Archive for Moneyball

So Long, Smoltz

According to numerous reports, John Smoltz will be joining the Red Sox for a guaranteed $5.5 million plus the potential for $4.5 million in incentives. This has already started an uproar in Bravesnation, because Smoltz has basically gone out of his way to deny his interest in other teams to fans. I’ve heard him on the radio a few times assuring fans that he planned to stay.

From a team-quality standpoint, I really don’t see what the big deal is. John Smoltz is not just slightly hurt, and $5.5 million is a lot of guaranteed money to cough up for an injury risk. He didn’t just get his knee scoped. He’s about to turn 42, and he’s coming off major shoulder surgery. Yeah, I know he’s throwing off the mound, yadda yadda yadda, but that’s a long way from being the dominant pitcher he has been over the past few seasons.

From 2005–2007, he was basically a $15 million pitcher—one of the league’s best, and I don’t want to understate this. From the reports I’m reading, Smoltz’s injury should keep him out for the first third of the season. So, if he returns to his old starting form immediately after his return, he’ll be worth about $10 million—two-thirds of a $15-million pitcher. That’s the level at which incentive bonuses max out. However, the incentives cannot be based on quality, and must be determined by awards or quantity-of-play benchmarks. I suspect the incentives will be based on the latter considering that the Red Sox bonuses have been defined as “more attainable” than what the Braves offered. I think it’s more likely that if Smoltz does reach innings-pitched goals it will be at a performance level closer to a third or fourth starter rather than as his old dominant self. Thus, if he doesn’t trigger the incentives, he’ll be getting paid a lot to pitch very little; and if the incentives do kick in, I doubt the amount paid will match the performance.

The Braves supposedly had offered $2 million with incentives increasing the total to $7 million. I would not recommend that the Braves offer more than this. It’s easy to forecast Smoltz being on the hill in October, but there’s also a decent chance that he’ll be sitting on a gold-plated butt cushion in the dugout.

I don’t think Frank Wren deserves the heat that he is going to get for this. The Braves have paid Smoltz $130 million over his career. Smoltz wanted more, and I don’t blame Wren for passing. Signing and not signing Smoltz both have risks, and I think he gambled on the right side.

Pat Burrell, Philanthropist

I’m not referring to the portion of Pat Burrell‘s new two-year $16-million contract that will be going to the Rays Baseball Foundation. When I first read the headlines, I inadvertently believed the deal was worth $16 million per season, which is close to what I anticipated he would get. For two years, I have him valued at approximately $30 million. This contract is also considerably less than the $31.5 million that Burrell’s former Phillies will pay Raul Ibanez over the next three seasons.

I can only guess what motivated Burrell to sign this contract. Here are a few potential explanations.

  1. The down economy has reduced revenue expectations, decreasing teams’ willingness to pay for free agents.
  2. There is a glut of free-agent outfielders on the market, forcing competition between players, and thus depressing salaries.
  3. Burrell wanted to take less to play in a comfortable environment that the Rays provide.

I don’t think the economy explains much of the discount. The inferior-but-similar Ibanez received a far superior contract in the same market conditions. Ryan Dempster and A.J. Burnett both received big contracts that I believe exceed their expected values. Furthermore, I believe the potential damage to MLB from the recession has been exaggerated by management, who want to convince players to sign for less. Though baseball will suffer, I think the damage will not be that large and short-lived. I’ve been following the economic impact stories closely, and baseball—like other major sports—seems to be somewhat resistant to recessions. Fans love their sports teams, and following sports is a relatively cheap form of entertainment. In any event, the economic downturn cannot explain the magnitude of Burrell’s discount—a short-term deal for nearly half of his potential revenue generation.

The second potential explanation is an argument that I see frequently in discussions of the free-agent market. However, the common intuition regarding the number of free agents on the market affecting the competitiveness of the market is wrong. The relative scarcity of talent doesn’t change when a player signs with a team or when there are many players on the market. For every free agent signing, there is one less buyer on the market, and for every free-agent player there is an additional open roster spot. Braves fans are well aware the available slots for outfielders.

