Archive for December, 2009

Did Soriano’s Agent Find a Way Around Draft Pick Compensation?

Like most observers, I was surprised that Rafael Soriano accepted the Braves’ offer of arbitration last night. Soriano’s agent Peter Greenberg seems to have indicated to the Braves that he doesn’t expect his client to pitch for the crowded Braves bullpen, but to be traded.

“If they accept arbitration, I don’t think they’ll be in a role that they’ll be excited about, based on what they did last year,” Wren said. “I would anticipate them coming to us and asking us to trade them once the market develops and goes forward.”

This decision appears to indicate that Soriano is a risk-taker. Soriano is likely worth about what he would get in an arbitration hearing, but he’ll lose out on a multi-year deal that he could sign as a free agent. And, it seems unlikely that the Braves and Soriano will agree to a long-term deal. He’ll get a big payday this year, then head out for free agency next year.

But, I wonder if there might be another explanation. Soriano is a Type A free agent, which means that any team that signs him would likely have to give up its first-round pick to the Braves. This compensation cuts into the salary that his signing team might be willing to pay him, depending on how the signing team values the Braves’ draft pick. The solution is to unbundle the pick from the player. Should the Braves trade Soriano, there is no lost-free-agent compensation. Since Soriano will likely be worth about what he will get in arbitration, no team will be willing to give up much for him. We’re talking a minor prospect instead of a first-round talent. Soriano then reaps his full value for next year.

The next step is to approve a trade. After the trade goes down, Soriano can approach his new team to discuss a long-term deal to guarantee security without even throwing a pitch in 2010. Maybe the Braves can capture some of that value in prospects, given that they know this is a possibility, but Soriano really holds all the cards. Reports are (though it’s not clear to me where this is in the CBA) that Soriano must approve any trades before June 15. Plus, he can always threaten not to sign a long-run deal with his new team; thus, teams aren’t going to be willing give up much more than what he’s worth on a one-year deal.

Now, this is all hypothetical justification after the fact, but I have to say that upon reflection this is making a little more sense. The end result is that Soriano gets his full value for next season and possibly a long-term deal similar to what he would have gotten as a free agent; all without having draft-pick compensation sap some of his worth. I wouldn’t be surprised if Peter Greenberg attracts some new clients if he pulls this off. Oh, and draft-pick compensation will certainly be going away in the next CBA.

Why Soriano Won’t Accept Arbitration

When the Braves signed Billy Wagner and Takashi Saito, front office sources made it clear that they expected Mike Gonzalez and Rafael Soriano to reject the club’s arbitration offer. But then Soriano’s agent Peter Greenberg started dropping hints that his client might just take up the Braves on their offer. Why? Some insiders have speculated that Soriano could get $8 million in arbitration, which is more than he might command on the free-agent market.

I think that salary number is a bit high, but let’s assume it’s true. Still, I don’t think Soriano will accept arbitration. And here’s why. Arbitration is good only for one year. If all goes well, he just postpones he gets a big annual salary and postpones his free agency by a year. No big deal, right? Take the money while it’s good, then hit the market after putting up another good season. But, what if things don’t go well? Let’s say his surgically-repaired elbow starts to flare up, or a new injury jumps up to bite him, possibly knocking him out of baseball altogether. Like all players, Soriano’s net worth is tied up in one skill. If it disappears, he’s out a lot of money.

Most of us don’t have our skills valued over such a narrow range. Even if the industry we work in implodes, most skills are transferable to new areas. Not so with baseball. Baseball players often insure against risk by trading higher annual salaries for long-run guaranteed salary. Teams are often willing to oblige, not only because they get the player at a lower price, but because they can diversify injury risks across many players. Some players will get injured, others won’t; the end result is that the team will come out ahead—that’s why insurance is a successful business.

Now back to Soriano. The advantages of free agency include not only forcing teams to compete for your services, but it also opens up more possibilities of long-run contracts. If you were in Soriano’s shoes, would you prefer a one-year, $8 million contract to two years at $12 million, or three years at $15 million? It’s ultimately a personal decision, but I’d have to think that the long-run guarantee is more valuable than garnering a high salary for one year.

I suspect that Soriano is willing to trade some risk for security, which is why I believe that it’s unlikely that Soriano accepts the Braves’ offer.

Update: Or maybe he will. Soriano surprises Braves, accepts arbitration

Braves general manager Frank Wren said nearly eight hours before the announcement that even if either pitcher accepted arbitration, it wouldn’t hinder the team’s ongoing roster moves and pursuit of offense. That statement will be tested in coming weeks.

“We feel protected either way,” Wren said Monday afternoon, and listed two possible results of arbitration decisions by Soriano and/or Gonzalez: “A., they don’t accept [arbitration]. B., they accept and at some point we trade them.

“It’s not a big deal either way.”

But there was no doubt the Braves preferred not to deal with the hassle of trying to trade either of them.

Figgins Signs with Mariners

According to several sources, the Seattle Mariners have reached a preliminary agreement with Chone Figgins on a four-year, $36 million contract. The deal also supposedly includes a vesting option for a fifth year that could push the deal to $45 million. The option likely won’t come into play unless Figgins lives up to his deal, so there is little risk to the team.

Figgins really had a monster defensive year this past season, posting a plus/minus of +40. I think he’s a good defender, but I doubt he’ll repeat that. Offensively his hitting production has fluctuated, and he is a decent basestealer. Based on his recent performance, I project him to be worth about $38 million over the next four seasons.

