aren't suffering from the winners curse, because the Cards would be hating life too. They basically have Ryan Howard's contract still to go. Ditto for Hamilton (1 avg year, followed by slightly above replacement level); Fielder (1 star year, 1 average year, then ugh). Choo (1 ugh year, but maybe he'll have a Werth bounce).

That is what I was trying to get at: what turns contracts into horrible messes are when the team doesn't even get the few star years it thought it was buying. CC, ARod, ok they are ending horribly, but they at least gave great performances early, and I'd argue that the team got what it was expecting, more or less, and now just has to ride out the expected bad times.

The other thing that was interesting about Keri's article was that half of his top 10 were extensions, not FA deals, which surprised me.

Any how, I digress. I still think if you get the player's performance evaluated correctly, I think the contract won't sink you. If Miracle Max puts up 4-5 WAR for the next three years, and then dwindles down to 1 by the end, the Nats will be fine., even though they will have overpaid for him.

Chaos said...

Froggy, Ryan turned 30 last fall; this is going to be his 11th in the bigs (part of '05).

As many have said, the Werth contract was a necessary evil at the time simply from a publicity standpoint. I'm with Harper, it's turned out pretty well and by the time it's played out it will have ended up okay to good.

DezoPenguin said...

Froggy, to add to what Chaos said, 34 is the age up to which the Nats will be paying Ryan under his present contract.

Personally, I think the "deferred money" part of the Scherzer contract is the key to it. As noted in the Keri article, part of what makes a bad contract bad is its actual impact on the team, not just its general badness in a vacuum. The Nats live in the upper third of MLB payrolls anyway, and the per-year cost of Scherzer isn't as much of a load on the team as it would be to a team like the Royals, Rays, or A's. (Of course, a dozen years from now we'll be paying $15M for literally nothing, so there's that, but on the other hand with any kind of luck a dozen years from now that'll be something like $7-10M in today's money, basically the cost of one win. Hopefully.)

I really have to agree with what Chinatown Express and Wally said, though, and this also highlights the top three in the Keri article: what really makes a contract bad is when executives and managers insist on playing a player who's fallen off a cliff because they fall prey to the sunk cost fallacy. A guy who's in his decline phase but still a two-win player, well, he's still helping the team on the field and only hurting in terms of the opportunity cost of money (which is a different fallacy--see Harper's past writings on the "money bucket" issue). Howard, Upton, Uggla before he was DFA'd, these guys are not only costing the team money, but they're out on the field stinking up the joint. The money is spent already, and if the player really isn't salvageable, management needs to be willing to put someone else on the field. (See also the Yankees last year, who committed to playing the corpse of Derek Jeter in every game he could shuffle out there*--he was likely *making* them more money than his contract cost due to the attendance bumps, the merchandizing, and so on, but he was killing them on offense and defense both. Given that they only missed the WC by four games, a commitment to winning instead of a commitment to the farewell tour might have put them in the WS instead of KC.)

*Mind you, at least the Jeter farewell tour had financial and team/community goodwill benefits. I have no idea what the heck they were thinking at 2B.

Anonymous said...

How much credit does Werth get for the team winning the NL East ahead of schedule in 2012?

I think the biggest luck factor that year was pitching health, but could Werth locker room grit be in the top 3?

blovy8 said...

Scherzer was a big splash signing. I don't think the Lerners need to give out another big deal to prove they will spend enough to win. The deferred money can be dealt with provided they're still willing to spend a top-8 budget on actual players. That doesn't take a long-term deal, just reasonable budgeting and keeping viable controllable players in the system. The thing that would impress me is if they were willing to take a luxury tax hit one year if a rash of injuries happened. I don't need to see 100 million dollar deal just for the sake of it.

Also, it take both sides to make an extension. All we know is that these guys said no. Zim's deal seemed team-friendly when he signed it, now it looks iffy because of injury and lesser value for 1B offense in comparison. We've talked about the risk in an extension for Desmond because of his K rate, the clear offensive downward trend he's taking, the aging pattern for shortstops, the fine line on his defensive value given his slow starts in that respect, etc. I think Rizzo had a value in mind, and probably there was some negotiating room there, but my feeling has been that if you aren't getting a wee bit of a discount with these guys, they're really no better than any other free agent you've scouted and "vetted" well who will sign for your price.

Bjd1207 said...

@Anon - No no and no. Even if you get to the point where "locker room grit" is a real thing, we have no way to measure its comparative value. Even if you can measure it's value, why is it Werth and not Harper that made the difference? Or getting rid of Pudge Rodriguez (to show how unfounded this is). Things that need to happen before we can consider this as part of the equation:

1. Identify what we mean by 'grit'
2. Find ways to measure that, how it contributes to W/L, and split it out by each player's contribution
3. Convert that to $ amounts to be used in contract talks