Nationals Arm Race

Santana to miss 2013 and end his Mets career on a sour note. Photo via wikipedia/flickr user slgckgc

Earlier this month I published an updated version of the “Starter Dollar per Win” analysis that I maintain and update on an annual basis.  In that post, I listed some of the worst free agent starter contracts ever signed (among them Kei Igawa, Jason Schmidt, Oliver Perez, Darren Dreifort).  However I did not mention Johan Santana among these awful deals because it looked like he could at least finish out the last year of his deal and increase his per-win values.

Last week we learned that Santana has a torn shoulder capsule and is likely to miss the entire 2013 season.  This is the last guaranteed year of the 6 yr/$137.5M contract that he signed with the Mets after his fantastic early-career stint with Minnesota and it seems almost certain that he’ll be looking for work elsewhere in 2014, if he continues to play at all (this being a re-tear of the same Anterior Capsule that sidelined him for all of 2011 and his third arm/shoulder surgery overall).

In his 6 years in New York, he had one great season (the first), two entirely missed due to injury, two with good results but still injury curtailed, and one (2012) that was entirely mediocre and injury curtailed after he (foolishly?) threw 130+ innings to chase a no-hitter.  That’s not entirely a great return on $137.5M.

Looking at my “Dollar per Win” analysis spreadsheet, and assuming that the Mets are going to pay him a $5.5M instead of his $25M option for 2014 (the $137.5M number only includes guaranteed money and thus already includes this $5.5M buyout), here’s how he ended up performing on a per-dollar basis for the life of this contract:

• 109 starts over 6 years: $1,261,468 per start.
• 72 Quality Starts: $1,909,722 per QS
• 46 Wins: $2,989,130 per Win.

This contract is now officially “Worse” than the infamous Denny Neagle deal (19 wins for a 5yr/$55M deal) and significantly worse than the even more infamous Mike Hampton deal (56 wins for an 8yr/$121M deal) on a dollar per win basis.

The cautionary tale is a familiar one: we all know that pitchers are health wildcards to begin with.  But guaranteeing many years and tens of millions of dollars to these injury wildcards is lunacy.  (Ken Rosenthal wrote a similar story on 3/29/13 on this same topic).   I now count Thirteen 9-figure contracts that have been given out to starting pitchers in the history of the game, and of the contracts that are closer to the end or finished its hard to find any of them that the signing team would do over again.

• Santana, Barry Zito, Hampton, Kevin Brown and Daisuke Matsuzaka were all 9-figure deals that did not live up to the money (Matsuzaka’s 9-figure haul includes the posting fee).
• Matt Cain, CC Sabathia, Cliff Lee and Yu Darvish (again, including his posting fee) are all 1-2 years into longer term 9-figure deals with (admittedly) satisfying levels of performance thus far.
• Felix Hernandez, Zack Greinke, Cole Hamels and now Justin Verlander as of 3/29/13 are all starting 9-figure deals in 2013 or later.  Adam Wainwright just missed the cutoff; his new deal totaled $97.5M.

How does this affect the Nationals?  Well, in 2017 Stephen Strasburg is likely to become a free agent (lets be honest with ourselves; his agent is Scott Boras, his agent is aggressive to the max, wants to explore every possible free agency aspect, and rarely if ever allows his clients to agree to contract extensions, team friendly or otherwise; Strasburg is going to hit the FA market).  Based on the list of arms above, and assuming Strasburg doesn’t get re-injured in the next few years you have to think he’s going to be in line for a 9-figure deal of his own.  What do you do if you’re the Nats?  Do you pay the man, knowing that the likelihood of a 9-figure deal being a good deal for the team is very slim, or do you let him walk and let some other team pay him that money and assume the franchise crippling risk?

At least it isn’t a problem we have to deal with for a few years 🙂

Cliff Lee. Photo: Al Bello/Getty Images

As Cliff Lee continues to dazzle in the post season (his most recent effort being his 8inning, 2hit 13k gem against the most potent offense in Baseball, your NY Yankees), rumors of his purported price tag in the Free Agency market continue to reach spiraling heights.  The most common numbers thrown out start at 5yrs, $25M per.  One author at Forbes thinks he may approach $200M for 6 years combining salary and endorsements.

If you are trying to compare talent to contract value, then you have to start with the highest paid pitchers at current.  CC Sabathia is at $23M/year, Johan Santana is at $22.9M/year on average, and Roy Halladay took a slight discount to sign with Philadelphia (and be able to live in his offseason Odessa home 2 extra months of the year and drive to Spring Training) and is making $20M/year on his new deal.  Clearly, Cliff Lee has shown that he belongs at least at the $20M/year scale.  But how much higher makes sense financially for the signing team?

Forgetting for the moment that payroll means very little to a team like the New York Yankees (unfortunately his likely destination), lets talk about the value of the Free Agent contract and whether a team that gives out a $25M/year contract can ever really get their money’s worth.  Baseball is filled with horror stories of huge FA contracts that went bust.  Names like Zito, Dreifort, Pavano, Neagle, and Hampton fill general managers and fan’s heads with dispair.