The Mariners will lose their first-round pick, but should get a supplemental pick, when Adrian Beltre signs with another team. While two picks before the second round are better than one, it may be more than the team can handle with its budget constraint. If teams could trade draft picks, the Mariners might be less reluctant to part with the pick. On the issue of losing a pick, Seattle GM Jack Zduriencik commented,

“If the right Type-A free agent came up and you knew it would help your club for the next several years … we all know lot of draft picks fall flat on their face.”

Red Sox Sign Scutaro

Marco Scutaro has agreed to a contract with the Boston Red Sox. Terms have been slow to come out, but Buster Olney reports via Twitter it’s a two-year deal that guarantees $12.5 million over two years, that could go a third year—$14 million total if Scutaro picks up the option or $17 million if the Red Sox pick it up the option.

In reality, the deal will almost certainly pay out a minimum of $14 million, because if Scutaro tanks, he’ll pick up the option. So, at a minimum, it’s a two-year, $14 million deal. A third year is gravy or a sunk cost that you write off. If he ages normally, the Sox will gladly pick up a cheap option. The Red Sox also must forgo their first-round draft pick, because Scutaro is a Type A free agent.

My take: an excellent deal for the Red Sox. I estimate that Scutaro will be worth about $20 million over the next two seasons. While his bat may not be much, he’s a good defender (Plus/Minus of +12 and +16 at shortstop the past two seasons) at a tough defensive position.

Braves Add Saito to the Bullpen

Frank Wren continues to be an aggressive shopper, picking up Takashi Saito on a $3.2 million, one-year deal. The contract includes $500,000 in bonuses for appearances, and $1.8 million for games finished. So, if he supplants Wagner as the closer, he’ll get paid for it.

I have Saito valued at $6.25 million for 2010. Although, aging for a player who’s about to turn 40 and has been injured recently is difficult to calculate, I think it’s another good deal. I also wonder if the Braves had an advantage here, because they have a Japanese interpreter on staff.

Phillies Bringing Back Polanco

Several sources are indicating that Placido Polanco has agreed to a 3-year $18 million deal to return to the Philadelphia Phillies as their third baseman. Polanco had a rough 2009 with Detroit; but, it appears to be mostly a batting average issue, so I think he’ll bounce back. His defense was also off a bit in 2009 (Plus/Minus: +2) after being stellar for most of his career. The move to third may hurt him some, because even though it’s a less-difficult position, transitions always require adjustment. And on top of this, he’ll be 34 — 36 over the guaranteed portion of the contract.

Even after factoring in these things, I estimate Polanco being worth around $25 million over the term of the deal. And I really have to go out of my way to punish him when determining what type of player he will be, accounting for a position switch and his extreme performance fluctuation over the past few years. Overall, I think it’s a good move for the Phillies.

Is Your Favorite Free Agent Over the Hill?

My latest column in The Huffington Post.

Though the buzz about adding free agents is mostly positive, there is one factor that is often overlooked: most free agents are old.

The ages of this year’s free-agent class range from 28 (Rich Harden) to 46 (Randy Johnson). The average age is 34, with half of the players between the ages of 32 and 37. Some of this is a product of the system: you can’t become a free agent until you’ve been in the league for six years, so even the best players don’t get the opportunity to enter free agency until their late 20s. And some of these players are hitting the free-agent market again. But still, even the top candidates in the free agent market are thirty-somethings: Matt Holliday will be 30 and Jason Bay will be 31 for the 2010 season.

Braves Sign Wagner

I’m not normally a fan of signing relievers on the free-agent market. So, when I woke up to the report of the Braves signing Billy Wagner my first feeling was concern. However, I think the terms of the deal are quite reasonable. It’s a one-year, $7 million deal, with a $6.5 million option for a second year that vests if Wagner finishes 50 games.

I estimate Wagner to be worth about $8 million per year to an average team.* Given that the Braves look to be an above-average team Wagner’s value to the Braves is a little higher. Wagner is a Type A free agent, so the Braves will lose a first-round draft pick. With the lost pick and his additional injury risks, Wagner appears to be worth close to what the Braves are giving up to sign him. It’s a good early move by the Braves. If for some reason the season goes poorly, Wagner can easily be moved to a contender.

*If you’re familiar with my past estimates of relievers, you will notice this value is higher than what I have estimated top closers to be worth in the past. I have adjusted the way that I value relievers to account for pitching in more valuable spots.

File Under True, But Misleading

Rob Neyer points to an AP story about the “rise” in stimulant exemptions for ADHD among MLB players.

Stimulant exemptions in MLB slightly rise again

NEW YORK (AP) -The number of baseball players authorized to use otherwise banned stimulants for ADHD rose for the second straight year.

Baseball granted 108 therapeutic use exemptions for attention deficit hyperactivity disorder during the year ending with this World Series, according to a report released Tuesday by MLB’s independent drug-testing administrator. That was up from 106 a year earlier and 103 in 2007.

So, in three years total exemptions have risen by a grand total of five…and an increase in exemptions is the story? I’m more shocked that players aren’t flocking to known effective performance-enhancing drugs (unlike growth hormone) through a legal exemption. These are the same drugs that for years players openly mixed into clubhouse coffee pots.