Valuing Maddux

ESPN’s Buster Olney is reporting that the San Diego Padres and Greg Maddux have agreed to a one-year $10 million deal. This is a good signing for the Padres, so good in fact that I believe Maddux is giving the Pads a small discount. It sounds like Muddux really likes pitching in San Diego.

“From my talks with Greg this year, he had as much fun this year as any other time in his career,” Padres manager Bud Black said Monday night. “It’s no surprise to us that he wants to continue. He loves to compete.”

Maddux’s ERA wasn’t up to his usual standards (4.14) especially considering his home park (ERA+ 98). Basically, he looked to be a league-average pitcher. However, Maddux pitched in a way that is more consistent with a lower ERA with a strikeout-to-walk ratio greater than four and 0.64 HR/9IP for 198 innings.

I’ve finished my dollar valuations for 2007 and I have Greg Maddux’s performance valued at about $12 million. And for the the amount of innings he pitched he provided $4 million more than an average pitcher would have generated. Mad Dog still has it.

Now compare this to Curt Schilling, who is rumored to be signing a one-year extension with the Boston Red Sox for around $13 million (we’ll see). In 2007, I estimate Schilling’s performance was worth $8.3 million. His strikeout-to-walk ratio was similar to Maddux’s, but he gave up more home runs (1.25/9IP). His value is that much lower than Maddux’s mainly due to the fact that he pitched nearly 25% fewer innings.

This is going to be another fun offseason.

UPDATE: Schilling has apparently reached a deal with the Red Sox for $8 million guaranteed, with $2 million in physical conditioning incentives, and $3 million in performance incentives. So, the $13 million numbers occurs only if pitches well and stays healthy, but he gets $8 million if he repeats his 2007.

7 Responses “Valuing Maddux”

  1. Sungwon Kim says:

    yes I agree with your article, but wouldn’t the fact that they pitch in different leagues and division differ their value?

  2. Marc Schneider says:

    Maybe Maddux is actually behaving like a normal middle-aged human being and not some obsessive rational economic man. Maybe he actually thinks he has enough money so that his family won’t need food stamps and he would prefer to play in a place he likes. Perhaps this is a “discount” in some sense, but from a quality-adjusted standpoint (ie, quality of life, etc.), maybe it isn’t. Maybe he actually wants to see his kids once in a while.

    I guess I’m getting cranky about hearing how players are so unselfish for making only $10 million. Maybe I’m not a good American.

  3. mflournoy says:

    When you say that a free agent player is worth X dollars, does that mean that he ought to sign for more money than that, since teams get so much production for so little money from pre-free agent eligible players?

  4. JC says:

    It is an estimate of how much revenue the player generates for a team. In a competitive market a person should earn a wage = marginal revenue product, as a team will be willing to bid up to the value that the player brings to the team.

  5. JC says:

    I don’t blame Maddux for taking less money. Utility counts monetary and non-monetary gains. Being close to his family was a big asset, and the Padres were smart to take advantage of it.

  6. Frank says:

    RE: “Maybe Maddux is actually behaving like a normal middle-aged human being and not some obsessive rational economic man. Maybe he actually thinks he has enough money so that his family won’t need food stamps and he would prefer to play in a place he likes.”

    A classic example of the gross caricature that economics is all about money. Contrary to such thinking, economists think that people do what makes them happiest. Location is, at least for many people, something that has a lot to do with happiness. Maddux taking less to play in a place that makes him happy is exactly what economists would predict.

  7. Marc Schneider says:

    Frank,

    I agree. All I was saying is, why should we treat it as unusual that Maddux would take less to play in San Diego? And, at this point, it’s not much of a sacrifice.