This leaves me with the final explanation: Burrell was willing to accept less to play in Tampa. If Burrell was a financial mercenary, I think that he would’ve waited longer to sign a deal like this. Burrell went to college in Florida, so maybe he likes it there. Playing in front of fans who boo you for your big salary even when you are a productive player has to be frustrating. In Tampa, if the team stinks the fans just don’t go to the game. He’s earned a total of $54 million over the course of his playing career, so he’s probably willing to sacrifice some additional wealth for comfort.

We’ll soon see how the rest of the market shakes it. If other deals are vastly below expectations, then I think it’s a sign that the economy is having a dramatic effect on the players market.

What If…

David O’Brien explains why the Braves might be reluctant to sign an outfielder to a long-term deal.

Among hitters, I just don’t think the Braves have any desire to give a three-year or whatever contract to a poor defensive outfielder like Pat Burrell or Adam Dunn. Not that they couldn’t use the homers (they obviously could), but I don’t think they want to go long-term with a guy who’d block one of the younger outfielders a year or two from now, namely Jason Heyward, their top position-player prospect.

What if, just what if, Francoeur were to get his career back on track in 2009? Then a year or two from now, when Jordan Schafer or Gorkys Hernandez is in CF and Francoeur’s a fan-favorite again in RF, do you just assume you’d be able to shed the salary of a Burrell or Dunn and open a spot for Heyward?

If the Braves are thinking long-term (and they are), they’ve got to plan accordingly, to have room for the prospects they’re grooming now in a farm system is back to a healthy state with a lot of legit prospects who’ll be in the upper tiers this year, not a farm system where most of the best prospects are in rookie or A-ball the way they were a year or two ago after the Teixeira trade.

What if Jeff Francoeur gets his career “back on track”? By getting back on track does he mean a below-average corner outfielder or plays like he did after he was first called up? I suspect the latter, and I think that is very unlikely. I mean what if Chipper Jones bats like he did in 2004? It’s not good policy to base decisions on unlikely scenarios.

But, let’s say Francoeur does blossom into a star, and Heyward, Schafer, and Hernandez are ready to join the team in 2010. Well, then you trade from a surplus in one area for a more-desirable basket of players. I consider this to be a nice problem, and I don’t worry about this potential occurrence. Having Jim Thome when Ryan Howard was ready to play wasn’t a problem for the Phillies.

On Frank Wren

With the collapse of the Furcal-to-Atlanta deal, Frank Wren has been getting a lot of criticism. I’m not sure it’s warranted, but I think now is a good time to pass along a few thoughts related to the Braves GM.

  • I heard Frank Wren on the the radio this morning (790 The Zone podcast), and he’s not happy about the Furcal situation. He stated a few important points that I want to pass along.
    • Furcal’s agent left a voice mail asking for a “term sheet” and stated “we’re good.” Wren emphasized that “we’re good” was a direct quote, and that in a business where face-to-face meetings are rare this constitutes a done deal.
    • He stated that he had talked to Furcal about moving to second base, and Furcal indicated that he was fine with the move.
    • Furcal’s agent did come back with further demands, but the terms were ones that the agent knew the Braves would reject, including a no-trade clause.
  • Frank Wren is a good interview. He is nothing like his predecessor in this area. He responds in detail to questions, giving more than the minimum. He’s emotional, but conveys rational thoughts even when expressing emotions. John Schuerholz always sounded to me like he had other things to do and was annoyed by questions.
  • I’m not sure you can say that Wren has performed differently from Schuerholz. My impression is that the Braves front office is a brain trust that still includes Schuerholz. When Wren was an assistant GM, he probably had a lot more power than most GMs. As a GM, I think that he has a little less power relative to other GMs. That doesn’t mean that Wren isn’t the leader, but I think the transition from Schuerholz to Wren hasn’t changed much about the organization. I recall that Schuerholz had considerable trouble working with agents.
  • Recently, I referred to Frank Wren as a stat-head. The stat-head designation was meant to be humorous, and I did not mean for it to be taken seriously. Since that post, I have seen several references to Wren being stat-savvy, and I think my post is partially responsible. I want to clear this up. I am sure that the Braves use statistical methods to help evaluate talent just as all ballclubs do. There is no organization that eschews quantitative analysis; however, some are more partial to stats than others. The information I have about Wren is that he is not a stat-focused decision-maker. From speaking with several sources regarding Wren, my impression is that Wren is somewhat hostile to quantitative analysis. Just because Wren used some DIPSish reasoning to defend a pitcher doesn’t mean that type of analysis is driving the organization. My guess is that ocular scouting played a larger role in evaluating Javier Vazquez than quantitative analysis.