How bad were these contracts?  I put together a spreadsheet with every significant starting pitcher FA contract that I could find, then cross referenced it by the Pitcher’s Won/Loss record during the duration of the contract.  See below: the table is sorted in reverse order of $/win.  In addition to the major FA contracts, I also arbitrarily added every “Ace” starter in the league, resulting in names like Lee, Jimenez, Price and Buchholz being in this list despite not being major FA pitchers (yet).  Their inclusion illustrates one of my major conclusions below.

Comment on Won/Loss records; yes I know that individual pitcher wins are not a great indicator of a starter’s worth.  However, they do reasonably indicate over the course of a longer term period the value of that pitcher to a team.  Perhaps a better argument is free agent dollars per quality start (despite the quality start measuring basically a mediocre start of 3ER or less in 6ip or more by a pitcher, it does generally correlate well to team wins andveven to a “real” quality start of 2ER or less in 6IP or more).  At some point I’ll re-run the analysis and count up QS per FA dollar to see how it compares.

Note for the purposes of this argument:

• The Contract total value is averaged over the life of the contract, even if the payments are different during different years.
• The W/L record is for the pitcher over the life of the contract, not necessarily for the original signing team.
• If the contract is current (i.e., runs from 2009-2012) then I’ve only counted the completed regular seasons.
• There are no off-season records taken into play.
• I entered in both Japanese Pitchers (Igawa and Matsuzaka) with massive posting numbers twice; one factoring the posting fee and the other not.  Without the fee Dice-K looks halfway decent but with it he’s overpriced (something all Boston fans probably already knew about their highly paid #5 pitcher).

Conclusions.

– If  you can get 1 win per $1M expended, you are doing about average it seems.  Anything above $1.25M and you are looking at a questionable contract.

– It is difficult to look at any contract below $1M/victory and say that the team made a bad deal.

– The absurdly low $/victory values for David Price and Clay Buchholz demonstrate as clearly as possible the value of the pre-arbitration superstar.  Tampa Bay (who did a similarly shrewd deal with Evan Longoria, buying out the arbitration years and tying the player to the club past the 6-year pre-FA window) now gets Cy Young-quality starts from Price for the next two years at 1/20th his market value.  Buchholz is even more evident; at a pre-arbitration salary of $443,000 for 2010, he went 17-7 and gave the Red Sox #1 starter capabilities.  On the open market he’s worth at least $15M/year at that level of productivity.

– The worst FA contract ever given to a starting pitcher wasn’t one of the aforementioned infamous culprets; it belongs to one Kei Igawa.  The Yankees paid the posting fee of $26M just to negotiate with him, then signed him to a 5 year, $20M contract.  For that outlay of $46M guaranteed, the Yankees have gotten a record of 2-4 over parts of two seasons, and he hasn’t appeared in a MLB game since June of 2008.  Luckily the Yankees can afford it; this kind of FA mistake would cripple a mid-to-small market team for years.

– Jason Schmidt‘s 3yr, $47M deal with the LA Dodgers is the largest $$ bust in terms of a pure FA play, not counting the vagarities of the Japanese posting system.  Schmidt had ironically just finished an incredibly efficient deal with San Francisco, where he went 71-36 over 5 seasons on a $40M contract (resulting in a very good $/win number of $563,380).  Six games into his Dodger career he went onto the DL list with shoulder injuries that eventually cost him the rest of 2007 and all of 2008.  He tried to regroup in 09, failed to make the team out of spring, made a few starts and was back on the DL.  All told, 3 wins in 10 starts for $47M.

– Some of the infamous deals do appear close to the top of this list; Neagle’s $51M for a 19-23 record.  Dreifort’s $55M deal resulting in a grand total of 9 wins and only 26 starts.  Ironically, the highest single season salary was Roger Clemen‘s $28M deal with New York in 2007.  For that money the Yankees got a middling 6-6 record.

– Are there any major FA deals that ARE paying off?  Well, you have to dig deep.  CC Sabathia has won 40 games for the Yankees in the first two years of his $23M/year deal, which is easily the best 9-figure deal.  However, it is early; we need to check back in years 6 and 7 of this deal.  Mussina went 92-53 for the Yankees after he signed his $88M deal in 2001.  Verlander won 18 games this year for his $16M annual salary and looks like a good bet to continue that trend.

– The BEST long term FA deal ever signed has to be Pedro Martinez‘s 6year $92M deal.  He went 117-37 between 1998-2004, won 3 Cy Youngs, had 2 Cy Young runners-up, and in the year 2000 posted an ERA+ of 291, which accounts for the best modern-day single-season pitching performance in the history of the game.

Bringing this back to Cliff Lee; the conclusion is thus; he may earn a $25M/year deal but the odds of his continuing to win 20-22 games/year for the duration of the contract and thus inflating the $/win value will eventually prove that contract to be an albatross (even more so if he misses significant time to injury at some point).