Updated Value of a Win & How It Relates to Andrew McCutchen

He's smiling about his potential extension value with the Pirates

This past week, Matt Swartz published a 2 part series of articles at Fangraphs that examined historical WAR value assumptions and what the actual numbers were.  It is a fantastic 2-parter, especially the second part that I linked.  It’s the kind of article that you really need to read, ponder for a minute or two, and then re-read it again to process the info.

To streamline the article, Swartz feels that the $/WAR has actually been undervalued historically.  He shows the WAR values accumulated by free agents and what the $/WAR is for each year, plus the $/WAR if you factor in the cost of the compensatory picks associated with signing those free agents as well.

Swartz’s conclusion that WAR has been undervalued actually gave me pause, because I’ve felt that in recent years it has actually been overvalued.  But his numbers and methodology are sound, so I have to change my way of thinking and start to accept these new numbers.  Swartz feels that the $/WAR for 2012 is actually $6.3 million if you include draft picks.  He allows a 9.4% reduction if you exclude draft pick compensation, which I would like to do as I feel the new CBA is going to severely limit how many free agents get arbitration offers from their old teams (a team has to make a $12.6M qualifying offer), so that gives a number of $5.7M/win.

One of the other interesting nuggets from the Swartz article is his breakdown of how free agents performed from 2007 to 2011 based on the tier of their average annual value: greater than $15M, between $10M and $15M, $5M to $10M, and less than $5M.  His research shows that players in the wobbly middle class of $10M to $15M actually performed the least effectively, needing $6.5M/win.  The best value?  The free agents in the less than $5M category are paid only $3.6M/win.

Hopefully this bodes well for Erik Bedard ($4.5M) and Rod Barajas ($4M).  Clint Barmes ($5.25M average value) just misses this bargain bin category.  Using the $5.7M/WAR  figure for 2012, you can see that all of these players, plus A.J. Burnett at $5M in 2012, only need to provide 1 WAR each to justify their contracts this year.

But how will this new value affect future contract extensions for the Pirates, specifically Andrew McCutchen?  Back in December, Tim examined the potential value of an extension for McCutchen.  At that time, Tim felt that 6 years/$51M was a fair value for McCutchen using Justin Upton’s contract as a baseline.  However, historically we have used $5M/WAR here at Pirates Prospects.

The other issue, and probably the one that the Pirates and McCutchen’s agent are wrestling with, is what is McCutchen’s ultimate ceiling.  In 2011, McCutchen tantalizingly produced 5.7 WAR, but you were left feeling that he had another gear not fully being used.  If we use 5.7 WAR as the baseline for 2012 (his age-25 season) and the $5.7M/WAR figure, McCutchen’s value would be $32.49M.  Considering that he will be paid an estimated $520,000 in 2012, his surplus value would be just under $32M.

Let’s take a look at what McCutchen’s potential next 6 years could look like, with a 5% escalation on WAR per year and upgrading Justin Upton’s existing contract:

Year Age $/WAR WAR Value Est. Salary Surplus Value
2012 25 5.7 5.7 $32.49 $0.52 $31.97
2013 26 6 6 $36.00 $5.00 $31.00
2014 27 6.3 6.5 $40.95 $7.50 $33.45
2015 28 6.6 6.5 $42.90 $11.00 $31.90
2016 29 6.9 6.5 $44.85 $16.00 $28.85
2017 30 7.3 6 $43.80 $16.00 $27.80

That totals up to 6 years/$56M and buys out the first 2 years of free agency for the Pirates.  You can also see that the Pirates have immense surplus value all throughout the duration of this assumed deal.  Even if you add in a $2M signing bonus for McCutchen and bring the deal to $58M, it is still a bargain for what McCutchen would bring to the franchise.

I would still consider a 5 year deal in the low $40M range as a compromise if McCutchen did not want to give up 2 free agency years.  At no point would I just buy out his arbitration years, as there is no benefit to the team other than providing cost certainty.

Author: Kevin Creagh

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  • CWPCWP

    I think by the time he is a free agent, with inflation and without injury problems, McCutchen will surpass Kemp’s deal.

  • http://www.facebook.com/people/Giraffe-Monsoon/100001295808534 Giraffe Monsoon

    He’s such natural talent that I would go 7-8 years if possible and just pray he never gets badly hurt. Lock him in at least until he approaches the age of 33-34.

    • Kevin_Creagh

      The whole thought process is that McCutchen and his agent don’t want to give up ANY free agent years.  Why would he want to give up 3-4 years in your scenario?

      It seems as if he wants to put his time in here and then hit the FA market young enough to get a Crawford-type of deal.

  • ElGaupo77

    There is ZERO chance he signs a 5 or 6 year contract beginning in 2012.  I’m not even sure about 7 years.  He would sign a 9 year deal and possibly a 8 year.  

    Maybe a 6 year contract starting in 2015.  Not a chance right now.   
    Great article other than that speculation.

  • leadoff

    He might have a 5.7 WAR, but that is a misleading stat IMO, designed to determine pay scales, but not a good stat if you are looking for certain accomplishments out of a player.
    For example McCutchen has a 5.7 WAR and was not even a 1.0 WAR for the entire month of September. He did not hit for average either.
    A player can’t bunch his stats into a month and spread them out IMO. If I were the Pirates McCutchen would have to show me a full season of quality.

    I do know that the Pirates and McCutchen tried to put a deal together least summer and over this winter, McCutchen would not take the deal.
    Since we know for sure they have made offers to McCutchen and with the Pirates sabermetric stance of values, one might surmise that McCutchen’s camp has McCutchen at a higher value down the road. The Pirates are pretty good at paying players their current values.

    I also agree that the Pirates would be wrong to sign McCutchen for just his ARB years.

      

  • emjayinTN

    I have been pitching the following for the past 3 months on different MB’s

    2012     $  3.00 mil
    2013     $  5.50
    2014     $  7.50
    2015     $  9.50
    2016     $11.75  1st year of FA
    2017     $14.00  2nd year of FA
    2018     $17.00  Club Option or Vesting Option

    That’s $51.5 mil for 6 years with a 7th year CO or Vesting Option.  If the Pirates choose to add a nice signing bonus, I think they can sell this.  With someone who has increased the number of HR’s from 12 to 16 to 23, he has moved from our leadoff to a #3 batter – he is only going to get better every year.

  • BondstheGOAT

    Just to preface I am very lazy and have no intentions on researching these things myself but is there any comparison to McCutchen and Vernon Wells. i like a 6/58 deal but wouldnt go any higher than that. It seems that some people think they should just pay him whatever to make sure he stays. Could doing something like that end up like Wells? Overpayed albatross killing a team late in the deal. Now I dont think Cutch will regress like that but he is a bit small to continue with that power and speed is usually the first thing to go. Just a small under researched observation

    • Thom Kay

      I don’t see the two as comparable. Wells signed his big contract in ’08 at age 30, and it was a massive 7yr, $126M contract. We’re talking about getting McCutchen for 6 yrs, less than $60. 

      Not only should we expect him to continue to earn his paycheck at that rate, but the  surplus value we’d get in the short term would outweigh the negative in the future. As long as, of course, he doesn’t have horrible injuries.