How I Value Players

I have been getting many requests to explain my player valuation system. I have added the following to the FAQ page.

How do you estimate the value of baseball players?

The method I use is complex and involves many steps. What follows is a brief explanation. I provide a detailed explanation in my book. Since its publication I have made a few minor modifications that I will detail in an upcoming book, but the basic structure is similar.

I estimate the impact of winning (via run-differential) on revenues (using Forbes’s The Business of Baseball report, various years). Then, I estimate the impact of player performance on run production (hitters) and run prevention (pitchers). These estimates are adjusted for home-park influences. I also add an adjustment for defense. In some cases I assume the fielder is average for his position, in other cases I use the Plus/Minus system to adjust for defensive quality. I then convert the run-contribution estimates to dollars using the estimates of the impact of winning on revenues. Because the impact of winning on revenue is non-linear, the reported values assume that the player is added to a .500 team. Players added to teams with above (below) average records generate more (less) revenue. The estimates are also gross (not net) marginal revenue product estimates, and therefore do not account for costs such as coaching, medical care, etc.

For projecting players into the future, I assume that league revenues grow at an annual rate of ten percent, which is consistent with the history of league salary growth. I also make an adjustment for aging.

Valuing Moyer

Jamie Moyer just re-signed with the Phillies for the next two years at $13 million. This is where estimating expected marginal revenue product becomes a pure art. Moyer will be 46 and 47: ages at which most humans can’t play baseball any more. There is no aging curve to follow; it’s more about whether or not he’s going to wake up one morning and have his body say “enough!”

So for this valuation I’ll just note that his value over the past three seasons has been between $10 and $11 million per season. $6.5 million for two seasons is probably a good gamble to take. The contract also includes performance bonuses to compensate Moyer for pitching benchmarks that he’ll likely be worth if he surpasses them.

He will receive base salaries of $6.5 million in each of the next two seasons, and he can make an additional $1.25 million in performance bonuses each year: $250,000 each for 150, 160, 170, 180 and 190 innings pitched.

In addition, his 2010 base can escalate by up to $4.5 million: $250,000 each for 150 innings and 23 starts, and $500,000 each for 160, 170, 180 and 190 innings, and 25, 27, 29 and 31 starts.

Furcal Returns

According to Ken Rosenthal, Rafael Furcal is on his way back to Atlanta. On the radio this morning, I heard the terms stated as three years at $9-10 million per year, with an option for a fourth season. David O’Brien of the AJC agrees with the number of guaranteed years, but I haven’t seen any other reference to the dollars or the option year.

Furcal is a valuable player. He’s a shortstop who can play defense and hit, and he’s only 32 (we think). Over the next three years, I estimate his value to be $49 million ($16.33 per season). If the terms of the deal are correct, this looks to be a good deal. His health is a major factor here. If he’s healthy, he’s worth more; if he’s not he’s worth less.

The deal creates some new questions. The Braves now have three good middle-infielders. DOB suggests this may open the door to a Jake Peavy or Zack Greinke trade. Danny Knobler has a source who claims the Braves plan to move Kelly Johnson to left field. This conflicts with Frank Wren’s recent statements.

Displeasure with Yunel Escobar has been an item on the Braves off-the-record talking points for most of the off-season, so I think the best bet is that Escobar is moved in a deal.

As a fan, I’m a bit disappointed with this move. I understand that there is a distinction between what players do on and off the field. Furcal’s second DUI in the city that I live really soured me. At the time, I wanted the Braves to suspend him for the season. I don’t think he even got the night off. I find it amazing that Barry Bonds can’t find a job because of his association with performance-enhancing drugs, yet you don’t even see Furcal’s drunk driving issues mentioned. It hasn’t even been two years since Josh Hancock was killed in a drunk driving accident.

Don’t individuals deserve a second chance? Yes, he got one: that’s two DUIs. I’m sorry, but I’m going to have trouble rooting for this guy.

UPDATE: According to Mark Bowman, the Braves are planning to move Johnson to the outfield.

