Is Francoeur Worth $4 Million?

Jeff Francoeur and the Braves swapped arbitration figures yesterday, and there is a significant spread between their salary expectations.

Coming off a season during which he hit .239 with 11 homers and a .359 slugging percentage, Francoeur is asking the Braves for $3.95 million. The club has offered the 25-year-old right fielder a salary of $2.8 million.

Is Francoeur worth $4 million to the Braves? The quick answer is yes, absolutely, and it’s not even close. Despite all the flaws in his game and his failure to meet misplaced expectations, he’s still a major-league baseball player. Even during his awful 2008 season, his marginal revenue product (MRP) contribution for his play in the field was approximately $12 million. This may seem like a lot, but all major-league quality baseball players are valuable assets. During the first six years of service, the Collective Bargaining Agreement (CBA) limits player compensation, and that is why we can easily say that many players are worth more than they are being paid.

However, that is not really the relevant question here. We want to know what he can expect to get. After completing three years of service—I’m simplifying here, because the exact criteria are complicated—players are eligible for arbitration. Each team and player submits salary figures that represent options to an arbitration panel. After a brief hearing, the panel decides which side’s figure is most appropriate and the player is awarded that salary: there is no compromise. The no-compromise requirement is designed to encourage the parties to negotiate a solution, or risk the other party’s preferred outcome.

The criteria for determining a player’s worth are set out in the CBA.

(12) Criteria
(a) The criteria will be the quality of the Player’s contribution to his Club during the past season (including but not limited to his overall performance, special qualities of leadership and public appeal), the length and consistency of his career contribution, the record of the Player’s past compensation, comparative baseball salaries (see paragraph (13) below for confidential salary data), the existence of any physical or mental defects on the part of the Player, and the recent performance record of the Club including but not limited to its League standing and attendance as an indication of public acceptance (subject to the exclusion stated in subparagraph (b)(i) below). Any evidence may be submitted which is relevant to the above criteria, and the arbitration panel shall assign such weight to the evidence as shall appear appropriate under the circumstances. The arbitration panel shall, except for a Player with five or more years of Major League service, give particular attention, for comparative salary purposes, to the contracts of Players with Major League service not exceeding one annual service group above the Player’s annual service group. This shall not limit the ability of a Player or his representative, because of special accomplishment, to argue the equal relevance of salaries of Players without regard to service, and the arbitration panel shall give whatever weight to such argument as is deemed appropriate.
(b) Evidence of the following shall not be admissible:
(i) The financial position of the Player and the Club;
(ii) Press comments, testimonials or similar material bearing on the performance of either the Player or the Club, except that recognized annual Player awards for playing excellence shall not be excluded;
(iii) Offers made by either Player or Club prior to arbitration;
(iv) The cost to the parties of their representatives, attorneys,
etc.;
(v) Salaries in other sports or occupations.

The exact rules seem to place great emphasis on the most recent season; however, the “length and consistency” of career provision does open the door for mention of past performance. I don’t know the extent to which arbitrators are allowed to consider the quality of play from past seasons. Still, it seems that Francoeur’s bargaining position will suffer from having his worst season just prior to arbitration.

On his side is his 2007 Gold Glove Award. It is certainly a significant achievement that is eligible for consideration. However, once you bring up defense, his most-recent season is brought to light. And according Plus/Minus, 2008 was a poor defensive season for Francoeur: he made 17 fewer plays than the average right fielder, ranking him 30th in the league.

How about his “public appeal”? Jeff Francoeur has been the team’s most popular players for the past few seasons. Only recently have some fans turned on him; but even with that, he still remains popular. He’s a local boy who excelled when he was first called up, and fans still remember this. But how do you measure his popularity without resorting to press comments and testimonials, which are barred? Attendance likely isn’t going to help, as the team’s attendance fell by nearly eight percent last season. I’m not sure if marketing reports like a Q-Score are admissible, but if they are I think this information is going to have to carry the day if Francoeur is going to win his case.

