Buying Santana

The New York Mets are in the process of acquiring Minnesota Twins ace Johan Santana. The Mets will send the Twins four prospects (Carlos Gomez, Phil Humber, Deolis Guerra, and Kevin Mulvey) if they can reach a long-term extension with Santana. Given what media reports are saying, I think there is little chance that the deal will fall through.

So, what will Santana get? Rumor has it that Santana rejected a 5-year, $100 million deal. Buster Olney speculates that Santana will get a 6-year extension at $22 million per year.

Using my player valuation method, explained in my book, Santana was the 24th most valuable pitcher in baseball in 2007—his worst season since he became a regular starter. In the previous two seasons he was the second most valuable pitcher in baseball (Chris Carpenter and Brandon Webb were first in 2005 and 2006, respectively). It’s no secret that Santana is a stud. What will this bring him with an extension?

Using Olney’s projection of a six-year contract, the model estimates his total worth to be $138 million ($23 million/year)—this accounts for aging and league revenue growth. Essentially, the Mets are signing Santana as a free agent, which is why the Mets gave up so little to acquire him. But the Twins didn’t come away empty-handed; four prospects who have close to zero service time are valuable for rebuilding the team on the cheap. He will earn $13.25 million in 2008, when he will produce approximately $17 million revenue to the team. Thus, the prospects going to the Twins represent the $3.75 million in excess revenue, the right to negotiate with Santana before he hits the free agent market, and the compensatory draft picks the Twins will lose. This is a good deal for both teams, and I can see why the Yankees and Red Sox were unwilling to part with their top prospects.

I look forward to seeing what Santana actually gets. There is no doubt that the Mets are now a much better team. As a Braves fan, this is not good news.

Addendum: You can record your prediction of Santana’s extension at MLB Trade Rumors.

2 Responses “Buying Santana”

  1. Vinny R says:

    Sounds like Reaganomics. You know, make you a debtor nation.

  2. Cliff says:

    JC,

    Obviously the revenue back from Santana is based on something. I believe you have done something like a $ per win share analysis. Therefore, the question is, how many of these win shares do you think Santana’s worth?