Valuing Miguel Cabrera
Miguel Cabrera is reportedly close to signing an eight-year $152.3 million deal. As hard as this is to believe, given the contract size, this is an amazing deal for Dave Dombrowski and the Detroit Tigers. I have Cabrera valued at $268 million over this time period, and this accounts for his first two years of the deal being restrained by arbitration.
Cabrera will be only 25 in 2008 and he has posted OPS+ in the 150s for the past three years. Eight years is a long time to be tied down to a contract, and during that time league revenues and salaries will grow. At growth rate of ten percent—the historical growth rate of major league salaries—salaries will double in seven years. By locking in now to a modest $19 million per season ($21 million per season after his arbitration-eligible years) the Tigers are protecting themselves against future salary growth.
And at the same time, I can understand why Cabrera would do this deal, because an injury could make it all go away. If had to choose between a guaranteed $152 million or a probabilistic $268 million to do what I am doing now for the next eight years, the former wouldn’t be a tough choice. For players, their eggs are in one basket. Teams can diversify their risks across many players—some will underperform their contracts, others will overperform—which is why it is smart for teams to make this type of deal. Detroit fans should be happy that they will have one of the best hitters in the game for a long time.
J.C. Bradbury is an economist and associate professor at Kennesaw State University in metropolitan Atlanta. He is the author of The Baseball Economist and has operated Sabernomics.com since March 2004.
March 24th, 2008 at 10:33 am
I wonder if the Braves could do something similar with Mark Teixeira.
March 24th, 2008 at 10:38 am
We’ll see how willing the Braves are to take on a big free agent salary.
Here is what I had to say about Teixiera’s value.
March 24th, 2008 at 1:13 pm
That’s a boatload of money! If I were the Tigers I would be VERY worried about his recent weight gains. Apparently he’s coming into this year down some, but it’s something that he’s going to have to regularly monitor over his career and could shorten his career in the long term. Despite this he’s so young that even eight years from now he’ll only be like 33 when this contract runs out so they shouldn’t have to worry about the end of his career problems unless he really falls of heavily.
All in all I would have to agree this is an excellent deal and hopefully he’ll be happy enough now to monitor that weight.
March 24th, 2008 at 3:31 pm
I’m not trying to spend the Tigers’ money but I wonder about that injury issue. This isn’t football and Cabrera isn’t a pitcher–what are the realistic odds that Cabrera would suffer an injury significant enough to reduce his value that much? I’m not saying he should hold out for more–he should be able to make ends meet on $19 mm per year–but I bet a Boras client (ie, Teixera) would be more willing to take what seems to me to be a rather small gamble.
March 24th, 2008 at 8:47 pm
I suspect your model wouldn’t like him as much if it knew how bad his defense was, but directionally I completely agree with this analysis. He’s one of the two or three best hitters in the game, period. I would much rather have him than Alex Rodriguez over the next 8 years.
March 25th, 2008 at 3:27 pm
Forbes valued the Marlins franchise at $244 million a year or two ago. I wonder if there is any other player in baseball whose value, based on your methodology, would exceed the value of the franchise he played for last year.
Of course you may disagree with the Forbes numbers, and with the new stadium deal pretty much done, the Marlins franchise value has probably already increased.
March 28th, 2008 at 9:27 am
JC, I’ve got Cabrera valued at exactly what the Tigers paid him. I suspect you are not dinging him for his fielding. If he were an average fielding firstbaseman (which is really what his value is as a fielder), what do you have your evaluation for him?
March 29th, 2008 at 8:09 am
I actually treated Cabrera as a first baseman in my analysis, because that is where he will be soon. I considered assuming that he would be a DH, which would erase any defensive liability he might create. When I do this he will still worth more than the contract he will be paid according to my projections. However, given the fact that the Tigers think he is more valuable on the field in a league with a DH leads me to believe his defensive damage is not all that great.
March 31st, 2008 at 9:44 am
That’s interesting. It appears to me then that the difference between your system and mine is that your exponential parameter is taking over at this level of play. Presuming that you also have a linear version of your system, how does it see Cabrera? Is it possible that while the exponential version may correlate better over all players, that it misses big at the guys we are most interested in?