I have done some analysis of player salaries during arbitration years, but I haven’t gone that in depth. In my book, I report that position players tend to receive 77 percent less than their estimated marginal revenue product during their fourth through sixth years of service (estimated). Based on his previous three-year average of his MRP ($13.78 million), that puts his expected salary at $3.17 million. Based on his past season alone, his expected salary is $2.84 million. The Braves appear to have the better offer on the table.

The estimates I present are rough, but I believe they are biased in Francoeur’s favor. I’m estimating his worth on the median difference in player salaries from their MRPs during four-to-six years of service. Francoeur is only entering his first arbitration hearing and therefore ought to be on the low side of this average.

54 Responses “Is Francoeur Worth $4 Million?”

  1. Colin Wyers says:

    JC,

    I just finished readng Krautman 1999 (“What’s wrong with Scully-estimates of a player’s marginal revenue product”) and he seems to share a similar concern with a lot of the rest of us – that MRP estimates derived using Scully’s model are larger than what we would expect given free agent salaries, and that it’s “difficult to believe that a bidding process as competitive as that associated with free agency could result in such large deviations between wages and MRP.” He then proposes a “Free Market Returns” approach that seems more similiar to the WAR-to-dollars conversion that Tom Tango uses than to what you’re doing with MRP.

    Is there a reason that you chose the Scully MRP model over the Krautman FMR approach?

  2. Sky says:

    “Mean MRP if PA>600:  $16.7 million”

    Well the average performance of a player with > 600 PAs is going to be quite good, because of sampling biases.  Can you either a) share what the average slash line is for players with over 600 PAs (or I guess I can go look this up) or b) share approximately what the MRP of a player with 700 PAs and a .260/.335/.410 line would be?

  3. Colin Wyers says:

    JC, if those values are correct, and you have a team of eight average starters:

    8 * $16.7 million = $133.6 million

    And 6 average starting pitchers:

    6 * $14 million = $84 million

    You have a shortfall in both PA and IP (which need to be filled with additional bench players and relievers, all of which would also have to be average to maintain the assumption of an average team), and you’re up to $217 million in marginal revenue for the average team. Forbes, in their most recent estimate of team revenues, gives us an average revenue value for an MLB team of only $183 million.

    Even if we assume that Forbes is shorting MLB team revenue by over $30 million – that would mean that almost all of an MLB team’s revenues derived from player personell, and that a team’s efforts at marketing, scouting, player development, and stadium contruction or renovation are in fact counterproductive.

  4. JC says:

    Colin,

    You can’t use the numbers that way. The estimates are non-linear and the players who play this much tend to be above-average.  Also, I address the non-player assets that contribute to revenues in my previous book.  These are gross MRP estimates: I’m just trying to get in the ballpark.

    On Krautmann’s paper. It’s good, and I think that his alternate MRP-estimation technique has merit. However, the Krautmann method has some weaknesses, the main one is that it assumes the free agent market is perfectly competitive. For various reasons, I don’t think it is right to assume that the free agent market represents a perfectly competative labor market, especially among lesser-talented players.  And if you assume that replacement players should be valued at the league minimum, as you do,  then the free-agent market is certainly not competitive. There are some other issues that may cause bias with estimates as well.  I don’t have time to get into them now. But, again I would like to stress that the Krautmann method is useful, and I have used methods similar to his before. I know and like Tony.

    And now we get to the heart of the problem with this discussion . Just this past week, I have been writing up the pros and cons of the Scully and Krautmann methods. I don’t have time to stop and explain every time that you think you’ve found a new reason that I might be wrong.  I am writing up all the things that you want to know, and I’m not just whipping it out in a blog post.  I am using the blog to share bits and pieces of what I am doing.  And I hope you can see why am particularly irked when individuals keep inquiring about issues that I already commented on in my previous book.  If you’re not buying my estimates, feel free to move on.