Where Furcal would be positioned defensively remains to be seen. But the Braves have no intention to trade either Johnson or Escobar. Instead, they are planning to move Johnson back to left field, a position he played before moving to second base before the start of the 2007 season.

The opportunity to have both Furcal and Johnson in their lineup proved more appealing to the Braves than any of the options they were evaluating in their search to find a power-hitting outfielder.

With Johnson, they feel they have a player capable of hitting 15-20 homers. Matt Diaz could also see some time in left field.

Uh, what about right field?

ANOTHER UPDATE: Apparently, it’s not clear that Furcal is coming to Atlanta. John Heyman sums up the saga.

So to recap, Furcal rejected a four-year deal for about $40 million with the A’s to talk to the Braves about a three year deal for $30 million with a vesting option (and according to the Braves, agree to that deal). And after allegedly wrapping things up with the Braves, he’s believed to be talking to the Dodgers, mostly likely about a two-year deal with an option.

If he takes a two-year deal with the Dodgers, he will be the first player ever to reject a four-year deal to take a three-year deal for a similar annual salary only to reject that for a two-year deal for a similar salary. If this keeps up, the next stop would be a one-year deal.

Ibanez Versus Burrell

The Philadelphia Phillies unceremoniously dumped Pat Burrell last week by not offering him arbitration and replacing his roster spot with Raul Ibanez. Ibanez has reportedly agreed to a three-year $31.5 million contract ($10.5 million/year) with the Phillies. The differences between Ibanez and Burrell are subtle: Ibanez will be 37 next year and is left-handed, while Burrell is 32 and right-handed. They are alike in that they are both poor-fielding outfielders with good bats, both with OPS+ consistently in the 120s during the past few seasons.

With Ibanez, the Phillies will get output similar to what Burrell gave the team. Given his age, injury may be a bit more likely for Ibabez, but I project their values to be close over the next three years. I project Ibanez to be worth $46.5 million ($14.5 million/year) and Burrell to be worth $48 million ($16 million/year) over this time span. I’m unsure of what Burrell was willing to work for, but Ibanez appears to have offered the Phillies a good deal. Burrell may be worth the $14 million he earned last season with the team, but I suspect he was a going to be more selective than Ibanez, who’s used to making about half the current annual salary of his new contract.

In any event, I think that Phillies fans should be pleased with this signing. Burrell is a valuable player and will likely land a contract with a bigger salary. The team gets to keep Burrell’s production but now has some budget flexibility to add roster depth.

This Is Getting Ridiculous

Kerry Wood was in Cleveland on Wednesday night to take the physical needed before he can finalize a two-year deal with the Indians worth about $20 million.

$10 million a year for Kerry Wood?! And I thought the K-Rod contract was excessive. Kerry Wood was a more valuable pitcher ($5.72 million) than Francisco Rodriguez ($4.62 million) in 2008, but he was limited by injuries during the four previous seasons. Assuming that Wood pitches exactly as he pitched in 2008, I estimate he will be worth approximately $6.5 million per season for the next two years. I reiterate: this assumes that one of the most injury-prone players in the league performs as he did last year. He made $4.2 million pitching for the Cubs last season, and the Cubs didn’t even offer him arbitration. Given his injury history, I think that was probably the right call.

I consider the Indians to be one of the smartest organizations in baseball—in my book I rate Cleveland to be the best-managed franchise in the American League—therefore, this move shocks me even more. What could be going on? I can think of only one explanation: Kerry Wood has been able to demonstrate such good health that teams think he can start. If Kerry Wood can get back to his 2002–2003 form he would be a $14 million/year pitcher over the next two seasons. Maybe his agent has been shopping his potential as a starter.

Wisely Spending on CC

Apparently, CC Sabathia and the New York Yankees have agreed to a seven-year $160 million contract, which is just under $23 million per season. [Update: Tim Brown is reporting the deal is for $161 million (exactly $23 million per year) and has an opt-out clause after three years.] Previously, I had projected Sabathia to be worth $24 million in a six-year deal. (Since I made that initial estimate, I corrected a minor error in my model that resulted in a very slight undervaluing of Sabathia.)

For the next seven years, I have Sabathia valued at just under $26 million a season, so the Yankees are paying about what he is worth.